India:
UPA Government Forced
To Put Disinvestment Plans On Hold
By T. Kala and Arun
Kumar
12 July 2006
World
Socialist Web
India’s United Progressive
Alliance (UPA) government announced the temporary suspension of its
disinvestment/privatisation programme last Thursday, after a member
of the Congress Party-led coalition threatened to quit the government
if it proceeded with the sale of a 10 percent interest in the Neyveli
Lignite Corporation (NLC).
The threat from the Tamilnadu-based
Dravida Munnetra Kazhagam (DMK) was made in the third day of an indefinite
strike by 19,000 NLC workers. The strike had forced the NLC to halt
its lignite mining operations and to almost halve its power generation.
The NLC, India’s largest
lignite mining and lignite power-generating company, is an important
supplier of electricity to Tamilnadu and the three other south Indian
states, Kerala, Karnataka, and Andhra Pradesh.
Tamilnadu Chief Minister
and DMK President M. Karunanidhi told the press, “When the Union
Government is not in a position to accept the demand of the workers,
the DMK is thinking whether to continue in the Union Government and
be a party to the decision of the Union Government. I have instructed
our Union Ministers to inform this stand to the Prime Minister.”
Taken aback by Karunanidhi’s
announcement, Indian Prime Minister Manmohan Singh held hurried consultations
with Congress Party President Sonia Gandhi and two key Congress cabinet
ministers—Finance Minister P. Chidambaram and Defence Minister
Pranab Mukherjee—before instructing his media advisor to issue
the following statement:
“There have been representations
from some of the constituents and allies of the United Progressive Alliance
about the process of disinvestment in some public sector enterprises.
Taking into account their concerns, the Prime Minister decided to keep
all disinvestment decisions and proposals on hold, pending further review.”
Singh and other Congress
leaders have subsequently been at pains to insist that the “review”
of the government’s disinvestment programme in no way constitutes
a retreat from either their commitment to implementing further neo-liberal
economic reforms or to the partial or complete sell-off of many of the
country’s public sector companies, including profitable ones such
as NLC.
According to the Hindu, “sources
close to Sonia Gandhi” said she wanted it known that the Congress’s
plans to improve education, public health care and rural employment
opportunities could be realised “only in the context of faster
growth and increased resource mobilisation” (i.e., disinvestment
revenue).
Planning Commission Deputy
Chairman Motek Singh Ahluwalia said Friday, “The reform agenda
is very, very wide ranging. Quite frankly I do not think that [the prime
minister’s] statement would prevent moving on a wide range of
things which are absolutely crucial.”
Singh’s press advisor
has dismissed as baseless and utter nonsense press reports that his
boss offered to resign over the disinvestment controversy.
Karunanidhi has tried to
claim that the DMK never approved of the government’s plan to
sell off a 10 percent stake in the NLC. But the UPA cabinet, which includes
six DMK ministers, sanctioned the sale at its June 22 meeting, and the
DMK as a partner of the UPA and a member of the previous Bharatiya Janata
Party (BJP)-led coalition has supported a raft of disinvestment-privatisation
decisions.
Only after the NLC strike
had erupted, forcing significant power cuts, did the DMK leadership
publicly oppose the disinvestment scheme, let alone threaten to quit
the government.
According to press reports,
the NLC strike enjoyed strong support from the entire population of
Neyveli, which lies 400 km south of Chennai. Contract employees joined
the strike, and shopkeepers and small traders staged a bandh (business
shutdown). A government offer to give the NLC workers stock in the company
was angrily rejected by the strikers.
In preparation for a possible
attempt to break the strike by declaring it illegal, the DMK government
deployed large numbers of police to Neyveli. Three thousand police from
a dozen Tamilnadu districts were sent to the Neylevi area, as well as
1,500 members of the Central Industrial Security Police Force.
But ultimately, the DMK leadership
decided that an all-out confrontation with the NLC strikers was too
politically dangerous at this juncture. In elections in May, the DMK,
succeeded in unseating its archrival, the AIADMK, as Tamilnadu’s
government after mounting a campaign replete with populist promises.
But its support fell far short of expectations and it failed to win
a parliamentary majority. Further complicating matters for Karunanidhi,
the DMK-allied union at the NLC had been compelled to support the anti-disinvestment
strike.
The Congress, meanwhile,
feared the defection of the DMK would render it even more politically
dependent on the Communist Party of India (Marxist) (CPI [M]) and its
Left Front. (The UPA survives in office only because of the Left Front’s
parliamentary support.)
