Volume 1, No. 6, August 2000

Never before has the capitulation to imperialism been so blatant, crude and all-encompassing as in the past ten months of BJP-led rule. This is reflected, both in the sphere of economics, as well as politics (see page 9). In these ten months, not a single day has passed, when the central government, or those in the states, have not gifted some aspect of our national wealth to the imperialists.

After taking power in Oct. ’99, the BJP-led government has been in desperate haste to sell off the wealth of our country and open the doors even wider to foreign capital. While the RSS, Shiv Sena and other fascist gangs of the saffron fringe, bark themselves hoarse against any opposition to feudal brahminical values (so- called cultural nationalism) they are silent on the outright sale of our country to foreign financial interests. The loud trumpeting on Pakistan, ISI, terrorism, conversions, ‘fire’, ‘water’, etc., not only creates the right hindu fascist environment for the rulers, it also acts as a convenient smokescreen to hide the blatant anti-national, traitorous policies being silently pursued by the central government. Cultural nationalism promotes feudalism; economic reforms, imperialism.

Going under the slogan of "second generation reforms", the BJP-led government has taken a quantum leap forward in the process of liberalisation, privatisation and ‘globalisation’ of the Indian economy. Quite naturally it has won immense praise from the so-called ‘international community’, with the US even waiving some of its earlier imposed economic sanctions. The process of rapid sellout began from day one of its present rule; and has continued through the budget and post-budget period. The Clinton visit has further catalysed the speed of capitulation to US imperialist interests.

It has been a three pronged attack on the country’s national interests. First, a host of bills, acts, legislations, policies, etc., dictated by the WTO/World Bank /TNCs, have been rushed through by the cabinet, which give an even freer hand to foreign capital to dominate and loot our country. Second, there has been scandalous sales of Indian public property (PSUs, etc) to TNCs and FIIs at throwaway prices; no doubt, for a hefty commission. And third, they have encouraged and promoted foreign capital (FDI, FIIs, GDRs, etc.) to take over industry, finance and our natural resources, on a huge scale. In addition, in the name of a joint fight against ‘terrorism’, the US has been invited not only to partake in Indian security-related matters, but the American intelligence agency, the FBI (Federal Bureau of Investigation) has, for the first time, ever been allowed to open an office at Delhi …….. thereby further infringing on whatever nominal sovereignty remains in this country.

While shamelessly prostrating before the imperialist vultures, the BJP-led government has launched systematic attacks on the Indian masses. Even prior to the budget, the huge hikes in diesel rates, electricity and water changes, etc; the massive retrenchments and wage-cuts of workers and employees; the reduction in subsidies and welfare measures; the reduction in small-savings interest rates by as much as 1%; and the increasing neglect of the entire rural sector ……….. has been combined with brutal attacks on peoples’ struggles, when they seek to resist this economic onslaught. As we have seen in the March issue, the budget has launched even greater attacks on the living standards of the people. The attacks continue in the post-budget scenario.

In this article, we shall examine the concrete economic steps taken by the BJP-led government in the country as a whole. While state governments too have been competing at a vociferous pace to sell off their assets to the imperialists (witness the corporatisation, privatisation and sell-off of the State Electricity Boards), in this article we shall chiefly concentrate on the central government’s steps.

(1) Imperialist Dictated Legislations

Never before has such urgency been shown to conform to imperialist dictates. Barely two months after coming to power, in the 1999 winter session of parliament, the cabinet introduced as many as 45 new bills. Of these, eight were directed to meeting WTO (World Trade Organisation) stipulations, while the rest also sought to take the Indian economy deeper into the quagmire of ‘globalisation’.

These bills were introduced by the ruling BJP-led alliance, openly supported by the Congress(I), and faced mock opposition from the ‘left’ and some others. The reality is that over the past eight years all the major parliamentary outfits have been instrumental in introducing these policies while they were in power at the centre…….and any opposition today, is mere subterfuge to mislead their supporters. Besides, the opposition is confined to mere parliamentary semantics, scrupulously avoiding building any movement against these policies, even in those states where they wield power.

