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Tuesday, September 29, 2009

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GLOBAL ECONOMIC CRISIS
AND ITS IMPACT ON THE
PEOPLE OF INDIA
M.K. Pandhe, President, CITU
Published by:
BSNL EMPLOYEES UNION
CHQ, Dada Ghosh Bhawan, 2151/1, New Patel Nagar,
Opp. ShadipurBus Depot, New Delhi-110 008 Email:
chqbsnleu@sify.com, Website: www.bsnleuchq.com
GLOBAL ECONOMIC CRISISAND ITS
IMPACT ON THE PEOPLE OF INDIA
(Presented in BSNL Trade Union class at
Thiruvananthapuram on 6th July, 2009)
Crisis in the Capitalist System
The whole capitalist system all over the world is in the grip of severe economic
crisis, the bottom of which is yet to be seen by the people. It commenced in the
middle of September, 2008 in the richest capitalist country - USA! The entire
world was shocked to hear the news that one of the topmost U.S. investment bank
in U.S.A. Lehman Brothers declared bankruptcy and openly pleaded inability to
pay money to the depositors. The bank had accumulated huge doubtful assets
which could not be recovered. It indulged in reckless housing mortgages without
assessing the capability of the debtors to repay the loans. The Bush administration
had to pump, huge amount to save the bank. The crisis created by irresponsible
behaviour of the bankers was to be resolved by using the poor and middle level tax
payers' money.
This was only the beginning. Big names in the financial circles in the world such
as Merrill Lynch, Morgan Stanley and Goldman Sacks had also followed suit and
Government of U.S.A. could save them by merging them and taking over their
doubtful assets. These banks had to give up their character as investment banks and
function as ordinary commercial banks. Another investment bank Bear Streams
reached the verge of bankruptcy and had to be saved by its merger with JP Morgan
Chase Bank. Before people could realize the gravity of the situation, the crisis
spread like wild fire affecting several banking and financial institutions. Many
found it difficult to believe when the largest insurance company in the world,
American Investment Group (AIG), faced bankruptcy and could be saved only
when U.S. Government had to shell out $150 billion to save it from liquidation.
Fannie Mac and Freddie Mac, leading investment companies faced total collapse
which could be saved only by nationalisation by the U.S. Government. Washington
Mutual and Wanchovia had to be taken over by the U.S. Government without
which they could not have been saved.
These sudden developments naturally resulted in panic all over U.S.A. and U.S.
Presidential candidate Barrack Obama had to say that crisis in Wall street had
become a crisis in all the streets. The champions of globalisation and free market
economy had no explanation to the people why such a crisis occurred in U.S.
economy. When Socialist system in Soviet Union and Eastern European countries
was dismantled, the capitalist economists started singing virtues of capitalist
system as the highest stage of human development. One economist had the
temerity to give title for his book "The End of History" to explain how Socialism
has failed which proved the superiority of the free market economy. Some
economists tried to explain that it was greed of some individual businessmen
which brought the collapse of the economic framework.
To understand the background of the crisis we must see the reckless policies
pursued by Bush administration. Public debt of U.S.A. doubled during the Bush
rule reaching a figure of $10.3 trillion. His reckless and unjust war in Iraq cost U.S.
over one trillion dollars to public exchequer. At the end of his eight year tenure the
bubble of U.S. economy busted. The most powerful capitalist economy which
advocated reduction in budget deficit for the developing countries itself was
indulging in budgetary deficit. The U.S. budget deficit which was $140 billion in
1997 rose to $800 billion in 2006 and exceeded $ one trillion in 2008.
The U.S. citizens were living on borrowed money. The average expenditure of a
U.S. citizen was estimated to be 60 per cent
more than the average income.
Utter Failure of Market Economy
The global financial crisis exposed the utter failure of the market economy
advocated by the World Bank, IMF and the WTO. The concept that the
Government should not play any role in economic matters indicated privatisation
of all economic undertakings at throw away prices. Moreover it visualised that the
market should be left to decide all matters relating to economy without any
regulation of the Government. It resulted in reckless business practices to make
quick money, high salaries and bonuses to Chief Executives of undertakings
without any restrictions from the Government and creation oMhe phenomenon of
subprime loan without ensuring that the indebted persons can repay the loans.
