UNION BUDGET 2018 More a vote-oriented exercise than a policy statement on economics

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Budget, as we know, is a fiscal tool to address the economic problems the people of the country face and intend to be resolved, at least mitigated. The people of India have been gasping with back-breaking problems of spiralling prices, mounting unemployment, spurt in job loss, progressively falling income, increasing burden of rising taxes particularly indirect taxes, lowering of interest from banks and national savings. As a fallout of all, misery and penury of the toiling millions are growing by leaps and bounds. People normally look forward to the budget to see how the government intends to tackle these issues to give them some relief from this ongoing torture and torment. But belying that legitimate expectation, the annual budgets for the last several years, irrespective of which bourgeois party is in power, have been turning more and more into a veritable farce. Budget documents abound in suppression and distortion of facts, overload of hollow promises and illusory expectations and yet shrewdly projected as pro-people, pro-poor though the underlying objective has been to brazenly cater to the class need of the ruthlessly oppressive ruling monopolists. And in course of this transition, the BJP-led central government has turned the budget of 2018-19 into a campaign document of the ruling party for winning coming elections. It has been so blunt and glaring that even a BJP minister could not but sarcastically comment: “Arun Jaitley announced everything in his budget speech except the date of the next election. Maybe, he forgot to read the relevant paragraph.” What was significantly noticed was that just after the FM’s budget speech, PM Narendra Modi delivered a 25 minute speech in media glare to outline the benefits and the vision of the budget— an exercise that looked like the sounding of the poll bugle. “This budget strengthens the foundation stone of ‘New India’ with a focus on agriculture to infrastructure. It covers aspects such as health plans for the poor and middle class and it has plans to increase wealth of small entrepreneurs”, Modi said. Is the reality so? Let us proceed to see.

 

So called focus on agriculture and doubling farmers’ income by 2022

The thrust of the areas highlighted in the budget are agriculture, healthcare and ‘ease of living’. We first take up agriculture since both the Finance Minister (FM) and the Prime Minister have claimed that the budget is pro-farmer. First of all, the budget talks of increasing the minimum support price (MSP) of crops by 50 per cent over the cost of production. This declaration has been highlighted as implementation of the 2006 Swaminathan Commission Report on agriculture. There is a twist, if not distortion, in it.

The Swaminathan Commission suggested fixing of the MSP for crops “at least 50 per cent more than the weighted average cost of production”. There are two cost measures for agriculture. The first one (A2+FL in technical term) consists of all expenses paid by the peasants in cash and kind, like the expenses on different heads like seeds, fertiliser, hired labour, fuel, irrigation, insecticides, and above all, an imputed value of the unpaid labour of the family members that went into the farming process. The second one (C2) is the comprehensive cost measure, which includes A2+FL and also includes imputed value of land rentals, interests over working and fixed capital, etc. The budget announcement is for increasing the MSP by 50 per cent using the A2+FL as the base leaving out the other component of C2. Here lies the catch. The MSP is already higher by 40 per cent on the A2+FL cost and therefore, the new hike will be a meagre 10 per cent hike on the present MSP. Moreover, this declared increase is on unannounced crops and as pointed out by Dr Swaminathan himself in a media interview, the government has actually left out the vast majority of farmers who cultivate the announced crops like paddy, millets, etc. When the FM announces the fulfilment of the BJP poll manifesto promise of granting an increase in minimum support price (MSP) for farmers at cost plus 50% in respect of rabi crops, he misleads the country. It has been between 3% to 38% and not 50%.

