May 14: In the hour of victory of forces opposed to the BJP, the Left is again displaying an inability to be a responsible player that is fit to share power in Delhi either as part of a government or providing support from outside.
Politburo member Sitaram Yechury’s statement that the disinvestment ministry should be wound up, accompanied by comments by other leaders that sale of profit-making public sector units would have to stop, sent the stock market reeling today. The crash, by nearly 330 points, was the fourth largest in Bombay Stock Exchange history.
CPM general secretary Harkishen Singh Surjeet, however, sniffs a conspiracy. “There are lots of forces at work — those trying to sabotage our efforts to put together a secular coalition at the Centre,” he said.
In the Left’s pronouncements, the market saw the seeds first of disagreement with the Congress on economic policy and second a reversal of the divestment process that was in fact set in motion by P. Chidambaram as finance minister in the United Front government supported by the CPM.
Seeing a crisis developing even before a government is in place, the Congress scrambled to calm jitters. “Investors can rest assured that the new government will pursue policies to crate a favourable climate for growth,” Manmohan Singh, a former finance minister, said.
“We are not pursuing privatisation as an ideology. We are not against divestment per se. We are open to all options,” he added.
Sonia Gandhi said in a TV interview reforms would continue. “The economic reforms were initiated by the Congress, by my husband, and later by Congress governments. They will be carried forward.”
The Congress is also believed to have sent word to Surjeet and Jyoti Basu that if the Left acts in such a manner in the honeymoon period, keeping the marriage alive will be difficult. Basu is expected to make a statement to soothe frayed nerves.
Keen that it had appeared to be on displacing the BJP alliance in power, following victory, the question of helping the Congress form the new government should be, and is, uppermost on the Left’s mind.
But its utterances have created the impression that divestment is the biggest issue before the upcoming government, reversing the trend on the stock market. After seeing the ruling coalition knocked off its feet, the market initially panicked but was reassured to see the Congress alliance emerging as a big player, carrying the perfume of stability investors like around them.
The comfort level plummeted today when one comment piled on another, reinforcing potential points of conflict between partners in the new government.
CPI general secretary A.B. Bardhan said the new government would have to drop the divestment policy.
Surjeet clarified the sweeping nature of this statement. “We cannot afford it (the divestment programme of the Vajpayee alliance). We oppose divestment of profit-making PSUs. All the mistakes of the NDA government have to be rectified.”
He interpreted the election verdict as a thumbs-down to the National Democratic Alliance’s “wrong” economic policies.
“We have to reverse the process of Arun Shourie. Divestment in IOC (Indian Oil) and BPCL (Bharat Petroleum) should be scrapped,” Bardhan added.
Shares of oil companies were immediately hammered on the market. Other public sector stocks suffered, too.
Rather than calm the nation — the stock market and industry happen to be part of it — the Left is doing the opposite. And, in any case, who benefits if public sector shares lose value: the government, the people whose money is invested in them'
Such statements do not merely show up the Left as an irresponsible entity, but also out of touch with reality. With dropping small savings and bank interest rates, mutual funds are a vehicle for fetching higher returns not for the Ambanis and the Birlas but even for those who have taken voluntary retirement schemes, not to speak of pensioners and the middle class.
The shift towards mutual funds is clearly brought out by the surge in investment in their schemes. Such drastic drops as occurred today on the market will affect returns from these schemes.
Bardhan said the proposed new coalition should work out a common minimum programme immediately on some basic needs. Fair enough. The NDA had such a programme and its replacement would also need one to be able to function. But it would seem this programme and its contents should be worked out inside the four walls of coalition politics based on give and take and not made the subject of brave proclamations based on arrogant assumptions that the verdict of 2004 is against NDA policies.
The results have given no one a clear mandate, least of all the Left, however much breast-beating it may do with a national score of over 60 in a House of 543. The majority mark is 272, it may be reminded. And the Congress and allies have won only 219.
There might be no two opinions about scrapping the disinvestment ministry, as Yechury suggested, because it is unnecessary. Some might even say ridiculous. With the mandatory curb on the size of government, it would probably have to go anyway. But the CPM leader should also bear in mind that in his party-led government in Bengal there is a fire services ministry, and many, many more such.
In Bengal again, chief minister Buddhadeb Bhattacharjee intends to sell public sector units. One advantage he has is the Bengal government is not known to own profit-making units. So it’s difficult to have two sets of policies on profit-making and unviable companies.
Speaking of Bhattacharjee, akin to his colleagues in Delhi, he made the Left’s naivete about economic issues apparent. Like the little boy mugging his multiplication table, he kept saying on TV “policies dictated by the World Bank and IMF” are unacceptable to his party.
It would be unacceptable to Manmohan Singh, too, simply because he’s no less a patriot than Bhattacharjee and possibly a better economist. With this statement, the chief minister only proves how unaware he is of the India he lives in. This country is no longer dependent on handouts from these institutions and has no compulsion to follow policies set by them.