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People's Democracy
Vol. XXX

No. 26

(Weekly Organ of the Communist Party of India (Marxist) June 25, 2006

Left Front Govt's Industrial Policy: Principled And Pro-People

Shyamal Chakrobarty

THREE major opinions have emerged regarding the industrial policy of the West Bengal Left Front
government. Vast majority of people wholeheartedly support the initiative. But there are others (basically
supporters of neo-liberal economy) who think that the government is close to the path of Manmohan Singh
in the economic sphere. There is a third group who claim to be left of the Left. They are of the considered
opinion that Left Front’s policies are identical with that of the central government and we have seriously
deviated from the principles of Marxism-Leninism.

IN SEARCH OF AN ALTERNATIVE

Yes, the CPI(M) is indeed talking of an alternative path of development even when it knows fully well that it
is impossible to follow an independent economic path in an essentially unitary bourgeois federal structure.
There are some people who erroneously think that we are talking of a socialist alternative.

The CPI(M) believes that the struggle for a socialist alternative must be based on the revolutionary
transformation of the existing system. But for that one needs to face the reality as it is – engage oneself with
the reality – to move forward. The goal should be to change the balance of forces in favour of socialistic
transformation. But the whole process must be carried out through engagement with the existing reality. No
wishful thinking will do. It can be seen in retrospect that this process of engagement marks the whole history
of working class movement. This has been essential in building the necessary potential force for realisation
of the socialist alternative.

In this era of globalisation we are witnessing both foreign direct investment and foreign institutional
investment (mainly deployed for capital gains in the stock market). So long as the socialist alternative does
not become an internationally viable force, such things will continue. So what will be our role as Marxists?
The CPI(M) will try to impose restrictions on this seemingly unchallenged flow of international capital. The
degree of our success will depend on how strong we are socially and politically throughout the country. It
should be noted that even after we have ousted the bourgeois-landlord State and established people’s
democracy in India we must allow foreign direct investment to a certain extent in select and priority-based
sectors to ensure technological advance and to improve productivity. At the same time we shall also have to
impose controls on the unimpeded flow of finance capital for the sake our economy. But till we reach that
stage we have to pass through many interim phases and adopt different interim slogans and approaches.

In view of the above understanding, the Party thinks that the following conditions should be enforced on the
flow of foreign capital:

1. It should enhance existing level of productivity

2. It should help in updation of our technology
3. It should lead to employment opportunities

We are categorically against the kind of foreign investment that is deployed, for example, for speculative
gains in financial markets; to plunder the mineral reserves and other natural resources; or to bring about
long-lasting negative impact on our economy by impairing our economic and political sovereignty (by trying
to change our existing legal framework about land use, commercial tax, price of fertilizers , seeds etc.).

The CPI(M) is trying hard to make the central government enforce this set of conditionalties. It should be
borne in mind that our struggle is aimed at changing the policies of the central government as a whole. This
is our slogan for campaign. But our agitation programmes have to be charted out on the basis of our real
organisational strength, that is on the combined strength of our allies and ourselves, and those we have been
able to bring along in the course of our struggles. This is our slogan for action.

The basic difference between UPA and the Marxists lies in the fact that the central government wants to
implement neo-liberal economic policies while we are against the entire neo-economic policies and are trying
to put forward the above conditionalties as our slogan for campaign while fighting within and without the

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parliament to achieve our objective.

FDI: UPA AND LEFT FRONT

The difference between the approaches of the two governments is crystal clear. It was the NDA, which
opened the doors to rampant influx of foreign capital. In many areas, it even allowed 100 per cent foreign
direct investment. Even in some sensitive sectors, where the country’s security and sovereignty could be
jeopardized, caps were removed so that foreign investors were allowed to invest up to 26 per cent, 49 per
cent, and even 74 per cent and gain ownership. The UPA government, from its very inception, desired
removing ceilings and caps to grant foreign entry in the remaining few sectors like media, mines etc. The
renowned economist Joan Robinson has pointed out that take-over of mines is most damaging for the
country’s economy because it can lead to exhaustion of the country’s mineral resources. The MNCs do not
bother about the country’s needs and go on digging indiscriminately to earn super profits. They export these
extracted ores and rocks. As a result the mine reserves may be completely exhausted in no time. The case of
Burma Shell Company in Myanmar is an interesting study. Once upon a time the company enjoyed
monopoly rights over the oil reserves in Myanmar. Their business prospered to the highest degree. Now one
cannot find oil in Myanmar. The country is now among the 40 least developed nations of the world.

