The Polit Bureau of the Communist Party of India (Marxist) met in New Delhi on July 11, 2004. It has issued the following statement:
On Budget Proposals
The Polit Bureau had already given its reaction to the budget speech of the Finance Minister. It had appreciated the emphasis given to agriculture, education, employment, conserving water resources and giving relief to the people by raising the income tax exemption upto Rs. 1 lakh. There is also an increase of rupees ten thousand crore of gross budgetary support to the plan. However, the allocations in various sectors are meagre and if the CMP proposals in these areas are to be implemented seriously, much more resources will have to be mobilised and allocated.
The Polit Bureau reiterated its opposition to the raising of the Foreign Direct Investment (FDI) cap in the telecommunications, insurance and airlines sectors. It is surprising that the Manmohan Singh government has thought it fit to make such major policy changes which are not strictly within the budget purview. For instance, the raising of the cap in the telecom sector from 49 to 74 per cent would mean that some of the existing Indian telecom companies would become foreign owned and controlled. As pointed out earlier, telecom is a sector which has security implications. Even the United States of America has a 25 per cent FDI cap and any investment above that requires specific approval. Among the OECD countries which have such restrictions are France, Canada, Japan and many other countries.
The CPI(M) has consistently opposed the opening up and entry of foreign capital in the insurance sector. It may be recalled that when the first Insurance Regulatory Authority Bill was introduced in 1997, the CPI(M) had opposed it in Parliament at the time of the United Front government. It had also opposed the introduction of the Insurance Regulatory and Development Authority Bill in the Lok Sabha and subsequently voted against it. While in 1997, the FDI cap proposed was 20 per cent, in 2001, the Vajpayee government raised the cap to 26 per cent. Now the Manmohan Singh government wishes to allow 49 per cent for foreign capital.
The argument that more foreign capital is required for expansion in this sector does not wash. There are big Indian companies which have access to bank funds for their expansion needs. Further, the state insurance sector is the biggest contributor to Plan funds since independence. Privatisation of half the sector would adversely affect the country’s overall economic development. The CPI(M), therefore, will oppose the move to amend the IRDA, if it comes up in Parliament.
In addition to the Polit Bureau’s response to the Finance Minister’s speech, the Polit Bureau also took note of the proposal in the Finance Bill to amend the law which grants the right to issue small savings instruments to the postal department. At present, the whole range of small saving schemes like the National Saving Certificate, Kisan Vikas Patra, post office deposit schemes etc are run by the postal department. The amendment would allow banks and other approved institutions to conduct the same service as the post offices. This would lead to a big loss for the postal services and cripple them financially. The government should, therefore, consider the adverse impact on the postal department before going ahead with this move.
The CPI(M) is conscious of the fact that the UPA government is interested in honouring the verdict of the people in the recent Lok Sabha elections and fulfilling its commitment to the Common Minimum Programme. The CPI(M) will discuss with the Left parties on taking up these issues with the government and for mobilising the people in support of the positions taken by the Left.
The Polit Bureau discussed a draft review report of the elections with particular focus on the Party’s performance. The review report will be placed before the forthcoming Central Committee meeting for adoption and to take the necessary steps to streamline and expand the organisation.