Let us take a look at some of the key legislations:

(a) WTO-related Bills

Most of the following bills, were introduced in the winter session of parliament in order to amend Indian laws to conform to the WTO’s TRIPS (Trade Related Aspects of Intellectual Property Rights) Agreement:

* The Patent (Amendment) Bill, 1999, to change India’s existing patent laws in order to serve the interests of the TNC’s better.

* The Geographical Indication Bill, 1999, to deal with industrial property laws.

* The Trade Marks Bill, 1999, and the Designs Bill, 1999, to protect the growing penetration of foreign brand names.

* The Copyright (Amendment) Bill, 1999, to make the copyright act conform to the TRIPS agreement.

* The Plant Varieties and Farmer’s Rights Protection Bill, 1999, to encourage new varieties of plants and protecting the rights of researchers like Monsanto that are entering our country in a big way.

* The Semi-Conductor Integrated Circuits Layout Design Bill, 1999, to protect layout designs of semiconductor integrated circuits (IC’s) through copyrights and patents, to safeguard the interest of the powerful Information Technology TNC’s.

(b) IRDA Bill

International finance has been pressurising the Indian rulers since the last five years, to allow foreign capital into the insurance sector. In anticipation, over the last four years, 15 major international insurance companies have signed MoUs(memorandum of understanding) for prospective joint ventures with Indian collaborators. Some have even bought a stake in the equity of the Indian partner — like Standard Life’s 5% stake in HDFC, and ING’s 10% stake in Vysya Bank. While earlier governments had moved cautiously, due to the sensitive nature of such outright betrayal, the present government has rushed headlong into the opening up of insurance to foreign capital.

Amidst vehement opposition from the employees of the LIC and GIC, the Insurance Regulation Development Authority Bill was passed by both houses of parliament, at the very start of the winter season. On this the BJP-led alliance and the Congress(I) were united.

The IRDA is supposed to regulate the private insurance companies that enter the field. But it has been framed in such a way that it is likely to be ineffectual, as it lacks teeth; it will not be able to enforce what it decrees, and the erring companies will be able to do what they want. Given that the foreign insurance companies have a notorious track record, the Indian middle-class investor is likely to be fleeced and duped by these international sharks, with little recourse to any action through the IRDA.

A report by the UNCTAD secretary brings out what exactly is the state of affairs of these companies. It said, "the scandalous mismanagement and rascality of pirates operating insurance companies and the ill-effects of frauds and incompetence has led to bankruptcies among 50 large-sized companies in the course of the last five years". It adds that even Lloyds of London, supposed to be the last word in stability and solvency, suffered a loss of over $38 billion in 1991. Yet, the Indian rulers have gone all-out to bring in these robbers into our country.

Besides, though the IRDA has stipulated a foreign equity cap of 26%, there are sufficient loopholes in the Act which would enable the foreign investor to overshoot the 26% allowed. With this, foreign capital is now set to rob even people’s savings accumulated in the country.

(c) FEMA

FEMA (Foreign Exchange Management Act) is a boon to the hawala dealers, who siphon off about Rs. 10,000 crores of black money abroad every year. FERA(Foreign Exchange Regulation Act) has now been replaced by FEMA together with the Prevention of Money Laundering Act (PMLA). Under FERA, hawala transfers were prosecutable offences, carrying a sentence of upto seven years. Under FEMA it is now a civil offence, liable to a penalty . FEMA also does not have any provision for recovery of dues. Though the regulatory powers of FERA have been shifted to the PMLA, that too deals more with the forfeiture of property rather than criminal action. Besides, while FEMA was passed by both houses, the PMLA was referred to a select Committee of the Rajya Sabha.

So for the present, no regulatory powers exists whatsoever, sending not only the hawala dealers into ecstasy, but even the politicians, big businessmen and top bureaucrats who stash crores of their black money abroad. Not surprisingly, the Lok Sabha passed FEMA, with little discussion, at the end of the day, with barely 30 MPs present in the house !!

