On the face of it, the UPA 2 government appears beleaguered. The Supreme Court has cancelled the 2G licences, thus, negating the telecom minister Kapil Sibal's claim that there is no scam as there is "zero loss to the exchequer" and that nothing "irregular" happened. New areas of conflict have arisen over the age controversy of the army chief, Indian Space Research Organisation (Isro) scientists, refuting government claims over the Antrix scam and IAS officers in Andhra Pradesh protesting against CBI action against them on charges of corruption while leaving ruling politicians alone. Price rise continues to burden people, distress suicides of farmers continue unabated. The prime minister himself admitted that the nutritional status of our children is a "national shame". He also bemoaned the sorry state of affairs in developing scientific research in the country that is bound to adversely affect our future. Problems with allies in the UPA keep mounting with the relentless throwing of tantrums by the Trinamool Congress.
The confidence that the government is displaying to brazen out these developments appears to arise from the comfort it seems to be drawing from the hope that the results of the current elections in some states would be in its favour. It hopes to wrest Uttarakhand and Punjab from the Opposition, succeed in numerical manipulations in Goa and Manipur and emerge as a 'king maker' in Uttar Pradesh. The visible discomfort and disarray in the main opposition - BJP - and the materialisation of these hopes, the UPA feels will allow it to 'ride the storm'.
On this basis, the UPA is preparing to launch a more aggressive offensive of liberalisation in the current budget. Even otherwise, under the pretext of containing the burgeoning fiscal deficit, such an agenda seems to be on the anvil.
This is happening despite the World Bank's recent warning that developing countries, India in particular, should be prepared for a crisis that will be on a par or worse than the 2008-09 global economic meltdown. Its forecasts are significantly lower than those in June 2011. The global economy is likely to grow by 2.5% in 2012 and 3.1% in 2013 compared with the forecasts of 3.6% for both years. The euro zone economy is expected to contract no longer in individual countries but as a whole, i.e., decline in real terms in 2012.
Almost simultaneously came The Economist with Lenin on its cover page sporting a Che Guevera cigar with the caption "The rise of State capitalism". This unabashed apologist of capitalism and neo-liberalism bemoaned this model of the emerging world. In an 18-page supplement mainly covering China, Russia and Brazil, it states that : "State capitalism is on the march" and concludes unconvincingly that liberal capitalism would be better for economic growth, notwithstanding the current experience. The non-inclusion of India in this survey is significant for we are increasingly being correctly seen as an emerging 'cheer leader' of neo-liberalism.
UPA 2 appears all set to bring in crucial financial reforms in the budget, legislations that Left parties had prevented from being made into law for the last seven years. Refusing to learn from our own experience that preventing the opening up of our financial sector is what helped India resist the devastating impact of the global meltdown in the first place, this government appears to blind itself to this latest warning by the World Bank.
The hopes in India that further financial liberalisation will attract an inflow of foreign funds providing an impetus for our growth also appear remote with the World Bank warning that the rich countries had little monetary or fiscal ammunition available to stem any vicious cycle of continuing recession.
Making capital available more freely and less expensively alone cannot spur economic growth. This can bolster profits. However unless the purchasing power in the hands of the people rises, sustainable economic growth would not be possible.
We had been suggesting repeatedly that instead of giving staggering amounts of tax concessions to the rich (nearly R15 lakh crore during the last three years), these amounts should be collected and used for public investments to build our much needed social and economic infrastructure while generating large-scale employment. The consequent growth of domestic demand in India is what can sustain a healthy economic growth which would be more inclusive as well.
The New York Review of Books recently said: "How could we have so misread history and treat with contempt the teachings of John Maynard Keynes?" Remember that post-1930's Great Depression, Keynes had advocated active State intervention (with the express purpose of saving capitalism from socialism) as the only manner in which capitalism could achieve full employment through public investments.
Despite the growing worldwide struggles against the ongoing capitalist crisis as seen in the Occupy Wall Street movement, and the snowballing strikes and protests in almost all European countries, capitalism and its apologists like The Economist have a tendency to ignore the boldest of writings on the wall. Marx had once said that capitalism "has conjured up such gigantic means of production and of exchange, it is like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells." This global capitalist crisis is systemic. It is not because of the greed or avarice of individuals.
Thus, in India, at this moment, it is necessary that popular pressures are mounted to change this neo-liberal policy direction and heavily invest in public spending for building our much needed infrastructure and generating large-scale employment. This is the direction that the forthcoming budget must give for the sake of India, that is Bharat.
Sitaram Yechury is CPI(M) Politburo member and Rajya Sabha MP. The views expressed by the author are personal.