On 6 September 2005, SAPRA India Foundation held its occasional Political Briefing session for a select group of diplomats, analysts, business executives and politicians. The three-hour briefing was held at the India International Centre, New Delhi. Among those who spoke at the briefing included Dr Nitish Sengupta, Member, Indian National Congress; Anand Sharma, Member of Parliament, Indian National Congress, and party spokesperson; Abani Roy, MP, Revolutionary Socialist Party (RSP) and Dipankar Mukhopadhyay, MP, Communist Party of India (CPI); Shankar Raghuraman, Senior Editor, Times of India; Paranjoy Guha Thakurta, Dean, School of Convergence; and Indranil Banerjie, Executive Director, SAPRA India Foundation.

The agenda of the briefing was to discuss the relationship of Left parties with the Congress-led United Progressive Alliance (UPA) government and to understand their differences and positions on various political and economic issues. Other participants in the seminar included diplomats from several embassies, mediapersons, corporate representatives and political commentators. A question-answer session was held after the presentation. Issues discussed during the seminar included: UPA’s Common Minimum Programme, economic reforms, privatisation, globalisation, foreign direct investment, status of relations between the UPA and the Left parties, stability of the coalition government and areas of convergence and differences between the Left parties and the Congress-led government.

The research team of the Foundation prepared a detailed background paper on the subject which covered several topics including: an overview of the Left-UPA relations, backgrounder on the Left parties, electoral performance of the Left parties at the national and state levels since independence, key personalities in the Left parties, mass organisations of the Left parties, party manifestos for the 2004 election, the Common Minimum Programme (CMP) and a state level analysis titled 'West Bengal Ruling Troika.'

Excerpts from the Political Briefing:
Opening the discussion, Indranil Banerjie briefed the participants about the Foundation and its research-related activities. He outlined the objectives for organising a briefing for diplomats and said that, it was important for the diplomatic community to get first-hand information and analysis of key political issues in order to form a comprehensive understanding of India’s political universe.

Drawing on his wide experience as a former top-level bureaucrat, Dr Nitish Sengupta of the Congress Party spoke of the controversies surrounding the issue of divestment, a major sticking point between the UPA government and the Left Parties—that provide support from the ‘outside’, without claiming ministries, but their numbers are crucial for UPA to maintain majority in Parliament. “The CMP says that there will be no privatisation of Navratna companies (nine major profit-making public sector companies that enjoy quasi-autonomy of management),” said Dr Sengupta. “But they can go to the market wherever it is necessary. This has become a major issue now because when the government decided to sell 10 per cent shares of BHEL (Bharat Heavy Electricals Limited), reducing government shareholding from 67 to 57 per cent, the Left raised an objection that this was a violation of CMP. That is not correct. Privatisation happens only when the government’s share goes below 50 per cent. However, nobody in the UPA had the courage to explain this position, (and that divestment would) make better use of the resources of the government. Given the stock market situation, the sale of even 10 per cent of BHEL shares would have given the Government several thousand crores of rupees (One crore equals ten million). I have a feeling that if the government had stuck to its position, the sale of 10 per cent through a compromise could have been possible. This was one case where because of the Left's opposition, the Government agreed to retain the shares.”

On the issue of increases in the price of petroleum and related products, Dr Sengupta urged a realistic position while criticising the position of the Left. “Earlier, the Government would control prices and the common man identified the government with oil prices. However, the prices have gone up in the past few months. Where will the government get the money to continue subsidising oil and oil products? The Left has given some alternatives, such as to reduce (in built) taxes and excise duties. However, this is not possible, as the Finance Ministry will not approve this measure—that can only be done at the risk of upsetting the government's budgetary position.” Dr Sengupta then underscored the point. “Can the Left persuade their state governments (Left parties rule in West Bengal and Tripura states and frequently come to power in Kerala) to reduce taxes on petroleum? I don't think they can do that. This is basically a question of playing with words. They will stick to it. (But) my hunch is that they will not go to the point where they have to vote against the government.” Dr Sengupta was of the view that, while the Left parties would undertake public protests over the decisions taken by the UPA government, they will however not try to destablise the government.

For his part, Congress leader and spokesperson Anand Sharma assured Left leaders that the Congress party would stick to the promises made in the Common Minimum Programme (CMP), and specifically addressed MPs from the Left parties present at the SAPRA Political Briefing. On the issue of differences within the coalition government as well as with the Left parties that are supporting UPA from outside, Mr Sharma said, “We have a coalition government in India and the Left Front supports it from outside. There are certain fundamentals on which this coalition has been formed.” Mr Sharma added: “Since 1990, Congress’ support base has shrunk. But even today, the Congress remains the largest national party. (Moreover) we did realise that the policies and priorities of the previous NDA (the Bharatiya Janata Party-led National Democratic Alliance) regime were not in harmony with what the Indian thinking and policies had been in the past, during Congress rule. It was therefore important to dislodge the NDA from power so that we could be in a position to pursue what we think is the correct approach for the country. Equally important was to restore the social and communal peace and harmony which was disturbed during the previous NDA government's tenure.”