(d) Other Bills

Both houses of parliament passed a bill to liberalise mining, which removes restrictions on foreign companies participation in prospecting and mining. In the first week of April the Union Cabinet decided on the deregulation of the coal and lignite sectors. Thereby the country’s enormous mineral wealth is opened out for loot by the imperialist powers.

It also passed a bill to allow derivatives trading (i.e., in stocks, options, futures, etc) in the Indian stock market. This huge market for financial speculation has now been opened out according to the dictates of the FIIs (Foreign Institutional Investors). . In order to do so, both the Securities Contract (Regulation) Act, and the Securities Appellate Tribunal Bill have been amended. With FIIs already owning 5% of India’s total market capitalisation, this liberalisation will further facilitate their vice - like grip over the stock market.

Then, a series of legislations have been passed that totally hands over the Information Technology sector to the imperialists. The US has been aggressively demanding, at the WTO, that e-commerce be made tax-free. But even before the WTO has taken a decision, in mid-June the Indian Government decided not to tax e-commerce transactions. In fact, the central minister, Jaitly, boasted that in the past one year the government has drafted six new legislations, including the new telecom policy, the ISP Act and the TRAI Amendment Ordinance. The new telecom policy itself has gifted away as much as Rs. 2,300 crores, to the telecom companies, primarily dominated by the TNCs. Now the government plans one Bill for all ICE (Information, Communications, Entertainment) industries, with the intention of setting up an independent Communications Commission of India (CCI) along the lines of the US’s Federal Communications Commission. The CCI is envisaged as a corporate body with totally independent (of the govt.) powers, and in the hands of the TNCs.

(2) Disinvestment or Foreign Loot of Public Assets

Though disinvestments of the PSUs (Public Sector Units) has been on the agenda of both the Congress and the UF governments, it is only the present BJP-led government that is rushing through sale of its holdings at a reckless pace. Desperate to lower its fiscal deficit (to World Bank dictated levels) it is selling the country’s assets at throw-away prices to meet current expenditures. It is like a house-wife disposing of household furniture at cheap rates, in order to meet daily requirements.

In order to do this the government set up a Cabinet Committee on Disinvestment (CCD). Arun Jaitley announced that the government would firmly push through the privatisation of 56 PSUs in blocks of 15 or 20.

Besides the GAIL (Gas Authority of India Ltd) and Modern Food disinvestments that have already taken place, the government plans disinvestments in : Indian Petrochemical Corps, through a strategic sale of 25% of its equity; MTNL (Mahanagar Telephone Nigam Ltd) through a GDR offering ; IOC (Indian Oil Corporation) through a sale of 10% of its equity; Bharat Aluminium Co., through a strategic sale; ITDC (Indian Tourist Development Corporation); and Indian Airlines through the disposal of 51% of its stake, 26% of which will go to a strategic partner.

Besides these, a number of other sectors are also up for sale (called privatisation):

* Mumbai Port Trust has floated international tenders for four terminals of the Indira Docks (employing 32,000 people). Bids have come from Germany, UK, Ukraine and Dubai.

* In mid January 2000 the cabinet decided to privatise five of the major airports by giving them on long term lease. These five account for 68% of total air traffic and 70% of the Airport Authority of India’s (AAI’s) total revenue. The leasing of the airports will result in a yearly loss of Rs 130 crores to the AAI.

* The government is preparing the ground for even the privatisation of water supply and sanitation services in a big way, under the guidance of one Anil Bhandari, operations adviser, the World Bank. The French TNC, Vivendi, plans to enter this sector and has already taken up a waste water management project in Chennai and a water treatment plant in Bangalore.

* In Feb 2000 the PM announced the government’s decision to even privatise health care.

In the majority of these privatisations the main purchasers will be the TNCs. If the two disinvestments that have already taken place is an example for the future, it is clear that the country’s most lucrative and profit-making PSUs are to be sold to TNCs at unbelievably low rates.