U.S.A. witnessed huge crisis of housing mortgages wherein the persons failed the
repay the loan creating toxic assets for the financial institutions.
The phenomenon of concentration of capital gave rise to the growth of monopolies
to control the global market. The cut throat competition among the leading Multi
National Corporations to increase the market share gave rise to several
malpractices among the big capitalists with tacit support from the capitalist
Governments. Several bureaucrats of the Government were also involved in the
process of quick money making. A bubble economy was created, and as several
economists warned earlier, the bubble was bound to burst one day and it actually
took place in September, 2008.
Paul Krugman, the Nobel Prize winning economist of U.S., who warned about the
crisis earlier stated, "Now the housing bubble has burst in turn leaving the financial
landscape strewn with wreckage. Even if the ongoing efforts to rescue the banking
system and unfreeze the credit markets work - and while it is, early days. Yet, the
initial results have been disappointing - it is hard to see housing making a
comeback any time soon. And if there is another buddle waiting to happen, it is not
obvious (New York Times News Service).
Similar statements have been made by several economists in U.S.A. There is
complete unanimity now among all the economists that the crisis is going to be a
long drawn one. However few realised that the crisis is shaking the very
foundation of capitalism itself.
Impact on the Capitalist World
The globalisation has strengthened the trend of internationalisation of finance
capital. For instance, several mining companies in U.S. are in control of foreign
financial companies while U.S. financial agencies are controlling several industrial
units in foreign countries. The finance capital showed a trend of going from one
country to another depending on a higher profit margin. Finance capitalist
increasingly gave emphasis on speculative share market transactions.
The economy in European countries were already facing acute recession during
2008. The second, third and fourth quarters of 2008 showed a decline in growth of
gross domestic product. The projected fall of GDP in European countries is
estimated at 0.4 per cent.
The decline in production also was seen in Japan in the year 2008 while the
projections for the year 2009 show further decline. The trend in other advanced
capitalist countries also showed the same picture.
The volatile prices of oil in the world showed clearly how by creating artificial
scarcity the oil cartels have been minting money. The oil price per barrel shot up
more than twice during 2008 but then drastically came down to $40 per barrel in
2009, when the global meltdown became a reality. However, the retail oil price
was still high in the market. In India for example, the price was brought down only
by Rs. two per liter.
The bailout packages prepared by several advanced countries included partial or
full nationalisation of banks or other financial institutions, taking over toxic assets
of financial institutions. Those who were advocating privatisation of banks and
financial institutions had to advocate taking over these institutions by the
Government as a means to save those companies. The total bailout packages all
over the world are estimated to be above $2 trillion.
To overcome the effect to economic meltdown most of the capitalist countries have
imposed job cuts on the working class. Over and above, the imposition of
deteriorating working conditions on the workers and even wage cuts have been
resorted to by the Governments of capitalist countries.
Several restrictions and even ban on migrant workers in advanced capitalist
countries were resorted to in a big way. The Obama administration imposed
restrictive taxes on companies who outsourced their jobs outside the country or
engage foreign labourers. Drastic action is being planned against illegal migrant
labour with a view to throw them out of the country.
In the name of taking protectionist measures, U.S. and other countries are
advocating purchase of their domestic products to reduce dependence on imports.
These measures will adversely affect the developing countries whose exports-will
be drastically cut!
The G-20 meeting of major heads of the State in London on 1st and 2nd April, 2009
could not come to definite conclusion to meet the global crisis. France and German
Governments opposed U.S. proposals while developing countries representatives
criticised the protectionist trends in advanced capitalist countries. The bailout
package of over $ one trillion visualised helped the capitalists to help their liquidity
problem. The financial assistance planned for developing countries is not likely to
materialise. The bailout packages do not give any relief to the workers who lost
their jobs due to economic melt down. It did not even accept the proposals given
by Prof. Joseph Stiglitz Commission to face the economic crisis and to come out of
it. Though the G-20 countries were representing overwhelming majority of the
world population, it failed to tackle the problems of the developing counters. D ue
to controversies among different countries, a patch up declaration was drafted.
Only some of speeches in the meeting indicated that the crisis is likely to be a long
drawn one whose bottom had not get been reached.
