NEW DELHI: A decade after socialist India began economic liberalization under pressure form the World Bank, this ambitious process has run into a wall because of resistance from ultra-nationalist groups that support the right-wing party of Prime Minister Atal Bihari Vajpayee.

Before embarking on Monday on a week-long tour of Cyprus, Denmark and Britain, Vajpayee told journalists that reforms were “on track and irreversible”. But many think he was whistling in the dark.

India’s economic liberalization drive, begun by the Congress party in 1991, has been opposed by left-wing parties, trade unions, non-government organizations, the bureaucracy — and even Vajpayee’s own Bharatiya Janata Party (BJP).

The party had promised to return the country to the path of ‘swadeshi’ or economic self-reliance, first advocated by Mahatma Gandhi during the anti-colonial, independence movement.

On gaining power, however, the business-friendly BJP quietly shelved its ‘swadeshi’ plans so much so that, last week, the fundamentalist Rashtriya Swayamsevak Sangh (RSS) or National Self-help Organisation, which provides ideology and muscle to the party, served notice that a “foreign model” of economic growth was unacceptable.

The dour leader of the RSS, K.S Sudarshan, railed against an “urban-based, high energy-consuming, labour-displacing and ecologically-destructive western model of development” that he said was being pursued by the Vajpayee’s government at the behest of the International Monetary Fund (IMF) and a coterie of Indian capitalists.

Sudarshan also called for the sacking of Arun Shourie, who as minister for disinvestment has over the last two years gained for the government 2.3 billion dollars through the sale of equity in 31 public sector units, including automobile manufacturer Maruti, a joint venture with the Japanese automotive giant Suzuki.

Vajpayee might have ignored Sudarshan’s nationally-televised diatribe, except that other constituents of the multi-party coalition that he leads have also criticized the government’s divestment policies that appear to favour powerful business groups in the name of gaining “strategic partners” in key state-run sectors.

India’s vocal Defence Minister George Fernandes, who leads the regional Samata Party (Equality Party), has called for a complete review of the divestment policy after the powerful Tata group bought up the international long distance company Videsh Sanchar Nigam Limited (VSNL) and the Reliance group acquired Indian Petrochemical Company Limited (IPCL).

Fernandes alleged that monopolies were being perpetuated through the sales, by keeping other public sector corporations out of the bidding process and also by preventing the participation of retail investors. “Divestment should not be such that it makes the rich richer,” he said.

Pressure from Fernandes and other Cabinet ministers opposed to further divestment of public sector units, such as Petroleum Minister Ram Naik, have forced Vajpayee to put on hold sales that may have fetched the government, according to a strategy outlined in Parliament, an estimated 10 billion dollars in the current year.

Many say that the sudden revival of the BJP’s ‘swadeshi’ or self-reliance slogan, which helped it to seize national power in 1998, may be a sign that Vajpayee’s government, beleaguered by political dissension and by unrelenting pressure from the opposition Congress party, may be readying for a snap poll though general elections are not due until 2004.

On Saturday, Vajpayee defended the privatisation of state-run firms at a meeting of the powerful Planning Commission on the grounds that many were loss-making and that the money was needed to boost growth and meet long-pending social objectives.

“An eight per cent growth target is a must in order to build an India free of poverty, illiteracy and one that is capable of meeting challenges to national security,” Vajpayee argued.

Vajpayee referred in particular to the slow pace of power sector reforms, which he said was responsible for the current stagnant growth rate of 5.5 per cent.

But Vajpayee was helpless to prevent the sacking of power minister Suresh Prabhu, who had pursued an aggressive economic liberalization agenda, by the Shiv Sena party. This party is a close ally of the BJP.

Vajpayee also emphasised that foreign direct investment needed to “strengthen economy” was dependent on India’s divestment policies. —Dawn/The InterPress News Service.