Annual budget by the union government does not any more create inquisitiveness among the common toiling people nowadays. They have seen from experience that this budgetary exercise has been virtually reduced to a routine prattle of how international situation and developments in US are badly impacting our economy, how resilient is our economy so much as to withstand the external shocks and poised to register growth at rate higher than others, customary thrust on ‘inclusive growth’ and ‘poverty alleviation’, increased spending on agriculture coupled with hollow promises of job creation and recently coined refrain of ‘skill development’. Along with with all these, there is some mundane pedagogy on so called fiscal consolidation, pegging budget deficit to a smaller percentage of GDP and boosting of investment. Only some bourgeois economists, academicians, columnists, analysts and industrialists find interest in these sickening rhetoric and statistical gymnastics to comment upon in media as if these are what is most relevant to the country. But, the common oppressed masses who find their life and livelihood deteriorating fast owing to fierce economic onslaught have come to know the fact. The fact is that the government irrespective of the party in power only ditches them with sweet coated words while all riches and benefits accrue to the handful of industrial barons, big business, corporate sector, MNCs and super-affluent to make India a country of super-rich. Not a single burning problem of their worsening life condition is addressed in right earnest. Consequently, the gap between few rich and vast multitudes of impoverished widens limitlessly. Only a section of the tax paying middle class and upper middle class keep a watch whether there is any reduction in the direct tax rates for individuals and rejoice if there is any marginal lowering, being often unaware that such rudimentary relief would soon be eaten away by skyrocketing of indirect taxes reflected in the soaring price line.
Concentration of power at the Executive level
It bears recall that during advent of bourgeois democracy in the period of rising capitalism, its exponents held that people would have a say in determining the policies and allocations in government’s budget through sovereign parliament contingent upon sovereignty of the people. But in decadent moribund capitalism today, bourgeois democracy in all imperialist-capitalist countries including ours, is stripped of all its essence and virtually turned into a farce. Parliament or Legislature is gradually becoming an appendage of the ruling monopolists and divested of whatever people-content it had earlier. Election is so manipulated as to only make passage of power-monger career-seeking bourgeois politicians to the Legislature where there is no meaningful debate on people’s issues. Even parliamentary sessions are progressively curtailed or disrupted for long to avoid desired deliberations on crucial policies most of which are adverse to people’s interest. In keeping with this degeneration of parliamentary democracy, budget decisions are also more and more concentrated at the level of the Executive (ministers and bureaucracy), one of the three wings of bourgeois state, in tandem with more and more centralization of economic and political power in the hands of the bourgeois state through its servitor government. People are reduced to takers of the coercive dictates of the state monopoly capital. The budget by the BJP government for 2017-18 has been no exception to that. Only in so far as trickeries and deceptions to the people are concerned, it has surpassed its predecessors in certain respects.
Conspicuous silence on effects of demonetization
Though common people are indeed indifferent to budget, this time there was some inquisitiveness as to what would the government say about the outcome of the sudden decision of demonetizing 86% of currency in circulation. Though the Prime Minister claimed in a public meeting in Dehradun on 27 December last that the demonetization move has destroyed “in one stroke the worlds of terrorism, drug mafia, human trafficking and underworld” besides immobilizing black money and curbing corruption, people have already come to know that this is a big hoax, if not rank falsehood. All these criminal acts and offences are continuing as before with impunity. Only the sufferings, harassment and impoverishment of theirs have multiplied severalfold. Even the Finance Minister could not but admit that demonetization did cause perceptible harm to the country’s informal sector, the middle economy, peasants, daily wagers, small and middle scale industries, salaried class and district co-operative banks. Instead of empowering the poor, as claimed by the Prime Minister, the stunt of note ban drive has impoverished about 40 crore people in the unorganised sector, close to 15 crore odd casual and manual labourers and 25 crore self-employed and daily wage earners. Most of them are in deep debt. Even the estimated revenue loss to the government has been reportedly Rs 5,500 crores besides around Rs1.5 lakh crore spent on remonetization of invalidated currency. The Economic Survey 2016-17 which gives a review of bygone fiscal year’s performance in the economic front estimated that demonetization would reduce growth in the current year to between 6.5 and 6.75%. Many feel it may be significantly lower, at about 6%. This also is after drastically changing the basis of calculating GDP so much so that computation of 4.7% as per old method would jump to 6.9%.
