A few days ago, Finance Minister Arun Jaitley said that the result of the Delhi Assembly polls, in which his party won a mere three seats, will not impact Budget 2015 or dictate the future of economic reforms. A few months ago, he hinted that his second Budget will unveil a slew of second-generation reforms. “The fact that four (Assembly) elections have been won and one (Delhi) not won does not mean reforms will not happen,” he said.
In a telephonic conversation with Tehelka, Baij Nath Rai, the president of Bharatiya Mazdoor Sangh (BMS), which is a part of the Sangh Parivar and the largest trade union in the country, spoke a different language. “We are unhappy with the government’s policies related to foreign investment, disinvestment of State-owned firms and labour. The dialogue between us is still on. Wait until Budget 2015 to see if the government pursues free market policies. Talk to me then.”
The fact is that the finance minister may lose his job and the prime minister’s popularity among the masses may dip if this year’s Budget doesn’t meet diverse expectations. The industry hopes that it will make their lives easy. The middle class wants reliefs and sops, just like the poor. And then there is the Sangh Parivar, which is against reforms and liberal policies. Jaitley’s second Budget will decide his future, and is a make-or-break one for Narendra Modi.
If the Budget displeases the investors, growth will suffer. If the middle class and poor feel hurt, the implications will be seen in the forthcoming Assembly elections in Bihar and Punjab. More importantly, if the Rashtriya Swayamsevak Sangh (RSS) and its offshoots such as the BMS, Swadeshi Jagran Manch (SJM) and Bharatiya Kisan Sangh (BKS) are unhappy, they will publicly demand their pound of flesh. The last is the most dangerous for Modi’s survival, as the Sangh can make his life miserable.
It is an open secret that the Sangh hates several of the pro-market economic policies being pursued by this government. But it has kept quiet till now, or shown its displeasure in a sober manner, because the RSS decided to give its poster-boy Modi a chance to prove that he conforms to its expectations, and is not an out-and-out reformist. The time is running out, especially after the Delhi debacle. 28 February 2015 may turn out to be the last opportunity for Modi and Jaitley to placate the BJP’s ideological wings.
Last month, the SJM, which has been a torch-bearer for the use of swadeshi products, upped the ante about NDA-2’s attempts to woo foreign investment. It was also angry with Modi’s Make in India mission, which aims to expand the manufacturing sector with help from foreign MNCs. “FDI (foreign direct investment) is not a panacea of all (economic) ills. FDI has done bad and good to the economy,” said the SJM, and demanded a white paper on the issue.
Sangh Parivar insiders claim that despite Modi’s public stance that he supports Deen Dayal Upadhyaya’s ‘Integral Humanism’, which was accepted as the RSS’ philosophy, the prime minister has pursued different policies. Upadhyaya maintained that Indians should consume products that were made in India by Indian businessmen and not foreigners. Therefore, the Make in India programme is contrary to the economic ideology of the Sangh.
The BMS is critical of the pro-industry labour policies. It is scared that the government may make it easier for businesses to retrench workers, and amend the Contracts Labour Act to allow employers to sack workers without notice or compensation, as long as the former promise alternative employment. In a pre-Budget memorandum, the BMS and 10 other central trade unions, urged the finance minister to adopt the policy of ‘ease of living’, and not an ‘ease of business’ one.
In October 2014, when Modi unveiled several labour reforms, he said: “Ease of business is the first and foremost requirement if Make in India has to be made successful. Ease of business is the priority for Make in India.” This went badly with the BMS and the RSS, which felt that workers’ benefits were more crucial to improve the overall standard of living in the country.
The problem faced by contractual labour is another priority for the BMS. Instead of making it easy for the industry to hire and fire people, it demands the opposite. In the pre-Budget memorandum, the central trade unions, led by the BMS, said that the laws should “regularise all contract workers working in perennial nature of jobs”. The BMS accused that the government was the biggest defaulter when it came to contract labour; the State-owned entities were among the largest employers of such workers.
A few months ago, Jaitley said that the government could sell the loss-making State-owned firms to private buyers. “We are certainly open to look at some set of PSUs (public sector undertakings) that could do much better in private hands. There are still a large number of them that are on the verge of closure, where people are going to lose employment. Given a choice between their continuing in the present shape or getting privatised, the second option will be preferred,” he said.
For obvious reasons, this didn’t go well with the BMS, which felt that privatisation would lead to more loss of jobs. According to it, past experiences have proved that the first step that the private owner takes to reduce costs and turn around the company is to lay off people. Therefore, the BMS’ solution is that the Centre should change its policy towards sick PSUs and “revive the PSUs that have some hope”.
In recent times, Jaitley has assured the trade unions that “neither the railways nor Coal India will be privatised” and the government “will maintain the government character while implementing the FDI policy, and will not raise the FDI cap by more than 49 percent”.