Long way from Avadi

The political class seems to function around a consensus to facilitate the forward march of privatisation and liberalisation.

It is not possible to pursue a policy of laissez-faire in industry.... It is incompatible with any planning. It has long been Congress policy that basic industries should be owned or controlled by the state. This policy holds and must be progressively given effect to. State trading should be undertaken wherever the balance of advantage lies in favour of such a course. A large field for private enterprise is, however, left over. Thus our economy will have a public sector as well as a private sector. But the private sector must accept the objective of the National Plan and fit into it. This was how the manifesto of the Indian National Congress delineated its concept of the mixed economy development model before the people during the first general elections of 1952.

Responses from a clutch of present-day Congress leaders, ranging from senior Cabinet Ministers to Youth Congress activists, when this paragraph was brought to their attention, were marked by derision, sarcasm, disparagement and scoffing. Some of them sought to make an objective criticism, saying that while the concept suited the 1950s, it was no longer relevant. A couple of senior leaders still found merit in the 1952 formulation and held that evolving with and adapting to the new global realities should have been carried out without deviating from this line, which they felt had happened during the post-1991 economic liberalisation. But there were also responses that conveyed that the Congress, which has been in power for over 50 years in the 65 years since Independence, is firmly rooted to the mixed economy vision of 1952 despite the widespread perceptions to the contrary both within the party and outside.

This latter point of view clearly followed the position advanced by the very initiator of the 1991 reform process, former Prime Minister P.V. Narasimha Rao. In a document titled Liberalisation and the Public Sector, circulated at the 2001 Bangalore plenary of the All India Congress Committee, he argued that the experience of liberalisation in India did not ipso facto mean conversion of the public sector into private enterprise, although it did mean a vast enlargement of private enterprise to coexist with the existing public sector. Narasimha Rao further argued that his government had clearly told prospective investors not to be eyeing our existing public sector for takeover, but to concentrate on starting new industries to fulfil large requirements not covered by the public sector. The note went on to say that the utility of foreign investment was to relieve the government of its massive commitments on large infrastructure projects, such as power, fertilizers, highways, etc.

Narasimha Rao made another significant distinction in this note. He argued that the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) government, which was in power in 2001, was plunging the cautious liberalisation line and partial disinvestment plans advanced by the earlier regime into a disastrous course of outright sale. His reference at that time was to the controversial disinvestment of Balco and the governments plans to put public sector telecom giants Mahanagar Telephone Nigam Ltd (MTNL) and Videsh Sanchar Nigam Ltd (VSNL) on the auction route. Interestingly, similar accusations were raised by the BJP between 1991 and 1996 when Narasimha Rao announced, through his Finance Minister Manmohan Singh, the decision to liberalise, privatise and globalise the Indian economy. The BJP had argued then that these plans were far too radical and that in the name of liberalisation and globalisation foreign banks and unscrupulous elements are benefiting. The party had advocated economic nationalism as opposed to external liberalisation, and the promotion of swadeshi was its motto. But once it assumed power at the Centre, the BJP pursued aggressive economic liberalisation, as Narasimha Rao pointed out in his 2001 note.

BJP and Congress: In tandem

A comparative review of the actions of the Congress and the BJP makes it clear that both have followed a path of political convenience and expediency, each rationalising its own actions and criticising the others policies. This dual strategy has manifested itself in many forums.

The August 1998 note of the Congress, circulated at the Panchmarhi brainstorming session, came up with this justification: In recent times, there has been criticism by our own party leaders that we have abandoned the traditional Congress ideology of socialism. There is a feeling that we are moving forward to a free market economy. The Congress remains wedded to a mixed economy, an economy that involves the joint enterprise of government and the private sector. What has happened is the mix has changed. In the initial years following Independence, the mix was dominated by the government, as indeed it should have been. But over the years private enterprise has grown and maturedas the demands on government expenditure have multiplied and as the limitations of the government administration and the public sector have become painfully evident, changes have been effected by successive Congress governments with the ingredients of the mixed economy.

The BJPs economic policy note of 1998 advanced the idea of calibrated globalisation. The partys explanation was that this was liberalisation step by step. Internal liberalisation would continue, but the state would intervene to protect Indian industry from foreign competition and regulate external influence in the economy. The note went on to add: The economy of India has come under tremendous pressure because of misguided tariff reductions and an uneven playing field for the Indian industry. It is clear that foreign capital will be only of little value to the national economy, though crucial to some sectors like infrastructure.

These double-track manoeuvres of the two parties were evident in the 2004 election manifestos, too, when both of them criticised each others liberalisation initiatives while seeking to justify their own. There were periodic claims about a rising growth rate, moves to push forward plans and programmes to help private enterprises such as the special economic zones, and announcements of mega infrastructure projects such as the Delhi-Mumbai Industrial Corridor (DMIC), which reportedly would spread over 1,483 kilometres across six States between Delhi and Mumbai. (The project, which professedly passes through Uttar Pradesh, Delhi, Haryana, Rajasthan, Gujarat and Maharashtra and is expected to cost $90 billion, is being taken forward with the participation of the government and private agencies in India and Japan.)

