Lessons not learnt

The Narendra Modi government’s economic policy direction remains unchanged in spite of the BJP’s terrible defeat in the Bihar and Delhi Assembly elections and the opposition, though muted, within the Sangh Parivar.

Published : Jan 20, 2016 12:30 IST

Employees of banks and insurance companies shouting slogans during a nationwide strike, in New Delhi on September 2. The BMS did not participate in it.

Employees of banks and insurance companies shouting slogans during a nationwide strike, in New Delhi on September 2. The BMS did not participate in it.

It was in June 2014, during the second month of the newly elected National Democratic Alliance (NDA) government headed by Narendra Modi, that the Rashtriya Swayamsewak Sangh (RSS) came up with what was perceived as the most emphatic endorsement of economic liberalisation policies. In interactions with the media during that period, Ram Madhav, the then spokesperson of the RSS, said the RSS’ idea of swadeshi was broad enough to accommodate policies of economic liberalisation, including disinvestment of public sector undertakings (PSUs) and opening up of sectors that generated employment to foreign direct investment (FDI). The sectors identified for FDI included infrastructure and defence.

This changed with the arrival of the Modi government. There was no free-flowing of anti-liberalisation pronouncement, although the BMS did make a few statements opposing the policy of liberalisation, particularly in relation to disinvestment of PSUs and opening up of select sectors to FDI. Observers and trade unions not affiliated to the Sangh Parivar see the anti-FDI and anti-disinvestment statements of the BMS from time to time as a sort of tokenism. They argue that under the Modi regime, the BMS has not been able to follow up its statements with collective action with other trade unions. The BMS even backed out of the general strike called by national trade unions on September 2, 2015.

These muted voices within the Sangh Parivar and some sections of the RSS had thought, in the immediate aftermath of the Bihar Assembly elections, that they would be given greater freedom to express themselves in the new political context. Some of them had even imagined that there would be some course correction in the NDA’s all-out pursuit of liberalisation. Speaking to Frontline from Varanasi on November 9, a day after the Bihar Assembly election results were declared, an academic activist of the SJM and the RSS pointed out that one of the major factors responsible for the BJP’s defeat in Bihar and in Delhi earlier in the year was the undefined but deeply ingrained resentment among the people, particularly the poor, against the implementation of economic liberalisation policies. “It was a factor that worked against the Manmohan Singh-led United Progressive Alliance [UPA] government and now it is working against the Modi government. But large sections of the BJP are either unaware of it or refuse to accept it. Perhaps, this drubbing will change their orientation,” the academic said on condition of anonymity.

But within 24 hours after the SJM-RSS activist expressed this hope, there was a clear message from Union Finance Minister Arun Jaitley indicating that such views were not shared by the higher authorities in the Modi government. This was made clear in the form of an announcement to further open up 15 major sectors, including mining, defence, civil aviation, high-speed train systems, suburban corridors, construction development, e-commerce and broadcasting, to foreign investors. Jaitley said: “In the last few months, growth in India has been driven by public investment, some private investment and increased FDI.” He made it clear that the enhanced ease of doing business for foreign investors and promoters would continue to be a top priority for the government. Making a direct reference to the Bihar results, he said the decision to allow FDI was taken after several months of consultations and that electoral and political developments would not have an impact on it. Evidently, in the vision of the higher echelons of the Modi government, nothing had changed since the BJP-NDA assumed office in May 2014.

Subsequent developments underscored the fact that the Modi government’s political economy directions would remain unchanged. In the last week of November, the government initiated work on a revised policy framework on PSUs with the stated objective of selling or reviving loss-making companies across sectors. A note on this was circulated for inter-ministerial feedback. Although full details of the framework was not available at the time of writing this report, officials in the Finance and Commerce Ministries as well as senior SJM and BMS activists told Frontline that the move was triggered by a number of factors, including a significant shortfall in resources raised through disinvestment over the past five years. This inability to fulfil targets on disinvestment started during the previous UPA regime and continued through the first year of the Modi government. So much so that the Finance Ministry was impelled to cut its ambitious disinvestment revenue target by 57 per cent to Rs.30,000 crore for 2016 fiscal.

In this context, the measures being contemplated include the formation of a new Disinvestment Commission, which would evaluate whether a company can be revived with additional capital funding, whether its financial health could be improved by ceding part of the stake and control to private sector investors, or whether it needs to be divested forthwith. A key task of the Disinvestment Commission, government officials told Frontline , would be to clear bureaucratic hurdles and undertake strategic sales or revival in a time-bound manner. They said the concept of “divestment forthwith” could mean asset sale of movable and immovable properties of PSUs deemed unfit for revival. This would include sale of assets such as factories, warehouses, offices and other facilities of the company. PSU majors such as Air India, India Tourism Development Corporation, Mahanagar Telephone Nigam Limited, Fertilizer Corporation of India and Scooters India could come under the purview of such a move.