GAIL saw 16% of its equity sold through the GDR route, mostly to foreign buyers. The government sold 155 million of its GAIL shares at a distress price of Rs.70 per share, when the price in August 1997 was Rs 180 per share …….. a loss of about Rs 1,500 crores. Worse still, the pricing of the GDR at Rs 70 per share meant a discount of about 11% on the closing price of the GAIL share on the BSE (Bombay Stock Exchange) on the day of issue ......... meaning a further loss of Rs 140 crores . Besides, of the 16% disinvested, Enron acquired 5 %, British Gas 1.3 % and FII’s a substantial number of the balance. The disinvestment was conducted by the merchant bankers, Morgan Stanley and Jardine Fleming, for a fat commission. In other words, all the major beneficiaries of this disinvestment were the TNCs.

Infact, Enron and British Gas have big plans to enter India’s gas sector . British Gas already has a controlling stake in Gujarat Gas Co., the biggest private gas distribution company in India. Both seek to utilise GAIL’s vast pipeline network, without entailing the necessary capital expenditure. The government is facilitating this, by giving them big chunks of GAIL shares ......... that too at low cost.

If the GAIL disinvestment was a scandal, the sale of Modern Foods was outright criminal. On Jan. 25, 2000 the CCD awarded 74% of the government’s equity to Hindustan Lever Ltd. (HLL), thereby kick-starting the first major strategic sale of government equity in a PSU to a private party…….. entailing the transfer of management into the hands of HLL. No tender was issued, no bids were asked for, and the agreement was struck in utmost secrecy.

The government sold its stake for a mere Rs. 104 crores, when the total assets of Morden Foods …….. which has 14 wholly owned bakery units, 19 franchise units and six auxiliary units across the country …….. is worth Rs 2,100 crores. The value of the land on which its factories stand, is alone worth Rs 550 crores. Except for 1998-99, it has been making good profits, has a turnover off Rs 172 crores and controls 32% of India’s bread market. All this has been gifted to a TNC for next to nothing. What is even worse, it has given HLL the right to sack any number of employees after one year. HLL has already announced that it can only absorb 700 out the current 2,000 workforce.

In March, the government decided to sell its entire 60% stake in Lubrizol India to IOC, which in turn will sell 10% to the parent company. In April the government signed a pact with the Italian company Piaggio to sell its entire 75% stake in the highly profitable company, Scooters India Ltd. This is to be followed by the sale of seven business units of SAIL (Steel Authority of India Ltd) for a massive Rs. 8,000 crores. Such then are the "privatisations" facing our country. These are nothing but gifts to the imperialists, and a disaster for the workers…….. the ministers and bureaucrats, ofcourse get the crumbs, through huge kickbacks on each deal.

In the current financial year, 2000-2001, disinvestments have been planned at a frantic pace :

* Pushed by the Centre and World Bank, all state governments are moving at a hectic pace to dismantle the State Electricity Boards through corporatisation, privatisation and finally selling them to TNCs and India’s comprador big bourgeoisie. This will result in a huge hike in electricity charges, to allow the Enron-type TNCs make gigantic profits..... and also allow the distributors (now privatised) big profits. What has happened in AP (see page 21) is only a fore runner of what is to happen in the rest of the country.

* After trying to silence the DTS (Department of Telecommunication Services) employees by gifting them free phones the government has decided to turn DTS/DOT into a private corporation. Further, in mid-July, the PM himself announced even the privatisation of long-distance telephone calls (STD, ISD) and also undersea optical fibre connectivity. The Telecom employees have vehemently opposed these steps.

* The government has decided to sell off 60% of its stake in Air India, of which 26% will go to a foreign investor (the domestic investor will have a mere 14% stake). Though AI has massive assets worth Rs. 25,000 crores it will be sold for a song as its net worth in 1999-2000 was a mere Rs. 355 crores compared to Rs. 1,435 crores in 1994-95 (due to accumulated losses). The valuation is to be done by the foreign merchant-banker, Morgan Stanley, who will quite obviously favour the foreign investor by putting a low price on AI.

* A Bill will be piloted in the monsoon session of parliament on amending the Banks (Regulation) Act, to bring about the dilution of government equity in PSU banks to a mere 33%.