But to one’s utter dismay, the Finance Minister in his budget speech quietly avoided any reference to the fallout of demonetization like how much of banned currency has come back to banking system, how much black money has been unearthed, how and whether generation of fake notes has been halted and so forth. He also did not spell out how the ‘moneyed and corrupt” have been impaired. Instead he has paraded some vague verbiages like “demonetization has strong potential to generate long-term benefits in terms of reduced corruption, greater digitalisation of the economy, increased flow of financial savings and greater formalisation of the economy, all of which would eventually lead to higher GDP growth and tax revenues” and “effects of demonetization is not expected to spill over to next year.” Clearly, the Finance Minister had nothing to say nor did he feel any answerability to the already slain countrymen who have been further slayed but for this most atrocious note ban drive. It only showed how inhuman, undemocratic, shrewd and anti-people the government is and how petty political agenda of the ruling party to brighten its electoral prospect by appeasing the ruling bourgeoisie overtakes all other considerations.
Some changes in policy matters
Before having a brief review of this downright anti-people pro-capitalist budget, let us focus on certain distinctive features associated with it. First, the budget was placed on 1 February much earlier than the usual scheduled date of 28 February. The government claimed that this would end a colonial hangover, enable speedy implementation of schemes and completion of the process of obtaining legislative approval for annual spending plans and tax proposals before the beginning of the new financial year on 1 April. But critics are of the opinion that such advancement of date would compromise with availability of quality data of economic performance of bygone year. As against current calculations based on July-December data, the budget preparations would be premised on numbers of a month less. Obviously, working on insufficient data would only help shielding the dismal state of country’s economy, particularly during the post-demonetization period.
Secondly, the practice of presenting a separate railway budget has been abolished. Instead, the railway budget has been merged with the general budget on the plea that such clubbing with the budgets of other modes of transport like road, waterways and aviation would facilitate better management of resources under the common head of ‘infrastructure spending’. This is hardly a tenable logic. Railways has long been the artery of India’s travel and transport network under the aegis of the government with a huge establishment providing substantial job and operating mainly on the principle of public welfare. On the other hand, bulk of road transportation, aviation and shipping is with private operators and run on commercial basis. Merger of railway budget with others clearly indicate that with passage of time, train service would also be completely privatized and run on the principle of profit maximization entailing hefty and continuous escalation of tariff increasingly hitting the passengers’ pocket.
Third aspect is that the government has removed separate allocations for plan and non-plan outlays. Non-plan expenditure is what the government spends on the so-called non-productive areas, such as salaries, subsidies, loans and interest, defence spending while Plan expenditure pertains to the money set aside for productive purposes like various projects of ministries. Higher plan expenditure implies that more money is being spent on assets that can multiply income and create jobs. Merger indicates that the government does not want to commit any planned investment upfront and wants to have flexibility in regard to spending mostly on unproductive heads like defence and servicing growing borrowings by the government (sovereign debt). All the three above changes have been made as per the recommendations of NitiAyog created in place of former Planning Commission.The key difference between Planning Commission and NitiAyog is that while the former had powers to allocate funds to ministries and states, this function is now with the Finance Ministry meaning the government. This confirms how in crisis-ridden decadent moribund reactionary capitalism, economic power alongwith political power is getting concentrated at the hands of the Executive wing of the bourgeois state tolling the bell of fascism .
Principal issues concerning people
Any civilized government having minimum concern for people’s growing plight and pauperization is expected to try to take some concrete meaningful viable steps to contain price rise, create adequate number of permanent gainful jobs for the unemployed in public sector through productive investment in key sectors, lower indirect tax and increase corporate tax alongwith toning up the utterly corrupt tax administration to generate better revenue inflow. Similarly, the government ought to ensure price reduction of agricultural inputs by increasing subsidy and guarantee availability of remunerative price to the poor peasants for their crops by freeing the procurement machinery form the clutches of the unholy nexus of utterly corrupt administration-bureaucracy-touts-ruling party satraps-blackmarketers-hoarders. At the same time, the government should put in place an improved storing system of the procured crops and other items of daily use and distribute the same at reasonable price through an ably and stringently managed widest possible network of Public Distribution System. Alongside, there should have been substantial allocation to education, healthcare, sanitation, civic amenities and other public welfare measures and plugging all loopholes of pilferage and leakage. The whole and sole objective should be to free these essential public welfare areas from the stranglehold of commercialization and profit maximization by private operators.
