NOVEMBER 10, 2008
India's Leftist Parties Hope to Gain Followers Amid the Financial Crisis
By ERIC BELLMAN and JACKIE RANGE
KOLKATA -- India's diehard Communists are hoping to parlay an "I told you so" stance on the global financial crisis into more parliamentary seats in the coming national elections, expected early next year.
Kali Ghose has been a card-carrying Communist for more than 60 years and is the general secretary of the Center of Indian Trade Unions, a group of unions in the Communist stronghold of Kolkata, formerly Calcutta.
Eric Bellman
In an interview in his office, decorated with photos of Karl Marx, Mao Tse-Tung and Ho Chi Minh, he said he foresaw today's problems of excess borrowing and volatility hurting the common man. He also claims that if India's Communists hadn't stubbornly and successfully opposed market reforms, the world's largest democracy would be in much worse shape.
"This is a crisis of the imperialistic economy," he said. "Now people understand that what we propagated all this time is true."
For the past 20 years, the Left Front, a group of political parties led by the Communist Party of India (Marxist), has typically held more than 50 of the up to 552 seats in India's legislature, even as India embarked on a series of reforms that turbo-charged its economy over the past few years. It hopes to attract new converts as disillusionment with unfettered capitalism spreads.
"There is a nonleft audience that is more receptive now to what we say," said Prakash Karat, general secretary of the CPIM, in an interview. For instance, he said, the threat of unemployment as India's economic growth slows means young middle-class Indians have learned a lesson: "unionize or perish."
That lesson was dramatically demonstrated when Jet Airways Ltd., one of India's biggest airlines, recently tried to lay off 1,900 nonunionized flight attendants. After mass protests, the government persuaded the company to reverse course. Indian Prime Minister Manmohan Singh last week called on business leaders not to fire employees in the downturn.
"The average guy doesn't know about layoffs. That's going to be a problem; they'll turn socialist as soon as they see any pressure," said Pramod Bhasin, chief executive of Genpact, a large Indian outsourcing firm based in Gurgaon on the outskirts of Delhi. "I worry it will stop reforms and people will say, 'See what happens in a free market?' "
Even so, the Communists face a tough sell nationally. Many in India view them as dinosaurs whose ideas have been undermined by India's rapid economic growth. And there is no prospect of the Communists winning power on a national level. Either the Congress Party, which leads the current ruling coalition, or the right-wing opposition Bharatiya Janata Party almost certainly will form the next government. Both are expected to pursue further economic reforms, albeit in the context of threats from the crisis.
"The reform agenda had a dynamic of its own in a democratic process," said Duvvuri Subbarao, the governor of the Reserve Bank of India, India's central bank, in an interview last month. "That dynamic will be affected, certainly, by what's happened around the world. But I don't think it will be the case that we'll put reforms in cold storage."
Still, neither Congress nor the BJP is expected to win a clear majority, leaving them scrambling for support among smaller parties to lay claim to a mandate for government. The Communists and other left-wing parties could play an influential role in the next government's agenda and in the debate over what economic model India should pursue.
The Communists already have shown they can be effective in that role. They were part of the current coalition before withdrawing their support from the government in July in protest against India's new civilian nuclear-technology pact with the U.S. Until the split, they were a key reason the government's privatization and economic liberalization efforts had stalled.
The Left Front helped block measures such as the revamping of the public pension-funds sector and increasing foreign ownership in banking. Instead, they advocated restricting capital flows, limiting foreign ownership in finance and controlling foreign exchange, food and fuel prices -- all policies the government has pursued to some degree.
Mr. Karat, the CPIM general secretary, said his colleagues deserve "much of the credit" for insulating India from the worst ravages of the economic storm engulfing the world. While bank lending has tightened dramatically, India is expected to emerge from the crisis relatively unscathed compared with many other countries.
"The Wall Street model of unregulated, finance-driven speculation and greed for quick profits has collapsed with disastrous consequences," the central committee of the CPIM proclaimed in a statement after its annual meeting in Kolkata last month.
The Communists "were quite right about the danger of some reforms and I imagine they will crow about it," said Bharat Karnad, research professor at the Center for Policy Research, a New Delhi think tank. "They will make a case that their advocacy has kept the Indian economy from spiraling downward."
Aditi Nanavaty, 27, came home to Mumbai with a master's degree in economics from the National University of Singapore and planned to join Lehman Brothers, or some other investment bank, early this year; but then, things got ugly. As more of the top investment banks announced problems, she had to dial down her salary expectations and change the companies she was interested in joining. While she is far from joining the Communist Party, she said, she better appreciates the job stability a union would bring.
Not even the Communists, however, have been immune to pro-market economics. In the state of West Bengal, where they have dominated politics for 31 years, the Communists have added a hefty dose of economic pragmatism to their beliefs. They are soliciting foreign and local companies to stimulate the economy. U.S. Treasury Secretary Henry Paulson, on a visit to India last year, met with West Bengal's chief minister, Buddhadeb Bhattacharya, to discuss investment opportunities.
Even the party faithful concede that a revolution isn't in the cards. "We cannot take up all the industries run by [the private sector] overnight," said Mr. Ghose at the Center of Indian Trade Unions. But, he adds, "The capitalist system has to go and it will go eventually. That is our task."
Write to Eric Bellman at eric.bellman@wsj.com and Jackie Range at jackie.range@wsj.com
