If the Congress propaganda in 2004 is given any credence, then the party has deviated significantly from its original commitment.
THE Indian Left cannot be accused of deviance for its decision to withdraw support to the United Progressive Alliance (UPA) government on the issue of the India-United States nuclear deal. It has for long espoused the position that given the aggressive expansionism of the U.S. under George W. Bush, the silence or collaboration of other major capitalist powers in response to this aggression, and the end of multipolarity after the collapse of the Soviet Union, the contradiction between U.S-led imperialism and the situation of people of developing countries such as India had emerged as the principal contradiction of our times. The Left supporting any truck with the U.S. would have meant both a violation of its programme and a betrayal of its cadre and the people. Unresolvable disagreement over the attempt to forge a strategic relationship with the U.S. through the instrumentality of a specially crafted nuclear deal was inevitable.
It was the recognition of this reality, besides the Congress own residual desire for political survival, that possibly ensured that the India-U.S. nuclear deal was nowhere mentioned in the National Common Minimum Programme (NCMP) of the UPA, which formed the basis for the Lefts support. Given the single-mindedness and no-holds-barred approach of Manmohan Singh in pursuing this deal, it must have been a project that Manmohan Singh the politician was keen on pursuing when he was gifted the prime ministership.
He shelved it temporarily because the Left would not have bought it and because most other parties in the UPA were not even contemplating such a deal. It was only when he was convinced that he could possibly swing a deal of this kind and had garnered the confidence to try and pressure the Left to join a new consensus on Indias position in global politics that he pulled out this card.
From then on the effort was to win the game, which finally succeeded when the government managed to garner the numbers needed to stay in power without the support of the Left. In sum, if anybody deviated from the original consensus it was the UPA, led by the Prime Minister.
This should not come as a surprise because there were other areas especially the contentious one of accelerated economic reform where the tendency to deviate from the original consensus was visible for long. The project of the Prime Minister and his inner circle obviously went much further than the nuclear deal. It included a shift in economic policy that Manmohan Singh pursued ever since he was a bureaucrat and through the years when he was Finance Minister and later Leader of the Opposition in the Rajya Sabha.
If, with the benefit of hindsight, we put together the different elements of that project, it appears to be one which privileges private capital over the state and labour, privileges international finance and privileges the U.S. (and its allies) in Indias foreign relations.
The difficulty Manmohan Singh faced after the general elections in 2004 was that the Congress did not have the parliamentary strength to pursue this agenda unimpeded, since it could not take office without the support of the Left. To gain that support the UPA had to frame its programme in a form that could ensure Left support, even if from outside.
The CMP was the compromise document, which was clear in areas where there could be little opposition from the Left. These areas included the National Rural Employment Guarantee Scheme (NREGS), agricultural credit, health and education expenditures, and the constitution of bodies such as the National Commission for Enterprises in the Unorganised Sector (NCEUS) and the Competitiveness Council.
In areas where Left opposition was likely or certain, the document chose to be vague. In many areas it referred fleetingly to the movement the government aspires to, only to caution that a course should not be pursued if its repercussion was adverse.
Thus, the document recognises that some flexibility has to be provided to industry in the matter of labour policy but cautions that such flexibility must ensure that workers and their families are fully protected. More importantly, it refers to pursuing a closer strategic and economic engagement with the USA (not a strategic relationship) but promises that the UPA government will maintain the independence of Indias foreign policy stance on all regional and global issues.
These non-committal and ambiguous statements make clear that the CMP was not a document that was forced on the Congress or the UPA by the Left, whose support from outside was crucial for the government. It was a document the Congress and its partners in the UPA owned but could not draft as desired by their leaders given the need to satisfy the Left.
The actual inclinations of the government came through in the four years that followed the CMP, when the emphasis was more on pushing policies not mentioned in the document than on those that were. When seeking to implement policies outside the CMP, the refrain was that the Left had to change and join the new consensus that incorporated policies that the CMP did not endorse.
These included contentious policies such as privatisation of public sector banks and profit-making companies, removal of the cap on voting rights of private shareholders in private banks, permission for lightly regulated use of pension funds for investments in the stock market, allowing near-complete foreign ownership of insurance companies and providing corporates the right to hire and fire workers freely.