Bluff of ‘peasant-friendliness’
We start with agriculture as the FM has pretended to be very peasant-friendly and said that ‘working closely with the peasants is a non-negotiable agenda of the government’. Claiming that “agriculture is expected to grow at 4.1% in the current year’ albeit with the caveat “with a better monsoon”, the FM boasted to have allotted Rs 1.87 lakh crore (Rs 1.87 trillion) to rural, agriculture and allied sector which is 24% more than previous year. The optimism that has been repeated for a second year in a row is “doubling farmers’ income” by 2022. Avoiding details for brevity’s sake, it can be said that all official statistics despite making a slew of manipulations to distort reality, could not hide the harrowing spectacle of growing misery and penury in the life of the peasants which conform to one’s practical experience. During the last ten years, over 3.5 lakh farmers have committed suicide in India. Peasants’ suicide has increased by 26% during the last two years. Migrant labour from rural areas is increasing thick and fast. This gives enough evidence of the destitution and haplessness of the peasants. All prosperity is skewed in favour of the rural bourgeoisie making a kill at the cost of the poor peasants and agricultural workers.
Coming to budget observations, one is astonished to find that after 70 years of independence and the government priding itself for remarkable advancement in the field of science and technology as evidenced in sending satellites to the orbit and manufacturing sophisticated missiles and other military hardware, the Indian peasants are dependent on rain-god for better crop yield. It is reported that less than half of 142 million hectares of the country is irrigated. While announcing fresh allocations towards irrigation and micro-irrigation, the FM has not explained what happened with the funds allotted towards irrigational infrastructure development during the last financial year. When we consider the fact that more than 50% of cultivable land is un-irrigated, the allocation amount of Rs 40,000 crore in phases would translate into just Rs 10,000 per hectare which is ludicrous. Suicide among the peasants for not being able to get remunerative price for their produce and consequently defaulting loans is rising alarmingly. The BJP government has gone back on its pre-election promise of ensuring Minimum Support Price (MSP) for crops according to the recommendations of the Swamina-than Commission i.e. at least 50 percent above cost of production. To make the situation even worse, the government is again and again emphasizing on contract farming. This budget also reaffirms that. Fact is that poor peasants are exploited by large MNCs in the form of contract farming of so called cash crops as well as GM (genetically modified) crops. Lured by initial promise of better price, peasants tilt towards the contracting MNCs or companies. And once they are entrapped in contract farming, there is hardly any way out. This is how modern form of contract farming, as derivative of globalization of agriculture, is facilitating monopoly invasion in agriculture and holding the poor peasants to ransom. Another hoax is the Fasal Bima Yojana (Crop insurance). While the FM has boasted to have increased its cover to 40% of the farmers, the allocation has been cut from Rs 13,240 crores last year to Rs 9000 crores. Even this allocation has so far overwhelmingly gone to pay private insurance companies rather than to the benefit of needy peasants. Finally, a word about much-trumpetted budgetary allocation. Although agriculture still employs more than 50% of the country’s workforce, it is allotted a miserly and shocking 2.38% of Union government’s expenditure. This amounts to just 0.3% of the Gross Domestic Product (GDP). Even if we combine allocations to the Ministry of Rural Development and Ministry of Water Resources, this is still as little as 0.98% of the GDP.
Posing increase in farm credit limit as pro-agriculture policy
In an extension to last year’s budget, the FM claimed that increasing farm credit (amount of loans banks and financial institutions can grant to agriculture) to Rs 10 lakh crore and decision to integrate Primary Agricultural Credit societies and district co-operative banks on the core banking system will enable inclusion of a large section of rural population within the seamless rural credit ecosystem, bring additional money into the hands of people and thereby boost consumption. Mark the anomaly. Farm credit is stated to be offered to procure inputs for crop production and pay bill of storage. It is no income but borrowing. How would that boost consumption unless the government believes the earning-starved peasants would use the money to buy items of daily use? If that be so, then indeed the government is encouraging a credit-driven demand augmentation in rural areas admitting that the condition of the poor peasants has so deteriorated that they have to survive on loan. But how would they repay that loan unless there is reining on skyrocketing of input prices (fertilizer, seed, pesticide, diesel for running shallow pumps, etc.,) and guarantee of remunerative price for the produced crops? So, either whatever little land some of them still possess would be confiscated or they would find temporary refuge in the expanding claws of the contract farming MNCs or commit suicide. Statistics would also show that most of these credits are availed by the kulaks or rural bourgeoisie flexing their money and political muscle. The only difference the measure makes is that in addition to private players, the government itself through the PSU banks indulges in usury.