Another significant aspect of the new framework would be bringing smaller PSUs under the purview of stake sales along with designated big ticket firms such as Oil and Natural Gas Corporation (ONGC), Coal India and NTPC. By all indications, the list of small PSUs is being compiled across Ministries and departments. Parallely, another initiative of the Modi government on this front is to corporatise PSUs by “empowering senior PSU executives” to take decisions without being constrained by cumbersome bureaucratic procedures or political clearance. This idea was floated by Modi and the Minister in charge of the Ministries of Power, Coal and New & Renewable Energy, Piyush Goyal, at a couple of public meetings in December. Leaders of trade unions, including the BMS, pointed out that this could become another ploy to facilitate the interests of private capital by way of disinvestment and stock sell-out.

Foreign policy initiatives Apart from these moves involving domestic policies, foreign policy initiatives driven personally by Modi have the stamp of facilitating foreign capital’s advancement to India. Even the famous “sudden and unplanned stopover” that Modi made at Lahore in Pakistan on his return trip from Russia and Afghanistan is perceived as a clear indication of the Modi government’s submission to the interests of the United States.

Writing in an online portal, M.K. Bhadra Kumar, foreign policy analyst and former Ambassador, pointed out that normalisation of India-Pakistan relations was almost an imperative need for the furtherance of the regional strategies of the U.S., especially with regard to the rebalance it was seeking in Asia, and that the Modi government was proving to be far more willing than any previous government at the Centre to hitch India’s wagon to the U.S.’ regional strategies. Sharad Yadav of the Janata Dal (United) and other political leaders pointed out that while this submission to the U.S.’ regional interests could primarily reflect in military cooperation and in the formulation of agreements providing U.S. forces access to Indian military bases, it was also bound to have direct commercial implications, including in enabling greater penetration of U.S. financial interests and companies into the Indian economy.

Talking to Frontline when the NDA was in the sixth month of its tenure, Vayalar Ravi, senior Congress leader and a critic of the policies of economic liberalisation, pointed out that the political dispensation at the Centre and the BJP’s organisational and ideological masters within the Sangh Parivar signified unprecedented total domination of the forces of liberalisation. He also said that in all the governments since 1991, when the policies of liberalisation were initiated, there were prominent voices against them although they ultimately did not dictate larger governance. Adding to that opinion, Vayalar Ravi told Frontline in January that the Modi government denoted not only a total marginalisation of dissenting voices against liberalisation within an Indian ruling dispensation but also the spread of liberalisation stratagems into all areas of governance, including foreign policy.

Political signals emanating from other segments of the BJP’s organisational and governance activities affirm that the strategic parameters devised in the early days of the Modi government remained the same after the passage of 19 months of its regime, in spite of the BJP’s sound electoral defeat in Bihar and Delhi. The socio-economic-political combination that was advanced by the BJP-led NDA soon after it came to power involved aggressive pursuit of communalisation at the social level and market-driven policy pursuits at the level of the economy. The communal agenda was advanced through stratagems such as “campaigns against the consumption of beef”, “love jehad” and “ghar wapsi”. Following the BJP’s defeat in Bihar, the strategy has been geared up to include the revival of the agenda of constructing a Ram temple at Ayodhya. In the best traditions of the multiple voices of the Hindutva combine, the Ram temple agenda is being advanced by the self-professedly militant Vishwa Hindu Parishad (VHP) and the Bajrang Dal, which had played a crucial role in the Sangh Parivar’s Ayodhya campaign of the 1980s and 1990s. A new value addition to the current campaign is the garrulous BJP leader Subramanian Swamy, who seems to have been accorded a key role by the Sangh Parivar to advance the Ram temple strategy.

According to Sangh Parivar insiders, this campaign will gather intensity and momentum in the run-up to the 2017 Assembly elections in Uttar Pradesh. The intensification drive is expected to commence with a special campaign on the Ram temple planned between April and October. It is expected to set the tone for the communal polarisation of the country’s most populous State before it moves into election mode. In the meantime, privatisation games will continue through new devices and plans. This strategic political combination did not work in Delhi and Bihar. Some sections in the Sangh Parivar doubt very much if this will fetch votes in Uttar Pradesh even as the top leadership of the government and the BJP continue to push forward this strategy.

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