The massive demonstrations organised prior to the G-20 meeting and during the
meeting reflected the anger prevailing among the people all over the world. The
WFTU also gave a call to organise demonstrations in all the countries to oppose
the policies of globalization and capitalist meltdown. These demonstrations reflect
the growing discontent prevailing among the people in the world against the
policies of globalisation and neo-liberalisation.
Pointing out the drawbacks of measures taken by leading capitalist countries to
overcome the crisis, Fidel Castro noted, "these measures will bring more inflation,
more devaluation of the national currencies, more unequal exchange". He further
observed that the crisis would bring more knowledge of the truth of the capitalist
system, more consciousness among the workers, more rebellions and more
revolutions (Gramma'-JournalofCuba).
No worthnoting Impact in Socialist Countries
While the entire capitalist world was engulfed in a deep crisis, the impact on the
socialist countries was minimal.
The economy of China was affected to the extent it had exports to advanced
capitalist countries. As is known, China has surplus balance of trade in major
capitalist countries including U.S.A. Due to fall in exports to these countries due
the capitalist global downturn Chinese economy had to find a way to increase
domestic consumption and avert the crisis.
Chinese Government prepared a package of 4 trillion Yuan ($586 billion)
providing creation of new jobs, improving wage level of low paid workers. The
basic thrust of the Chinese policy makers was to improve the living standard of the
people which would absorb the additional production generated due to expansion
of industrial and agricultural output. Though in some quarter the rate of growth of
Chinese economy declined during 2008 the overall growth target of 8 per cent was
fulfilled by the Chinese economy. Even the Western economists have admitted this
achievement by the Chinese socialist society.
The Vietnam faced certain problem due to decline in exports but the Govt. took the
step of increasing domestic consumption and maintains the growth rate.
The economy of Cuba and North Korea had not many relations with advanced
capitalist countries and therefore did not face the impact of the global slowdown.
Setback to Unipolar World
The present global financial crisis has hit the influence of U.S. in the world and it
has shattered the dream of U.S. imperialists to dominate the world economy. The
hegemonistic policies adopted by the U.S. Government with a view to create a
unipolar world received a big jolt and possibilities of emerging a multipolar world
have become powerful. The aggressive position taken by U.S. imperialists to
expand NATO and establish U.S. missile defence system in Europe is being
resolutely opposed by Russia. Latin American countries have opposed U.S.
dominating designs and expressed solidarity with Cuba. The emergence of
Shanghai Club for developing strategic alliance between Russia, Central Asian
Republics, China and others have resulted in emergence of a new power centre.
The growing opposition to U.S. policies all over the world including West Asia
have undermined U.S. role in the world.
The global financial crisis has further aggravated the world situation against U.S.
imperialism and U.S. model of capitalism is no more acceptable to many capitalist
countries. The opposition to U.S. policies in G-20 meeting in London by French
and German Governments has highlighted this phenomenon.
The set back received by the concept of unipolar world has no doubt strengthened
the anti-imperialist forces all over the world. The emergence of multipolar world
with collapse of U.S's hegemonistic role is a welcome development which has been
buttressed by the global capitalist meltdown.
Bail out package for whom?
The UFA Government first claimed that the fundamentals of Indian economy were
strong and the global financial crisis would not adversely affect it. Former Finance
Minister P. Chidambaram had repeatedly assured the Indian people that Indian
economy is insulated from the global financial crisis. However, the impact soon
began to be felt by the Indian economy when export started falling and Indian units
were forced to cut their production.
The Reserve Bank of India was first to announce the bailout package by reducing
restriction on banks to give loans to needy corporate sector. Pressure was brought
on Indian banks to reduce rate of interest so that more credit was available to the
corporate sector. More concessions were given to housing loans which actually
helped the builders lobby.
Despite these concessions the production did not increase since these measures
failed to increase the purchasing power of the people. Many Corporate houses
utilised the cheaper credits to repay their costlier loans.
The UPA Government announced tax cuts and reduction in excise duty on some
items. However, the employers did not pass on the concession to the consumers
which failed to boost the market. Despite giving liberal concessions to export
industries, the exports did not pick up but export houses tried to misutilise the
concessions.
The UPA Government did not take any measures to restore the import restrictions
which were withdrawn due to WTO conditionalities. Foreign goods continue to
enter Indian market freely adversely affecting the Indian commodities.
