ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Fortifying Investors’ Interests

The government’s stimulus package, by prioritising foreign and private capital, undercuts the significance of self-reliance.

In the midst of the COVID-19 crisis, the government’s rescue-cum-stimulus package, which purportedly aims to build a self-reliant economy, has also ironically paved the way for the expansion and control by private as well as foreign capital. This step taken by the government has offered private and foreign capital an entry into hitherto inaccessible sectors of the economy. The government, by announcing the opening up of strategic sectors, has thus safeguarded the interests of capital and ensured new arenas for unbridled capitalist accumulation. But, considering the unfolding humanitarian crisis involving the migrants and the working poor and excessive loss of livelihoods, these announcements have come at an inopportune moment. Moreover, these announcements were made without any consultation with the stakeholders or discussions and debates in parliamentary committees. Although these reforms were on the government’s agenda for some time, these were kept on hold until now.

The government’s structural reform announcements have focused on eight sectors, such as defence production, coal and minerals, airspace management, airports, maintenance, repair and overhaul (MRO) in aviation, power distribution companies in the union territories, space, and atomic energy. The reforms include permitting and expanding private participation in these sectors in accordance with the neo-liberal agenda pursued by the government, subjugating societal interests to that of private and foreign capital, leading to the accumulation of profits by the investors. In the defence sector, foreign direct investment (FDI) limits have been relaxed from 49% to 74% through the automatic route. What would these relaxations in FDI norms imply? For certain, a greater share of returns on investments will be transferred out of the country. Therefore, the effects of the multiplier on the domestic economy and employment generation would be limited.

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Updated On : 2nd Jun, 2020

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