Secondly, another fact is not clear to most people. Farm credit is not funded from the budget. It is a target set for banks. Moreover, the stated target of Rs 10 lakhs is just 0.5 lakhs more than the revised one of Rs 9.5 lakh crore in 2016-’17. And there is no roadmap for bringing in small, marginal and tenant farmers, who constitute more than 8 out of 10 farmers, into the formal banking sector. These farmers depend mainly on usurious private money-lending. Interest subvention also bypasses this mass of vulnerable farmers – many of whom are women farmers – as they are unable to access bank loans. So, how does larger farm credit benefit the poor peasant?
Let us look at the mockery with MGNREGS. The FM says that allocation under the scheme of Rs 48, 000 crore this year is up by Rs 10,000 crores. This is a plain lie. In 2016-17, the total allocation was Rs 51,500 crores taking into account both budget allocation of Rs 38,500 crores and the supplementary allocations of Rs 13, 000 crores. Further, there are huge arrears of wages estimated to be around Rs 14,000 crores. As of now, only 46% of payment has been made within specified 15 days. Also, on average, not more than 35 days of work as against stipulated 100 days was made available under this ‘job creation’ scheme. These find no mention in the budget. Hence, the so-called empathy for the rural poor and pledge for doubling peasants’ income are nothing but playing to the gallery.
Healthcare remains neglected
Health and education are two areas that need focussed attention of any welfare state worth the name. But, with Indian government, both the present and the past, the thrust is on increased privatization of both the sectors, and run on commercial basis so that only the rich can have access to both and the impoverished and have-nots are left in the lurch. Let us take healthcare first. India has one of the most shamefully privatised systems of health care in the world. Cost is exorbitant. Miniscule government facility is fraught with all kinds of aberrations—paucity of quality doctors and nurses, shabby conditions of hospitals and rural health centres, non-availability of rudimentary diagnostic facilities, rampant corruption and pilferage, thumping around of touts often linked with ruling party and dishonest administration and so forth. They are often viewed as nothing short of a netherworld. Cost of medicines is spiralling. National Sample Survey Organisation data tells that nearly 70% of out-of-pocket expenditure of Indians is on medicines. But the FM finds no time to address these issues. He only played the broken record of infrastructural development, transformation of more and more sub-centres into health and wellness centres, time-bound eradication of some long-prevailing diseases etc. with no obligation to provide progress report of the bygone years nor did he mention anything about rapid degeneration in the standard of medicare. He said health budget is increased from Rs 37, 061.55 crores to Rs 47, 352.51 crores. However, this falls distressingly short of the long-standing demand to increase allocation to the health sector to at least 2.5% of GDP (assuming GDP to be Rs 2.9 trillion, it stands approximately at Rs 75 billion). Even for ICDS (Integrated Community Development Services), the budget allocation of Rs 15245.19 crore is less than those of 2014-15 and 2015-16 and just half of the 12th Plan allocation for the year 2017-18. Similarly, legitimate demand for increasing salary and other facilities to lakhs of Anganwadi employees and Accredited Social Health Activists (ASHAs), and recognizing them as bona fide workers has continued to be totally overlooked.
Notably, the FM has made a statement that “Poverty is usually associated with poor health.” We do not want to question his wisdom. But, anyone aware of the ground reality knows that fact is just the reverse. Poor health is due to growing poverty and criminally callous attitude of the bourgeois governments irrespective of hue. How subtly the reality is distorted by the political managers of ruling oppressive capitalism!
Step-motherly treatment of education continues
Similarly, while presenting the customary list of the proposed developments envisaged in the field of education, the FM has not said anything whether such develop-ments would be implemented through government initiative or be left to private houses running education institutes solely on commercial basis. It has been rightly pointed out by a section of college and university teachers that the budget proposals are “backdoor implementation of the discredited Draft National Education Policy”. Similarly, the announcement that “Colleges will be identified based on accreditation and ranking, and given autonomous status”, smacks of giving further incentive to full-fledged commercialization in the form of self-financing. This autonomy ought not to be confused with desired academic autonomy which means the government would provide all finance to the educational institutions but would not interfere in their internal management and academic affairs.
Next is about budget allocation to education. Fifty years ago the Kothari Commission recommended to raise public spending on education to 6% of GDP. The BJP in its election manifesto of 2014 stated that “Public spending on education would be raised to 6% of the GDP.” As per Economic Survey, India spent just 2.9% of its GDP on education for the year 2016-17. While commenting on this, Union HRD minister claimed that if spending by both the Centre and the states are taken taking together, it would be 4.5% of GDP. But that is wrong or false. The Economic Survey estimates that from 2001 onwards, government (Centre and state together) spending on education has been hovering around 3% of GDP. The HRD minister further said that the private investment, and not government spending alone, must also be accounted for when considering the 6% figure. But then he is contradicting his party manifesto which said, “involving the private sector would further enhance this (i.e. 6% of GDP)”. This is how the ministers are bluffing people.