The stimulus package offered by the Government of India failed to overcome the
crisis but only added to the coffers of the Super rich. The 2008-09 budget of UPA
Government only added to the sops for the capitalists to enable them to garner
higher profits. The UPAGovernment miserably failed to protect the large number
of workers who lost jobs as a result of meltdown of the economy. The survey
conducted by the Union Labour Ministry found that five lakh workers lost their
jobs due to global financial crisis but no relief was given to the workers. Only ESI
Corporation announced some allowance fora period of one year which did not give
any benefits to most of the workers because their units were not covered by the ESI
Act.
The net result of the UPA Government's policy was that the capitalist class was
trying to put on the burden of the crisis on the shoulders of the working class and
the toiling people. The budgetary losses due to liberal concessions given to the
capitalist class were recovered by imposing tax burden on the common people.
The capitalist class which was responsible for the crisis was given relief to come
out of the crisis while the working class and the toiling people who were not at all
responsible for the crisis had to pay the cost for overcoming the crisis.
To maintain profitability of the capitalists, hours of work for the workers were
increased. A large number of units were working for 12 hours a day without paying
any overtime wages to the workers. Several units illegally announced wage cut for
the workers while some declared lay-off without taking statutory permission from
the Government of India and without paying wages to the workers. Illegal closure
of units became the order of the day. Despite labour laws were being violated
openly by the employers, the Union Labour Ministry connived at the steps taken
by the management in the name effacing the economic meltdown. In the Indian
Labour Conference held in February, 2009 all the central trade unions criticized the
policy of the UPA Government and demanded full implementation of the Labour
Laws and introduction of the employment insurance scheme but these appeals fell
on deaf years.
Role of Left and Trade Unions
The role played by the Left parties and the trade union movement in opposing the
UPA Government's policies of neo-liberalisation and privatization compelled the
Govt. to go slow on their programme of economic reforms. The Left parties
prevented UPA Govt. from disinvesting profit making public sector undertakings.
They did not allow Bill to privatize the Pension Scheme to be passed, they
prevented putting PF money of workers in share market, they prevented increasing
FDI in banking and insurance companies they prevented entry of FDI in retail trade
they did not allow UPA Govt. to handover Indian banks to MNCS etc.
These measures of the left parties prevented the global crisis from having wider
effect on the Indian economy. The. former Governor of Reserve Bank of India had
to admit that the global crisis did not affect the Indian banking industry since they
were in the public sector. Despite collapse of AIG, the largest insurance company
in the world became bankrupt, but LIC and GIG remained unaffected since they
were in public sector. The PF money and Pension funds of workers remained safe
since they were not privatized and not entered the share market in a big way as
visualized by the UPA Government.
Trade Union movement organized 3 nationwide strikes during UPA regime to
oppose the policies of globalization. It compelled the UPA Govt. to slowdown
their reform agenda which saved the country to some extent. The working class
and the people of India should note the positive role played by the left parties in
not allowing UPA Government to pursue neo-liberal policies recklessly.
Scandalous Participatory Notes
Despite the demand by the left parties to ban the operation of participatory notes in
the share market operations, the Ministry of Finance continue their role in the share
market manipulations. With the global financial crisis looming large the Govt. of
India did not take steps against the depredations of participatory notes but
withdrew certain restrictions imposed on these notes earlier by the Government of
India itself.
Participatory notes are defined as "Financial instruments used by investors or
hedge funds are not registered with the Securities and Exchange Board of India to
invest in Indian Securities".
Many persons do not know what is hedge fund. According to its definition it is "an
investment company that is organized as a limited partnership and uses high-risk
techniques in the hope of making large profit". It thus indulges in speculative
activity and plays an important role in manipulations in the share market
operations.
The participatory notes have become a device to make black money white or to
permit Havala money freely in share market. The Foreign institutional investors
who operate in Indian share market are also utilizingjhese notes for making quick
money and indulging in clandestine deals. According to an article published in
Hindu Business Line estimated that outstanding participatory notes account for
over 51 per cent of foreign money in India. It further states that Foreign
Institutional Investors control most of the floating stocks in the Indian share
market. According to an estimate the participatory notes increased from 2004 to
2007 by 11 times which shows the seriousness of their problem.
Business Line reports, "There have been estimates that show FIIS including
participatory notes holders, owning around 15-20 per cent of stock of the top 1000
companies in the bourses.
