Disastrous Economic Policies Of the Vajpayee Government
We reproduce below a brief account of the policies and actions of the Vajpayee Government in India, which has managed to bring the country and its people to the brink of ruin. Itgives an idea of what is happening to South Asian countries today.
This Bharatiya Janata Partty (BJP)-led National Democratic Alliance (NDA) government came to power by promising the moon. They extolled swadeshi pledging to protect and strengthen India's economic sovereignty. They promised to create one crore jobs every year. They claimed to liberate the country and the people from bhookh, bhay and bhrashtachar (hunger, fear and corruption).
By now it is amply clear that the economic policies pursued by this Vajpayee government are all videshi and no swadeshi. Instead of eliminating bhookh, these policies have resulted in an alarming rise of starvation deaths and distress suicides. The economy is in a deep crisis with fall in growth rates; menacingly rising unemployment, erosion of the livelihood status of the vast majority of people, growing inequalities between the rich and the poor, both in terms of people and regions and the overall impoverishment of the vast millions. The vision of providing every Indian with roti, kapada and makan remains an illusion that is receding farther.
During these years, this Vajpayee government has, on the one hand, mortgaged the Indian economy to foreign capital, and, on the other, is imposing unprecedented burdens on the people.
During the course of these three years the Vajpayee government has provided unprecedented access and facilities to foreign capital to take control of the Indian economy.
By July 1998, import restrictions on 1308 items were lifted. This had a disastrous effect on domestic production.
The economy has been opened up to the plunder of foreign capital by allowing a 100% direct foreign investment in almost all sectors--insurance, pharmaceuticals, hotels, tourism, airports, ports etc. 75% FDI is allowed in select telecom sectors and 49% in banks. Throwing to winds all concerns of India's vital interests, private companies are now allowed to enter defence production with 26% foreign equity.
Free import of coal has been allowed leading to the threats of closure of many mines. Foreign companies have been given the rights for exploration and production.
The liberalised import of steel has had a disastrous effect on domestic steel companies.
The opening up of the power sector to predatory multinational corporations is imposing havoc in terms of galloping tariff hikes. The Enron experience in Maharashtra clearly shows how the people have been looted for the sake of profits of the MNCs. The Vajpayee government in its first 13-day stint, in 1996, provided the counter-guarantee to Enron. Similarly another American multinational, AES, has packed up from Orissa after raking in huge profits.
48 exploration blocks for oil have been handed over to foreign companies. This has led to a decrease in the domestic output making India rely more on imports and thus putting greater pressures on our balance of payments.
In a complete reversal of its earlier position, this Vajpayee government adopted the Indian Patents (amendment) bill. This has had a direct effect in pushing up the prices of many products particularly medicines.
By withdrawing quantitative restrictions on the import of 1429 items, this government has virtually spelled the doom of millions. Agriculture is severely hit with the prices of many commodities falling steeply. In some places, the prices of paddy has declined from Rs650 to Rs 450 per quintal, ground nut from Rs 1500 to Rs460 per quintal; cashew from Rs2500 to Rs1600 per quintal, coconut from Rs10 to Rs2 per nut; rubber from Rs60 to Rs16 per kg. and coffee from Rs58 to Rs30 per kg. The depth of suffering of the peasantry is reflected in widespread suicides by farmers with reports of 800 coming from Andhra Pradesh alone in the past three years.
The small-scale sector has been worst hit by the continuous de-reservation of items as well as allowing free imports. The small-scale sector, next to agriculture is the largest employer in the country.
The impact on the Indian economy can be seen by the fact that the total liabilities of the Government of India at the end of the financial year 2000 stood at Rs1120049 crores i.e. 57.23% of our country's GDP. During the last three years, the liabilities have grown by more than three lakh crores. The interest payments on these alone are more than 1,220,000 crores. The burden of this directly falls on the common man.
Ferocious Attacks on the People
During these three years, the public distribution system has been virtually dismantled. Millions of people who are in the arbitrarily defined "Above the Poverty Line," no longer receive any protection. Even the recently announced reduction in the prices for this section is meaningless since these prices are close to the prevailing market prices. Prices for people below the poverty line had been increased from Rs2.50 for wheat and Rs3.50 for rice in 1997 to Rs4.15 for wheat and Rs5.65 for rice. Sugar has been withdrawn altogether from the PDS.
Notwithstanding all the high sounding schemes announced recently in the name of the poor, put together they hardly meet the requirements poor. It is a shame that more than 60,000 tonnes of foodgrains are rotting in government godowns but people particularly in the drought-hit areas, are dying of starvation.
Procurement of foodgrains by the Centre is to stop from the coming year as announced in the latest budget. This would once again put the peasantry at the mercy of unscrupulous traders and make them vulnerable to price fluctuations. The government expenditure in the social sector has sharply declined meaning the already inadequate facilities provided for the people have been further reduced. The privatisation of health, education etc is making access to these facilities beyond the reach of a vast majority of the people.
During these three years, administered prices of all essential commodities have been hiked. By relying on hikes in indirect taxes as the means for raising governmental revenues, the government has been passing the burdens on to the poor rather than the rich. During the last three years over Rs20,000 crores of extra burden has been put on the people through hikes in excise duties. On the contrary, the rich have got direct tax concessions in every single budget during the Vajpayee government's tenure. The last budget alone gave them concessions worth Rs5500 crores.
