The United Progressive Alliance was out to mortgage the economy to foreign capital by deciding to raise foreign direct investment (FDI) cap in certain sectors and allow foreign investment through automatic route, the Communist Party of India (Marxist) has said.

Desperate measures were being adopted by the government faced with mounting economic difficulties, the CPI(M) said in a statement here on Wednesday.

The party said it was opposed to the 100 per cent FDI in the telecom sector. The decision to allow foreign capital beyond 26 per cent in defence production was fraught with serious implications. This would open the way for foreign control of the vital defence production sector.

“This bankrupt policy of the government is motivated by need to attract more foreign capital flows to meet the widening current account deficit. But the supine attitude of the government to foreign capital is only going to lead to further flow of profits and resources out of the country,” the statement said.

Already the government had given up the claim on capital gains tax which the Vodafone has to pay. The proposal to dilute the norms for investment in multi brand retail would adversely affect domestic industry.

The proposal to increase FDI in the insurance sector must be adopted through legislation in Parliament. The CPI(M) and other opposition parties should thwart this move in Parliament, it said.

Disastrous step: CPI

Describing the decision as a “disastrous and desperate measure,” the Communist Party of India said: “The economy is already in bad shape. The value of rupee against dollar has declined to the lowest level. GDP growth rate has declined to less than 5 per cent. Unemployment has increased, making the future of the Indian youth very bleak. Prices of essential commodities have shot up. Oil marketing companies are hiking the prices of diesel and petrol arbitrarily and frequently,” a party statement said.

“The Congress-led UPA-II government, instead of reviewing its anti-people, neo-liberal policies, is relying upon FDI. After multi brand retail trade, now the government has decided to open up all sectors, including the sensitive sector defence, and increase the FDI cap in very strategic sectors like telecom,” the statement said.

“The country is yet to overcome the loot and losses due to the 2G spectrum scam. Now 100 per cent FDI in the telecom sector will be disastrous not only in terms of economy, but in terms of national security. After the disclosure of U.S. spying into the affairs of other countries, including India, it is a matter of serious concern,” it said.

“Funds will flow out”

CPI MP Gurudas Dasgupta said the inflow of foreign funds to India would depend on the profitability of the economy and right now India was going through a serious crisis with high inflation, slowdown and falling value of the rupee.

“Whatever steps the government takes, it is unlikely that the funds will flow into India. Rather, there is every possibility that the funds will go out of the country.”

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