Now consider the promoters; they own over 50 per cent but those shares rarely
ever come to the market. The means that the FIIS have had a near ruling of the
market. In effect, they control the market because they not only own a chunk of
floating shares, they are also the most active".
Women - The Worst Sufferers
The global economic meltdown has affected the women most severely. The recent
ILO publication "Economic Meltdown Has a Woman's Face" has noted that 14
crore mothers in the Asian Pacific region's developing countries would be forced
into extreme poverty.
The ILO Report further points out, "For policy makers, failure to take into account
this gender dimension, especially at the lower end of the socio-economic scale
could be a critical miscalculation, worsening the working and living conditions of
millions, deepening economic and social inequalities and wiping out of a
generation of hard-won gains in pay inequality and workplace inequality. The
report continues "Shrinking global demand for clothes, textile and electronics as
well as for related business services use hotels, and restaurants means that women
will be the first to lose their jobs".
The capitalist society is trying to use women as a cheap source of labour. In a
period of global meltdown the capitalist class had been increasing their hours of
work and lowering their earning and thus making them cheaper. The conditions of
Anganwadi, ASHA and mid-day meal workers is a clear example of this. The
conditions of women workers in Bidi and Plantation industry had further been
deteriorated invoking them to adopt a path of struggle.
Satyam Swindle
The harrowing swindle by the management of Satyam Computer Services, the
fourth largest IT sector company of India has highlighted how the corporate
undertakings are minting money by resorting several illegal practices at the
connivance of the state administration. The Raju family having close contacts with
Chief Minister of Andhra Pradesh have been blatantly making a mockery of
corporate governance.
The amount of swindle is estimated by some researchers works out to Rs.8000
crores. The dubious $1.6 billion deal to take over Matyas firm owned by one of the
promoters came to the forefront which exposed the greedy promoters who
accumulate ill-gotten wealth at the cost of vital interests of the company. The
shocking news had come that the company had over 13,000 fictitious employees
whose salary was paid by cheques. This involves the co-operation of the banks in
siphoning of the funds to Raju regularly by manipulating banking accounts. In this
case one of the auditors Price water Coopers role in helping the company to
prepare fictitious balance sheet and hide the misdeeds of Raju family has been of
crucial importance. The manipulations in the share market operation by the
company has also shocked the country.
Though the Government of India intervened and the company was taken over by
Mahindra, the bungling that is going on in the corporate sector is yet to be fully
brought to light. It is a clear' case of a capitalist management taking full advantage
of a deregulated free market economy with full patronage of the state
administration. The CBI has opposed release of Raju brothers on the ground that
they were influential persons and may destroy the evidence!
There are several such Satyams who are yet to be exposed. The length to which the
degenerated capitalism can go is exposed in this case but defenders of capitalist
system are trying to cover up such instances at the cost of genuine development of
national economy.
Swiss Bank Fraud
When India is suffering from the impact of global meltdown, reports had been
published of Indian Super rich depositing billions of dollars in secret Swiss Bank
accounts. Press reports estimate vary from Rs.40 lakh to 70 lakh crores of rupees
of such deposits!
This illegal money is the outcome of tax evasion, kickbacks received secretly while
signing collaboration agreements with foreign companies, havala transactions or
garnering of black money, commission demanded by Ministers, bureaucrats or
intermediaries of foreign companies have also been responsible for such secret
accounts. Before gun scam highlighted how the money goes to Swiss Banks as a
result of secret deal which is yet to be fully revealed to the Indian public.
Recently, UBS the largest Swiss Bank agreed to provide information to the U.S.
Government about secret accounts of American citizens. The U.K. Government
has also followed suit. However, despite demand of the left parties, the UPA
Government has not demanded such details about Indian citizens holding such
secret accounts in Swiss Bank. The lack of keenness by the Government of India
has been noted by Swiss newspapers.
The money deposited in such secret accounts is actually Indian assets illegally
flushed in Swiss Banks for money laundering or using it for wrong purposes. The
Government must confiscate these huge resources and use them for improving the
standard of living of the Indian people. Several Ministers and bureaucrats as well
as Industrial houses may be holding such secret accounts but the UPAGovt. is
protecting these elements for their ulterior objective.
