UPA dithers, BJP gains
While political commentators continue to conduct a postmortem, the BJP’s victory in Karnataka cannot be seen as a ‘flash in the pan’. Since 1994, the BJP has consistently improved its voting percentage — from 17 per cent in 1994 to 20.69 per cent in 1999 to 28.33 per cent in 2004 to nearly 34 per cent in 2008. This consistent rise in its support base has been due to a variety of factors. Sharpening of communal polarisation centering around the Datta Peetha shrine in the Baba Budangiri hills in Chikmangalur, described by the BJP as ‘Ayodhya of the South’, the controversy over the Idgah maidan in Hubli, or the widespread communal clashes across the state connected with the birth centenary of Golwalkar have mainly contributed to its consolidation.
More recently, the political 20-20 game that Karnataka witnessed has benefited the BJP in these elections. The 20-month government led by the Congress supported by the Janata Dal (Secular) followed by the 20-month government led by JD(S) supported by the BJP was to have been followed by yet another 20-month BJP-led government supported by the JD(S). That the last lap was not run due to the JD(S)’s ‘betrayal’, as the BJP describes it, contributed to a sympathy factor. Additionally, it sharpened the dominant caste divide between the Lingayats and the Vokkaligas, with the former consolidating around the BJP following this ‘betrayal’. The BJP’s gains in these elections have been the JD(S)’s losses. The JD(S) has paid the price for its rank opportunism at the expense of giving the BJP its first entry to form a government in the south.
Keeping these facts aside, it needs to be noted that this is the 13th electoral defeat for the Congress and its UPA allies since the 2004 general elections. It is of little solace to be reminded that while Vajpayee was the Prime Minister, the BJP lost elections in 14 states consecutively. Following this, the BJP lost the 2004 general elections. Can anything be done to prevent such a repeat for the secular forces in the 2009 general elections?
Yes. This can be achieved only by pursuing an alternative policy direction and by resurrecting the spirit of the Common Minimum Programme (CMP). Apart from the overriding objective of preventing the communal forces from gaining power at the Centre in the interests of strengthening the secular democratic republican character of modern India, the CMP, broadly endorsed by the Left, had advanced another objective. And, this was a shift in the focus of economic reforms from being solely preoccupied with corporate profits towards improving people’s welfare. It is towards this end that the CMP promised guaranteed rural employment, granting forest rights to the tribals, enlarged public spending in education and health, increasing investments in agriculture to counter the growing agrarian distress etc. If this conceived shift in focus was implemented in right earnest, then the consequential benefits to the people would have had its political impact.
Unfortunately, this has not happened so far in the way it should have and in the way it could have given the huge bonanzas of increases in governmental revenues enjoyed by this UPA government. In the final year of the UPA, the rural employment scheme was announced to be universalised across the country. Its implementation continues to remain tardy, to say the least. The notification of rules for forest rights to the tribals took full four years to be framed. The expenditures on education targeted to reach 6 per cent of the GDP and on health targeted to reach 3 per cent are far from being achieved. Clearly, there are forces at work that are not allowing such a shift in the focus of economic reforms that the CMP envisaged. Similar is the story with regard to massive infrastructural projects of roads and rural connectivity, airport modernisation etc. The needle of suspicion for the delay in the implementation of such projects directly connected with improving people’s livelihood points to the ‘procedural’ objections of the Planning Commission. (Or, is this the mechanism to advance corporate interests at people’s expense?) The net result is that the consequent growing discontent among the people is benefiting the BJP and the communal combine electorally.
In this context, take the current, relentless price rise which, surely, played an important role in the Karnataka results as well. This column in the past had pointed out the faulty analysis of the government in explaining the causes for this inflation. Instead of curbing speculative trade in essential commodities and strengthening the Public Distribution System, the government’s preoccupation with fiscal and monetary measures aimed at reducing liquidity in the economy is doing more harm than good to our economic growth besides being utterly ineffective in containing inflation.
A similar situation arises in dealing with the prices of petroleum products in the wake of the unprecedented rise in international oil prices which have breached $130 a barrel mark. The easiest way to meet the rising import costs is to raise the domestic prices of petroleum products in an equivalent manner. This would not only impose a crushing additional burden on the people but will also fuel further all-round inflation. But, then is there any alternative?
Yes. There is an alternative. As international prices rise, so do government revenues due to ad valorem taxes. In 2007-08, it is estimated that the governmental revenues increased by Rs 35,000 crores due to rise in international prices. This is an additional resource mobilisation or ‘profits’ for the government. If these were to be returned to the oil companies, then the pressure to raise prices would ease. Surely, the government cannot be making profits and expect the people to fund this through higher prices. Further, importing oil for our economy is akin to importing food to prevent starvation. Can such imports be taxed? The abolition of the existing 5 per cent customs duty on crude oil and reduction in the 7.5 per cent on petrol and diesel will save thousands of crores.
Further, the government follows a pricing policy of import parity. This means, the price of petroleum products after refining in the country will be on par with the international price irrespective of the actual costs of refining. This is leading to unprecedented profits for private refineries. During the first quarter of this year, some refinery majors registered a whopping 35 per cent net profit. Further, private oil-producing companies extracting oil and gas in India were permitted operations when international prices were around $30 a barrel. With today’s prices, they are making anywhere close to $100 extra for every barrel they extract. While the public sector oil companies continue to subsidise and consequently bear the burden, the private companies are making windfall profits. What is required is to introduce a windfall profit tax as was done in the US in the 1980s.
We, thus, return to the basic choice — corporate profits or people’s welfare? If it is the former, then raise prices and bear the consequent political costs. If it is the latter, then restructure taxes and impose windfall profit tax. Clarity on this is central to the efforts to prevent popular discontent from delivering political and electoral benefit to communal forces.
Sitaram Yechury MP, Rajya Sabha and Member, CPI(M) Politburo