ECONOMY-INDIA: Liberalisation Runs into Rough Political Weather

By Ranjit Devraj Reprint | | Print |

Ranjit Devraj

NEW DELHI, Oct 7 2002 (IPS) - A decade after socialist India began economic liberalisation under pressure form the World Bank, this ambitious process has run into a wall because of resistance from ultra-nationalist groups that support the right-wing party of Prime Minister Atal Bihari Vajpayee.

Before embarking Monday on a week-long tour of Cyprus, Denmark and Britain, Vajpayee told journalists that reforms were ”on track and irreversible”. But many think he was whistling in the dark.

India’s economic liberalisation drive, begun by the Congress party in 1991, has been opposed by left-wing parties, trade unions, non-government organisations, the bureaucracy – and even Vajpayee’s own Bharatiya Janata Party (BJP).

The party had promised to return the country to the path of ‘swadeshi’ or economic self-reliance, first advocated by Mahatma Gandhi during the anti-colonial, independence movement.

On gaining power, however, the business-friendly BJP quietly shelved its ‘swadeshi’ plans so much so that, last week, the fundamentalist Rashtriya Swayamsevak Sangh (RSS) or National Self-help Organisation, which provides ideology and muscle to the party, served notice that a ”foreign model” of economic growth was unacceptable.

The dour leader of the RSS, K S Sudarshan, railed against an ”urban-based, high energy-consuming, labour-displacing and ecologically-destructive western model of development” that he said was being pursued by the Vajpayee’s government at the behest of the International Monetary Fund (IMF) and a coterie of Indian capitalists.

Sudarshan also called for the sacking of Arun Shourie, who as minister for disinvestment has over the last two years gained for the government 2.3 billion dollars through the sale of equity in 31 public sector units, including automobile manufacturer Maruti, a joint venture with the Japanese automotive giant Suzuki.

Vajpayee might have ignored Sudarshan’s nationally-televised diatribe, except that other constituents of the multi-party coalition that he leads have also criticised the government’s divestment policies that appear to favour powerful business groups in the name of gaining ”strategic partners” in key state-run sectors.

India’s vocal Defence Minister George Fernandes, who leads the regional Samata Party (Equality Party), has called for a complete review of the divestment policy after the powerful Tata group bought up the international long distance company Videsh Sanchar Nigam Limited (VSNL) and the Reliance group acquired Indian Petrochemical Company Limited (IPCL).

Fernandes alleged that monopolies were being perpetuated through the sales, by keeping other public sector corporations out of the bidding process and also by preventing the participation of retail investors. ”Divestment should not be such that it makes the rich richer,” he said.

Pressure from Fernandes and other Cabinet ministers opposed to further divestment of public sector units, such as Petroleum Minister Ram Naik, have forced Vajpayee to put on hold sales that may have fetched the government, according to a strategy outlined in Parliament, an estimated 10 billion dollars in the current year.

Many say that the sudden revival of the BJP’s ‘swadeshi’ or self-reliance slogan, which helped it to seize national power in 1998, may be a sign that Vajpayee’s government, beleaguered by political dissension and by unrelenting pressure from the opposition Congress party, may be readying for a snap poll though general elections are not due until 2004.

”The current instability arising form infighting within the BJP may be an indication that there might be elections soon,” commented Arun Kumar, who teaches economics at the Jawaharlal Nehru University.

On Saturday, Vajpayee defended the privatisation of state-run firms at a meeting of the powerful Planning Commission on the grounds that many were loss-making and that the money was needed to boost growth and meet long-pending social objectives.

”An eight percent growth target is a must in order to build an India free of poverty, illiteracy and one that is capable of meeting challenges to national security,” Vajpayee argued at the commission, which allocates funds for social and economic development.

Vajpayee referred in particular to the slow pace of power sector reforms, which he said was responsible for the current stagnant growth rate of 5.5 percent.

But Vajpayee was helpless to prevent the sacking of power minister Suresh Prabhu, who had pursued an aggressive economic liberalisation agenda, by the Hindu fundamentalist Shiv Sena party. This party is a close ally of the BJP.

Vajpayee also emphasised that foreign direct investment (FDI) needed to ” strengthen our economy and enhance our competitiveness” was dependent on India’s divestment policies.

But the RSS, through its affiliates the Swadeshi Jagran Manch (Forum to Protect Self-reliance) and the Bharat Mazdoor Sangh (Indian Workers Union ), has already opposed plans to raise the limit of FDI key sectors such as oil as outlined in a government paper.

A third RSS affiliate, the Bharatiya Kisan Sangh (Indian Farmers’ Union), warned that the present government was going the way of the previous Congress government of former prime minister Narasimha Rao (1991 -1996).

That government is credited with ushering in economic liberalisation, but the Congress party was voted out of power since the policy was seen to have concentrated wealth in a narrow upper crust.

”This government has done nothing but watch while farmers have been committing suicide because of poverty,” said K B Jadhav, who leads the BKS.

The cadres of the BKS and the BMS had promised to hold agitations against the Vajpayee government’s ”anti-people” economic policies starting Sep. 20, to continue until November.

”Our agitations will culminate in a major rally in the national capital on Nov 26. We hope the government comes to its senses before that,” Jadhav said.

ECONOMY-INDIA: Liberalisation Runs into Rough Political Weather

By Ranjit Devraj Reprint | | Print |

Ranjit Devraj

NEW DELHI, Oct 7 2002 (IPS) - A decade after socialist India began economic liberalisation under pressure form the World Bank, this ambitious process has run into a wall because of resistance from ultra-nationalist groups that support the right-wing party of Prime Minister Atal Bihari Vajpayee.
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