Meanwhile, the miseries of the poor and the lower classes persist, amidst scams relating to liberalisation initiatives and accusations and aggressive politicking. Thus, we have the BJP raising the pitch of its campaign against Prime Minister Manmohan Singh and some other Ministers on issues such as the coal allocation scam and the 2G spectrum allocation. The Congress, too, points to similar issues linked to liberalisation policies such as the mining scam in Karnataka and the controversy relating to the VSNL disinvestment carried out by the NDA government.

Non-Congress, non-BJP parties

The non-Congress, non-BJP parties, which have either held power at the Centre or have supported governments from outside, such as the Left parties led by the Communist Party of India (Marxist), or the CPI(M), have also not been able to reverse the process of liberalisation and privatisation despite evolving theoretical and ideological parameters against it. The non-Congress, non-BJP United Front government, which came to power between 1996 and 1998, consisted of parties professedly advocating socialism, such as the Samajwadi Party (S.P.), the Janata Dal and the Rashtriya Janata Dal, and had the support of the Left parties. It followed policies promoting financial sector liberalisation, disinvestment and foreign investment. However, it had to do this in the face of consistent opposition from the Left parties. But the Left parties also had a mixed record when it came to their own State governments in Kerala and West Bengal. On the one side, both these States witnessed a revival of several public sector units while the Left was in power, but on the other, there were also incidents that pointed towards a rather violent pursuit of private sector industrialisation. This latter streak got highlighted in the violent incidents at Nandigram and Singur during the 2007-08 period. The negative reaction created by these incidents contributed majorly to the Left parties losing power in West Bengal after 34 years.

Union Minister Vayalar Ravi, one of the few Congress leaders who have consistently spoken out against deviations from the policy enunciated in the 1952 manifesto, told Frontline that the opposition raised by him in party forums and outside had sometimes helped slow down liberalisation but the overall thrust in the polity was one of continued pursuit of profit and privatisation: The forces interested in these had tried to assert themselves in the early days after Independence through outfits like the Swatantra Party, but they did not succeed in a global context marked by the march of socialist thought and ideology and the growing importance of the Soviet Union in global affairs. The collapse of the Soviet Union added strength to the forces of profit and privatisation. This has been reflected in the polity over the last two decades. When I moved an alternative economic affairs document at the 1998 conclave in Panchmarhi, I iterated that reducing the role and contribution of the public sector would have disastrous consequences for the common man and the country. But the overall direction of polity has not affirmed this public sector orientation. And the results are there for all to see, including the growth of left-wing extremism.

Former Union Finance Minister Yashwant Sinha of the BJP said that it was not right to say that his party had succumbed to the forces of liberalisation and globalisation. Swadeshi and economic nationalism continue to be the cornerstone of our policy. But the party also realises that calibrated globalisation is required to ensure Indias standing in the global economic arena and connect it to related streams. This policy would also help protect domestic industries, he said.

Akhilesh Yadav, Chief Minister of Uttar Pradesh and S.P. leader, said that his party was trying to address issues of liberalisation not merely by looking at it as an enterprise involving the private sector and the government but by bringing in the interests of the people at every stage.

CPI(M) Polit Bureau member Sitaram Yechury held that the Left had effectively stopped many dangerous liberalisation initiatives and protected the public sector, public assets and public interests, both during the United Front tenure and during United Progressive Alliance (UPA) rule. Clearly, we were able to act as roadblocks in many disastrous initiatives. As far as the State governments are concerned, we have consistently stated that there is a basic imbalance marked by high development expenditure by the State governments, while their revenue receipts are consistently low. They get only 38 per cent of revenue receipts and this imbalance compels them to look at other forms of investment. But even here, the Left has by and large been careful not to allow the forces of liberalisation and privatisation a free run, Yechury said.

The economist Nitin Desai, who has had long stints with the government and international agencies such as the United Nations, pointed out that the current economic policy drift had made a mockery of the whole idea of planning. What we have now is infrastructure fantasies like the DMIC, which conjure up visions of catching up with China in a jiffy. There is no clue as to how these grandiose projects are being implemented or what benefit they would bring to the people. The plans being formulated for any of these projects are urban-centric and take development to the very places that are already developed. This was not the case during the public sector-oriented initiatives of the Nehruvian era, which had the alternative vision of taking industrial development to areas like Ranchi and Bhilai, considered to be the back of beyond during the 1950s. In contrast, what is clear now is that many of the big projects would facilitate land-grabbing by private entities and boost quasi-legal and illegal real estate operations. There is an urgent need to stop this negative process and promote organic entrepreneurship across the country and help it build block by block.

It is a moot question as to how far the caution expressed by analysts such as Desai will get a hearing from the political class, which seems to have a kind of consensus about allowing the forward march of liberalisation.