Friday, January 31, 2014

BJP’s High Rhetoric Economic Blueprint - Greater Misery for People

IF at all there was any reconfirmation that was ever needed on the score that there is virtually no difference – virtuality lies in the semantic verbiage – on  matters of economic policy between the Congress and the BJP, it has come in the RSS/BJP’s prime ministerial prospect’s address at the recently held BJP’s national council meeting. 

This speech unveiled a so-called vision in terms of an economic blueprint for India if the BJP is elected to form the government following the 2014 general elections.  This, we have been told, will build “BrandIndia through 5 Ts – talent, tradition, trade, tourism and technology”. This is supposed to exploit India’s current “demographic and democratic dividend” setting in motion an investment cycle to revive India’s stalled growth.  Such a blueprint, we are told, will, at the same time, uphold a new representation of a rainbow of “Indian traditions – family values, agriculture and rural India, empowerment of women, environment, youth, democracy and knowledge”.  This comes along with a declaration of concern and zero tolerance towards “western influences” such as drugs and narcotics amongst others.

This is supposed to be achieved through the building of 100 smart cities and bullet trains in all four corners of the country, creating more IITs, IIMs and  AIIMSs, as well as the development of infrastructure, reviving power plants, setting up of agro infrastructure, deploying optical fibre networks, pushing river interlinking and establishing special courts to punish black marketing. These are to be accompanied by a mix of social welfare schemes.  Does this sound any different from the UPA’s objectives of Bharat Nirman along with inclusive growth?

The moot point is that, however laudable and high sounding such objectives may sound, how are they going to be achieved? How and from where/whom are the resources going to be mobilised?   What are the mechanisms and vehicles that are available or will be created to achieve this? The key elements of the Bharatiya Janata Party’s prime ministerial aspirant’s programme, as outlined in his speech, are urbanisation, infrastructure, education and health care apart from cracking down on scourges like inflation, black money and a relentless crusade against corruption.  How is all this to be done?

There is a complete absence of any suggestion on the implementation of such a vision.  This is fascist demagoguery whose hallmark is high rhetoric and zero content. Georgi Dimitrov, in his incisive analysis of the rise of fascism in Europe in the first half of the 20th century following the global capitalist crisis of the Great Depression, says that “fascism puts the people at the  mercy of the most corrupt and venal elements but comes before them with the demand of an honest and incorruptible government.  Speculating on the profound disillusionment of the masses….fascism adapts its demagogy to the peculiarities of each country,  and the mass of petty bourgeois and even a section of the workers reduced to despair by want, unemployment and insecurity of their existence fall victim to the social and chauvinist demagogy of fascism”.

As discussed in these columns earlier, it was international capital that hailed Hitler and actively supported his rise and, hence, of fascism as a way out of the crisis of the Great Depression and largely profited from this phenomenon notwithstanding the gross violation of human rights and persecution ever seen in modern history. Likewise, in India today, India Inc. is hailing such BJP rhetoric.  Chairman of one of the corporates says: “Finally some economic sense has prevailed ….rather than distributing wealth, the government should be a facilitator for investments to create jobs and help economic growth”. Another says: “Developing 100 cities is a big idea.  Look at China, so many new cities have led to economic prosperity”.  Completely ignoring the fact that it is economic prosperity that has led to the development of cities and not the other way around.

Yet, another corporate chief says: “Brand India (the 5 Ts) is the big idea which can trigger a psychological turn around. It helps people dream big, boost consumer spending, build factories and make substantial investments”.  India’s pink – economic – dailies are equally euphoric. The Economic Times says that this “economic vision has much going for it. Modi’s emphasis on big investment – 100 cities, big infrastructure, fast trains – has a boldness that has been lacking from the political class.  India grew fast because of private investment.” And, “His economic heart seems to be in the right place”.   One commentator says that Modi’s pitch portrays “himself as a messiah of big business and believer of neo-liberal prescriptions on development and growth”.  He concludes by saying: “However with the extant government unwilling to stipulate anything normal, the AAP unraveling in its own confusions, Modi’s prescriptions, though a tad overconfident, did much to instill confidence and hope”.

India Inc.’s overall applause of such a vision is based on its longstanding understanding that instead of expending public money on providing some relief to the people through provisions of rural employment, farm loan waiver, food security, right to education etc., however inadequate they may be, such expenditures from governmental revenue should have been instead put at the disposal of private capital, both domestic and foreign, for their profit maximisation.  They seek to conceal their naked desire for profit maximisation by advancing the logic that making available such resources to private corporates at cheap costs would lead to greater investments generating both growth and employment and, thus, putting India back on a high growth trajectory. As one of their spokesman says, this BJP blueprint promises “to tackle all issues economists and industrialists have been pressing this government (UPA-II) to address – industrial growth led GDP revival, the need to harness a vocationally skilled workforce, rapid urbanisation to create jobs and lift people out of poverty, technologically aided agricultural reform as well as a crack down on key elements of India’s food chain that are exacerbating inflation”.