Next comes the all-important issue of toning up the procurement mechanism. As anyone familiar with rural economy knows that notwithstanding all tall talks and high sounding phrases of e-marketing, price availability online and gearing up the Agricultural Produce Marketing Committees (APMCs) etc., procurement of crops from the peasants continue to be dominated, if not controlled, by an unholy nexus of big MNCs-corrupt administration-middlemen-ruling party leaders-panchayat touts. This nexus manipulate things in such a way that the peasants are compelled to distress sale. Next is that the peasants pay escalating retail prices for inputs but are denied remunerative prices for crops. Beset by that, the poor peasants default loans. Unable to bear with the ignominy of default and bite of hunger, many of them have been committing suicides. In the last three years of the BJP rule, peasants’ suicide has reportedly increased by 26%. The much-trumpetted Fasal Bima (Crop Insurance) which leaves maximum peasants ineligible for claim has proved to be a cruel hoax. Neither the budget nor the Prime Minister in course of his sickening self-eulogy addresses any of these problems. On the other hand, a section of the cheerleader economists and market analysts shamelessly claim that this announcement of a higher MSP for farmers would boost farm produce leaving more money in the hands of farmers, which in turn would lead to higher rural consumption and trigger spike in rural demand. Incredible indeed!

Equally incredible is the claim of doubling farmers’ income by 2022 in this budget as well given the above-mentioned factors as well as some other aspects. A survey shows that in 2015-16, the majority of the farmer households earned something around Rs. 1,600 a month. The Economic Survey has also revealed stagnant agricultural growth over the past four years and projected a fall of 25% in agricultural output within a few years because of climate change. If that be so, then the question is what is the concrete plan to overcome the problems caused by natural calamities? If the government can send satellites after satellites to the orbit, boast of manufacturing latest sophisticated missiles and other military hardware including nuclear weapons, then is it to be believed that scientific development of the country is so poor that it is incapable of tackling the issues of storing flood water and release the stored water during drought through proper irrigation system? The Economic Survey 2017 has further pointed out that the average GVA (Gross Value Added—a new measure that gives the figure of output minus intermediate consumption) in agriculture of the last four years had been merely 1.9 per cent. For doubling farmers’ income by 2022, GVA growth rate should be at least 12 per cent per annum. What a novel promise attuned to reality!

Budget 2018 claims that a massive spending of Rs 14.34 lakh crore has been decided on rural infrastructure like construction of roads, new houses, toilets, and providing new electricity connections.  But, the bulk of this expenditure would be from non-budgetary resources. It is not clear what these non-budgetary resources are. Given the pretended emphasis on the rural economy, the task of the government was to alleviate immediate stress of the toiling rural poor and increase public investment in rural infrastructure. However, the budget for the Ministry of Rural Development gets a mere 4% increase in allocation. In fact, the actual allocation to the agriculture sector is merely 2.36 per cent of the budget, lower than even that of last budget!  The expenditure on agriculture and rural development, as percentage of GDP, is also reduced from 1.5 per cent to 1.08 per cent.  Moreover, boasting of increasing the volume of institutional credit for agriculture sector from year-to-year taking it to Rs11 lakh crore for the year 2018-19 is another deception. This is just a mandate to the banks and other financing institutions and not a budgetary subject. The budget promises to give loan to the fisheries sector and animal husbandry. But there is no budget allocation for that. Financial institutions like NABARD would raise funds from the market and then give this loan. Yet, this has been a part of budget announcement.

Secondly, institutional credit hardly reaches the poor small peasants but gets largely cornered by the big peasants and the rural bourgeoisie. The term ‘farmer’ which the government uses with so much of customary passion includes these rich peasants and rural kulaks as well. So, “farmers’ interest” per se does not mean the interest of the poor and marginal peasants. Affluence and aggrandizement of the rural kulaks, big agro-firms owned by the bourgeoisie and MNCs can also, therefore, be passed as rising income of the farmers. How much the government is concerned about the rural poor is revealed from unchanged allocation of Rs 55,000 crores under MNREGA. But, if one considers pending payment of Rs 4,800 crores to the state governments for 2017-18, the allocation is lower. And yet we are to believe that the Prime Minister’s claim of having unveiled a pro-peasant budget  is not mere  rhetoric, no palpable parade on vending false dreams!

The budget also says that “in order to encourage professionalism in post-harvest value addition in agriculture’’, hundred per cent tax deduction in respect of profit derived for a period of five years from financial year 2018-19 is granted to the ‘Farmer Producer Companies’. This move is also questionable. These companies though projected as a hybrid between cooperative societies and private limited companies in fact, are entities under private ownership and controlled by the moneyed and landed gentry. There are reports of covert entry of even MNCs in these companies. Such a tax bonanza would, therefore, carry coal to Newcastle while the poor and marginal peasants, the sharecroppers would reap no benefit of that. Let it be very clear that even a co-operative in capitalist set up is principally guided by the laws of capitalism and hence in dying capitalism can in no way be conducive to the interest of the poor peasantry.

