Friday, February 18 2005 16:16 Hrs (IST) - World Time -

New Delhi: Ahead of the budget, Communist Party of India-Marxist (CPM) ideologue Sitaram Yechury has cautioned liberalisers in the United Progressive Alliance (UPA) coalition about the anti-incumbency factor in Indian politics and made ominous references to former Chief Ministers Chandrababu Naidu and S M Krishna who had lost elections last year.

Writing on 'Truth About Liberalisation Effect' in his party mouthpiece 'People's Democracy', he referred to news reports that Prime Minister has claimed that the impressive performance of the Indian economy has silenced the critics of liberalisation.

"Far from silencing its critics, these years of liberalisation has brought into currency the famous 'anti-incumbency' factor in Indian politics. If, indeed, the critics of liberalisation were silenced, then neither Chandrababu Naidu nor S M Krishna would have lost the elections.

"Or, for that matter, since the initiation of the liberalisation policies, no incumbent Prime Minister in India, from Narasimha Rao downwards, has ever been elected," he said.

Yechury said liberalisation had benefited only rich and India Inc due to tax concessions, thus leading to shrinkage in revenues.

"Thus the shrinking revenue base of the Government will have to be reversed if peoples' discontent has to be met. Any such reversal, which must be done under popular pressure, amounts to vindication of the critics of liberalisation," he said.

"What is required is consistent sustainable growth accompanied by a significantly higher index of distributive justice," he said, adding, "The objective ought to have been to increase the tax-GDP ratio so that the Government will have greater revenues at its disposal to fulfil the constitutionally mandated social obligations to the people."

Declining tax-GDP ratio was more due to tax sops given to the rich and India Inc, which led to shrinkage in Government revenues, he said, describing the concessions showered on them as subsidies. "The incentives gives a veneer of respectability for subsidising the rich," he added.

Citing that tax-GDP ratio slowed to over nine per cent in 2000-01 from about 11 per cent in 1989-90, he said a drop of near two per cent in it means a near Rs 60,000 crore loss to Government.