Marxist intellectuals seem to be talking nonsense whenever they attack economic reforms. Only recently CPI(M) general secretary Prakash Karat and the party's in-house (JNU) economist Sitaram Yechury were blaming everything that is going wrong with the economy, particularly the price rise, on the economic reforms of the Nineties. The Marxists not only want to stall further reforms, which anyway they are doing by using their veto power on the UPA government, but also to return to the old socialist dogma of command and control economy.

The UPA government has been blackmailed by the Left to stall, if not give up, vital reform legislations in sectors like banking, insurance and pension. The process of disinvestments in public sector that would have fetched thousands of crores of rupees to the public exchequer has come to a dead stop because of the Left. The UPA government itself says that the country needs at least $150 billion in FDI to get the process of huge infrastructure development on track, but the Left opposes FDI. The communists are opposing such innovations as SEZs and organised retail trade. According to them, price rise is manipulated by traders and so ban trading by private parties in everything, from food grains onwards.

They arm twisted Indira Gandhi in 1972 to monopolise wheat trade under government auspices. It proved to be disastrous for her and was directly responsible for the huge inflation that followed and fuelled public anger. These and other "socialist" steps that intensified the scarcity economy that her then closest adviser Mohan Kumaramangalam, himself a top communist leader, had persuaded her to implement, led ultimately to the imposition of Emergency to protect her throne. The rest is history.

Why the socialist days of a communist influenced Congress regime from the Sixties to the end of Eighties, had double digit inflation is well known. The licence-permit raj and the concomitant controls on every aspect of business and production created a governmental behemoth that decided everything, from production capacities and prices and to distribution. From telephone connections to two-wheelers and cars, everything was in short supply, including daily necessities like sugar and kerosene. The economic policy was so skewed that business thought it prudent to retain export earnings abroad and consequently Reserve Bank of India was forced to impose more controls to prevent foreign exchange leaks, and to keep rupee value at an artificially high level. The process was reversed after the reforms of the Nineties, and during the NDA regime, Indian's foreign exchange reserve crossed $150 billion. Now you need not knock at RBI doors to go abroad.

The Left strongly opposed the entry of the private sector in civil aviation and in airport modernisation. Under the socialist garb Congress governments too were blocking this entry. But once the private sector entered this sector, what happened? Ticket prices steadily fell. Today, you can fly from Delhi to Bangalore for a total of Rs 3,000 out of which Rs 1,500 is tax money that is going to the government. On many tickets the actual journey charge is as low as Rs 77. This has forced the railways to reduce its fares.

During the decades of government controlled and managed economy, after every annual budget prices would always rise as government raised call charges, airline ticket charges, railway freight and passenger fares etc., in a scarcity economy. For the first time in the last six years we are seeing all these rates decreasing due to competition. Much of the success of grand visionary schemes like the NDA's Golden Quadrilateral is due to liberal economic policies, with the government allowing business enterprises to take their own business decisions. A scarcity economy has been transformed into an economy of surpluses and waiting lists are now history.

The two communist ruled states are themselves in the grip of reforms and liberalisation with the roles of the political parties changed. In West Bengal, Left Front chief minister Buddhadeb Bhattacharjee has emerged as an eloquent and powerful supporter of private sector industrialisation. It is the Tatas he has invited to set up a low cost car factory, when his dogma should have told him to get such cars manufactured through a state owned enterprise. Why did he go to the Tatas? Why does he go to Mitsubishi for his proposed expansion of Haldia? Why does he go to the Indonesian Salim group for his new industrial city?

The Left comrades in Kerala, now in power, too are caught in the shallow waters of their own ideology. The same Marxists who opposed loans from ADB when they were in Opposition, have now turned to the same ADB for assistance. It is their party secretary who is calling names to all those in his own party's government who are opposing the ADB loan. The Left government in Kerala is worried seeing Reliance retail offering its farmers double the prevailing price for their produce while the Left opposes retail trade going into large business models.

How destructive and disruptive the Left is to public interest is displayed in its opposition to electricity distribution reform. The government controlled distribution machinery displays high percentage of electricity losses, while the private sector owned distribution system is able to reduce losses by a significant proportion. But the Left is obstructing the implementation of the Electricity Act's provisions that are likely to improve the power situation. Yechury and company are refusing to learn from China's experience. China's tremendous market power was let loose by Deng Xiao Ping in the Seventies after he met Singapore's reformer Lee Kuan Yew.

But the Left in India refuses to learn its lessons. Having the UPA government eat out of its hands is a good policy for the Marxists. It is however disastrous for the Congress. In addition, Congress' own foreign-born president is sometimes with the Marxists and then against them. First she opposes SEZ etc. Then she supports reforms like banking and insurance bills. Poor Manmohan Singh is sandwiched between the two. Even calling Buddhadeb Bhattacharjee "my good friend" is not helping Manmohan Singh to get some mercy from Prakash Karat.

Earlier, during the balmy Soviet days it used to be said that when it rained in Moscow, the comrades in India unfurled their umbrellas. Now they are picking up the discards from the dustbin in Moscow and placing them as breakfast on Dr Singh's table.

Courtesy: www.asianage.com, March 16, 2007