The
Indian Left cannot be accused of deviance for its decision
to withdraw its support for the UPA government on the
issue of the Indo-US nuclear deal. It has for long espoused
the position that given the aggressive expansionism
of the US under 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 Imperialism
led by the US and the people of developing countries
like India had emerged as the principal contradiction
of our times. Supporting any truck with the US would
have meant both a violation of its programme and a betrayal
of its cadre and the people. Unresolvable disagreement
over any attempt to forge a strategic relationship with
the US through the instrumentality of a specially crafted
nuclear deal was inevitable.
It was the recognition of this reality, besides its
own residual desire for political survival, that had
possibly ensured that the Indo-US nuclear deal was nowhere
mentioned in the Common Minimum Programme of the UPA,
which formed the basis for the Left’s support. Given,
the single-mindedness and no holds barred-approach with
which Manmohan Singh the Prime Miniister has pursued
this deal, it must have been a project that Manmohan
Singh the politician was keen on pursuing when he was
gifted the Prime Ministership. This project he must
have temporarily shelved since it would have not been
bought by the Left, and since much of the Congress and
most other parties in the UPA were clearly 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 an ally
like the Left to join a “new consensus” on India’s position
in global politics that he pulled out this card. From
then on the effort has been to win the game, which finally
succeeded when the government managed to garner the
support to stay in power without the Left. In sum, if
anybody deviated from the original consensus it was
the UPA, led by the Prime Minister.
This should come as no surprise because there were other
areas – especially the contentious one of accelerated
economic reform – where the tendency to deviate from
the original consensus has been 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 has been
pursuing ever since he was a bureaucrat and through
the years when he was Finance Minister and opposition
MP. If with hindsight we put together the different
elements of that project, it appears to be one which
privileges the private capital over the State and labour,
privileges international finance and privileges the
US (and its allies) in India’s foreign relations.
The difficulty Manmohan Singh faced 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 Common Minimum
Programme of the UPA was the compromise document that
was clear in areas where there could be little opposition
from the Left (National Rural Employment Guarantee Scheme,
agricultural credit, health and education expenditures,
constitution of bodies like the NCEUS and the Competitiveness
Council). In areas where Left opposition was likely
or certain the document chose to be vague and non-committal.
In many areas it fleetingly referred to the movement
the government aspires for, only to caution that this
should not be pursued if its repercussion were adverse.
Thus the document does recognize “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 “closer strategic
and economic engagement with the USA” (not a strategic
relationship), but promises that “the UPA government
will maintain the independence of India’s foreign policy
stance on all regional and global issues.”
These non-committal and ambiguous statements make clear
that the CMP was not a document forced on the Congress
or the UPA by the Left, whose support from outside was
crucial for the government. It was a document which
the Congress and its UPA allies owned, but could not
draft as desired by its leaders given the need to satisfy
the Left. The actual inclinations of the government
came through when in the four years that followed the
CMP, the emphasis has been more on pushing policies
that were not mentioned in the document, rather than
focusing on those that were. When seeking to do implement
policies outside the CMP the constant refrain was that
the Left had to change and to join the new consensus
that incorporates policies that the CMP did not endorse.
These included contentious policies such as privatizing
public sector banks and profit-making companies, removing
the cap on voting rights of private shareholders in
private banks, permitting lightly regulated use of pension
funds for investments in the stock market, allowing
near-complete foreign ownership of insurance companies
and providing capital the right to freely “hire and
fire” workers.
In the event, the last four years of the UPA regime
have been characterised by two tendencies. First, an
effort to delay and if possible avoid the implementation
of pro-poor programmes, including schemes like the National
Rural Employment Guarantee Scheme. While more recently
the Prime Minister may have chosen to declare the NREGES
a “flagship” programme of the UPA, it is well known
that for long he considered that programme a waste of
money and agreed to implement it only because of pressure
from the National Advisory Council when it was still
headed by the Congress President. A 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 which could not be explicitly
and clearly included in the Common Minimum Programme.
Despite the CMP’s silence, ambiguity or clear opposition,
rather early in its term the government sought to push
ahead with measures of liberalisation, be it in the
form of divesting equity in profit making public sector
units, hiking FDI caps in crucial sectors including
telecom and banking, pushing ahead with the current
form of restructuring of the electricity sector rather
than reviewing 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 due to
staunch opposition from the Left and other sections
of civil society.
While the government’s “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 BJP, the
cumulative effect of these measures of reform was a
direction in policy which 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 are
many who believe that if this trend persisted, the continuation
of support from without was under threat even if the
government did not accept the strategic embrace of the
US.
The government’s urge to push ahead with reform was
strengthened because of three factors. First large capital
inflows into the country 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 over just a year and a half resulted in
a doubling of the value of the 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 were visibly bypassing 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 and UPA used to win itself
the position of the single larges party in Parliament
in the last election. That rhetoric attacked the India
Shining slogan of the previous NDA government and stressed
that the kind of neoliberal policies adopted by it had
implied that the benefits of whatever growth had occurred
had bypassed the poor. Second, 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 privatization 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 election is given any credence, then the
government that was formed after the elections has deviated
significantly from its original agenda. Many political
observers attributed this shift to a few to whom the
reins of economic policy had been handed over by the
Congress President, including obviously the Prime Minister.
But if the decision of the Congress to rally behind
the Prime Minister is any indication, this does not
seem valid any more.
In fact, the immediate fall-out of the withdrawal of
Left support and the Congress’ victory in the Trust
Vote based on dubious partners and practices, is speculation
that the government would not only push ahead with the
nuclear deal but also with that larger reform agenda
which was either expressly negatived or completely ignored
by the CMP. Fortunately for the Left, it no more needs
to tone down its opposition to these kinds of policies
that now would be coloured by the strategic embrace
of the US. For the Congress and its UPA allies, support
for this agenda would not only amount to a betrayal
of the 2004 mandate, but could be the basis for substantial
loss of legitimacy and erosion of even its limited popular
support. Unless, of course, it is believed that the
nuclear deal with the US is an election winner that
can neutralise the adverse responses to this agenda,
the effects of inflation, the agrarian crisis and persisting
poverty.
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