Certain other aspects also merit mention in this connection. Over the last six years, allocations to Sarva Shiksha Abhiyaan (SSA), the government’s much-trumpetted programme for universal elementary education, have fallen far short of the central share approved by the Ministry of Human Resource Development (MHRD). For 2017-18, while MHRD estimated a resource demand of Rs 55,000 crores for the SSA, only Rs. 23,500 crore was allocated i.e. 42.7% of the approved outlay. Though in terms of amount, SSA spending is up by 4.4%, allocation towards higher education is at a standstill at Rs 1300 crores. Similarly, allocation towards Mid-day meal is quantum wise lower than 2014-15. Finally, though people continue to pay education cess, education is no priority for the government.
Cutting subsidies to people, allowing huge benefits to corporates and super-rich
The story is similar when it comes to the question of giving subsidy for welfare measures to give some relief to the people gasping to cope with mounting price line of essential commodities. A big section of self-styled economists-experts subservient to bourgeois class interest has long been advocating abolishing subsidy completely since, according to them, this is wasteful expenditure depleting public exchequer to a large extent. In keeping with their recommendation, the process of reducing subsidy in a phased manner has already started. Subsidies as a percentage to GDP have already come down from 1.9% of GDP in 2015-16 to 1.61 % of GDP in 2017-18. Though food subsidy this time is marginally up by 5% (miniscule compared to the rise in food prices), fertilizer subsidy remains the same. Declining trend in petroleum subsidy continues with allocation of Rs 25,000 crores; lower than Rs 27, 532 crores expected this year. If one takes into account share of food (including the allocations under the National Food Security Act), kerosene and LPG subsidies to total budget, it has come down from 9.5% in 2015-16 to 7.9% in 2017-18. Pertinent in this connection is the fact that though the government saved as high as Rs. 1.50 lakh crore because of drastic fall in international crude oil price, the benefit of that has not been passed on to the suffering countrymen. Instead, the government has repeatedly imposed additional duty on oil prices to better revenue collection at the cost of the people. The claim of marginal lowering in fiscal deficit has not been achieved by shrinking overall expenditure, but, among other factors, owing to 35% rise in tax collection in 2016-17 primarily attributable to higher taxes on petroleum products and higher petroleum prices. Who gained most? Obviously the giant oil companies with Ambani-led Reliance petroleum topping the list. Now the government in this budget has rolled out the process of privatization of the public sector oil companies. 67 discovered oil fields of ONGC and Oil India are being processed for privatisation. Once it is an ‘integrated oil behemoth’, private international oil giants shall certainly be attracted in the game of ‘its’ privatisation. In tandem would move the car of disinvestment (now euphemized as strategic sale) of other Public Sector Units (PSUs), once created with public money, on the plea of enhancing revenue. The disinvest-ment target this year is Rs 72,000 crores and list of companies to be thus handed over to private operators include the rail PSUs like Railway Catering and Tourism Corporation, Indian Railway Finance corporation, and IRCON International, general insurance companies, banks and mines.
Coming back to subsidy, the total social sector expenditure of the government (Rs 4,92,635 crore) as a percentage of the GDP is now only 2.92, lower than 3.23 in 2014-15, and 3.43 in the 2010-11. But when it is a question of giving tax exemptions, waivers and condoning defaults to the industrial houses and super-rich, the government is extra-ordinarily liberal and the economists-experts in the pay roll of the ruling monopolists do not grumble about huge loss in public exchequer. Take the figure of revenue foregone now denoted as ‘revenue impact of tax incentives’ or “indirect subsidy to preferred taxpayers”. If we add revenue foregone in the case of corporate tax, on account of Special Economic Zones (SEZ) not taken off, on account of deduction of export profits of units located in SEZs (section 10A and 10AA), deduction of profits of undertakings engaged in generation, transmission and distribution of power as well as profits of industrial undertakings derived from production of mineral oil and natural gas and non-recovery of direct tax, the figure would be a whopping Rs 9,38,827 lakh crores (Rs 9.38 trillion). In other words, it is 3.5 times higher than total subsidy of Rs 2.72 lakh crore. So, when government expenditure, which is a source of economic stimulus (if government spending is in employment-intensive areas), is cut to 12.5% of GDP (actual amount—Rs 21.5 lakh crore of which interest payment on sovereign debt is Rs 5.2 lakh crores) as a step to lower fiscal deficit, there is no dearth of amnesty to the industrial houses, corporate barons and super-rich. Now when fiscal deficit is envisaged to be around 3% of GDP because of self-declared ‘fiscal prudence’ of the government, this deficit would now be financed by heavy market borrowing (target this year is Rs 5.8 lakh crores and overall sovereign debt stands at 62% of GDP), disinvestment of PSUs and then printing additional currency notes—all three measures are against people’s interest.