 

Hoax of introducing “World’s largest healthcare programme”

The FM’s speech mentions two main interventions – health and wellness centres that “will bring healthcare system closer to the homes of people” and “a flagship National Health Protection Scheme (NHPS) to cover over ten crore poor and vulnerable families (approximately 50 crore beneficiaries) providing coverage up to five lakh rupees per family per year for secondary and tertiary care hospitalisation”. The FM boasted that “this will be the world’s largest government-funded healthcare programme.” Since then, this line has been very emphatically articulated and repeated by the Prime Minister and the television channels. But is what is claimed true or would it in any way mitigate even a bit of the perilous healthcare situation in the country?

The scheme in fact is an insurance policy that is stated to be providing a cover of up to Rs 5 lakh for 10 crore families per year for secondary (district hospitals and community health centres) and tertiary cares (like admission in a super-speciality hospital). In fact, the scheme was announced in the 2016 Budget itself, the only difference being the raising of cover from Rs 1.5 lakhs to Rs 5 lakhs. But, the scheme has not been operationalized in the last two years for reasons not disclosed by the FM. Health insurance schemes, incidentally, are not new to India. Rashtriya Swasthya Bima Yojana (RSBY) of the central government and the state government schemes have been running for years. But, evidence received so far indicates that hardly have the promised benefits been delivered even partially to the countrymen. RSBY is for in-patients. But the Primary Health Centres enrolled in RSBY have no facility for admitting the patients.  Moreover, not even 50% of the funds under the other existing health cover schemes have been spent in the past year.

A number of studies and National Sample Surveys show that existing government health insurance schemes are failing to provide financial protection. It is no secret that our primary health system is in a shambles and critical issues of doctor absenteeism, poor infrastructure and lack of doctors, nurses, equipment, medicines and even water supply and electricity remain unaddressed. According to the statistics released by the Health Ministry, only 11% of the Primary Health Centres met the Indian Public Health Standards as on March 31, 2017. One can safely assume that for a sub-centre to become a health and wellness centre, the least that could be expected is that these basic facilities and human resources are provided. Any attempt at improving tertiary healthcare will only be successful if its foundation — primary health care is strong. But, the budget does not address any of these issues nor allots any funds for that. It only talks of setting hospitals like AIIMS. Secondly, the government has been systematically handing over healthcare and pharma sector to the private operators who run them on commercial basis by squeezing the people. Whenever this government had promised healthcare improvement, it has talked of the delivery through the private sector and not by strengthening the public health system. In such a situation, can simple announcement of a health insurance scheme have any meaning? Experiences from across the world, our country included, show that depending upon the private sector to deliver healthcare for all – based on health insurance to take care of the burden of out of pocket health expenditure – escalates overall healthcare costs, excludes many and distorts practices of ethical and appropriate care. Note must also be taken about the widespread reports of reckless profiteering by private hospitals in India with such increase in irrational, unnecessary and even non-provided care and medicine. With little being done to erect a robust public health infrastructure that could make healthcare available regardless of one’s ability to pay, highly-priced sophisticated medical interventions mostly by private sector have been the main feature of the Indian healthcare scenario. Hence, it is believed by the countrymen and rightly so that healthcare is for the rich and affluent and not the general masses who are destined to die without any proper medical attention in a country that boasts of being biggest democracy.

Those who might have been swayed by the budget speech of 2018-19 hailing the concept of health protection would only be flabbergasted when they come across a set of dismaying figures. First of all, the revised budgetary estimate for healthcare in 2017-2018 was Rs 53,198 crores and the budgetary allocation for the current year is Rs 54,667 crores. It means, it is virtually at the same level. The health budget by any reasonable estimate ought to be at least 2.5 to 3% of GDP. As against that, health budget continues to languish at 1%-1.2% only. The budget also announces a combined ‘health and education cess’ of 4% estimated to bring in an additional revenue of Rs 11,000 crore. Even if one expects 25% of this additional amount to come to the health sector, one would have seen an increase of Rs 2,750 crore in the health budget. Rather, the increase has been of only Rs 1,250 crore. But, if we combine central allocation for health, water and sanitation in this budget, it has actually decreased by 0.5% from Rs 77,305 crore to Rs 77,024 crore. That’s because though health budget has marginally gone up by 2.8%, allocation towards water and sanitation has come down. This is another deceit neatly camouflaged.