The policy of over reliance on foreign capital by the NDA and UPA Governments
has increased the inflow of foreign in India since the commencement of the present
century. In the year 2001-02 the total inflow stood at $8.2 billion which increased
to $15.7 billion in 2003-04. It rose further to $21.4 billion in 2005-06 while in
2006-07 it jumped to $29.8 billion and further to $63.8 billion in 2007-08. A
sizable portion of this inflow was in the share market and speculative activities.
However, after the global financial crisis foreign capital started withdrawing from
India which drastically brought down the share market index. It also brought down
retail credit flow in the country. As pointed out by a well known economist Prof.
C.P. Chandrashekhar, "..the credit stringency generated by the exodus of capital
from the country and the uncertainties generated by the threat of default of retail
loans that now constitute a high proportion of total advances could freeze up retail
credit and curtail demand as in happening in the developed industrial countries!!"
Adverse Impact on Informal Sector
The National Commission for Enterprises in the Unorganized Sector in their
memorandum to the Govt. of India on the Global Economic Crisis and the informal
Economy in India on 26th November 2008 has noted, "It is critical for our country
to pay focused attention to protect, at the least, the livelihood security, employment
and income of the vast majority of the people who are either poor or vulnerable
and so doing stimulate overall economic growth". The size of such people is
estimated by the Commission at 88 crore! The Commission earlier estimated that
77 per cent of Indian population in the unorganized sector live with an average per
capita daily consumption below Rs.20 per day. It now observes, "However, during
the current slow down, it is precisely these people, the poor and vulnerable
engaged in informal sector enterprises or formally employed by the formal sector,
who will be affected the most adversely."
The Commission studied at length the impact of the crisis in the following manner.
1. Forty five per cent of the employment in the organized sector is without any
job security. In a period of crisis this strata is the first to lose jobs.
2. Thirty percent of Indian exports are contributed by small producers with
declining exports due to melt down sectors as handlooms, textiles, wearing
apparel, leather products, gems and jewellary, meal products, carpets, spices
and marine products are adversely affected. In March 2009 alone 70
diamond cutting workers in Gujarat committed suicide. The total loss of
jobs in the last six months is estimated at 15 lakhs.
3. Due to so called credit crunch the banks and financial institutions are
refusing to give credit to the small industry which is facing closure and
sickness.
4. Due to slow down in the organized sector the ancillary units who supply
components to the larger units are starving for orders. The competition from
big manufacturers also is adding to the critical conditions of such small and
traditional units.
5. With steep price rise of essential commodities and absence of rise in their
income levels the vendors, workers in small units and marginal farmers are
experiencing drastic curtailment in their living standards leading to
starvation.
6. Due to fall in international prices cheaper imports of several commodities
such as cotton, oilseeds are putting strain on Indian producers. The failure of
the Govt. to protect such sectors from cheaper imports is making them more
vulnerable. The withdrawal of quantitative restrictions on import of several
commodities have opened floodgates of imports of several commodities
which are produced in India in sufficient quantity.
As the Commission noted, "The combined impact of all the above effects on the
informal economy would be an increase in livelihood insecurity, decline in income
and an intensification in the conditions of poverty and vulnerability. The worst
affected segment of India's poor and vulnerable would be the casual laborers of
whom the poorest segment is constituted by the agricultural workers."
The commission has not dwelt with the plight of the migrant workers due to this
meltdown, who are among the worst sufferers in a period of crisis.
The left parties and the trade union movement demanded several measures to help
the worst affected persons so that they can face the crisis and maintain their
standard of living. The following are some of the urgent measures.
The Government of India must take steps to generate demand in the economy. For
this purpose through public expenditure infra-structural projects can be undertaken
which would generate jobs and create more demand in the economy.
The National Common Minimum Programme visualized employment guarantee
scheme for urban, rural and poor middle class sections of the society. Every family
was to be guaranteed 100 days job for one person in every family. However, the
programme was implemented only for rural areas and only a small segment was
covered. It was controlled by bureaucrats who indulged in corrupt practices
preventing genuine benefit to the needy people. The central trade unions demanded
that the scheme should coverall urban areas and a minimum of 180 days job as
proposed by ILO should be provided. Action should be taken against corrupt
officials and the scheme should be implemented in its true spirit.
The minimum wages of all informal sector workers should be increased at least by
20 per cent to increase their purchasing power so that they would be able to
consume more to maintain a proper standard of living. This would also boost the
demand for goods in the society and would result in reducing the extent of
economic meltdown.
