Sitaram Yechury

The BJP, which assumed the reins of political power for the first time in the country, has unveiled an economic philosophy and consequent policies that represent the most reactionary onslaught both on the welfare of the Indian people and the economic sovereignty of our country.

In the run up to the general elections, the BJP successfully misled large sections of the Indian people by appearing as the champions of protecting their economic livelihood and that of the country through the slogan of “Swadeshi”. Having reaped the political benefit of the popular discontent amongst the people against the economic policies of liberalisation, the BJP immediately upon assuming office went about doing the opposite of what they have promised during the election campaign. It, thus, has become clear that “Swadeshi” was yet another mukhota of the BJP meant to deceive the people into supporting them.

In less than three months of this government, the economic policies that have unfolded reveal its true colours as a party committed to destroying the self-reliant basis of Indian economy and, at the same time, being blatantly pro-rich. The budget, considered by far as the blueprint of the policy framework of the government represents a frontal attack on the livelihood of millions of the working people. It is neither “Swadeshi” nor growth oriented. It has unleashed an inflationary spiral that is fast undermining the real earnings of the people. Prices continue to soar breaking all previous records. More importantly, all the essential food consumption articles have seen a sharp rise in prices. The prices of vegetables have gone up by nearly 600%. Similarly, the prices of pulses or dals have seen a massive hike. Likewise, the prices of rice and wheat have also gone up. This, in turn, has led to an overall inflationary spiral which shows no signs of abating.

There are two basic reasons for such savage inflation. The first relates to the set of policies that the government undertook to raise its revenues. In the background of an increase in the railway fares and the postal rates, the BJP government is relying essentially on indirect taxes for its revenues. The direct taxes put the burden on those who earn high income and are hence in a position to tolerate the burden. Indirect taxes, on the other hand, are taxes on commodities and services and their burden falls on the consumer. The BJP government continues to give a bonanza for the rich by not increasing a paise of direct taxes. By increasing indirect taxes, the government has transferred the burden of the revenues on to the shoulder of the common man.

Apart from the fact that the BJP government’s faulty economic policies are leading to an unprecedented rate of inflation, much of this price rise is attributable to the superprofits that the BJP’s social base, the traders or the banias, are making. It is obvious that the BJP, in order to consolidate its political position, is patronising these unscrupulous traders at the expense of the people, through a massive erosion in their real earnings.

This is proved by the fact that, compared to the rise in oil seeds prices, the rise in edible oil prices is four times higher. No doubt, there has been a drop in the production of oil seeds, vegetables and fruits. The government, however, remained a mute spectator instead of intervening and providing assistance to the farmers to overcome the possible shortfall or to the consumers by holding the price line. As a result, while the supply of vegetables has gone down by 17 to 20 per cent, the wholesale prices have gone up by more than 200 per cent and the retail by more than 600 per cent. The bonanza that the BJP’s support base is making as a result, constitutes the most criminal onslaught on the people’s livelihood.

At another level, this government has unveiled plans for massive privatisation and dismantling of the public sector. The insurance sector has been privatised. Ironically, it was the BJP that supported the Left parties in forcing Mr. Chidambaram to withdraw such a proposal in 1997. It was then in the opposition.

The dismantling of the public sector is going on in a massive scale. Indian Airlines, blue chip companies like IOC, VSNL, GAIL etc are to be privatised in a big way. In a majority of the public sector, the government share will be reduced to 26% only. In addition, the BJP is opening up the Indian economy to loot all multinational corporations in a big way. During these three months, the government has approved a large number of foreign investment proposals in the core sectors like petroleum, natural gas, mining etc. What these amounts to is the virtual handling over of India’s natural resources to multinational corporation’s exploitation.

Thus, the privatisation of the public sector and the opening up of country’s resources in such a big way together constitute an unprecedented attack on India’s economic sovereignty.

These proposals by themselves have a potential for reducing the rate of employment generation. This is so because any privatisation is accompanied by modernisation which means the induction of capital intensive and labour saving technologies. Thus, not only would future potential employment generation reduce, but even existing employed would find themselves on the streets. In addition, the increase in the retirement age from 58 to 60 years has led to a virtual freeze of recruitment in the public sector and government which is the largest employer in the country. Thus, the youth of the country will face the brunt economic hardships and insecurity under the BJP rule.

While price rise on unemployment will add to the miseries of millions of Indians, the government through its policies has allowed a virtual 15% devaluation of the Indian rupee. Apart from raising the prices of imports and consequently the prices of all goods having imported content, this will increase India’s debt burden which is calculated in dollar terms. In rupee terms, the country will have to pay more as interest on the same loan. This year’s budget has shown that the government’s debt payments are estimated to be 75,000 crores. The precarious state of the economy can be understood from the fact that out of every rupee earned by the government in 1997-98, 24 paise will go to meet the interest payments. On the other hand, 29 paise of every rupee of its revenue comes from internal borrowings. In other words, the government is borrowing to pay back the interest on its earlier borrowings. This is the vicious debt trap into which the economic policies of liberalisation have pushed the country. In the name of “Swadeshi”, the country is being led on a path of further indebtedness.

A major problem facing the Indian economy in recent years has been the slowing down of economic growth and the consequent recessionary tendency in Indian industry. Its main reason is the lack of sufficient growth of domestic demand. With the erosion of people’s real incomes through inflation and unemployment, their demand for domestically produced goods falls short of the production. Those who need the goods do not have the money to buy them, while on the other hand, those who have the money, do not need these goods since they already possess them. The demand of the rich is reflected in a clamour for imported goods which in conditions of devaluation costs the country more than before and puts our balance of trade under tremendous pressure.

The only way out of this situation, naturally, is to increase the domestic demand by paying greater purchasing power in the hands of the vast majority of Indian people. This can be done if two concrete steps which the CPI(M) has been suggesting for long time are undertaken. The first is to implement land reforms which, in one stroke, will not only liberate millions of impoverished peasants and landless labour but will also provide them with the economic wherewithal. The experience of the Left Front government’s implementation of land reforms has shown the tremendous expansion of the rural market in Bengal.

Secondly, the large amounts of food stocks that are there in government godowns can be used for a massive food for work programme, but will employ millions of rural youth in the country. Apart from building infrastructure saw necessary in rural India like roads, bridges, drinking water wells etc, such a scheme would not only employed millions of unemployed but give them the economic resources, which in turn, can generate domestic demand.

But such proposals are not considered by the BJP government precisely because of its class bias which favours the rich capitalists and landlords.

It is such a reactionary policy package that must be relentlessly opposed by all working people in the country, particularly, the youth , if they wish to inherit an India that is worthy of the pride of being our motherland.