India: Budget 2010- Offers Much for the Rich, Nothing for the Poor!

-Rajesh Tyagi/ 2.3.2010

Amidst applause by the big business groups, Finance Minister Pranab Mukherjee, presented $239 billion budget of Union Government, on Friday, in Lok Sabha (Lower chamber of parliament), for the financial year 2010-2011. Stock markets showed a rare rally, as the budget was being presented by the Minister. On BSE sensex, a record surge of more than 300 points was recorded. With the Government’s pledge to cut fiscal deficit, without corresponding cut in the profits of capitalists and the luxuries of the bosses, and even at the cost of steep inflation, Government borrowings, expansion in the net of indirect taxes, hike in fuel prices, etc.etc., i.e. a pledge to put all burden on the back of the working people, there was jubilation in business world.

As budget focussed upon the concerns and interests of big business, the expectations of the rich were all met. Capitalist bosses have thus welcomed the budget from all sides. Unlike the times, when Congress led UPA Government in the centre held power with the aid of support from Stalinist left front and thus was forced to accede to maintain at least the farce of a centrist budget, this time Congress did not have any such compulsions, as none of its allies could exert any pressure. This, not only relieved the Congress from influence of its allies, the allies themselves were relieved of the responsibility of exerting any pressure.

More free hand was assumed by the Government to shift the burden of the budget upon the backs of the working people, as no elections except those for one State Assembly of Bihar, are in the offing, this year. With Congress having clear mandate for another four years at its disposal, the timing of presentation of the budget, doubtlessly, is most convenient for it to unveil its policy and proposals to favour the big business, in complete derogation to the interest and opinion of multi-millions of working people. This made the big business specially cheerful in advance, anticipating a budget without any hassles from allies or ineffective opposition.

Attitude of the business world, to the Union budget, is best expressed in the words of H.M. Nerukar, MD, Tata Steel, who lauded it saying that, “It has surprised mostly on the positive side. It is a good budget which lays out the target and road map of the Government to maintain growth momentum, while ensuing greater fiscal prudence in the near term”.

Though the previous Governments whether supported by left or right, have presented budgets, essentially favouring the rich and burdening the poor, but the budget this year is peculiar in many of its projections.

This budget has raised the state borrowings to unprecedented height, with an abrupt 1.3% hike in the same. With this estimate Government borrowings would touch Rs.15,000 Crore per week. This is necessitated by the measures taken by the Government to set-off the losses of big business during the recent financial crisis. The direct aid, concessions and subsidies given to the business enterprise, resulted in huge fiscal deficit of $75.8 billion, part of which Government plans to make up through state borrowings. Repayments for these borrowings would give further push to future budget deficits and resultant inflation.

Fiscal deficit has gone on steep rise since 2007-08, surging from 2.7% to 6.2% of GDP in 2008-09. Measures proposed to curb the same could not have impact as the non plan expenditure, mainly for arranging luxuries for political and administrative bosses and ever-growing pilferage in public exchequer, has neutralised them, continuosly.

Even with such huge fiscal deficits and unparalleled borrowings creating immense pressure upon public exchequer, roll back of the huge and convenient stimulus measures, like concessions in direct financial aids and concessions in Excise and Taxes, offered to business enterprise last year during recession, has been put at very low pedestal. Huge allocations have been made to upgrade the infrastructure to stimulate trade and business, while no support is proposed for expanding and perfecting the infrastructure in social sectors like the public distribution system.

With continued focus upon divestment of public sector, another major arena, the Government has selected to make up for budget deficit by $8.6 billion, is through sale of stakes in public sector to private players. Dismantling of public sector by turning it over to private sector, is one of the stark features of the budget. Under the cover of public-private partnership, large scale enterprise are planned, which would make it possible for the capitalist bosses to have at their disposal huge chunks of public money accumulated through state channels, including direct and indirect taxation, and utilise them with the aid of state bureaucracy, to mince private profits.

Burdening lower income groups with proposals for additional taxes of Rs.20,000 Crore, the surcharge paid by companies is further lowered, while support and incentives for SEZs would remain in place untouched.

The much trumpeted slogan of ‘inclusive growth’ is apparent landscape for a farce with no whisper in the budget to curb consumer price inflation, the biggest concern for working and poor people. Alongside no measures have been projected to boost food production and productivity. With Kharif production declining by 6.5% (18.5 million tonnes) over 2008-09 and a loss of 46.18 lakh hectares of cultivated land, the speculations of a good Rabi harvest in the budget is a distant dream.

Remarkable rise in fuel prices threatens not only to dilute the marginal benefits given to lower income groups, but a further shot in inflationary index. Direct rise of upto Rs.3 per litre in petrol and diesel prices would make direct impact on food prices, in which transportation cost is major component. In February alone the food prices rose by 17.5%. Government has though recognised the fears that surging prices of essential food items may trigger a double-digit inflation in food prices, which in its turn may spill over to steep general inflation, resulting in some sort of social unrest, even food riots, but fell short of addressing the issue. Allies of UPA, Trinamool Congress (TMC) and Dravid Munetra Kazhgam (DMK) have demanded rollback of hike in fuel prices to avoid cascading effect on overall prices.