More benevolence to industrial houses and corporate barons
We know that most of the large industrial houses and corporate behemoths are defaulting huge bank loans. It is also alleged that a good part of this loan has been used for creating individual wealth by the industry-owners who despite owing thousands of crores to banks continue with lavish lifestyles and amassing huge wealth.
Latest figure says that amount of loans having no chance of recovery (termed as Non-performing Assets or NPAs) has now touched almost Rs 11 lakh crores. Two-third of impaired loans relates to just 24 big companies. This is public money which is thus being embezzled by the guilty corporates. In fact, this is naked subservience to the sinister class interest of the ruling monopolists who have been plaguing India’s Rs.90 lakh crore banking industry.
But the government is very lenient to them. Already banks have been asked to write off as high as Rs 1.14 lakh crores of NPAs (given a showy name of ‘hair cut’ by banks). But that is not all. NPA provisioning break for taxation has been increased to 8.5 % from 7.5% to clean the balance sheets of the banks. Of the slew of measures, first one has been to set up Asset Reconstruction Companies (ARCs) and give opportunity to the banks to get rid of NPAs by selling those bad loans to the ARCs at a discounted price and receive security receipts (SRs) in their books. Overnight, zero value assets would be turned into value-giving assets, bad loans sold to ARCs would appear as investments in the books of the banks and the defaulter companies would become candidates for getting fresh loans. Incredible indeed! Thus, instead of penalizing the NPA holders, the government is creating provision for granting further loans to them. In fact monopolists like Gautam Adani have already been granted fresh loans despite their huge defaults of previous loans. Economic Survey says public sector banks avoid tough but essential decisions for granting fresh loans to such defaulters for fear of the four Cs — Courts, Central Vigilance Commission, Central Bureau of Investigation, and Comptroller and Auditor General. So, the government is now out to ensure that the four Cs do not levy unfair accusations and launch witch hunts.
There is another aspect. Consequent on demonetization, banks are flushed with deposits forcibly extracted from the public. This additional deposit is lying idle with them and as per law, interest would have to be paid on that.. On the other hand, because ongoing recession accentuated every day with further shrinkage of market on account of rapid fall in the purchasing power of the common people attributable to mounting unemployment, job loss and diminishing wage—inevitable in dying capitalism—there is no demand for fresh credit from borrowers whom the banks consider “credit-worthy” (i.e. capable of repaying loan). It is learnt that as an immediate solution, Reserve Bank of India (RBI) has started selling them government securities which are already in its possession, so that they get an interest income which the RBI foregoes. This is tantamount to transferring government’s budgetary funds to the ailing banks as a kind of bail out besides promised recapitalization (i.e. fresh direct financial assistance from public exchequer). In order to find another window for release of the extra cash with them, the banks have once again been drastically reducing interest on housing loan at the behest of the government. In turn, the budget also talks of refinancing individual housing loans of about Rs 20,000 crore through National Housing Bank and providing interest subvention for housing loans. In other words, there is a frantic effort to drive the economy based on credit and usury and at the same time find a parking place for accumulated cash. As a result, bank interest on public deposit is also coming down rapidly denting into income flow of common people, particularly retired senior citizens dependent on earning through bank interest. Moreover, scope is widened for more intensive speculation centred on securitized loan packages with individual housing loans as underlying assets. This might well entail another sub-prime like crisis.
