[Marxistindia] highlights of pamphlet on Economic Crisis

[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