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Rediff.com  » Business » 'We are not opposed to foreign investment'

'We are not opposed to foreign investment'

November 24, 2004 16:05 IST

Nilotpal Basu, member of India's Rajya Sabha and chairman, parliamentary standing committee on transport, tourism and culture, was in New York recently to participate in United Nations General Assembly meetings.

 

Basu clarified the Communist stand on foreign investment and the changes that have come about in the Indian Communist movement in an interview to Suman Guha Mozumder. An interview which first appeared in India Abroad, the newspaper owned by rediff.com

 

The West Bengal government has been wooing foreign investment, but the Leftists who support the federal government oppose foreign direct investment in insurance and civil aviation. Don't you think there is a contradiction?

 

It will be quite naïve to see this as a contradiction. At the national level we are not opposed to foreign direct investment per se. We have made this very clear. We recognize the resource gap and the need to do what needs to be done in terms of development of infrastructure, in funding social infrastructure programs.

 

The domestic savings we have is hovering around 23 percent of the GDP. There is a resource gap. In addressing that you have to have FDI. But the problem is the FDI requirement cannot be automatically met by wishful thinking.

 

Almost 80 percent of the FDI globally is directed towards developed countries. Out of the remaining 20 percent, 70 percent goes to China. More than 150 countries are vying for the remaining small amount.

 

CPI-M MP Nilotpal BasuIs that not reason enough to try for more FDI?

 

If the government feels merely getting FDI will solve economic problems, it's not going to happen. While we need to have FDI, it should not consume all our time and energy. We need to focus on economic problems and the requirement of investment in areas that are fundamental.

 

In West Bengal, our attempt is to have public investment, private investment and foreign investment. It is a multi-pronged strategy. In New Delhi our stand is that we want FDI, but we want it in areas where it will be beneficial to the country.

 

What we are saying is we must have investment, but in a manner and in areas where you need the capital or technology upgrade. There is no difference in the position of West Bengal and the position the Communist Party of India-Marxist pursues at the national level on the issue.

 

What is wrong with allowing FDI in civil aviation?

 

In civil aviation, we have FDI to the tune of 49 percent. No enterprise or company has suffered because of it. Whatever FDI we could receive within that limit has not taken place. The same is true for telecom and insurance.

 

The point is, these are critical sectors of the economy. We have prepared a paper and shown that most countries, including the United States, do not have an FDI policy that allows the majority stake to be handed over to foreign players. No self-respecting, independent economy will allow that.

 

As far as insurance is concerned, it was essentially in the private sector and following a major fiasco in the mid-1950s, it had to be brought under State control. Subsequent to nationalization, we had huge growth in the insurance sector and the performance, especially in life insurance, has been very good. The public sector companies mobilized huge resources for funding of Plan processes. The right to have control over savings of people should remain with the nation.

 

We are opposed to increasing the cap in the insurance sector. India is not a banana republic that has to open up even at the cost of the interests of the people. If opening up is in the interest of the country, of the people and development, it should be done.

 

What can be done to attract FDI in sectors where India needs it?

 

Foreign institutional investor funds are different from FDI. We have major volatility in the Indian capital market, FIIs are increasingly becoming important. This is a very delicate issue as the huge financial flows create problems for the economy.

 

The FII policy has to be very carefully made as they are very ephemeral. For example, sudden withdrawal of the FII money or sudden inflow of funds can send shockwaves through the market that can adversely affect the economy.

 

And FDI?

 

We have to admit a large part of the population is not really part of the market. Therefore, State intervention needs to continue. As much as it is true that the government cannot do everything, the market has its limitations, more so in the Indian context.

 

Public investment has to be made in building up infrastructure and agriculture where returns on investments have a time lag. It is very difficult to have FDI in infrastructure or agriculture in the short term.

 

Even domestic private investment is not going to address the concerns of agriculture or infrastructure in the short term. You need to find resources to finance programs on these, as they are the most crucial areas along with others like primary health and education.

 

Essentially the challenge lies in trying to pursue foreign or public investments and to see how we can mobilize resources for areas like infrastructure, human resources development and agriculture.

 

The CPI-M worked for the rights of workers. Of late, there seems to be some concern about giving workers absolute rights at the cost of industry.

 

The West Bengal government is committed in terms of protecting workers rights as allowed by the laws of the land. The government speaks on behalf of them wherever there is a dilution of those rights.

 

But where we are very firm is that actions that are not in the realm of legitimate trade union activities will not be acceptable.

 

Trade unions and workers clearly understand the strength of the trade union activity depends on the sustainability of the industry. Therefore, most trade unions — I cannot say all — are working responsibly.

 

At the same time we see hooliganism, or what people call militancy, which is not good for society or for the unions.

 

From your perspective what is the difference between the Communists of India today and the Communists of the 1960s and 1970s?

 

The essence of Marxism is to understand a concrete situation in concrete specifics. Since the concrete specifics of the new situation — in India and elsewhere — are a whole lot different from what they used to be in the 1960s and early 1970s, a difference has come about in approach, in the thinking of Communist parties.

 

The Left movement in general is symptomatic of changes in the concrete specifics of the situation. Our basic approach of applying dialectics and applying principles of scientific socialism remains unchanged, but they have to be applied in the context of the changed environment of today.

 

What are the 'concrete changes'?

 

The biggest change is that today we live in a largely unipolar world. Earlier there was a bipolar world where developing countries like India had great strength and also had a lot of autonomous space. Today, there is only one superpower that has belied all expectations.

 

One would expect that with greater power and greater hegemony over world affairs there would be a degree of restraint, responsibility and sense of accountability. That is nowhere to be seen. It is difficult for developing countries to embark upon an independent path.

 

The second major change is the impact of scientific and technological revolution, especially in information technology, and the great financial flows that are taking place as a result of that.

 

Thirdly, lessons have been learned and are being learned by the Communists following the collapse of the Soviet Union and East European countries that certain ideas were essentially not part of the main body of Marxism and Leninism, but were certain subjective experiences of the Soviet state.

 

What is the change in approach you are talking about?

 

With this background, Communists are trying to build and consolidate the movement. When global economic reforms started taking place and global politics started changing, we saw a major manifestation of what has come to be known as political neo-conservatism. This had its impact on political processes within and across countries. All the changes have to be factored into the work of the Communist parties all over.

 

It is often said there has been 'embourgeoisification' of Communists in India. Do you believe character changes have occurred in Communist parties?

 

That is not the point. Those who talk of embourgeoisification, are misplaced in their notion. The issue here is to change society, to change the economic structure so that it can benefit the majority of the population.

 

The market and market forces are a reality in which you have to work. You cannot change the situation overnight. You have to make tactical adjustments so that without compromising on basics, you are able to discharge a meaningful role whereby you can be seen or identified by the working class or the middle classes or intelligentsia that what you are trying to do is for the larger good.

 

This is in contrast with the most rightwing neo-conservative kind of approach, which believes progress or advancement is synonymous with improved conditions of a handful of people.

 

Image: Uday Kuckian