New Delhi: Drawing a parallel between the current economic crisis with that in 1991, CPI(M) today said the largest share of external debt now came from external commercial borrowings and the "main culprits" were the big corporates.
"The largest component of external debt today comes from external commercial borrowings whose share has risen from 12 to 31 per cent since 1991.
"Hence, the main culprit for today`s Current Account Deficit (CAD) crisis is not excessive government spending (which is ironically used as the excuse to further reduce subsidies) but India Inc., mostly big corporates," senior CPI(M) leader Sitaram Yechury said.
While the government, on the one hand, asked the people to tighten their belts, on the other, it was opening up almost every sector, including defence production, insurance, banking and pension funds, to greater foreign capital inflows, he said.
In an editorial in the party organ `People`s Democracy`, Yechury said this would "only make our economy more vulnerable to the uncertainties of international finance capital markets while imposing greater pains of existence for the people."
"Just ten large corporate groups have registered a six- fold increase in their total outstanding borrowings during the last six years. Worse, five of these ten big corporates` operational earnings annually are not adequate to even pay the interest on the borrowings. It is India Inc that is caught in a debt trap," he said.
Maintaining that this was the outcome of what the Prime Minister had called "unleashing the animal spirit of the corporates", he said the reform policies which earlier allowed corporates to access up to USD 500 million under the automatic approval route, recently hiked the limit to USD 750 million.
"True to its character, the capitalist State in India comes to its rescue by further opening up the economy, thus permitting them to access greater foreign borrowings."