Red alert for the Indian economy

It helps to acknowledge new realities. Even six weeks ago, no one, apart from the hapless citizens of Kerala and West Bengal and members of the Indian History Congress, gave a damn for Communists. They were harmless bores who counted for very little outside the drinking area of the local Press Club. As for trade unionists, they were invariably perceived as noisy
and pampered racketeers, adept in the art of cutting deals on the side. In an India that was in unseemly haste to make up for the time lost under Socialism, these relics from the dark ages were neither seen as righteous nor relevant. They symbolised everything we wanted to unlearn.

Since May 13, India has turned topsy-turvy. It is not merely that a BJP-led coalition has been replaced by a Congress-led coalition. Circumstances have catapulted the Left from the margins of polite company to the centre of power. With nearly 100 MPs swearing allegiance to the evergreen Comrade Surjeet, the Communists have a stranglehold over the Government of India.

Between 1969 and 1977, the CPI exercised a tremendous influence over the Indira Gandhi regime. The Reds and their 'progressive' fellow travellers got some of their insane economic prescriptions transformed into official policy. Thanks to the patronage of Nurul Hasan, Leftists systematically took over the bastions of intellectual power. What they lacked in electoral
clout, they made up through influence in the right places. However, at the end of the day, as Sanjay Gandhi demonstrated so starkly, it was the Congress that called the shots.

In the Manmohan Singh government, it is the Left that has the final veto power. What the likes of Surjeet and A B Bardhan want will not necessarily always happen, but what they definitely don't want will not happen under a UPA government.

Harsh economic realities may propel a modification in the future balance of power. For the moment, however, the Left is one of the main puppeteers. As West Bengal Chief Minister Buddhadev Bhattacharya put it at a public rally in Kolkata: 'When we want them to stand, they will stand. When we want them to sit, they will sit.'

Civil Aviation Minister Praful Patel was the first to experience the Left veto. With all the overzealousness of a frequent flier, he imagined the Left would be placated if the foreign direct investment norm for airports was brought down from the NDA's generous 74 percent to a modest 49 percent. He is now undertaking a crash course in cohabitation with the Reds.

First, the Left-controlled trade unions in the airports began an agitation against any privatisation proposal. Second, despite Patel having consulted Left leaders before making the announcement, CPI-M Politburo member Sitaram Yechuri participated in the trade union dharna and proclaimed his party's opposition to the sale of profit-making public-sector units. Not to be left
out, the CPI added its own veto.

In short, the UPA government's first hesitant attempt at economic reform was scuttled even before takeoff. Regardless of what the Cabinet finally decides, no worthwhile investor is going to put his money into a project where trade union opposition is going to be coupled with political hostility from the ruling coalition.

There are important lessons to be learnt from the fiasco over airports. First, militant trade unionism, particularly of the white-collar variety, has received a major boost with the new importance of the Left. The impact of this is almost certain to be felt in the public sector, whose lack of efficiency had been targeted by the NDA government.

With the fear of privatisation receding fast, India will experience the clout of a labour aristocracy. It will demand more privileges, more subsidies, more protection, and more pay for less work. Finance Minister P Chidambaram got a taste of this when Left trade unions demanded that the interest rate on provident fund deposits be raised by a further 3 percent.

The knock-on effects of this demand for special status will, in turn, spur aggressive trade unionism in the entire organised sector, particularly in areas where the Left's electoral presence is nominal. India's small export-oriented units that depend on labour flexibility to maintain global competitiveness will be the first casualties of this process.

Secondly, the pressure on the Left to act with exemplary restraint and not rock the fragile boat of Indian capitalism will be compromised by intra-Left competition. Both the CPI and the CPI-M don't want to be at the receiving end of charges that they tempered labour militancy for the sake of governance. The leadership of both parties will want to demonstrate to the
committed that they have not lost their fire. The parliamentary Left is always vulnerable to charges of 'reformism' and 'revisionism' from those who still perceive themselves as revolutionaries.

It may be instructive to be reminded that the wave of labour militancy and the 'gherao' movement that led to the flight of capital from West Bengal in 1967 wasn't initiatited by the CPI-M. The man who unleashed mindless militancy was a representative from a small, ultra-Left outfit called the SUCI, or Socialist Unity Centre of India. The CPI-M, harassed by another radical peasant uprising in Naxalbari, merely followed suit. To normal people, this is infantile politics. But let us not forget that there are enough crazy people out there who dream of the Red Star over India.

To those who have learnt nothing and forgotten nothing, it doesn't matter if India's airports are shoddy and ill-equipped to cope with the volume of air traffic. What matters is that more and more people get involved in the 'struggle'. Unlike you and me, the Communists have no stake in the India as we know it.

Manmohan Singh's real problem is not Laloo Yadav or some of his tainted ministers. At best, they will sully his personal reputation. His long-term threat comes from a Left that has got the chance of a lifetime to play being Communists.