On the issue of specific differences with the Left parties, Mr Sharma said, “There would be areas of difference between us and them. We are happy to hear that the Left does talk of the people of the country and their rights. Every political party that contests elections speaks for the people and the disadvantaged sections. The Congress has always been identified with the disadvantaged sections, if you look at the history of India since independence and the policies that have been pursued. However, there are constraints and compulsions of a coalition.”

On the issue of economic growth and reforms, Mr Sharma said, “The Left has concerns about economic reforms, its direction and purpose. The Left has concerns over FDI, oil prices, etc. It is important to have a balanced view towards India’s strengths and weaknesses. Our strength (lies in) human resources—skilled and trained professionals, doctors, scientists, etc.  In this area India scores over most other countries. Over two-thirds of the population is under the age of forty. A greater proportion is between the age of 15 and 35. We are sustaining an economic growth of over 6 per cent a year and we aim to take it to 10 per cent a year in the next fifteen years. It will also help in sustaining pro-people programmes and also ensure that, rural areas at brought at par (with urban areas).”

Responding to a question about the possibility of an increase in oil prices, Mr Sharma admitted that it remained a critical area. “After Hurricane Katrina, we do not know what damage has been done. But this will have a global impact given America’s own energy needs and huge consumption.” He added: “No popular government would like to lose public support by taking policy decisions that do not have popular approval. What needs to be understood by everybody is that globally the prices have gone up by 220 per cent in the past few years. In India, only 60 per cent of the hike has been passed on to consumers. The remaining 160 per cent is still being subsidised by the government and the oil companies. Kerosene, which is needed by the most poor people continues to be (heavily) subsidised.”

Mr Sharma told participants at SAPRA’s Political Briefing of the government’s objectives in promoting Indo-US relations and said that the UPA government would not compromise India’s sovereignty and national interests. He refuted the perception that India had made significant concessions during the recent US visit of Prime Minister Manmohan Singh, especially with regard to use of nuclear energy and related issues of monitoring—a point raised repeatedly by many leaders of the Left parties.

Abani Roy of the Revolutionary Socialist Party was critical in his observations about the working of the UPA government. “The present government is not by the people, not for the people and not of the people also,” he said. “That is the main problem with the government of India and the ruling party whether it is the Congress or the BJP, or the Congress coalition or the BJP coalition. They are just trying to pass five years (the term of Parliament) and trying to get another tenure in government.” On the Left parties' relations with the UPA government, he was equally adamant. “The Left is compelling the UPA government to follow promises made in the CMP. We are first pressuring them to implement promises related to poorer sections of the country. Whenever government action, such as oil price hike, affects the poor, we are trying to convince the government not to enhance the prices of petroleum and petroleum products. We are asking the government to reduce taxes and not increase prices. The government is also facing problems due to rise in global price of oil, (but) our request is not to increase the prices so as to provide relief to poor people.”

Responding to a question on the Left's policies with regard to the issues of unemployment and divestment, Mr Roy said, “The Parliament has accepted that the government will give few days of employment to poor people (the Rural Employment Guanrantee Scheme). All parties supported this move. Even the BJP supported it despite being in the Opposition. The question is of implementation; we do not know how this government is going to implement it. We have been told that the government would need Rs 10,000 crore (Rs 100 billion) to implement this. How they will mobilise (funds) is their responsibility.” Mr Roy then offered a Catch-22 solution, symptomatic of coalition politics. “We are telling the government to mobilise resources, do not sell your property. Don't try to sell or disinvest anything that is in your hands. We are asking the government not to disinvest the Navratnas and also the profit making sectors.”

During the question-answer session with diplomats present at the SAPRA Political Briefing, Dipankar Mukhopadhyay of Communist Party of India noted that the removal of the previous BJP-led NDA government was a positive development. “After the UPA government came to power, as far as the people are concerned, as far as the public debate is concerned, at least we have shifted from (disputes over) temples or mosques, and (debates over) soft Hindutva or hard Hindutva,” said Mr Mukhopadhyay. “We have now come to specific issues. Yes, there are differences of perceptions between the Left parties and the Congress party with regard to policies. What has really helped the people of this country is that these issues are coming into the public domain.”

Responding to a question raised by one of the diplomats on the Left’s policy for employment generation, Mr Mukhopadhyay said, “When the Employment Guarantee Scheme was being discussed, our perceptions, Congress party's perceptions, and other perceptions (were offered). They should come into the public domain. The issues that are bothering the country for the last 15 years, such as globalisation, the unorganised sector (of the economy), agricultural crisis, unemployment, pricing, etc., are coming before the country now.” He said that, the Left parties would continue to struggle for the protection of labour rights and advocate against divestment of profit-making Public Sector Undertakings. Speaking on the current oil crisis, he said that while India has refining capacity for all the oil it either imports or drills for locally, the country’s production capacity is only around 27-30 per cent of requirements. Because of this, the country has to import a huge amount of crude and thereby suffer price shocks. He urged that the Government should emphasise more on domestic production of crude to meet surging demand.