On the other hand, there is every possibility of a junk of the fresh credit off-take by large corporates making way into speculative capital market of shares, bonds and other tradable financial instruments including derivatives on food articles, as has been the trend of late. To encourage more and more exposure to capital market, the government in this budget also has announced some additional policies notwithstanding gross abuse of some of the existing provisions. For example, the FM himself has acknowledged that exemption provided under Section 10 (38) has been misused by unscrupulous individuals for declaring their unaccounted income as exempt from long term capital gains by entering into sham transactions. The modus operandi involves creation of ‘khoka’ company, putting some worthless investment, showing great appreciation in that, listing the companies on stock exchange and the quickly get out of it by encashing the high value. Thus bogus long-term capital gains by ‘khoka’ companies are about Rs 80,000 crore. Yet, the base year of calculating capital gains tax has been changed from 1981 to 2001 in the budget so that an asset, mostly shares and real estate acquired earlier at lower price say in 1982 and sold today at higher price, would attract much less tax capital gains (paid on the difference between sale and buying price) since price level of 2001 would be much higher than 1982. Thus, tax evaders, manipula-tors, speculators and punters are set to benefit at the cost of the people.
So called tax balms
As regards taxation, budget has sought to apply some balm over the wounds of the tax paying middle class who suffered badly because of demonetization by marginally reducing individual tax rate from 10% to 5% for annual income from above 2.5 to 5 lakhs albeit with some caveat. Similarly, to sooth the fray of the mid-cap business hit considerably by demonetization, tax rate for companies having turnover not exceeding Rs 50 crores has been reduced to 25%. But the fact is that as per government’s own admission, effective tax paid by larger companies is 24% as against statutory rate of 32.45%. Some of the biggest companies pay taxes at rates even lower than the average. Earlier all income arising from Indian assets or through transfer of a capital asset situated in India was to be deemed to accrue or arise in India and taxed in India. Budget has removed foreign portfolio investors from the ambit of such tax. This would allow more opportunities to speculate in Indian capital market without paying tax.
A few experts have held that this marginal relief in individual tax would boost consumption and hence production. This is another lie. People, irrespective of whether taxpayers or not, pay indirect tax at exorbitant rates. There are 20 cesses and surcharges like education, krishi kalyan etc. which we pay along with every other tax. CAG recently observed that fund generated through swachh bharat tax is either remaining idle or diverted elsewhere. But the Finance Minister did not utter a single word about it, nor did he spell out what happened to the additional resources raised through agriculture cess. Already service charge is 15%. Once Goods and Services Tax (GST) are clamped, one would have to brace for an increase in tax incidence in services to at least 18% to start with. After GST, all existing cesses will be subsumed into it, plus a new cess would be levied over and above that to compensate states for fall in their revenue. A rough calculation shows that right now, assuming no GST, the shortfall of around Rs 20, 000 crores because of marginal lowering of direct tax rates would be covered by mopping up Rs 60, 000 crores from common people through indirect taxation route. So, while it is a feast for the large industrial and corporate houses, it is doom for the toiling millions.
Customarily, budget on unproductive defence sector has gone up to Rs 2.74 lakh crores excluding pension liability. There is also thrust on domestic arms manufacturing which is boosted further because of opening up 100% FDI. Already large Indian monopoly houses are on a spree to have joint ventures with foreign arms manufacturers particularly with those based in US and bagging orders from the government also. Anil Ambani’s Reliance Defence has bagged Rs 916 crore valued contract from the Indian Coast Guard to build 14 fast patrol ships. As per latest report of the Stockholm International Peace Research Institute (SIPRI), India accounted for 13% of the total global arms import from 2012–16, which is the highest in the world. So when people are starving and virtually vomiting blood to eke out a living, the government in order to stimulate sagging economy artificially is spending heavily on arms production and stockpiling arms to flex its military muscle as a rising Asian superpower. This, as explained in detail by Comrade Shibdas Ghosh, Founder General Secretary of our Party, is militarization of economy and domination of industrial-military complex in dying capitalism.
Peril of capitalist economy
For some scholars and pedagogues who by way of indulging in pedantic discourses play second fiddle to the government’s claim about resilience and growth prospects of the country’s capitalist economy, a pertinent fact is worth pondering. They claim that Capital Formation is the broadest indicator of investment spending. For information of the common readers, Capital formation is a term used to describe the net capital accumula-tion during an accounting period through transfer of savings from households and governments to the business sector, resulting in increased output and economic expansion. Capital formation in our country has declined from 32.3% in 2014-15 to 31.2% in 2015-16. Provisional data, which does not factor in the impact of demonetiza-tion, suggests it would decline further to 29.2% in the current fiscal. The actual figure could turn out to be lower. It indicates that people can hardly save whatever little they earn. Hence, there is hardly any savings and whatever is saved cannot find productive investment avenue. This is a glaring manifestation of increased peril of obsolete reactionary capitalism.
