HVK Archives: "Unalloyed capitalism is not an answer for a nation"
"Unalloyed capitalism is not an answer for a nation" - Sunday
N.V. Subramanian (New Delhi)
()
17-23 August 1997
Title: "Unalloyed capitalism is not an answer for a nation like India" -
Interview - Jaswant Singh
Author: N.V. Subramanian (New Delhi)
Publication: Sunday
Date: August 17-23, 1997
Last week, the I.K. Gujral government faced a major embarrassment when it
was forced to withdraw the Insurance Regulatory Authority (IRA) Bill in
Parliament after realising that the Bill was sure to fall through. This
was not only a set back for the UF government, as a whole, but for finance
minister P. Chidambaram, in particular, who had set great store by the
passage of the Bill.
Clearly the government had miscalculated the support for the Bill in the
House. And one possible reason why it was misled was the BJP's refusal to
back the Bill even after giving the impression earlier that it was ready to
go along.
Did the BJP really change its mind at the last moment? Jaswant Singh, the
BJP's finance minister in its 13-day government at the Centre, clarifies
the party's position and articulates its opposition to the entry of foreign
insurance companies into India.
Sunday: Did you, or, in your knowledge, anyone else give any assurance to
the finance minister that the IRA Bill would be supported?
Jaswant Singh: The finance minister certainly spoke to me about certain
amendments moved by two or three BJP members. I explained the BJP's
position-which I repeated in Parliament-as stated in its election manifesto.
Firstly, we advocate an opening up to Indian entrepreneurs. Secondly, we
do not favour the entry of multinationals in the field. Transnational
insurance companies with much greater financial clout would prevent the
growth of a vibrant indigenous Indian insurance industry.
And, so far as an IRA is concerned, we believe that a multi-member body is
needed. When I enunciated all this, the finance minister had no
difficulties and said he'd be satisfying the House in regard to foreign
participation in this sector. This conversation certainly took place.
What was sought was an assurance that there was no intention to permit
entry of transnational corporations in this sector under the guise of the
IRA Bill.
Q: Did he take what you said to him to be an assurance?
A: It will be difficult for me to say what the finance minister assumed.
To be fair to him, I will say that discussion on the Bill followed a
comprehensive discussion in the standing committee where all parties are
represented. All parties had given the go-ahead except the CPI(M)'s
(pauses)...
Q: ... Biplab Dasgupta, who gave a dissent note.
A: Yes. It is therefore for the finance minister to draw such conclusions
as he did.
Without being unfair, I do not think legislation in Parliament and its
enactment is the responsibility of any single minister. It is the
government of the day that brings forward the legislation. A minister
simply pilots it.
And, it is not for anyone in government to point out that a failure to
steer safely the passage of a Bill through parliamentary passions is that
of the Opposition, which suggestion is disingenuous, to say the least. I
think the BJP continued to play its role as the Opposition with caution,
with restraint and with responsibility.
In any case, this government is an artificial construct sustained in office
by the wholly questionable device of support from outside.
Q: In the standing committee of Parliament, there was no opposition of the
Bill by the BJP.
A: This aspect of foreign intervention was raised by the BJP and it was
answered to their satisfaction. But you must understand that committees are
in aid to deliberations on the floor of the House. They are not an
alternative or a replacement. The role, duties, functions of Parliament are
facilitated, not
Q: Are you personally opposed to foreign capital?
A: As a party functionary my views become subservient to party views. In
its election manifesto of 1996, the BJP has stated its preference for (a)
long-term capital in (b) high-tech areas.
If we improve our regulatory mechanism and the financial services sector,
we can absorb more capital than has been presently demonstrated.
Q: But you have just killed one regulatory Bill. And usually insurance and
pension funds come as long-term capital.
A: When you talk of long-term capital, you have to examine the role of
insurance. Banking is natural to India. Insurance is not. Only 56 lakh
out of a population of 90 crore or less than .5 per cent - have life
insurance because of the inefficiency of LIC and also due to cultural
resistance to insurance.
Foreign insurance companies with more investable resources are -looking at
this enormous market of 90 crore. If even a third of this population is
covered, look at the enormous benefits that would accrue.
These benefits must not go out of India. At a coverage .5 per cent, LIC
sits on a treasure store of nearly Rs 50,000 crore which is not efficiently
utilised. Imagine the treasure if 30 per cent of India were covered.
The cultural and institutional resistance can be broken by breaking the
state monopoly. Indian entrepreneurs should be allowed in. But foreign
money ... ? No.
Q: You are one of the few liberalisers left in your party which is
increasingly becoming swadeshi. Are you an endangered species?
A: I do not think so. Economic reforms divorced from a larger concept of a
moral universe and a national impulse will dilute our sovereignty.
Swadeshi in essence is a voice against precisely such blurring of lines of
economic sovereignty.
It would also be a great error to think that unalloyed capitalism is an
answer for a nation like India. We might or might not be a poor country
but we are a country of the poor. At least 350 million people cannot feed
themselves. The fashionable words of today - globalisation, market forces,
etc -do not mean, in the Indian context, an abolition of the state. What
the nature of that state ought to be and whether the Indian state has the
required attributes are different inquiries.
Q: Do you see the Bill ever going through?
A: Not (if it's moved) by this government. There has to be mote
consultations. The first step is for the standing committee to examine the
IRA Bill along with the GIC/LIC Acts to set all doubts at rest.
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