In the event, the past four years of the UPA regime were characterised by two tendencies. The first was an effort to delay and avoid if possible the implementation of pro-poor programmes including the NREGS. While the Prime Minister may have chosen more recently to declare the NREGS a flagship programme of the UPA, it is well known that for long he considered it a waste of money and agreed to implement it only because of pressure from the National Advisory Council when it was headed by Congress president Sonia Gandhi.
The second tendency was to use all manner of propaganda and pressure to get the Left to support, or at least not oppose, the kind of economic reforms that could not be explicitly included in the CMP.
Despite the CMPs silence or ambiguity on some measures, or its clear opposition in the case of some others, the government sought to push ahead rather early in its term with measures of liberalisation such as divesting of equity in profit-making public sector units; hiking of the foreign direct investment (FDI) cap in crucial sectors including telecom and banking; pushing ahead with the current form of restructuring of the electricity sector rather than go in for a review of the Electricity Act; opting for full convertibility on the capital account; diluting, and for all practical purposes shelving, the promised Employment Guarantee Act; and, above all, reforming labour laws. It succeeded in some areas, but failed in many because of the staunch opposition from the Left and other sections of civil society.
While the governments success with pushing through such policies in particular areas may have been distributed over time and may have appeared too small for the Left to withdraw support and risk a return of the Bharatiya Janata Party, the cumulative effect of these measures of reform was a direction in policy that the Left could not have been seen as condoning for too long. It was a measure of forbearance of the Left that it stuck to voicing its opposition without withdrawing support, but there were many who believed that if this trend persisted, the Lefts continuation of support would be under threat even if the government did not accept the strategic embrace of the U.S.
The governments urge to push ahead with reform was strengthened because of three factors. The first was the large capital inflows, which resulted in substantial accumulation of foreign exchange reserves. This gave India a China-like image, even though, unlike China, India had not earned these reserves through exports but accumulated them because of excess inflows of speculative capital.
Second, an unprecedented boom in the stock market that in over just a year and a half resulted in a doubling of the Bombay Stock Exchange (BSE) Sensex from 10,000 to more than 20,000 in January this year. This speculative surge was seen as reflective of strong fundamentals and a sign of economic health.
And third, the high levels of savings, investment and growth in the period after 2002, even though this growth was driven by a few sectors and its benefits visibly bypassed a majority of the population.
The decision to celebrate these signs of buoyancy and use them to push ahead with liberalisation of a kind that the Left could not accept also amounted to a deviation from the rhetoric the Congress used in the last elections to win for itself the position of the single largest party in Parliament. That rhetoric attacked the India Shining campaign of the National Democratic Alliance (NDA) government and stressed that the neoliberal policies adopted by it implied that the benefits of growth had bypassed the poor.
Some of these policies were seen in that rhetoric to be destroying the ability of the government to deal with deprivation. Finally, the UPA claimed to be opposed to privatisation of the public sector not only because these enterprises were profit-making but because the process endangered the employment of those associated with these enterprises.
In sum, if the political propaganda adopted by the Congress in the last elections is given any credence, then the government that was formed after the elections deviated significantly from its original agenda. Many political observers attributed this shift to a few persons, including obviously the Prime Minister, to whom the reins of economic policy had been handed over by the Congress president. But if the decision of the Congress to rally behind the Prime Minister is any indication, this does not seem valid any more.
The immediate fallout of the withdrawal of Left support and the Congress victory in the trust vote through questionable practices and with the help of dubious partners is the speculation that the government would not only push ahead with the nuclear deal but also with the larger reform agenda that the CMP either expressly negatived or completely ignored.
Fortunately for the Left, it no more needs to tone down its opposition to these kind of policies, which would now be coloured by the strategic embrace of the U.S. For the Congress and its partners in the UPA, support for this agenda would not only amount to a betrayal of the 2004 mandate but could be the basis for a substantial loss of legitimacy and erosion of even its limited popular support. Unless, of course, it believes that the nuclear deal with the U.S. is an election winner that can neutralise the adverse responses to this agenda, including the effects of inflation, the agrarian crisis and the persisting poverty.