Such precisely has been the logic of the reform process that continues to be implemented by the Dr Manmohan Singh-led UPA governments. The BJP’s vision of “high growth with a mix of social welfare schemes” is nothing else but a rephrasing of the UPA’ s agenda of “liberalisation with inclusive growth”.  The UPA’s efforts have only led to the consolidation of the creation of two Indias started by the Vajpayee-led NDA government earlier.  The BJP, notwithstanding its illusions of forming the government in 2014, is seeking to further cement the growing divide between the two Indias – the rich and the poor. 

This logic of making available capital to private corporates at cheap rates for investments would automatically lead to high levels of employment and economic growth is seriously flawed. Any investment produces something.  Unless that product is sold in the market, neither can growth take place nor can profits be generated. For a product to be sold in the market, there needs to exist people with adequate purchasing power. In the absence of this, investment itself will not take place as its product remains unpurchased.  The funds made available will find the way into unproductive accumulation of capital as can be seen in the current phenomenal rise in the prices of real estate, gold, and of foreign exchange. The rich are investing in speculative profits and not in production. 

Thus, the BJP’s vision, aping the Congress’s trajectory of economic reforms while paying lip service to people’s welfare, will likewise only widen the divide between the rich and the poor by heaping greater miseries on the vast mass of the Indian people.

The Indian people, looking for much-needed relief from the mounting economic burdens, need an alternative economic vision, alternative to both the Congress and the BJP. They require a vision where the resources available in the country are stopped from being looted through mega corruption scams, or, being doled out to the rich as massive tax concessions and, instead, are mobilised for massive public investments by the government to build our much-needed infrastructure.  This would generate substantial additional employment, significantly enhance the purchasing power in the hands of our people, laying the basis for a sustainable and more equitable economic growth trajectory. 

For building a better India and for vastly improving the quality of life of the mass of Indian people, such is the alternative policy trajectory that is required to be put in place in 2014.  A secular political alternativesans the Congress and the BJP that will implement such an alternative policy trajectory is what our country needs.

(Editorial, Peoples’ Democracy, 26.1.2014)

Monday, January 27, 2014

Spectrum Trading-Severe loss to BSNL

As per the reports in “The Economic Times”, the guidelines for spectrum trading are being finalized by TRAI as per the direction of the E GoM. The guidelines, as per the report in the news papers are:

Spectrum trading does not require the approval of the Government. Prior information 6 weeks before the agreement is sufficient.
The spectrum obtained as per the administrative price decided by the Government prior to 2010 cannot be traded since it has not been acquired by the price determined in the market through auction. However, it can be traded on payment of the market determined price.
The buyer has to comply with the prescribed limit and cannot exceed 25% of the total spectrum in the Circle or 50% of the total spectrum in a particular band in the circle.
A transfer fee of 1 per cent of the transactional amount or 1 percent of the prescribed market price, whichever is higher, shall be imposed on all transactions.

These guidelines will create an insurmountable difficulty for BSNL. It was allotted 2G spectrum by Government without any payment considering its social responsibilities. The allotment was done before 2010. The private operators like Airtel, Vodaphone, and Idea etc have received 2 G spectrum as per the administrative price determined by the Government, prior to 2010. The Supreme Court has cancelled the 2G allotments done in 2010, and a part ofthe resultant spectrum was auctioned in 2012 as per the direction of other Supreme Court. BSNL is having 10 MHz 2G spectrum allotted before 2010 in almost all circles whereas the private operators are rarely having the 2G spectrum in 10 MHz quantity. Therefore it has more surplus spectrum that can be traded. But it is being prevented from doing so since the proposed guidelines are preventing the auction of spectrum allotted before 2010. Moreover, the license for mobile services was given to BSNL in 2000 only and it will last for 20 years until 2020. Therefore until 2020, BSNL can continue with its present quantum of 2G spectrum. In case BSNL wants to trade its’ surplus 2G spectrum, it has to pay the market decided rate for the 2 G spectrum in the auction held in the year 2012, which will be a huge amount (for 5 MHz for all the 22 circles, it will be Rs 14000 crores and even if the two circles Delhi and Mumbai where it is not present, are excluded, the amount will still be high. It is not possible for the BSNL facing an accumulated loss of around Rs 25,000 crores for the last 4 years. In the same way MTNL is also prevented from spectrum trading.

On the other hand, some private operators have obtained 2G spectrum in the auction held in the year 2012 and 2013. The license of Airtel, Vodafone etc are going to expire in many circles in the years 2014, 2015, 2016 on completion of 20 years. Therefore they have to participate in the auction to be held in February this year, and the Government has reduced the base price in the auction for their convenience from Rs 14000 crores to Rs 8824 crores for 5 MHz. Thus the private operators can get spectrum at a price determined in the auction based on the reserve price of Rs 8824 only for 5 MHz spectrum whereas BSNL has to pay the market rate based on Rs  14000 crores for 5 MHz, in case it wants to trade its’ spectrum.

Thus the spectrum trading guidelines said to be under preparation by TRAI are putting BSNL at a serious disadvantage.

Spectrum trading should not be allowed at all since Government is the owner of spectrum and if any Company is having extra spectrum, it can be returned back to the Government so that the Government can auction it again. If at all spectrum trading is to be allowed,BSNL should be allowed to trade its spectrum without any payment to the Government for the spectrum held by it, since BSNL is facing losses due to its’ shouldering several social responsibilities.