Besides these, the Prime Minister’s office has asked the government to undertake privatisation to mop up a huge $12 bn (Rs. 52,000 crores) in two years. This will include massive disinvestment of NTPC (power corporation), VSNL and MTNL from 53% to 26%; Maruti from 50% to 26%; National Fertilisers from 98% to 26%; and Bharat Earth Movers from 61% to 26%. As part of this process the Cabinet Committee on Disinvestments (CCO) cleared disinvestments in eleven more PSUs, including IBP (petroleum), MMTC (minerals and mining), STC (state trading corporation) and the SCI (shipping). The CCD has already asked the ministry to appoint global advisors for nine PSUs, (including Hindustan Copper, IA, AI, Madras Fertilisers, National Fertilisers, ITDC...) for sale to foreign buyers through the strategic route.

(3) FDIs Swamp Indian Industry

As though the above policies are not sufficient the BJP-led government has gone all out, to permit the free flow of FDI (Foreign Direct Investment) into the country, thereby facilitating the takeover of industries and various other sectors, by the transnational corporations.

In October itself the government allowed 74% FDI in the Information Technology sector (including satellite systems, broadcasting and internet-related), and the prime minister himself launched a Rs 100 crore national venture fund for the Software and Information Technology industry. The Government also decided on allowing FDI in retail chains and permission was given for the import of foreign cars for sale in the country. In Nov. ’99 it decided to open up the domestic secondary share market to foreign companies, giving thereby a free hand to FIIs to further penetrate the economy.

On Dec. 3 ’99, it decided to do away with dividend – balancing (in accordance with a commitment made to the W.T.O.) which stipulated a balance between foreign exchange outflows and exports.

In January of the new year there were a spate of measures leading to the further liberalisation of the financial sector. First, the govt. removed all restrictions on Indian companies seeking to issue ADRs (American Depository Receipts) and GDRs (Global Depository Receipts) thereby facilitating greater control of Indian companies by foreign capital. Further, companies are now allowed to borrow up to $200 million to finance their equity investments in subsidiaries and joint ventures executing infrastructure projects. Also, the ceiling on foreign exchange exposure to finance project costs in the insurance and export sectors have been raised from 30% to 50 and 60% respectively.

And then came the major policy decision of all. Immediately after their sojourn to Davos, where our politicians spent their time licking the boots of their imperialist bosses, the government announced the defacto disbanding of all major controls on FDI entering the country. On Feb. 1, 2000 the government threw open most of the industrial sectors to the automatic route, keeping only six areas …….. alcohol, cigarettes and tobacco, aeronautics, defence, aircrafts, explosives and hazardous chemicals…….. on the negative list. In other words, in all sectors, but these six, foreign investment can freely enter, without government permission. In addition it has hiked, from 23% to 100% the amount of FDI allowed into each sector. With this, the grip of foreign capital over Indian industry is tightening.

In mid-May 2000, the government decided to go ahead even further with a clutch of second generation reforms. These include : allowing 100% FDI in telecom services, tea and coffee plantations; and to lift restrictions on dividend repatriation to TNCs even in the consumer sector — benefit to be available with retrospective affect from June 1992. This latter legislation is a major gift to the powerful TNCs like, Coca Cola, Pepsi, ITC, General Motors, Ford, etc., as the industries covered by this ruling (as per the stipulation of the WTO’s TRIMS agreement) include food products, dairy products, sugar, salt, coffee, tobacco, cigarettes, leather, furniture, cars, electrical items, white goods, etc.

Once again in, mid-June 2000, the government allowed 100% FDI in the power and oil sectors as also in petroleum refining and e-commerce. Till then foreign investment allowed in oil refining was 49%. With this, oil majors like Shell, Exxon, BP, Amoco, which have been demanding ‘liberalisation’ will enter in a big way.

