ECONOMY-INDIA: Communists Wave Red Flag at Speedy Reforms

By Ranjit Devraj Reprint | | Print |

Ranjit Devraj

NEW DELHI, Sep 20 2004 (IPS) - Plans by the pro-reform Congress party-led coalition government of Prime Minister Manmohan Singh to incorporate representatives of the World Bank and foreign consultants in the country’s hallowed Planning Commission have been stymied by vigorous opposition from key communist allies.

”We have told the prime minister that we cannot have experts of international agencies to be part of groups or committees set up by the Planning Commission,” Sitaram Yechuri member of the politburo of the Communist Party of India -Marxist (CPI-M) told reporters following a stormy weekend meeting at Singh’s residence.

Manmohan Singh’s final decision will depend on the opinions of other members on the Planning Commission, which has long presided over India’s Soviet-style planned economy – now undergoing reforms.

However, it is difficult to see him defying the communist parties of the Left Front that provide critical outside support to his minority government.

But Singh, a former World Bank economist said at a press briefing before he left Sunday on an eight-day trip to London, New York and Geneva that India would ”carry forward economic reforms.”

What brought the ideologically dissimilar Congress party and the communists together is a determination to keep the pro-Hindu, Bhartiya Janata Party (BJP) out of power at all costs and both groups have repeatedly said that they would ensure that the ruling United Progressive Alliance (UPA) coalition lasts its full five-year term.

”We have our differences but we will have to try and sort them out from time to time,” said veteran CPI-M leader and former chief minister of West Bengal state Jyoti Basu who had specially flown into the national capital for Saturday’s meeting.

The meeting was specially convened by Congress party leader Sonia Gandhi after a week in which the communist parties publicly criticised the policies of the UPA government which took office in May following the surprise electoral defeat of the BJP government.

At issue was the new government’s policy on foreign direct investment (FDI) with the communist parties bitterly opposing plans to Singh’s Congress-led coalition government to increase foreign investment limits in insurance, telecoms and aviation, fearing massive job losses in these sectors.

”We want the government to consider our view that there is no justification for raising the caps in the telecom and insurance sectors,” said Prakash Karat, a senior member of the CPI-M politburo at a press briefing last week.

Karat warned that the communist grouping would vote against any move to raise the investment limits on insurance since that would call for a two-thirds majority in Parliament to amend existing laws.

The communists have already opposed moves to privatise India’s major airports but said they had no problem with inviting foreign investment if new ones are going to be built.

Private investment, including money from Indian expatriates have seen the successful building of India’s first joint-venture international airport in southern Kerala, which has long been a leftist stronghold.

Besides rising communal violence under BJP rule, analysts said the May elections results were greatly influenced by reforms that seemed to widen the gap between the rich and the poor particularly in the rural areas where farmers began to commit suicide by the hundreds.

Saturday’s meeting had the effect of the government reiterating that priority would be given to ushering in a law to guaranteeing employment, initiating food-for-work schemes, and widening a plan to provide free mid-day meals in schools to improve nutrition and ensure better attendance.

Said D. Raja, spokesman for the Communist Party of India (CPI) : ”We do not want to bring down the government – all we are saying is that if we do not deliver on promises made during the elections the people will not forgive us.”

As for representatives of the World Bank (WB) and the Asian Development Bank (AsDB) sitting on the consultative committees of the Planning Commission, officials said there were plans to make them less visible.

”But these experts (from the WB and AsDB) do have a crucial say on policies and this is not new,” a Planning Commission official told IPS.

India’s structural reforms began after a balance of payments crisis that resulted in the induction of Manmohan Singh as finance minister in a Congress government that ruled between 1991 and 1996 under then prime minister Narasimha Rao.

But those reforms were seen as benefiting the urban rich while leaving out the rural masses and the Congress party found itself in the political wilderness for the next eight years.

On being sworn in as prime minister, Manmohan Singh pledged to continue with the reforms that he had alternatively been given credit for and chastised at the same time.

This time around, he said, his reforms would have a ”human face”. But it remains to be seen how the communists take to that.