Similarly, promise of an insurance cover of up to Rs 5 lakh for 10 crore families per year under the proposed NHPS apparently sounds impressive until one realises that the Budget does not indicate how this scheme is to be financed. The average premium paid in state-run health schemes is around Rs 3,000 per household. This would mean an outlay of minimum Rs 30,000 crores, if not more, for NHPS. But the budget outlay for the scheme is just about Rs 2,000 crore. Here lies the enigma. Already it has been seen that the much-clamoured Fasal Bima (Crop insurance) proved to be a bonanza for the insurance companies particularly the private insurers who have allegedly siphoned out 97 % of the premium income amount while claim  payment ratio dipping to just 6.61%. Large scale corruption has also been reported in settlement of claims from various parts of the country.  Those having experience regarding operation of individual hospitalization covers like Mediclaim provided by the insurance companies know how the private sector hospitals manipulatively inflate the bills for such policyholders. Would it then be wrong to conclude that the very tilt towards insurance instead of strengthening availability of public health system allows the government to get away with low allocations for health and, on the other and at the same time provides more opportunities for the insurance companies as well as the private sector hospitals to make huge money from the exchequer out of poor people’s illness?

 

Education

In keeping with the ongoing scheme of increasing privatization and commercialization of education, government goes on lowering budget allocation in this sector. Central expenditure on education has fallen from 0.49 per cent of the GDP to 0.45 per cent. As we have stated above, a combined ‘health and education’ cess of 4% has replaced the existing 3% of education cess. If the division of the cess revenue is 50: 50, education sector would now receive less (2% against 3%). Secondly, no one knows how and where the education cess collections have been spent by the government. To bluff the people, it is being propagated that the HRD ministry has been allocated Rs 85,010 crore as against Rs 81,869 crores of last year. So, there is an increase of 3.69%. However, if 1% shortfall in cess revenue is deducted, then the increase would be a negligible 0.46%. As a percentage to total budget spending, share of education budget has come down from 3.69% to 3.48% while the long-standing demand of the education-loving people has been for augmenting it to 10%.  Budgetary grants to UGC and other educational areas have also been slashed drastically. Significantly, Economic Survey presented before budget said that the government does not have much fiscal space to spend big on social sectors, including education. So the cat is out of the bag.

The budget proposes to treat education holistically without segmentation from pre-nursery to high school. This means that there could be eventual merger of several school schemes like Sarva Sikhsha Aviyan (SSA) and Rashtriya Madhyamik Shisksha Aviyan (RMSA) thereby firming up centralized control over school education subverting academic autonomy further. The budget has no mention as to how to arrest continuous fall in standard of government and government-aided schools squarely attributable to a slew of anti-education policies and pathetic absence of rudimentary infrastructure including number of qualified teachers. It only shows that the government encourages proliferation of private schools that arbitrarily raise fees to take advantage of the growing rush of students seeking to receive relatively better education. Obvious discrimination against students based on the quality as well as affordability of education is also thereby abetted. The budget announcement of advancing 10 year repayable loans to the few centrally funded higher education institutions for infrastructure development through a restructured Higher Education Financing Agency (HEFA), a non-banking financial company, would only entail further rise in cost for higher education making it yet more skewed in favour of a miniscule section of students from  affluent households. What a novel way of curtailing higher education!

Another aspect is mid-day meal for the poor school going children. There has not been any increase in budgetary allocation for this though inflation is spiralling. A calculation shows that average cost for midday meal per child is just Rs 4.13. Law stipulates that the children should be given egg at least twice a week besides vegetable protein as staple diet. But, it is unknown how the economics would work out for the prescribed menu with this absurd budget allocation. This is how the government cares for the poor children.