The process of FDI takeover of Indian industry continues unabated. In March, the Commerce Ministry decided to increase the FDI limit in the plantation sector from 24% to 74%. And the Karnataka Power Transmission Corporation Ltd (KPTCL) decided to sell off 51% of its stake to a ‘strategic partner.’ In April, 57 proposals entailing FDI’s of Rs. 2,505 crores, was approved by the government. Since then, in a series of decisions, proposals worth thousands have been passed. In the budget and post budget scenario, the major sphere of massive foreign capital penetration is in the computer sector. In this sector foreign capital operates with major tie-up with the local comprador bourgeoisie. To facilitate the growth of this sector and the further penetration of FDI, Pramod Mahajan announced, in April, a ten-year tax holiday for all Software Technology Parks.

So, in the private sector, all the major comprador bourgeois houses, are being tied into an inextricable web of foreign capital. Recent examples of such tightening fusion are : in the Reliance-Worldtel (UK) joint venture, both will provide 37% each of the equity, while the balance 26% will come from the Electronic Corporation of Tamil Nadu. The two companies are in the process of forming similar joint ventures with six other state governments, a classic example of the fusion of imperialist capital with that of the comprador big bourgeoisie and the state. Then Hinduja’s huge Vizag power plant has 49% equity of National Power (UK), while Rediff Communications now has 49% foreign equity.

In the PSUs there is also developing a similar fusion between the three capitals ....either through the disinvestment path or through mergers. A classic case is the recent formation of Ircon Telenet, which is a collaboration between Enron Communications (ECI), British Telecom (BT) with the Indian Railway Construction Company (IRCON). In this ECI and BT will hold 24% of the shares each, Ircon 50% and the balance 2% will be held by Mahindra Telecom.

The following list will give a picture of some major penetration of TNCs during the last few months in various sectors of the Indian economy — either through collaborations with the Indian comprador bourgeoisie or through direct control. The method of penetration is either, by TNCs directly bringing in FDI or FII into the country; or it is by ‘Indian’ companies issuing ADRs or GDRs (American Depository Receipts or Global Depository Receipts) and there by raising the share of foreign equity in the company. If one opens the business newspapers, we will find that not a single day passes without some such take-over. Here we will sample a few, to indicate the pace at which Indian industry/finance is being swallowed up by foreign capital at the behest of the Indian government :

* Citicorp Finance India (CFIL) announces that it has acquired a 74% stake in the SAK Group company Nation Wide Finance (NWFL).

* Citigroup takes 40% equity in the joint venture, Times Internet.

* German major, Henkel KGaA, is pumping in Rs. 51 crores to take a controlling stake in Henkel Spic India Ltd by increasing its stake from 48.5% to 51%.

* Nestle’s withdraws its 60% joint venture with Dabur in Excelcia Foods, to start a 100% biscuit company of its own.

* FIIs invest $85 million to acquire a 40% stake in Ambuja India.

* Adidas India increases the stake in its downstream venture from 80% to 91.4%.

* The Siddarth Shriram group flagship, Siel, is to sell off its well-known Vanaspati brand, Rath, to US food major Con Agra. Rath was second in vanaspati sales in India, after Dalda.

* American Home Products Corp., has hiked its stake in Cynamid Agro Ltd from 40% to 68%, while Atul’s holding has come down from 26% to 14%.

* The Dutch Bank, ABN AMRO assets in India have increased from Rs. 100 crore in 1991 to Rs. 3,900 crore today.

* Golman Sachs has picked up 28% in two subsidiaries of Kotak Mahindra Finance.

* The US based Janus Funds acquired 5.64% of Reliance shares from the open market. With this, foreign investment (FII/GDR) in RIL stands at 23%, while the Ambanis have 29% of the share capital.

* Siemens India and its parent Siemens AG, will together execute a Rs. 820 crore power transmission project connecting Orissa and Karnataka.

* Microsoft invites 200 politicians, bureaucrats etc., from the third world for a 2-day ‘branstorming’ session on the "future of the net". India has ten invitations including the Chief Ministers of AP, Gujarat, Maharashtra; Sharad Pawar, etc.

* US company Carlson, to set up a chain of 15 five-star hotels in India.