During this period, petroleum prices have been hiked seven times imposing a burden of thousands of crores on the people. The last hike was in 2001-2002 budget. The September 2000 hike itself imposed a burden of Rs8000 crores on the people. Items of mass consumption like kerosene and LPG have seen a sharp rise. Hike in petroleum prices have a cascading inflationary impact adversely affecting the livelihood of the vast millions of people.
Every single railway budget during this period has imposed burdens through hikes in freight and passenger fares.
The postal rates have been hiked continuously.
While giving tax concessions to the rich, the salaried classes are being adversely affected through reduced interests on small savings. Interest on post office savings have been reduced from 4.5% to 3.5%; one year post office deposit from 8% to 7.5%, National Savings Certificate from 11% to 9% and Public Provident Fund interest from 11% to 9.5%.
The growth rate of employment in the organised sector under this Vajpayee government according to their own economic survey dropped from 1.09% in 1997 to 0.04% by 1999.
Subsequently, the government has continued to ban all recruitment and announced a 2% reduction (66,000 posts) annually.
According to the NSS and census data, during 1993 and 1999-2000, rural employment grew by a measly 0.58%.
The Vajpayee government is going ahead with indiscriminate sale of public assets and virtually dismantling the public sector.
Modern Foods was sold to a multinational corporation, Hindustan Liver for a paltry Rs150 crores. The employees union had estimated the net asset value of Modern Foods at Rs2200 crores.
Public sector BALCO worth more than Rs5500 crores has been sold for Rs550 crores. It was sold to a dubious company already shortlisted for stock market manipulations. In both cases there was only a single bidder.
In the current year alone the government proposes to raise more than Rs13000 crores through disinvestment. India's flagship carrier, Air India is to be sold to a single bidder.
All profit earning blue chip public sector companies are slated to be privatised.
The privatisation of the state electricity boards in the name of "power reforms" is imposing unbearable hikes in power tariff further burdening the people.
The wealth of the people is being handed over to the private corporate sector and foreign capital for a song.
Concessions to the Rich
Apart from the direct tax benefits amounting to thousands of crores of rupees in the annual budget exercises, the rich are allowed to go scot free misappropriating public money. The non-performing assets (loans, bad debts) from nationalised banks amount to a staggering over Rs80,000 crores. The list of the defaulters made public by the employees union includes leading corporate houses. The Vajpayee government refuses to take any action.
The ministry of finance has admitted that the total amount of taxes outstanding as on 31st March 2000 is the following:
Income Tax arrears: Rs47,888 crores
Corporation Tax Arrears: Rs52,617 crores
Custom Duty and Central Excise Duty arrears: Rs62,392 crores
Total: Rs1,52,897 crores
A whopping Rs1,62,897 crores is due and yet the government has not cared to recover this amount.
Double taxation avoidance treaty with Mauritius which is officially protected by the Vajpayee government is being utilised to siphon capital and resources out of the country without paying any tax. For example, five companies having signboards in Mauritius had brought in Rs777 crores in the stock markets and repatriated profits worth Rs3677 crores within two years ending March 2001. The reforms in the financial sector are all aimed at facilitating the loot of the savings of the vast majority of the Indian people. The system has been so created that the vast amounts of such accumulated savings are placed at the disposal of corporate houses and stock market speculators. There has been a regular siphoning off of these funds to the tune of thousands of crores. The stock market scam and the recent crisis in the UTI are the most glaring examples.
Aggravating Economic Crisis
The Central Statistical Organisation has estimated GDP growth at 5.2% for 2000-2001 as against an exaggerated 6% announced by the finance minister while presenting the budget.
This is a sharp decline from the growth rate of 6.4% in 1999-2000.
The manufacturing sector growth fell from 6.8% to 5.6%.
Agricultural output grew by a meagre 0.2% as against an estimated 0.7%
The first quarter of this year (April-June 2001) saw the core sector of the economy (crude oil, refinery, electricity, coal, cement and steel) registering a growth of a mere 1% compared to 9.3% in the first quarter of last year.
During the first four years of the current 9th five year plan, the average growth for agriculture was 1.4% against the target of 4%. For industry it was 4.7% against the target of 8%.
Foodgrain production is on the decline having serious consequences for our country's food security. During 2000-2001 production was 196 million tones, i.e., 13 million tonnes lower than the production of 1999-2000.
The economic policies being implemented by this Vajpayee government are patently anti-national and anti-people. They are aimed at providing quick profits for the capitalist class and the rich while at the same time mortgaging our economy to foreign capital and squeezing the people. The net result is growing unemployment, misery and impoverishment. With the economy clearly going through a deep recession further attacks are imminent. Already there are threats of a hire and fire policy for retrenchment, lay offs and closures without restrictions in enterprises with upto 2,000 workers. In the rural areas, the misery is growing at staggering proportions. For the sake of India and its people, these policies must be reversed. If this Vajpayee government proceeds with these policies then the people will ensure that it will have to quit office.