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.
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