The Hindu : The Left and disinvestment

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Wednesday, Aug 28, 2002

Opinion

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The Left and disinvestment

By Supriya RoyChowdhury

How should we redefine the public sector?... This question, which constitutes the cutting edge of the current debate on liberalisation, has not evoked a systematic response from the Left.

A SPECIAL discussion took place in the Lok Sabha on August 1 on disinvestment of public sector undertakings. Amongst the Opposition MPs who criticised the NDA's disinvestment policies, Somnath Chatterjee, veteran member of the CPI (M), voiced the most scathing criticism. The crux of Mr. Chatterjee's attack was on expected lines: the NDA's disinvestment policy demonstrates that for the central government making money through sale of PSUs is more important than protecting the interests of workers. Mr. Chatterjee mentioned that many of the sick public sector units in West Bengal had originally belonged to the private sector; these had been taken over by the Government because of their sickness and in the interest of workers. He called for a complete reversal of the Centre's disinvestment policy.

Curiously, Mr. Chatterjee's attack on the NDA's disinvestment policy came hard on the heels of a very recent announcement, made on July 12, when the CPI (M)-led Left Front Government in West Bengal unveiled its own disinvestment policy. Nirupam Sen, West Bengal Commerce and Industries Minister, announced a new thrust towards industrial restructuring in the State whereby non-viable units would be closed down and joint ventures with private sector partners (74 per cent shares to be sold) would be pursued. With this broad policy outline in the backdrop, the Minister announced the closure of two units, the Indian Paper Pulp Company and the Sundarban Sugarbeet Company. Additionally, private sector partners would be sought for six state-owned companies. Mr. Chatterjee is surely not unaware of this recently announced disinvestment thrust of the West Bengal Government. His comments therefore are characteristic of the Left's dual path on the question of economic reforms. This is to put forward aggressive attacks on liberalisation policies being pursued by whichever party is in power at the Centre, and at the same time to quietly pursue reform measures at the level of the State Government. The incongruity between Mr. Chatterjee's pronouncements in the Lok Sabha, and the new disinvestment policy in West Bengal is only one example of the discrepancy between a political rhetoric of Leftism and economic policies underlined by a market-oriented pragmatism.

The pitfalls of pursuing this kind of a dualistic approach are, however, many. For example, recently the West Bengal Government appointed the well-known consultancy company, McKinsey, for advice on the State's economic regeneration. This is, of course, a significant departure from the Left's sustained criticism of the increasing intrusion of international agencies and multinational companies, both in the economy and in policy thinking.

Apart from the embarrassment, at the ideological level, caused by this invitation to McKinsey, the Left Front has been placed in awkward positions, as a consequence of straddling two very different horses at the same time. In its report, McKinsey recommended the introduction of flexible and contractual labour hiring system. Accordingly, the Government had announced, in May of this year, the setting up of an expert committee to review McKinsey's prescriptions on labour. The review committee would consist of members of business associations, trade unions, as well as from the Government and from McKinsey. The committee, however, was never convened, as the Government later announced that there was no need to incorporate any changes in the labour laws.

This odd turnaround perhaps underlines the Left Front's continuing vulnerability to sections of the organised workforce, such that the possibility of a market-driven hiring and firing system remains out of bounds politically, even as the Government is forced to seek the guidance of a McKinsey in economic matters. The CPI (M)'s sensitivity to labour, however, remains confined to these political gestures and rarely extends to substantive benefits. For example, the Left Front had earlier announced a state-assisted scheme of Provident Fund for workers in the unorganised sector (agriculture, construction, manufacturing and other services). The Standing Committee on Labour recently reported that budgetary allocations of Rs. 3.49 crores, Rs. 40 lakhs and Rs. 48 lakhs were made towards the scheme during 1999-2002, but remained unutilised. The scheme, thus, has not yet materialised, and only Rs. two lakhs has been allocated to it in the present budget.

The points that need underlining here are two. First, the Left Front faces an unenviable situation, where the number of loss making PSUs is as high as 82, with a total investment of Rs. 18,241 crores and a net accumulated loss of Rs. 5,068 crores. Despite this huge and continuing drain on state resources, up until 2000, only two units had been identified for disinvestment. This situation possibly partially explains the Left's desperation, manifested in inviting McKinsey for advice, or the more recent announcement of disinvestment and closure policies.

A recent industrial policy announcement of the West Bengal Government stated clearly that the salient features of the policy on industrial promotion and economic development were to welcome foreign technology and investment. The Left Front Government has, for a fairly long time now, recognised that the private sector, including multinationals, has a central role to play in the reinvigoration of the State's economy. Yet, the broader implications of this invitation to private capital, for large sections of the economy, for example the small-scale sector, and labour, have not been spelt out. There is little acknowledgement that labour issues need to be substantively addressed before a disinvestment policy can be put in place. Thus it is that the Left continues to voice a populist rhetoric while at the same time making feeble attempts to incorporate elements of market efficiency.

Second, today the overall intellectual space in policy thinking has been completely overshadowed by the marketisation model. But the fact is that given the inherent limitations of a predominantly market oriented approach to development in a desperately poor country, there is now an enormous vacuum in the realm of policy thinking. How should we redefine the public sector, in a situation where private capital obviously needs encouragement, but where vast numbers remain outside the margins of the market? This question, which constitutes the cutting edge of the current debate on liberalisation, has not evoked a systematic response from the Left. And the Left's own surreptitious and undefined forays into the realm of marketisation, as also its failure to provide a viable alternative paradigm, has meant that its critique of marketisation is itself insubstantial, if not hollow.

The roots of this intellectual malaise may well be in the changing dynamics of Leftist politics. As the links between the Left parties and the organised trade union movement have loosened, the political anchoring of a class-based politics of the disadvantaged is lost. This characteristic feature of globalisation underlines the weakening of Leftist politics. But the Left itself has faltered greatly in the face of this challenge. This failure is in multiple realms: to imagine a constituency wider than the now shrinking organised workforce, to intervene in lower caste politics in order to incorporate it within a comprehensive definition of radical politics. This inability to creatively transform its politics in a rapidly changing political economy context has meant that the Left's so-called radicalism speaks to no defined constituency, nor does it have a specific mandate. In this vacuum it is not difficult to tread the marketisation path and echo conflicting ideologies.

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