Finance Minister, who went to answer the business magnates in New Delhi the very next day of delivery of his budget speech, acceding to worries of high inflation said that, “I had to take that risk of inflationary pressure to mobilise resources to prepare economy for a higher growth trajectory, to enable a reduction in Government borrowings and return to fiscal consolidation. In the course of time it will be absorbed”. Rather, he should have put it more clear that in the course of time people will digest this ‘bait’.

As the Government showed its readiness to demolish the regime of subsidies, gradually, the Chamber of Commerce and Industry was quick to respond, saying that, “the budget is inclusive and strikes right balance between growth propulsion and fiscal consolidation”. The fact is that in the guise of ‘rationalisation of subsidies’ the Government is ready to undermine all subsidies, starting from fertilizers and fuel. No measures are however suggested to cut the non-plan expenditure, which makes the major component in structure of fiscal deficit.

Marginal raise in income tax slabs with restructuring thereof does not offer any substantial relief for those having yearly income upto Rs.5,00,000/-. Only those above it, the upper middle class would be beneficiary of it. Concessions in direct taxes for upper middle class, are coupled with burdens in indirect taxes, bringing twelve new items under service tax and raising of fuel prices.

The budget as a whole focuses upon keeping the economic recovery robust, counting chiefly upon the public savings and investments. In its bid to lower the fiscal deficit, whose main component is the non-budgetary aid given to propel the business in crisis last year, the government has chosen consciously to shift the burden upon the shoulders of unsuspecting poor working classes.

No provisions have been made in the budget to address the issue of ever rising unemployment in youth, which is one of the biggest social concerns, especially in urban areas, rural as well. Employment exchanges in Delhi alone have enlisted four lakh unemployed young people with them.

Inadequacy of budgetary allocations for basic social sectors like health and education may be gauged form the fact that this budget has gone down by .01% from 0.36 to 0.37%, this year, in budget allocations for health, despite the promises of UPA for an allocation upto 3%.

Price control system, a regulatory measure in the hands of the government for ensuring supply of essential commodities in the market at regulated prices, is the focussed casualty. The items in fuel, food and fertilisers would be left open to blind market forces. The Government has planned first to dissociate subsidies from ‘price control system’ and then to put the subsidies to an end.

However, it is not out of place to mention that the budget unveils the policy of Government only partially, while leaving the rest to be executed outside it. The reforms on the anvil like demolition of protections to workers under labour laws, relaxing cap on FDI etc. are the issues which are not addressed in the budget proposals are left to be tackled outside the same. Similarly, issues like demolition of subsidies on items of domestic use like cooking gas, are again left out in the budget to be dealt with separately and gradually.

Assurance of ‘inclusive growth’ in the long run, with the measures proposed in the budget does not seem to be serious word as the past record shows that fiscal consolidation of economy does not result in any relief to the working people. Budget, in nutshell, offers relief to the rich and promises to the poor. The promises, notably are made at a time when speculations about the world capitalist economy, going to take a double-dip are gaining ground. World Bank President Robert Zoellick, on Friday, though denied speculations about double-dip, but admitted the possibility of a re-plunge of economy, saying that, "The world economy is no longer staring into the abyss but we're definitely not out of the woods by any means," Zoellick told a meeting of the Bretton Woods Committee. "I don't believe a double-dip is likely but the pace of recovery is going to be quite uncertain." He said: “As economies recover there were also hidden dangers and re-pricing of sovereign credit risk would be a challenge in 2010”. Commenting upon the crisis in Greece, he said "It extends beyond Greece and in the case of the U.S., I think this will also be an issue for states and municipalities".

The Stalinist left -CPI and CPM- who staged a ceremonious protest against the budget, this time in the shape of a walkout from parliament, during budget speech of the Finance Minister, did not present a serious critique of the budget. Immediately after staging walkout, Sitaram Yechury, leader of CPM, told the press casually that the action was not well thought of, rather was spontaneous. TMC under Mamata Banerjee and DMK under M. Karunanidhi, have only registered a meek opposition to hike in fuel prices. None of the bourgeois parties or any of the Stalinist party has posed a serious challenge to the rabidly pro-rich budget of the Union Government.

The bourgeois governments, the managing committees of capitalists, present budgets offering everything what can be offered to capitalist, political and administrative bosses and have only false promises to offer to the working people. Whatever little they seem to offer to common people, stands diluted soon through the channels of inflation and price hike etc. Only the government of the working class can really prepare and present a budget aimed at management and welfare of public affairs and public welfare. Striving towards a socialist revolution is thus the only legitimate answer of the working class to the apathy of the bourgeois governments and their capitalist-landlord bosses.

1 comment:

  1. Little huhmour on the Budget proposals by Pranab Mukherjee


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