news from the cpi(m)
March 28, 2009
HIGHLIGHTS OF THE PAMPHLET ON
THE GLOBAL ECONOMIC CRISIS AND INDIA:
NEED FOR ALTERNATIVE PRO-PEOPLE POLICIES
1. The adverse impact of the crisis is being felt in India through
a downturn in industry and agriculture, massive job losses and
plummeting crop prices. This global crisis is the end result of
the imperialist globalisation process. The Congress, which had
embraced imperialist globalisation and the neoliberal free
market policies since 1991 and the BJP, which is also firmly
wedded to the policies of privatisation and liberalization,
cannot offer any credible solution to this crisis.
The current global economic crisis is the biggest in the capitalist
world since the Great Depression of the 1930s. The deepening of the
crisis has eventually caused a significant policy shift at the
international level. Public pressure forced the governments of
capitalist countries to partly nationalise the banks, abandoning
neoliberal policies.
1. The Congress-led UPA government has been on a denial mode
vis-à-vis the impact of the economic crisis on India, claiming
that the "fundamentals" are strong. This despite the hard facts
that GDP growth has fallen to 5.3% in the third quarter
(October-December 2008), with the agriculture and manufacturing
sectors witnessing negative growth rates of 2.2% and 0.2%
respectively. The response of the Congress-led government has
been grossly inadequate. The increase in Plan expenditure by a
meager Rs. 20,000 crore, (0.5% of GDP) is the fourth lowest
fiscal stimulus package in proportion to GDP among the G 20
countries. Even as it cited the constraints of an Interim
Budget, it doled out Rs. 30,000 crore in tax concessions to the
big corporates, without linking them to protecting the workers
from lay-offs and retrenchment.
2. With international oil prices falling to $45/barrel, the
government cut the prices of aviation turbine fuel eleven times
to bailout the private airlines; but petrol and diesel prices
were reduced only twice and cooking gas only once.
3. The Congress-led government underplayed the massive job losses
and pay cuts that are affecting workers and employees. At least
5 lakh workers lost their jobs during October-December, 2008.
Another one lakh jobs were lost in January 2009.The most
affected sectors were Gems & Jewellery, Transport and
Automobiles andTextiles. Even these shocking figures are gross
underestimates, since 4.13 lakh workers lost their jobs in the
diamond industry in Gujarat alone. If the organised and the
unorganised sectors are taken together, the magnitude of job
losses would run into crores.
1. It is yet to even acknowledge the serious situation arising out
of the plummeting prices of crops like cotton, rubber, coffee,
tea, coconut, copra and groundnut, wheat and maize. Huge inflows
of speculative finance into the commodity futures markets have
led to sharp increases in commodity prices. Following the
financial meltdown, prices are coming down even more sharply.
2. India's financial sector remained relatively immune from the
devastating financial meltdown, mainly due to the existing
regulations and public sector domination of the financial sector
in banking, insurance, pension funds, etc, which the CPI (M) and
the Left parties have struggled hard to defend by preventing
financial liberalization measures like the takeover of Indian
private banks by foreign banks, increase in FDI in the insurance
sector, privatization of Pension Funds, etc.
3. The stock market crash in India has occurred because of the
Foreign Institutional Investors (FIIs) pulling out a whopping
Rs. 78800 crore since the beginning of the financial crisis,
causing the rupee to depreciate below Rs. 51 per dollar. This
demonstrates the volatility of speculative capital flows by
FIIs. Yet the Congress-led Government wanted to push capital
account convertibility, opposed by the CPI (M).
4. Learning little from the experience of the global meltdown, the
Congress-led government continued to push financial
liberalization measures. Restrictions on the Participatory Notes
(PNs) were removed in October 2008 despite Government's own
National Security Advisor saying that terrorists are using PNs
to invest in the Indian stock markets; In December 2008 it
introduced legislation to raise FDI cap in insurance; FDI
guidelines were clandestinely revised in February 2009 bypassing
Parliament to nullify foreign investment caps across all
sectors.
5. The Congress-led government violated its own NCMP which had
committed to reduce "the vulnerability of the financial system
to the flow of speculative capital" and tried to lure the FIIs
and other speculators through tax concessions and it failed to
plug the Mauritius route, through which FIIs and MNCs evade
Indian taxes.
6. The BJP's economic policies are no different from that of the
Congress. The CPI(M) had detailed a set of measures to tackle
the global economic crisis in November 2008. These included: (1)
Enhancing annual Plan expenditure to 10% of India's GDP
(currently it is below 5%). (2)Adopting specific relief packages
for crisis-affected sectors aimed mainly at the small and medium
enterprises; preventing job and pay cuts (3) Increasing public
investment in agriculture and irrigation; providing protection
against price crashes of crops through price support and
increased import tariffs. (4) Expanding the employment guarantee
to cover all adults and for as many days as demanded; extending
it to the urban areas. (5) Universalising the PDS and supplying
14 essential commodities at subsidised rates. (6) Providing
income tax relief for salaried employees, pensioners and senior
citizens; increasing taxes on speculators and the wealthy and
crackdown on black money. (7) Strongly regulating the financial
sector and strictly controlling the outflow and inflow of
speculative finance; maintaining predominant state control over
finance and revive development finance.
end
for the complete text of the pamphlet:
http://vote.cpim.org/sites/default/files/Global Crisis and India.pdf
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