Privatisation of Financial Sector

 

The 20^th Congress of the CPI(M) strongly opposes the privatization of people’s savings by the Government of India.

 

India has a bright record with respect to people’s savings. Household savings amounted to Rs 17,49,311 on March 31, 2011, and gross domestic savings constituted 32 per cent of Gross Domestic Product.

 

Domestic savings are channeled by means of insurance, banking, mutual funds and pensions to make up a stock of capital that constitute an important resource for meeting infrastructural and social investment needs. These savings represent a alternative preferable to foreign capital in building our nation’s economy.

 

The primary reason for the nationalization of national financial institutions such as the major scheduled commercial banks, insurance, and other institutions was to make funds available to the state for public investment. Today, however, the Government of India has chosen a different path: that of privatizing financial institutions and sources of  domestic savings. The three Bills currently before Parliament – the Banking Laws (Amendment) Bill, the Insurance Laws (Amendment) Bill, and the Pension Fund Regulation and Development Authority Bill, are part of the dangerous move to hand over control of domestic savings to the private corporate sector, including international finance capital.

 

There is a live danger that savings will be exposed to the vagaries of the stock market. The recent Budget proposal to give tax concessions on equity-based investments is a move in this direction.

 

The role played by financial derivatives in the financial crisis of 2008 is well known. Now insurance companies are also being allowed to invest in derivatives; and there are indications also that mutual funds will also be allowed soon.

 

This Congress

 

·        opposes the Banking Laws (Amendment) Bill, the Insurance Laws (Amendment) Bill, and the Pension Fund Regulation and Development Authority Bill;

·        opposes the dangerous move to allow savings to be invested in derivatives;

·        opposes the dangerous move to divert pension funds to stock market

 

 

The Congress calls upon all sections of the working class to join the struggle to protect the people’s savings.