* Birla AT&T to bring in Rs. 1,017 crores foreign funds to merge its operations with Tata Communications, giving AT&T a vice-like hold over both Birla’s and Tata’s cellular service provider operations.

* FDI of Rs. 172 crores allowed into Ogdin Energy India whereby the foreign partner increases its stake to 74.8%.

* Schenectady India is allowed to increase its stake in the Indian company from 85% to 97.6%.

* Taib Capital Corporation allowed to increase its holding in the Indian venture from 51% to 74%.

* Danish beer company, Carlsberg, allowed to manufacture and distribute beer in the country.

* HDFC (Housing Development Finance Corporation) board passes a resolution which will, in effect, raise the foreign share-holding in HDFC from the existing 56% to 70%.

* Intel Corporation picks up a 49% stake in Hinduja Finance subsidiary, Grant Investrade.

* Hutchinson Whampoa acquires 49% stake in Sterling Cellular for Rs. 1,122 crores in December 99, and has operations in the key cellular circles of Bombay, Delhi, Calcutta and Gujarat.

* UK based Power Gens purchase 46% of Torrent’s stake in Gujarat Torrent Power for Rs. 1065 crores.

* Zee Tele films issues ADRs to raise $1.5 billion. Rediff and Aptech to tap overseas markets to raise Rs. 1,400 crores.

* Satyam Infosys to transfer Rs. 217 crores worth to a foreign collaborator.

* BPL to set up two power projects involving FDI of Rs. 350 crores.

* Global investors meet in Bangalore resulted in deals with foreign partners worth Rs. 9,000 crores.

* The UK company, Thomas Cook, takes over India’s largest travel operator, TCI (Travel Corporation of India) for just Rs. 120 crores) to become India’s largest travel company. Ironically while TCI had a turnover of Rs. 300 crores, Thomas Cook had a turnover of just Rs. 75 crores before the take-over.

What is developing in the country is a monolithic block, comprising capitals of the imperialists, the comprador big bourgeoisie and the state ... with the imperialists beginning to dominate.

(4) Boon for Import-Export Sector

In a highly retrograde step, the government struck an agreement with the US, in the first week of Jan. 2000, to remove all Quantitative Restrictions (QRs) on imports by April 2001 — that is, two years before the date set by the WTO. The removal of the QRs has been a major point of contention between India and the other imperialist countries. India then went ahead and struck separate agreements with most countries for removal of QRs by 2003 …….. as stipulated by the WTO. But the US demanded a faster pace, and refused to sign a similar agreement . FINALLY, THE BJP- LED GOVERNMENT TOTALLY CAPITULATED TO US PRESSURE BY ADVANCING THE DATE BY TWO YEARS. What is even worse, this new date will be applicable to all countries, and will negate the other independent agreements signed. This will result in a flood of imports, which will have a particularly disastrous impact on agricultural and the small scale sector.

True to this agreement, in the new EXIM (Export-Import) policy announced on March 31, the government abolished QRs on 714 items. These primarily include products reserved for the small-scale sector and agricultural commodities. This will result in a flood of cheap imports, and will have a disastrous impact on both these sectors. In addition the government has allowed second hand capital goods to be freely imported without any licence; and has further cut the import duty on capital goods from 10% to 5%. So, in other words, the local capital goods industry will also be hit. Besides this, in this EXIM policy, the government has announced a large number of concessions to exporters and removal of a number of controls.

In a major concession to foreign capital, the government has announced the setting up of Special Economic Zones (SEZs) in which FDI will be allowed to invest at a full 100%. At present three have been decided at Gujarat, Tamil Nadu and Orissa; while the existing four EPZs (Export Processing Zones) are to be converted into SEZs. Three more SEZs have been planned in Navi Mumbai, Calcutta and AP. These SEZs, will be exempted from a plethora of rules and regulations governing exports and imports; they will be allowed a tax holiday and will be exempted from sales tax and octroi, and will be treated as "public utilities" in order to restrict Trade Union rights. This virtually amounts to setting up foreign enclaves within the country — all in the name of promoting exports.

