In the year 1991 when the New Economic Policy or the Neo-liberal Economic Policy was adopted by the then Narasimha Rao Government at the Centre with much fanfare, it was repeatedly declared that it is a panacea for all the crisis faced by the Indian economy and shall ensure rapid growth of Gross Domestic Product (GDP). After 22 years, it is the very same neo-liberal policies which is leading the country to an economic disaster. The then Finance Minister Sri. Manmohan Singh had brush aside the criticism and opposition of left parties and trade unions and they became a target of concentrated attack by the supporters of the neo-liberal policies. Inspite of stiff resistance from all trade unions the Government went ahead with the rigourous implementation of the anti-people, anti-labour policies of Liberalisation, Privatisation and Globalisation (LPG).
While the UPA Government desperately wooed foreign capital and handed out concessions to big business and corporates, the plight of the people has been worsening because of the economic slowdown, falling industrial production and high inflation. The rupee has steadily depreciated in value, with the exchange rate of the rupee to the dollar breaching the Rs.68 mark last week. The current account deficit (the gap between exports and imports and other remittances) has reached an unsustainable level, there is rising external debt with the bourgeoning short-term debt, posing immediate problem. This financial crisis is accompanied by high inflation. The fact that the creation of two India’s of the rich and the poor, with the gap between them widening alarmingly, is a reality that stares us every moment.
The first UPA Government was not allowed to implement the reforms in the financial sector, pension sector and retail sector etc. by the left parties who supported the Government. It prevented the passing of PFRDA Bill by threatening to withdraw support to the Government. The second UPA Government without the left support, started rigourous implementation of the reforms in all sectors. All barriers for the inflow of foreign capital to the country was removed and the cap of Foreign Direct investment (FDI) in banking, insurance, pension, retail, defence, telecom etc. are either enhanced or removed. Large scale disinvestment of public sector has become the order of the day. Deregulation of petrol pricing has resulted in everincreasing prices of petrol and diesel fuelling inflation which resulted in the increased burden of price rise for the people. Onions,vegetables and all other necessities of life are becoming out of reach of the people. The other outcome of the economic slowdown is the loss of jobs in the industrial and services sectors and rising unemployment.
The UPA Government is seeking to overcome this crisis by attracting more foreign capital and giving more concessions to the multinational companies (MNCs) and Indian big business. The growing dependence on foreign capital flows and FDI has worsened the situation further and the entire exercise has proved futile. The bulk of the capital flows out of the country is from equity, debt markets and Foreign Institutional Investments (FIIs), which the Government cannot control. The neo-liberal policies of the Manmohan Singh Government and the boosting of the economy through Foreign Capital inflows have now come to roost.
During the last three years at least, the tax concessions provided to the corporartes and the rich amount to, according to budget papers, to over five lakhs crores every year. Despite such “incentives”, the overall growth of the industrial production was minus 1.6 per cent in May 2013. If, instead, these legitimate taxes were collected and used for public investments to build over much needed infrastructure, this would have generated large-scale employment. This, inturn, would increase the purchasing power of the people and vastly enlarge domestic demand. This would lay the basis for a turn around in manufacturing and industrial production and put the economy on a more sustainable and relatively pro-people growth tragectory.
What the country needs is an alternative pro-people policies. Such an alternative can be brought about through the intensification of popular struggle of the people and working class in the coming months.