It was this very same Vajpayee-led BJP in parliament that had earlier opposed such privatisation, donning its by now infamous mask of Swadeshi. As masters at deception and double-speak, the BJP has no parallel in Indian politics.

The government and the captains of Indian big business seek to brush aside the Left's, particularly the CPI(M)'s, opposition to this move as either "ideological" or compulsions of protecting its "constituency of workers." In the process, they deliberately conceal from the people the actual reasons why multinational corporations and US finance capital are eager to seek entry into the India's insurance sector.

Currently, the LIC and the GIC together have nearly two lakh crores of rupees of investible funds. Additionally, the insurance sector in India is growing at a rate of nearly 18 per cent. On the contrary, the world insurance market is growing around 3 per cent. The MNCs and the foreign companies are seeking this lucrative market at a time when their capacity to make profits in their market is shrinking. It is this huge investible fund and the healthy growth rate of the insurance market in India that the foreign companies are eyeing to bolster their profits.

The Vajpayee government, however, argues that since the LIC and GIC are not being privatised and since foreign companies are only being allowed to operate in addition to the LIC and GIC, there should be no problem. According to them, on the contrary, whatever the foreign companies may bring in, would only be an additional flow of capital into the country and not vice versa.

Let us examine this falsification. Any new company in the insurance sector will enter the existing market. Currently, over 40% of LICs and GICs operations are in the rural sector which is not very profitable. But they are able to provide service to the most needed by utilising the profits they make in the urban centres. This is the principle of cross subsidisation. Since the foreign and private companies are primarily interested in their profits, they will compete with the LIC and GIC in the urban sector. This reduces the capacity of the LIC and the GIC to cross subsidise its operations in the rural areas. And, since the foreign and private operators would not enter the rural areas due to lack of profitability, that crucial sector which is home to crores of India's poor will be neglected. What is worse is that whatever little is going there currently through the LIC and GIC would be further curtailed.

Another euphoria that the Vajpayee government is creating is that with the opening up of the insurance sector, huge funds will flow into India to develop our infrastructure. International experience has shown that for all the developing countries put together during the decade of the nineties, there has been a net outflow of capital to the developed countries. Currently, the LIC and GIC are the largest contributors to India's plan expenditure. For the current plan, LIC alone is likely to exceed the target of Rs. 1 lakh crores. To expect foreign companies to invest in infrastructure where the returns are low and take a long time is plain absurdity.

By opening up the insurance sector and adversely affecting the profitability of LIC and GIC, the government, apart from grievously injuring national interest also looses directly its revenues. For the current year, as dividend and tax, LIC alone has remitted to the government nearly a thousand crores of rupees. This is the annual rate of return to the government of India on an initial Rs. 5 crore investment it had made at the time of setting up the LIC.

These, Mr. Vajpayee, are the reasons for the CPI(M)'s opposition. And, these are in the supreme interests of our country and people. If such patriotism is labelled as "ideological", then so be it.

What is worse is that this opening up of the insurance sector is only the prelude to a series of financial reforms that the Vajpayee government is contemplating. Next to follow would be the efforts to privatise the nationalised banking sector. All this is being done when even the UNCTAD has observed that both China and India insulated themselves from the South East Asian crisis that crippled many of the "Asian Tigers" recently, precisely because their financial sectors would not opened up. By taking this decision, the Vajpayee government is taking India on the same path that led to the devastation of the South East Asian economies.

Another canard being spread by the Vajpayee government is that India is committed, according to the WTO, to open up the insurance sector. This is plain untruth. The Uruguay round of discussions which led to the formation of the WTO deliberately left out the insurance sector since the USA did not want to loose its monopoly position. The US while maintaining its strict monopoly control of its domestic insurance sector (only 3% of the market is owned by foreign companies in the US) insists on the opening up of the sector in other countries to maximise its profits and since profits can be repatriated, there will only be a net outflow of the capital from India and not an inflow.