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India's economic reforms in the
balance
By Ranjit Devraj
NEW
DELHI - A decade after socialist India began economic
liberalization under pressure from 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 on Monday on a
week-long tour of Cyprus, Denmark and Britain, Vajpayee
told journalists that reforms were "on track and
irreversible". But many think that he is whistling in
the dark.
India's economic liberalization drive,
begun by the Congress party in 1991, has been opposed by
leftwing parties, trade unions, non-government
organizations, 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 Organization, 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, labor-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
past two years gained for the government US$2.3 billion
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 criticized the government's divestment
policies that appear to favor powerful business groups
in the name of gaining "strategic partners" in key
state-run sectors.
India's vocal Defense
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 in the
current year.
Many say that the sudden revival
of the BJP's swadeshi 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 privatization 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
liberalization agenda, by the Hindu fundamentalist Shiv
Sena party. This party is a close ally of the BJP.
Vajpayee also emphasized that foreign direct investment
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 (BMS -
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 (BKS- 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
liberalization, 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 on
September 20, to continue until November. "Our
agitations will culminate in a major rally in the
national capital on November 26. We hope the government
comes to its senses before that," Jadhav said.
(Inter Press Service)
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