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| An agenda of affirmative action | | |
Arjun Sengupta
May.18 : After the election results, we should address issues of national concern within the framework of a national agenda, with programmes to meet at least four major challenges. The Congress is the only national party eminently suited to formulate and implement that agenda.
The first is concerned with national security. It is not a simple issue of law and order that a reasonably competent administration should be able to provide. What is important is to deal with the root causes of the internal insecurity following from disaffection of the people suffering economic deprivation, social discrimination and a deep sense of injustice. Programmes to improve living conditions must complement affirmative action to help the disaffected.
The second concern is external insecurity. With our neighbouring countries falling apart, we need a foreign policy to influence events without giving up our commitment to a just international system. The Sri Lankan situation today threatens peace and stability in the region. The war is coming to an end but the ethnic animosities aren’t. A major effort has to be made to rebuild trust between the communities with the help of India. It was Indira Gandhi who provided support to the Sri Lankan Tamils in distress, without supporting their violence. The same was true of Rajiv Gandhi. Over time both the Tamils and the Sinhalese people came to trust India. We must build on that goodwill with financial and other forms of support to reconstruct Sri Lanka.
Similarly, Bangladesh was liberated with the help of India. After 40 years, millions of Bangladeshis still consider Indira Gandhi as their saviour and India as their well-wisher, though some of them display strong antipathy. Bangladesh is again in trouble. Sheikh Hasina, the present Prime Minister of Bangladesh, has been a genuine friend of ours who needs to be helped and supported.
Pakistan is now facing an enormous crisis. The challenge to Indian foreign policy is how to help democratic forces and oppose the fundamentalists.
Indira Gandhi was responsible for the liberation of Bangladesh and the splitting up of Pakistan. But shortly after the victory, she held out the olive branch by not only releasing the 90,000 Pakistani prisoners of war but also reaching an understanding with Zulfikar Ali Bhutto to sign the Simla pact.
The then Prime Minister had no illusion that this would resolve all the problems between India and Pakistan. But she realised that after the Bangladesh war, Pakistan’s democratic forces had to be supported with concessions so that they may withstand the pressure of their fundamentalists. That approach based on promoting understanding and support of the civilian forces, without compromising our interests, has again become important.
Pakistan’s internal situation is very fragile. India must display an understanding of the situation in spite of the shrill anti-Pakistani stance taken by many of our communal elements. For this we need to have an understanding with the United States.
In fact, in the current international situation, a mature relationship between India and the US is essential to promote our external interests. We cannot bypass the US, not only in the context of Pakistan, but also in developing our position with the West Asian countries, even China. That was the lesson of Jawaharlal Nehru’s foreign policy, which was independent, non-aligned and friendly to the then Soviet Union, but also never against the US. Even when we differed with the US government — the height of it was reached during the Bangladesh war — we built an enormous support for ourselves among the American people, civil society and the American Congress. It is that tradition of foreign policy that must be revived. No one can mistake that as subservience to the US.
The third most important challenge that India is facing is economic insecurity. The world is going through an unprecedented recession. With globalisation and our open linkages with world trade and investment, India cannot remain unaffected.
The two areas that caused maximum concern — a drastic fall of the Indian stock market and a severe slackening of our exports — resulted directly from our integration with the world economy. We cannot halt that integration. Nor can we ignore the fact that our private investors also suffer from the loss of confidence in the stock market. We have followed what the industrial countries have done for their economies — to inject liquidity in the banking system and provide stimulus through tax reduction and other supply-side support to the corporate sector. These have not worked very much here, just as they haven’t in the industrial countries.
The problem is one of lagging effective demand which depends on investors’ confidence in the economic uptake, and consumers increasing their spending on domestically-produced goods and services. Tax concessions given to those who have a low propensity to consume, or putting liquidity into the system hoping that credit expansion will automatically rise with lowering of interest rate, presumes a responsiveness of demand through price elasticity. However, the problem is the shortage of effective demand resulting from a fall in purchasing power.
The only way to revive demand in such a situation is to see what the Chinese have done, and what a proper Keynesian approach would suggest. Thus, what is required is to increase the purchasing power of those who have a high propensity to spend, and to increase production by units not requiring substantial investment for capacity creation. The policy has to raise the purchasing power of the poor. This is immediately translated into increase in demand for goods and services that are domestically produced, mostly by small and marginal units that can expand their production quickly. The economic stimulus package of this government has to be basically that of social assistance.
The other challenge is that of expanding employment, and ensuring social security. In the years of high GDP growth, employment growth had declined. A totally new approach to economic planning, one that makes expansion of gainful employment the objective and economic growth the means to achieve it, will have to be a crucial element of our national programme.
Expanding social security will be the Indian contribution to the general economies of growth and welfare, similar to the Beveridge Plan of post-war Britain.
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