THE Left is feeling left out. While the high-profile Finance and Industries Ministers have been on the rampage, the Left quietly sulked and maintained that it will not alter its stance on key issues and will raise its voice when the time comes. That time seems to be approaching fast.
Of course, the first signs of the cracks were visible even at the beginning of the secular-democratic-federalist alliance. According to highly-placed sources, on June 4, as the final touches were being put to the Common Minimum Programme (CMP), Left representatives walked out of the last meeting of the United Front steering committee. Since then, dissent has flaredup again and again over announcements emanating from the economic ministries. "The economic aspects of the CMP do not reflect the views of the Left," says CPI(M) politburo member Prakash Karat. "It has some add-ons. There are certain aspects like disinvestment and insurance privatisa-tion on which we can never agree."
Within days of taking charge, Finance Minister P. Chidambaram set the cat among the pigeons with his announcement of wage freezes in government departments. Next came the petroproduct price rise. The Budget goose-stepped around contentious issues, but the newly set-up Disinvestment Commission is being viewed with great suspicion from the left side of the road. Some—to the Left—highly reactionary people like Rupert Murdoch have also been spotted hobnobbing at very high places. And all the time, in the background, Industries Minister Murasoli Maran has been aggressively pursuing foreign investors, approving their proposals with minimum fuss, and sending signals that more industries may be delicensed. "The CMP says foreign investment will be welcomed only in priority areas," points out Karat. "But the minister is already saying that spelling out high and low priority is not possible. This amounts to a total dilution of the CMP spirit."
The latest bone of discontent is a $500-million Euro-issue by the State Bank of India which the Finance Ministry has cleared over strong opposition from the Left. The Left logic: that the issue could theoretically lead to foreign investors olding as much as 34 per cent of SBI's equity, and this cannot be allowed for an Indian organisation of such national importance.
The Left is not against the reforms, insist its leaders. "Our view is that reforms are necessary but it has to be for growth and growth has to be with social justice and not the way it has been or is now," says CPI General Secretary A.B. Bardhan. "The deprived sections should be the subject and not merely the object of such a process."
The key areas that are getting the brunt of the Left's ire are:
Public Sector Unit (PSU) policy and disinvestment: The Left shall oppose disinvestment in any form, since it is "anti-people, and a motivated move towards privatisation." The emphasis, says the Left, has to be on reviving and modernising the PSUs rather than disinvesting in and dismantling them. The CPI(M)is open to considering moving some of the perennially sick PSUs to the joint sector, but closure can be considered only if revival is impossible. "Disinv-esting in profit-making PSUs which is being done is totally against the spirit of the CMP and is unacceptable to us," says Karat. And the proceeds of disinvestment must be used to revive laggard PSUs and in the social sector. And the Disinvestment Commission? The Left sees that as an open loophole, since there is no assurance in the CMP or by the United Front that the commission will not be used as a weapon for privatisation.
Fast-track foreign investment approvals: Indiscriminate opening up will erode India's self-reliance, is the Left view; the Government should hold its horses on granting automatic approval for majority FDI stake in large projects. "Why should we give foreign investors better facilities at the cost of our domestic industry? We do not want to keep consumer goods or better facilities away from our consumers. But the question is which are the sectors where we can effectively utilise foreign capital and this is something which neither the previous, nor the present Government has tried to clearly demarcate," says Karat.
Opening up the financial sector to foreign investors: This is anathema to the Left. Bardhan is categorical that allowing private or foreign players in the insurance sector is unacceptable to the CPI; if such a decision is taken, Left trade unions will take to the streets, notwithstanding the fact that the CPI is part of the Government. Why not, instead, says the Left, induct professionals into the insur-
ECONOMIC POLICY
ance companies and make them more effi-cient? Restructuring is also fine, as long as the Malhotra Committee recommendation that the GIC be split into smaller units is paid no heed to. "The financial sector is the heart of an economy and once you allow an outsider access to your heart, he will start ruling your head and controlling all your moves. You will have no freedom of your own," warns Karat.
However, the signals coming from the Gowda Government are not exactly what the Left is looking for. This puts the CPI and the CPI(M) in somewhat of a bind—the CPI far more so than the CPI(M), since the latter, after all, has left a porthole open: it is not part of the Government. In fact, the perceptions of the two Left parties on the key question—whether the Gowda Government's policies are different from the Rao administration's—differ subtly, but tellingly. And perhaps for obvious reasons. The CPI's stance: "While the earlier reforms were targeted at the elite, the present ones have the poor and farmers in mind while deciding reform policies." The CPI(M) does notthink so: "While this Government and its reforms talk about a change in direction and its pro-poor stance, the basic framework of liberalisation is the same. There is no departure from the old reform regime."
The problem facing the Left, however, is how far do you relent on your economic beliefs before you put the foot down? For the Deve Gowda Government will survive even if the Left pulls out of the coalition, as long as it doesn't vote against it. Which the Left cannot, since there are many issues other than economic policy, most importantly "secularism", which binds the coalition together. Perhaps it is this knowledge that has allowed Chidambaram and Maran to go through with many policy decisions.
This is not to say that the Left has been totally unable to influence economic policy. Insurance deregulation appears unlikely in the foreseeable future. The disinvestment proceeds, it seems now, will be used to try to revive sick PSUs, which flies in the face of free-market economic theory or what the Left refers to as "the IMF-World Bank diktat". In the coming months, the war of nerves can only intensify. In his maiden budget, Chidambaram hinted that the next one will have many liberalisation-directed proposals, a signal that the Left could not have missed. "Eventually we think the Government will alter its policies or else we will be forced to agitate," warns Bardhan. "People's intervention is necessary both for ensuring implementation for good progress and opposing wrong policies or correcting mistakes. We have a separate entity and our policies and responses are not decided by the Deve Gowda Cabinet."
Who'll blink first?
