CPM to fine-tune FDI stand

Party may amend stand on aid from Multilateral agencies

The 18th congress of the CPI(M) is debating a report on policy matters that approves state governments taking aid from multilateral agencies such as the World Bank and the Asian Development Bank as long as the lenders do not make demands on states for "structural adjustment".

Titled, " On certain policy Matters", the document is a part of the political-organisational report of the CPI(M), and is supposed to provide an answer to why West Bengal is allowed to woo foreign investors and accept aid from multilateral agencies, whereas the central government has to be circumspect about the same initiatives.

"Under globalisation, the neo-liberal policies reduce state governments to extreme penury, by reducing central transfers to them, by charging higher interest rates on loans given to them and by precipitating recessionary conditions and peasant distress. On the other hand, the imperialist agencies come with 'aid packages' to these very governments (and especially attractive ones for the communist-led governments with not too many strings attached)," the report says setting the tone for the debate on whether why these loans are acceptable.

Suggesting "guidelines" for these funds, the report says: "These governments, therefore, may accept aid for developmental projects but the important criterion that needs to be adhered to is that these should come with no recommendations of policy changes, usually referred to as structural adjustment programmes," the report says.

Politburo member Sita-ram Yechury said the report would also put down the conditions under which foreign direct investment could be invited into the country. He said as long as FDI augmented production capacities, upgraded technology and created jobs, it would be welcome.

But he failed to explain how FDI in retailing, which was perceived as a "threat to employment" of thousands in India, was being pursued in West Bengal. "That is being currently discussed at the congress, you will know the future of these policies after the congress ends," he said.

Yechury also pointed out that a bad model for states to emulate would be what N Chandrababu Naidu did in Andhra Pradesh in accepting World Bank loans. The CPI(M) has held that those loans and the structural adjustment undertaken by the Naidu government are responsible for the spate of farmers' suicides.

Other issues that the report will settle once and for all, according to Yechury, was the party's working relations with foreign-funded non-government organisations.

"We have decided not to work any more with NGOs that are fully-foreign funded. They have their own agendas", he said.

Similarly, self-help groups could not be used by multinational as "marketing agents" he said. While SHGs were hig-hly beneficial, they could not replace rural banks, he added.