Several lakhs of people are forced to do the work of Hawking and Vendoring to
make both ends meet. They do not get adequate earning to meet the essential
requirements of their families and are living an existence below the poverty line.
They do not get adequate facilitates of micro-finance from the financial
institutions. If the Govt. arranges financial assistance to them their conditions will
improve and this process will lead to increase in the domestic demand. Though
these persons are grouped as self-employed they are forced to adopt this
occupation due to non-availability of work as a wage labourer.
The marginal and small farmers are also facing the brunt of the crisis since they are
unable to get a proper price for their products. The procurement price fixed by the
Govt. is low and uneconomic for them. Moreover, the forward trading permitted by
the Government to purchase their products in advance at low prices by the
unscrupulous traders. The demand by the left parties and central trade unions to
ban the forward trading in essential commodities has not been accepted by the
Government of India with the result that this exploitative practice continues
unabated.
The small and tiny sector of our industry gets less than 2 per cent of the total credit
available to the industrial sector as most of the credit is appropriated by the big
capitalists in the country. The democratic movement in the country must prevail
upon the Govt. to give credit to the small and tiny sector at concessional rate and
the share of credit to them must increase sizably. They require facilities of
marketing their product which the Govt. must give through a net work of sales
organization.
The Government of India has not investing much in granting social security to a
large section of our vulnerable population. The Human development of India is
extremely poor while the gains of economic development have been pocketed by
the affluent section of the society. Forty eight rich persons in India have income of
over Rs.5000 crores per annum who control one fourth of the total national income
of India while three fourth of our population are unable to get two square meals a
day. In Human Development, India ranks 128 among the 177 countries studied by
UNDP in 2007. Three years earlier India ranked 123 which shows that in human
development there is severe deterioration. Under these circumstances, the
Government of India must invest substantially in granting social security benefits
to the vast deprived sections of the society. This improvement in their living
conditions will increase the demand in the economy and which act as a real
stimulus to the industry in the country.
Struggle for Revolutionary Social Transformation
The global crisis of capitalism has raised to the forefront the basic issue that
capitalism cannot solve a single issue faced by humanity in the world. The bail out
package is only an attempt to save capitalism and profits of capitalists.
However, ideologically the working class all over the world does not fully
understand the real game of global capitalism. A large section of the working class
is still having illusion about the capitalist system who think that they would get
justice within the capitalist framework. The class collaborating leaders by the trade
union movement are hoodwinking the workers that the capitalist system can be
reformed and working class interests can be duly protected within the framework
of capitalist system. Though the working class is realizing the true nature of
capitalism the process needs to be made faster.
One must note that growing interest is taken all over the world to understand what
Karl Marx said about the capitalist system. The leading book stores all over the
world are displaying Marxist classics prominently and the number of readers
buying these books is swelling day by day.
Karl Marx and V. Lenin are no more absolute today. What they predicted about
capitalist system has proved to be correct.
This is an occasion for us to educate the working class about the real nature of
capitalist system and stress the need for transformation of the exploitative system.
Establishment of a Socialist system is the only alternative to capitalist system.
Those who criticized Karl Marx for calling profit as theft by the capitalists are now
compelled to speak about "greed for profit of some CEO's was the cause of the
present global financial crisis."
Ninety two years ago in 1916 while analyzing the role of Finance capital, Lenin
pointed out. "Financial Capital concentrated in a few hands and exercising a virtual
monopoly, extracts enormous and ever increasing profits from floating of
companies, issue of stock, state loans etc, strengthens the domination of Financial
oligarchy and levy tribute upon the whole society for the benefits of monopolists"
(Imperialism: The Highest stage of Capitalism).
Without ideological preparations of the working class, it is not possible to launch
powerful struggles against capitalist system. We must tell the workers that it is not
sufficient to fight against the effects of exploitation. We must ultimately prepare
ourselves to fight against the cause of exploitation itself.
It is, therefore, the duty of people of India to fight against every attempt of the
capitalist class to pass on the burden of the crises on the shoulders of the working
class. At the same time we should also call on the working class to be prepared to
fight against the moribund capitalist system itself which alone ensure
establishment of a world without crisis and exploitation. History has given the
responsibility on the working class of the world to be the "grave diggers" of
capitalism.
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