From Business World of 8 November 2004. The alliance between the Congress and the communists was fraught from the beginning, and broke down eventually, leading Manmohan Singh to ally himself with the spectacularly corrupt southern party, Dravida Munetra Kazhagam.
The foreign
devil
Although they would be the first to agree
that he is the least of all evils, the communists have a problem with the Prime
Minister: he behaves like a friend of foreign investors and a lackey of
American capitalists. They first took umbrage when he met American
industrialists and financiers in New York last September and invited them to
invest in India; he rebutted them gently saying that it was his job to serve
the national interest.
More recently,
they upbraided Manmohan Singh for congratulating George W Bush on his
reƫlection. If they had reflected on it, they would have realized that he did
not do what is usual on such occasions – namely pick up the telephone and say,
“Well done, George! The people of India rejoice at your victory.” Instead, he
wrote a long letter reiterating the agenda for Indo-US cooperation that he had
spelt out when Bush and he met over breakfast on September 20. That meeting
itself came at the end of phase one of the Next Steps in Strategic Partnership
initiative, which was begun last January. The US has had a problem with India
since the NDA government staged the nuclear ceremony in 1998. The Vajpayee
government was trying for years to overcome the estrangement that its nuclear
explosions occasioned. Slowly it had brought the US over to shift from boycott
to cooperation. The stakes for India are substantial: they involve strategic
technologies whose exports to India the US has prevented. Prime Minister
Manmohan Singh understands the stakes, and is simply continuing the process of
persuading the US to treat us better. The communists want an end to the
process, and a return to the cold war, 15 years after it ended.
The national
interest in attracting foreign investment was spelt out to them by the finance
minister, who said that the huge investments required in infrastructure – he
mentioned the Rs 1.6 trillion required for telecommunications in the next five
years – could not be financed without foreign investment. On
telecommunications, the communists got a learned paper drafted by their fellow
travelers from the Jawaharlal Nehru University; Chidambaram gave an equally
erudite reply drafted no doubt by his kitchen cabinet.
The communists
have assailed the finance minister on foreign investment in banks as well.
Reserve Bank has made rules that would deprive any foreign investor from a
voice in the management of a bank he buys into. As money supply and the deposit
base expand, the banking industry is poised for expansion; and as it expands,
it will need more capital. In this process, Reserve Bank has given nationalized
banks an advantage by making it difficult for private banks to attract new
capital. The finance minister has tried to moderate Reserve Bank’s
obstructiveness by suggesting that investors should be allowed to increase
their stake in banks in steps of 10 per cent a year. Here too, the communists
have taken issue with him. They control a major bank trade union, and nothing
favours it more than state ownership and lack of competition. So their
opposition to foreign investment is closer to self-interest in this regard.
Whilst the Prime
Minister has resolutely followed his own foreign policy, he has been meticulous
about adherence to the Common Minimum Programme. He may have reckoned that as
long as he honours his agreement with the Left, the Left will let him follow
his own judgment in matters not covered by the CMP. But the Communist Party
(Marxist) refuses to let him entertain such illusions. In a statement on
November 1, its Politburo rejected an approach where “The
core issues of liberalisation and privatisation should be left to the
government to pursue, while the Left should confine itself to concerns such as
employment generation and food supply, education and health”. So if the Prime
Minister hopes for a quiet life, he is living in a fool’s paradise. Very likely
he is not.
In the circumstances, he could draw support from the
opposition to his external policies. But he is unlikely to do so because the
Left would see that as treason, and the BJP would want its pound of flesh for
support.
So he does not have any easy options. In the circumstances,
he may temporize. But he should also take a leaf out of his predecessor’s book.
Atal Bihari Vajpayee, whenever he encountered a difficult issue, used to call
for a public debate on it. In his case it was prevarication. But Manmohan Singh
might do well to involve the broader society in a discussion of what is to be
India’s place in the new world order. The communists are not entirely immune to
rational argument; even they see that the world has changed since the fall of
the Soviet Union. A public debate would give them too a chance to persuade the
country that hostility towards the United States is in national interest.