As announced in end May the SEZs will be deemed to be a foreign trade territory and goods produced here will have to be IMPORTED by India if they are to be purchased here. No duties, taxes, laws will apply to companies operating in these areas. Yet these companies can process goods within ‘Indian territory’ (outside the SEZs) without any regulations. What is even worse the government has decided to allocate Rs. 250 crores of people’s taxed money to help set up these foreign enclaves. In other words, the foreign investor, will get a ready-made infrastructure, windfall profits, due to India’s cheap labour and tax exemptions, and the facility for cheap exports in a competitive international market. The country gains nothing whatsoever.

(5) Smash the Imperialist Stranglehold

Today, there is no sphere of the economy or social life of the people that remains untouched by these foreign blood-suckers. The foreign debt has now reached $100 billion, on which a minimum of Rs. 44,000 crores has to be paid each year in just interest charges. In the current year debt servicing (repayment of principal and interest) amounts to a gigantic Rs. 1,35,000 crores, that too in foreign exchange. In addition, in the current year the trade deficit is a gigantic $17.5 billion. The government was even willing to open out legal practice to foreign firms, if it had not been for the militant actions of the lawyers. The imperialists and their capital are penetrating deeper and deeper into every nook and corner of the country. Even the small scale sector is not being spared. With the dereservation of the lucrative garments, leathers and toys industries, in end July the process has begun for the swallowing up of the SSIs by foreign capital. It is clear that with Clinton’s visit and the ‘Vision Statement’ this process is planned to be speeded up. And those who shout the loudest about ‘national interest’ are the biggest traitors. They are servile lapdogs of the imperialists, acting at their dictates in return for a few dollars commission. They seek to divert people’s attention from this total capitulation, through a chauvinist hysteria whipped up against Pakistan. Ofcourse, the benefits of this great sell-out go only to a handful of elite, with a few crumbs to a section of the middle classes. The bulk of the population are being pushed into a kind of poverty not seen in recent years. Massive unemployment, huge hikes in prices, removal of even the limited social security and even outright loot of people’s savings .... are all the result of these policies while the rich wallow in the luxury of foreign goods, the masses live in hunger, poverty and growing insecurity.

The main promoter of this sell-out of our country are the comprador bourgeoisie (who mint fortunes through their tie-up with foreign capital) and the comprador politicians through the commissions and benefits they gain by licking the imperialist boots. A good example of this is the very Finance Minister himself, who cancelled a ruling of the Central Board of Taxes, which sought action on a number of FII operating in India, with fake headquarters in Mauritius. FIIs with ‘headquarters’ in Mauritius, which has a tax exemption agreement with India, save Rs. 3000 crores on tax in India every year, while Yeshwant Sinha’s daughter-in-law has accumulated a massive $5.3 million (Rs. 23 crores) while working for a US based company, with a branch office opened in Mauritius in 1999.

Though, on August 15, the government and parties will give solemn speeches and promote the waving of the ‘national’ flag in every nook and corner of the country, the people are fast realising the traitorous character of these rulers, and the hypocrisy of the independence day speeches.

Though the BJP-led government, is today, the prime promoter of these disastrous policies, all the parliamentary parties at the Centre and state-level are accomplices in pushing the country along this track. Some, like the swadeshiwallas and revisionists, make a show of mock opposition in order to dupe their rank-and-file, but are, in reality, totally for the so-called ‘economic reforms’. It is the people and the people alone who can reverse this total sell-out to the imperialists. The fighting militancy of the lawyers, has, at least temporarily, stalled the entry of foreign law firms. Also, in a number of PSUs the employees have been resisting this sell-out through strikes and other forms of actions. But due to the betrayals of their bourgeois or revisionist leadership, together with fierce repression by the state, their actions have not met with success. The farmers and dairy producers are agitating against the impact of the WTO regime. And most importantly it is the revolutionary forces, led by the CPI (ML)[PW], that has taken up the challenge. It is they who have openly declared their intention is to kick out all foreign capital and build a genuinely self-reliant and truly independent India.

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