Roadmap for eventual privatization of Railways
Now, a few words may be added on the combined Railways budget. Of capital expenditure estimated at Rs 1, 31, 000 crore, only Rs 55,000 crore will come from gross budgetary support. While the Railways would raise Rs 22,000 crores from PPPs, including its joint ventures with state governments and public sector units, internal accruals are estimated to bring Rs 14,000 crores. Then where would the balance fund come from? There is no word about that. With accidents becoming a periodic affair, there is no real concern expressed except announcing a safety fund Rs 1 lakh crore over a period of 5 years. The FM has suppressed the fact that currently as high as 1.42 lakh rail safety staff posts are vacant across India and safety aspect is outsourced to private operators without any monitoring on their work and accountability. An increase in fare has been held back may be due to the impending assembly elections in five states. But already it has been stated that railway tariff which earlier was declared in the budget, but now decided by the lately created Railway Tariff Authority to remain outside the budget, would be fixed taking into considerations costs, quality of service and competition from other forms of transport. In other words, tariff would see periodic spurt imposing further burden on the passengers for whom train travel has become just short of a nightmare , fare-, safety, punctuality and comfort-wise. The budget has talked of eventual corporatization of Metro Rail. And gradually the entire operations would be privatized on the pretext of its non-viability under government sector. Cunningly it has been added that a new Metro rail policy will be allowed focussing on standardisation and indigenisation (meaning domestic sourcing of computer support) of hardware and software which would open up new job opportunities. Besides this, the budget did not speak of job creation anywhere else though it talked of “comprehensive labour market reforms to improve ease of doing business”, thus giving clear indication of more anti-labour legislations to be in the offing.
Hoax of transparency in political funding
Finally, we focus on the hoax of bringing “greater transparency and accountability in political funding, while preventing future generation of black money”. The FM has said henceforth cash donation from one person to any political party cannot be more than Rs 2000. Donations by cheque could be of any amount. Then came the stunt— issuance of bearer ‘electoral bonds’ redeemable in the account of any political party within a specific period. Anyone can purchase these bonds and give to any party. Anonymity of the bond buyers would be maintained. As laundering of high value notes showed earlier, such curbs are easily evaded. Everyone knows that only a tiny fraction of political money enters party books, so the measure is toothless. First, the threshold for disclosure will be reduced significantly (from Rs 20,000 to Rs 2,000); and second, this threshold will be tied to the individual rather to any single contribution. According to prevailing laws, donors can make an infinite number of payments without disclosing their identity by segmenting their donation up into multiple, smaller contributions. Since no single payment exceeds the Rs 20,000 threshold, parties are able to keep the vast majority of their funding hidden. Now, bogus entries of Rs 2000.00 each would be increased tenfold. Anonymity would protect the donor. Moreover, the electoral bonds besides being a convenient instrument of funding the political parties would also become new instrument to hold black money. As these would be bearer bonds, even smugglers and drug lords would use it globally to exchange clandestine money. Indeed fertile (!) is the brain who has conceived this great “reform” of purifying political funding. Let us put it bluntly—both the donee vote-based power-hungry bourgeois political parties as well as the donor corporates, industrial barons and holders of unaccounted money want the deals black and the corrupt capitalist system abets that. With the system and the players remaining unchanged, there cannot be any cleansing of the process. These are all meant for playing to the gallery.
So, it is clear, that except some lingual gymnastics to shield the truth, there is no change in the content of this budget when compared with the previous ones—brazenly anti-people, nakedly pro-capitalist. Obviously the industrial house, corporate sector and their lackeys are effusive in praise for such a budget which has given them more than what they expected as doles, concessions, waivers and licence to fleece people more fiercely. Budget promises of ‘cashless economy’, ‘digital India’, ‘inclusive growth’, ‘sab ka sath, sab ka vikas’, transition from ‘a discretionary administration to a policy and system based administra-tion’, from ‘favouritism to transpa-rency’, from ‘blanket and loose entitlements to targeted delivery’, from ‘informal economy to formal economy’ and ‘objectivity in decision making’ are all waffles to hide what is there up their sleeves. Suffering millions must realize that no political party subservient to the class interest of ruling capitalists can offer any relief to them in the budget which is nothing but a blueprint of escalated squeezing of the poor and increased bonanza for the rulers. So there will be pretended empathy for the poor, tall talks of inclusive growth and hollow promises of bumper opportunities but at the end all will end in a fiasco for common men. Suffering people must therefore rise in protest, in united organized movement and wrest some of their legitimate demands under pressure of movement. There is no other way they can dissuade the bourgeois government from annually repeating such deceptive budgetary exercise to pauperize them on a higher scale.