The UPA government arrived at some other ideas. It tabled the Insurance Regulatory And Development
Authority (IRDA) Bill and the Banking Fund Regulatory and Development Authority Bill in Lok Sabha. The
aim was to deregulate the financial sector to allow large-scale entry of foreign banks, insurance corporations
etc. and to pave the way for handing over the pension funds to them. In the same way efforts are on to make
the labour laws (Industrial Dispute Act and Contract Labor Act) more flexible in the interest of Indian and
foreign capital. But these dream projects have not materialised because of the strong opposition from the
Left.

But they have already been able to partially introduce FDI in the retail sector (affecting the life and livelihood
of over 4 crores of people), warehousing, FDI in mines, raise the foreign investment limit in telecom sector to
74 per cent, sell 5 per cent share of NTPC, (in effect) privatise the Delhi and Mumbai airports, along with
declaration of their intention to do the same for Kolkata, Chennai and other airports throughout the country
and to reduce the interest rates on Employees Provident Fund etc.

Interestingly, it may be noted that among the reforms mentioned in the above two paragraphs, those listed
in the first paragraph require assent from the parliament to be put into effect. But if the Left maintains its
steady opposition, the government cannot ever get the necessary approval. Consequently, these bills are
pending. But the issues related in the second paragraph do not require the endorsement of the Lok Sabha. So
they have enforced these by virtue of administrative orders. The UPA government is also readying itself to
give access to widespread foreign investment in the service sector. The Hong Kong ministerial meet of WTO
has designed that MNCs should be allowed entry in the sectors of health, education and finance. This along
with the common design of granting tax benefits to foreign agro-products and industrial goods is leading the
country towards deeper crisis.

The abject surrender of the central government to the policies of imperialist globalisation is causing untold
misery to the working people overall. The state governments are also facing severe resource crunch. In an
ostensible offer to help the crisis-ridden state governments, the imperialist agencies have arrived with aid
packages. If the Left Front government accepts any such package or some other special package prepared by
the central government, our critics cry themselves hoarse accusing us of compromise. Or else they label us as
pragmatic in a supposedly sympathetic manner. Nevertheless, the reality remains that the Constitutional
constraints do not allow the respective state governments to overcome the crisis on their own. In addition, if
they try to take up welfare programmes, their financial position becomes precarious. However, it is well
known that the Left Front government is being able to carry on in spite of all adversities. It is the advanced
outpost of the struggle for finer life and the pending social transformation. Therefore, it is the task of all
those who are against imperialist globalisation to guard the advanced position of this government.
ABOUT DFID LOAN

The state governments have little options in executing any alternative policy on their own. Nevertheless, the
people expect the Left governments to be steadfast in their struggle against neo-liberal economic policies and
avoid surrender to imperialist enticement while carrying forward their pro-people policies and programmes.
Therefore, while we may accept aid from outside agencies, we must however apply a very important
yardstick in considering these packages. They should never contain any such conditionality that goes against
our basic policies and priorities. We shall never accept any loan that entails a structural adjustment
programme leading to wholesale privatisation, retrenchment, withdrawal of subsidies and similar economic
measures.

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The Left Front governments have to work under the confines of bourgeoisie-landlord State. We have to
struggle hard to overcome our limitations. This includes fighting against the limitations imposed by the
central policies that are guided by imperialist dictates. This struggle is a part of our general struggle to
protect and advance the interests of the state governments of India. The CPI(M) is of the opinion that our
governments are committed to serve the interests of the people. For that, they need money. Whenever any
imperialist agency or organisation patronised by the western governments comes up with an aid package,
we shall accept it provided it does not weaken our basic fight against the imperialist dictates. If we accept
any loan from World Bank, DFID, JBIC and other international institutions, we shall immediately inform the
people and explain before them why we have taken the loan.

In this era of imperialist globalisation, western agencies are coming up in larger numbers with aid packages
for expediting developmental activities in Third World countries. We shall adopt the same method in
dealing with these aid proposals. We shall examine their terms and conditions and make case-to-case study.
We shall always be guided by the basic principle that loan of any kind should never hamper the financial
autonomy of the state government in decision-making, and side-by-side, it must provide some relief to the
people above and beyond bringing economic progress. So accepting loan proposals will be strictly based on
the above considerations.

