For taking credit for the economy not being worse than it is, the CPI-M general secretary, Prakash Karat, has correctly excoriated the prime minister, Manmohan Singh. Indeed, so nervous is the government about the economy (instead of being genuinely concerned from the first) that it believes killing all the bad news will miraculously turn them good. An Assocham forecast of twenty-five to thirty per cent job losses post-Diwali in such sectors as aviation, information technology, steel, financial services, real estate, cement and construction has got the finance minister, P.Chidambaram, foaming in the mouth. Since business associations cannot exist, leave alone prosper, directly confronting the government, Assocham has withdrawn the report without abjectly apologizing. But how long can you go on not telling the truth?

Karat, for example, has caught the prime minister's lie that, to quote a news agency report, "the UPA government had strengthened banking and insurance sectors and India was able to meet the global financial crisis because of these steps". If India's economic crisis is not worse than it is, thank the Left, in particular the CPI-M, for it (Commentary, "It's about market CBMs," 27 October 2008). For four years, till the Left was giving outside support to the government, the government could not hike the FDI cap in private insurance to forty-nine per cent. Last week, the Union cabinet, no more bound by Left anxieties, approved precisely that, the FDI hike in private insurance. The bill will most likely be tabled in Parliament in December and the Left will oppose it, although that may not prevent its eventual passage.

What's the danger of the FDI cap hike in insurance? A CPI-M statement puts it succinctly. "…the increase in FDI cap," it says, "could lead to the outflow of Indian people's savings to lubricate speculative profits". American International Group or AIG, which was one of the players pushing for a FDI cap hike, was prevented from going bankrupt in September by a $143 billion US government bailout package. Experts now say the bailout is not working. If AIG was allowed to go down, in US government thinking, the domino effect would have sunk other American institutions.

The Left directly blocked AIG and other insurance companies from benefiting from a FDI cap hike before. This is why when the PM claims the government strengthened the insurance and banking sectors, Karat gets livid. Recently in Delhi, the CPI-M general secretary was unusually candid about the four-year Left outside support to the government, and the hard time he had in blocking the sellout in insurance and banking. "We even cited the case of AIG itself, which was under scrutiny for bad accounting practice," said Karat. "We told them, 'What is the need for bringing in such companies here?'"

The significant point Karat makes is that those in government are as ideologically dogmatic about liberalization as the Left is accused of being against it. Recounting discussions with the PM and Chidambaram against financial sector liberalization, Karat said, "After spending hours together, they used to say we have taken an ideological position. It is in fact they who are stuck to the ideological dogma of neo-liberal policies." "My hair," added Karat, "turned grey arguing with Chidambaram." It is such ideological fixity that turns ministers like Chidambaram against anybody who brings down their make-believe world. It is this that is behind the savage attack on the Assocham forecast of tremendous job losses soon. Then there is the inevitable comparison with the NDA.

The projected seven per cent growth rate under the UPA government, said Chidambaram, would "create more jobs than was done in the entire NDA regime, when the growth rate was only 5.8 per cent". But there is also Prakash Karat's very considered opinion. Karat said that the effect of the financial meltdown would be felt soon. "This is going to lead to the loss of lakhs of jobs," said Karat. Since Karat is not Assocham, he cannot be told to shut up. But that is not to say that the government is speaking in one voice. At the Beijing Asia-Europe Meeting, Manmohan Singh said apropos crashing markets that "Speculators have had a free run for far too long a period." That "free run" infected Indian markets as well and his government did not intervene to bring sanity to it. Rather, as the markets crashed, Chidambaram was urging investors to stay invested and the government through the media was coaxing others in. The PM might like to ask his finance minister why he was hell bent on shoring a casino market that could only burn up more investors. And Chidambaram might wish to check with Manmohan Singh why he squealed against the markets when they were crashing.