On the issue of divestment, Mr Mukhopadhyay said, “With regard to divestment, the Left has been saying right from the beginning that, we are not interested in acquisitions and mergers. We want investments. We want public investments in agriculture and industry, private investments in industry. We have been talking about creation of jobs and not reduction in jobs.” He questioned the government’s policy of creating new industrial units rather than reviving existing non-performing units. According to him, the cost of setting up a new fertiliser plant could be avoided if the government spends the same money on reviving sick units.

Paranjoy Guha Thakurta and Shankar Raghuraman, who have co-authored a recent book on coalition politics in India, moderated the briefing. The two analysts provided a comprehensive overview of the relationship of the Left parties with the Congress-led UPA government. While Mr Raghuraman analysed the electoral performance of the Left parties at the national and state levels, Mr Thakurta analysed key economic policy decisions taken by the UPA government. (Read their analysis in a related article on elsewhere in this SAPRA Bulletin.)

On the issue of differences between the Left and the Congress, Mr Raghuraman said, “There is a very real element to the fight. What makes it seem a mock fight is that both sides have a drawn a line which they will not cross. Both realise that, ultimately the fight has to be kept within the boundary of the stability of government. Neither side would like the government to come down. Both need each other in that sense and therefore, all fights will be ultimately resolved by some kind of a consensus. In some cases, it would be more acceptable to one side than the other. For instance, on the issue of FDI in telecom, the resolution was more in favour of what the Congress wanted than what the Left wanted. But on the issue of interest rates related to the Employee Provident Fund, the Left got more than the Congress. I do not think that it is a mock fight in the sense that the outcome is predetermined. What is determined in advance is that no one side can win all of these fights. There will be a balance of winning and losing.”

He said that a lot of the differences arise from different interpretations of the CMP. Also, in the drafting of the CMP, there have been several instances of leaving the wording somewhat vague wherever clear consensus could not be reached. Divestment, for instance, is being read differently by the Congress and the Left. The paragraph that deals with divestment states, “strengthening the Navratnas and allowing them access to market to raise resources”. The way the Left reads it implies that there is no question of a sale of government equity in any of the Navratnas. For the Left, accessing resources from the market means that the Navratnas can raise resources from the market but the government cannot do the same by selling its equity. The way the Congress reads it is that by selling a part of the equity without fully privatising, the Navratnas are, unambiguously, using market resources. This tussle, therefore, was built into the CMP due to the ambiguity of the wordings, Mr Raghuraman stressed. “This ambiguity is not accidental. Two sets of people with diametrically opposite positions can get to only a limited consensus. Some areas will remain contentious. Some areas were left undefined to be worked at a later date.”

Speaking on the issue of economic reforms, Mr Guha Thakurta said, “Very often in India, there appears to be a consensus on certain issues. But this consensus is illusory. There are areas such as economic policy issues where the consensus keeps breaking down: on liberalisation, privatisation and globalisation, or price of LPG (Liquefied Petroleum Gas, a major cooking medium in urban India).

Elaborating on this point, Mr Guha Thakurta said, there exists considerable consensus on issues such as on the so-called BSP or Bijli (power), Sadak (road) and Paani (water). On how to liberalise, privatise and globalise, there are differences within the Congress, Sangh Parivar (as the right wing conglomeration is popularly known), and the Left parties as well. “BHEL manufactures power related equipment. It is considered to be one of the best companies of its kind in India as well as in the world. It has successfully competed against giant multinational corporations such as ABB and Siemens. The division within the political spectrum is on a number of issues. What was proposed was divestment and not privatisation. Even if the government sold 10 per cent of its equity, it would not result in the government losing its managerial control, as it would still control 51 per cent of the equity. But it became a big issue due to the ambiguity in the wording of the CMP, which was deliberate. Even in the Congress manifesto, it was mentioned that divestment would take place if it helps consumers and enhances competition. The argument was: who is the consumer? Finance Minister P. Chidambaram and his supporters argued that, those who purchased shares of that company would benefit. But the contrary viewpoint was that, how many people in India invested in the stock market. Barely three per cent of the population invested in shares.

On the issue of oil prices, Mr Guha Thakurta said, “There is an element of shadow boxing. The Left understands it also. If India is importing more than three-quarters of its crude oil requirements, and global prices rise, the domestic economy cannot be insulated beyond a certain point. However, I don’t think that the Left goes along with the government’s view that if oil prices do not increase, then the Navratnas such as IBP Ltd and Indian Oil Corporation would become sick. Their point is that, if a litre of petrol costs Rs 40, about half the amount derives from various taxes and customs duties. Some people can argue that the reason why inflation in India has remained under 3 per cent a year for the last few months is because the oil prices have not gone up. As soon as oil prices go up, the rate of inflation could also rise. The fact is that, India’s demand for oil is increasing whereas domestic production of crude is stagnating. It might fall this year due to the accident at a major rig of ONGC (India’s largest oil exploration company). The Left says that, it will protest if the government increases oil prices. The Left is arguing that the government should raise resources differently. They are saying that the government should do something about the non-performing assets such as loans to banks that have not been repaid. These run into hundreds of billions of rupees, and half of these loans have been taken by well established industrialists—some of them are Members of Parliament and members of the Prime Minister’s advisory board.”

[The full report is available for a payment of Rs 1,500.]