We are presently using loans and/or grants from the World Bank, ADB, and DFID (an organisation of the
government of UK). We need to have a transparent idea about these loans. We know that these loans/grants
are given with some intent or purpose. We need to be aware of this factor. These loans are being disbursed
throughout India. If we don’t accept these packages other states will. So we have to examine to what extent
we can utilise these grants/loans to the best of our interests. We must ascertain whether their terms are
consistent with our basic principles and understanding.

Firstly, why do these institutions dispatch funds? Capitalism as a system has adopted this approach from the
post-World War era as a safeguard against possible downfall. If any country suffers from acute poverty and
under-development, along with the breakdown of the administrative system, de-industrialisation, and
rapidly declining quality of life, it becomes a focus of social and political unrest that may lead to a change of
the social order itself. This is a cause of great concern for world capitalism. To preclude such eventualities,
measures were taken to evolve global multilateral financial institutions. The Bretton Woods system was set
up to prevent such revolutionary upheavals. The United States assumed the leadership of this re-
organisation process. Later other advanced capitalist countries joined the initiative to retain the progress of
capitalism by funding loans and grants to different countries. The IMF and WB were established by these
countries with this clear intent. DFID is no exception. Its loans/grants are guided by the identical class
approach.

We must take these aspects into consideration while staying in touch with these agencies. What shall we do
if they come up with a concrete scheme to help the Left Front government with funds? We shall accept those
loans that can be used to step up welfare work among the poor people. We shall turn down the schemes that
are not advantageous for the poor and the needy. We have nothing to hide. We are clearly explaining before
the people the philosophy of capitalism and trying to use the loans in the interests of the basic classes of our
state. Here in lies the essence of this aspect of our struggle.

Let us take for instance the grants issued by the DFID. The DFID does not provide loans, it only offers grants.
In Orissa or Andhra Pradesh, it is working in association with the World Bank. There their grants include
loan components and other condionalties. In Orissa they are giving funds for structural adjustment. The
state government is indiscriminately privatising core areas of the state electricity sector.

But in West Bengal, the DFID is disbursing grants only. The structural readjustment programme is
exclusively a state government initiative. We have clearly stated that we will not privatise the trams, port,
the electricity sector etc. We do need to work out plans for more efficient functioning of the state electricity
board. But the question of privatisation does not arise. If they are agreeable, they can give us grants. We have
already received funds from them for reconstruction of our PSUs. What is the understanding? We shall not
give up our responsibilities in any of the profit-making PSUs. We shall continue our efforts to run them in a
better way. It is not possible to subsidise the loss making units for ever as the subsidy burden is increasing
every year. They have to be made self-supporting. If we cannot do it on our own we have to take partners
from the private sector and go for joint ventures. Only if we find the unit cannot be made viable in any
manner, we shall have to think of reconstruction by providing alternative training to the workers and
employees or trying to re-deploy them in some other place. We have arrived at another understanding with
DFID. We shall utilise the funds saved through reconstruction of PSUs in social spheres. This is what one
may term as the basic stipulation. We shall utilise this fund in revamping our health and education sectors.
The panchayat system of our state has drawn international acclaim. The DFID is ready to expend untied
funds so that we can train our personnel for better management of our panchayats. That is, in no case shall
we have to compromise with our basic policies and principles. We have decided to pursue this tactical

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position in face of the deep financial woes gripping the country only to provide relief to the poorest of the
poor at any cost.

The total FDI in West Bengal in 2005 amounts to Rs 2648 crore. Some more projects are in the pipeline. The
whole lot of investment has been received as per the three basic formulations mentioned earlier.

It should be noted that FDI is entering in some of the other states of India. We neither know about the
conditionalties attached to these investments nor can we comprehend whether there is any sort of guidelines
in any of these states. But one thing is very clear. Whatever is happening is going on without any significant
hullabaloo and without any reckonable resistance. According to figures of 2005 (January-December), FDI
received by Maharashtra for 125 projects is Rs 35,548 crore, Karnataka for 33 projects is Rs 9596 crore,
Andhra Pradesh for 27 projects is Rs 2572 crore, Gujarat for 11 projects is Rs 4384 crore, Tamilnadu for 47
projects is Rs 3982 crore, Kerala for 6 projects is Rs 333 crore and Delhi for 74 projects is Rs 8908 crore. So the
question that naturally arises is that will there be unconstrained flow of FDI in all other states barring West
Bengal?

[The writer is president of the CITU West Bengal unit]

(To be continued)

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