The DMK only asked for the
UPA to suspend the NLC disinvestment, but the Congress-leadership deemed
it wise to suspend the entire disinvestment programme, which is supposed
to raise some 10,000 crore rupees ($2.2 billion)—money that the
government badly needs to meet its revenue projections.
The Congress leaders calculated
that reversal of the NLC disinvestment decision would only stiffen the
resolve of other workers to oppose the government’s disinvestment
and privatisation plans. The 5,000 workers at the National Aluminum
Company (Nalco) plant in Angul, Orissa, had begun an indefinite anti-privatisation
strike June 23, and employees of the National Mineral Corporation were
set to begin an agitation on July 7 against the disinvestment of 15
percent ownership in the company.
Second, by placing the entire
disinvestment programme on hold, the Congress leaders hope to force
their UPA allies to recognise that they cannot dissent from unpopular
measures affecting their states without threatening the government’s
entire agenda.
In the coming weeks and months,
Singh and the other top Congress leaders plan to extract a firmer commitment
from the DMK and other UPA allies of their support for its disinvestment-privatisation
programme.
Said Congress spokesman Abhishek
Singhi, “Till this exercise of give and take is complete in depth,
things [disinvestment] have been put on temporary hold. There is no
doubt a holistic and constructive solution will emerge after a proposed
discussion in the near future.”
The unions seized on the
UPA’s decision to temporarily suspend its disinvestment-privatisation
programme to order an immediate end to the various anti-disinvestment
strikes.
The CPI (M), for its part,
has heaped praise on the DMK, claiming that its about-face on the proposed
NLC share sell-off constituted a forthright stand against disinvestment
and one that has transformed the disinvestment of profit-making public
sector units into a “national issue.”
Having defused the political
threat constituted by the NLC strike and the popular opposition to the
NCL share sale, Karunanidhi is now claiming that he never threatened
to bring down the UPA. Rather, he says he simply warned his party would
have to consider its place in the cabinet if the government persisted
with the NLC share sell-off.
Indian big business has expressed
frustration, if not exasperation, with the government’s decision
to suspend, if only temporarily, its disinvestment-privatisation programme.
On Thursday and Friday, the value of Bombay Stock Exchange stocks, especially
those constituting its Public Sector Unit index, fell sharply.
The corporate media took
both the DMK and Congress Party leadership to task for the disinvestment
retreat. “[T]he government’s decision to put the disinvestment
process on hold has made it look weak and vacillating within the country
and abroad,” complained the Hindustan Times. The government “appears
to be buffeted by the whims of its allies, who, in turn, are unburdened
by any principle, ideological or otherwise.”
Several of the editorials
drew a contrast between the actions of the DMK and the Left Front, which
routinely denounces the government for its “anti-people”
socio-economic programme and for aligning India with the Bush administration,
yet has never threatened to bring down the UPA government. “There
is a major difference,” declared the Deccan Chronicle, “between
the perception of the Left parties and regional organisations like the
DMK, as the former have decided to bark, while the Tamil Nadu party
has demonstrated its willingness to bite if an issue affecting its base
is involved.”
The UPA’s decision
to place its disinvestment-privatisation programme on hold exemplifies
the fragility of the Congress-led government. Elected two years ago
on the basis of a calibrated appeal to popular opposition to poverty
and economic insecurity, the UPA has pursued neo-liberal policies no
different from those implemented by the BJP in the face of repeated
worker and popular protests, including growing anger over recent oil
and food price prices.
Playing a crucial role in
the government’s survival and the realisation of corporate India’s
ambitions to make India a major site of cheap-labor services and manufacturing
are the Stalinists of the CPI (M) and their Left Front. While sustaining
the UPA in power through their parliamentary votes, the Stalinists systematically
work to divert the mass opposition to the neo-liberal agenda of Indian
capital into limited strikes and protests aimed at pressuring the Congress,
the traditional ruling party of the Indian bourgeoisie, to implement
the Common Minimum Programme—the ostensible programme of the UPA
and a document based on the fiction that it is possible to pursue neo-liberal
reform with a “human face.”
Following the recent crisis
in the UPA, CPI (M) elder statesman and Politburo member Jyoti Basu
rushed to reiterate the Stalinists’ intention to sustain the Congress-led
UPA in office for a full five-year term. “We want this government
to continue,” said Basu last Friday. “We do not want to
bring it down.”