A wishlist for the Congress
Noting that this victory comes with the “challenge of rising expectations,” the Prime Minister described this as a verdict for “inclusive growth”, “equitable development”, “a secular and plural India”. If this has to be translated into action, then the existing state of denial on the disastrous impact of the global economic recession must be discarded, writes Sitaram Yechury.columns Updated: Oct 09, 2009 16:42 IST
With the dust settling down post-elections, the Manmohan Singh-led government will assume office by this weekend. The Left, particularly the CPI(M), has met its worst electoral debacle. A serious self-critical introspection has begun to identify the reasons and draw correct lessons. This is absolutely necessary to regain the support and confidence of those sections of the people who have been alienated from the Left and to further expand the party’s influence.
It has been suggested that the Congress gained mainly due to people’s desire for stability. If this were the only issue, then there would have been little to choose between the UPA and the NDA. The people, clearly, wanted stability along with a firm commitment to uphold India’s secular democratic foundations.
Given this, the efforts by the Left to project a non-Congress secular electoral alternative were not seen by the people as both being credible and viable. The Left had always worked for the creation of a third political alternative that can effect a progressive shift in the policy trajectory of the country. Such an alternative cannot, obviously, be a cut-and-paste arrangement on the eve of elections. This can only emerge through sustained popular struggles. There are no shortcuts.
Further, the parties with whom the Left chose to project such an alternative were those who earlier allied with the BJP. This, to some measure, facilitated greater support for the Congress among the minorities and secular people. Ironically, what also stood the Congress in good stead were some of the measures adopted by the UPA like the NREGA, the Forest Tribal Act and other social welfare measures, which were pushed through under Left pressure.
It is time to look ahead for the new government. Noting that this victory comes with the “challenge of rising expectations,” the Prime Minister described this as a verdict for “inclusive growth”, “equitable development”, “a secular and plural India”. If this has to be translated into action, then the existing state of denial on the disastrous impact of the global economic recession must be discarded.
The World Bank’s Global Economic Prospects (GEP), 2009, says: “What began six months ago with a massive de-leveraging in financial markets has turned into one of the sharpest global economic contradictions in modern history”. It adds: “Global GDP is expected to contract by 1.7 per cent in 2009 which would be the first decline in world output on record.
“The deceleration in economic growth in low-and middle income countries as a group is expected to match the deceleration in high-income countries. The developing world is anticipated to see growth fall from 5.8 per cent in 2008 to 2.1 in 2009, a drop of 3.7 percentage points, similar to the fall in high-income economies (drop of 3.7 per cent from 0.7 per cent to minus 3.0 per cent). This highly synchronous growth collapse cannot be solely explained by trade linkages, but illustrates also that developing countries have been directly hit in their domestic economies by the financial crisis. The reversal of capital flows, collapse in stock markets, and in general the deterioration in financing conditions have brought investment growth in the developing countries to a halt, and in many developing countries investment is sharply declining.”
The failure to meet this by sharply increasing public investments has had its inevitable effect in the sharp drop in our industrial output. This dropped to an alarming minus 2.3 per cent growth in March 2009. Of this, the manufacturing sector, which has nearly 80 per cent weightage in the Index of Industrial Production (IIP), fell by a whopping minus 3.3 per cent as compared to March 2008.
Foreign direct investment (FDI) in India has been estimated to have dropped by over 55 per cent — from $4.4 billion in March 2008 to $2 billion in March 2009. India’s exports have declined for the seventh consecutive month in April 2009 amounting to a fall of 33 per cent. Similarly, imports contracted by 35 per cent. While this may narrow the trade deficit, the export targets for 2008-09 are much less than even the revised scaling down done by the Commerce Ministry.
As against our higher projections, the GEP has estimated the current growth rate to be 5.5 per cent, projected to fall to 4 per cent next year. Apart from having a devastating impact on employment, this sharp fall in the growth rate has increased the level of poverty in India with the GEP estimating that we are now only ahead of Sub-Saharan Africa in terms of population below the poverty line with over a quarter of Indians “living in extreme poverty” living on less than $1.25 a day. In terms of purchasing power parity, this tallies with the estimation of the Arjun Sengupta Report of 78 per cent of Indians living on less than Rs 20 a day.
Notwithstanding the euphoric breach of the sensex upper ceiling, this is a reality check for our economic fundamentalists. Hopefully, the new government shall substantially hike public investment that will generate both employment and demand while, at the same time, building much-needed economic and social infrastructure in the country.
Sitaram Yechury is CPI(M) Politburo member and MP.
First Published: May 20, 2009 23:13 IST