 

Unemployment and job loss

The Indian President said a couple of years back that more than half of the Indians are unemployed. The fifth survey of the state of employment in the country showed that joblessness has hit a five-year high. The extent of unemployment can be guessed from a recent report. 992 PhD holders, 23,000 M Phil holders, 2.5 lakh post-graduates and eight lakh graduates were among the nearly 20 lakh applicants for the examination conducted by Tamil Nadu Public Service Commission to fill 9,500 posts of typists. Earlier, 23 lakh applications including many from doctorates and post-graduates were reported to have been received for just 368 peons’ posts in UP. The BJP during its electoral campaign promised 3 crore jobs per year. But the fact is not even 3 lakh jobs have been created. If job losses are taken into account, the net employment would turn negative. Fact is that hardly any new vacancies are created. Vacancies arising out of retirement are being abolished. There are 2,20,000 posts including 1,41,000 safety category posts lying vacant in the Railways. But there is no initiative to fill up the vacancies. Acknowledging failure in job creation, the BJP leaders openly say shamelessly that it is not possible to provide jobs to all. Echoing the same argument, the Prime Minister also virtually derided the unemployed youth by saying that they should be “job creators and not job seekers”. We know that decadent moribund capitalist system cannot generate jobs today. Still, a government can, if it so desires, create some jobs by making productive investment under its aegis. But the BJP government would never move that way since that is not the mandate from its mentors, the ruling monopolists. Rather, it is entirely left to the private sector. The business of the union budget, therefore, is to hide the problem of unemployment in a superficial way and then make spurious claim that “creating job opportunities and facilitating generation of employment has been at the core of policy-making and the measures taken in this regard have started showing results”.

It is noteworthy to see how the pro-capitalist measures are cunningly passed as initiatives towards job creation. The budget says that additional deduction of 30% granted under Income Tax Act to employers in select sectors on emoluments paid to new employees would be relaxed from 240 days of employment to 150 days in the first year of appointment and extended to footwear and leather industry provided salary is less than Rs 25,000 pm.  The FM argues that this would encourage the employers to recruit more. This is a superb argument! For getting some meagre tax benefits, employers would add number to his employees even if there is shrinkage of demand (inevitable in capitalism) in the market and developed technology is available to substitute manual work. Further, with the budget proposing to reduce women employees’ contribution to Provident Fund from 12% to 8% for first three years of their employment, the FM feels that employment of more women in the formal sector would be incentivized. Perhaps, the FM needed a face saving as the Economic Survey 2017-18 stated that there has been a drastic decrease in women’s employment in the last few years. Then, there have been customary throwaway remarks that more jobs would be created because of so much allocation being made to infrastructural development. But, what kind of jobs?  Would there be any permanent gainful engagement or extremely casual and contractual jobs at a less than subsistence-level wage? Is that called employment or deluding the starving downtrodden? Moreover, in all infrastructure development, highly sophisticated machines are substituting manual jobs squeezing even opportunity for casual jobs substantially. While presenting budget for 2015-16, the FM had said that to enhance the employability of rural youth, he was bringing a new scheme and earmarked only Rs. 1,500 crore for the purpose. But in the three succeeding budgets, he gave no clue as to what this scheme was all about.  The Prime Minister in a Television interview on 22 January last said that “In one year, EPF (Employment Provident Fund) accounts of 70 lakh youth between the ages of 18 and 25 have been opened. Doesn’t this show new employment?” Now the FM in his budget says that 70 lakh formal jobs will be created this year. But he does not spell out where and how. These are hoaxes to confuse and misguide the people and the millions of unemployed. Do EPF data reflect the job losses or record how many of jobs have been formalised from previous informal-sector jobs? Moreover, EPF data is not in public domain. So its veracity cannot be ascertained. Let the government make the details available with people. On the contrary, most of the surveys report huge job losses starting from textile, banking, information technology, to start-ups. Over and above, massive jobs have been lost consequent on demonetization and introduction of GST. However, the FM felt no necessity to deal with this aspect in his budget. Rather, the roadmap is laid for more and more contractualization and casualization of jobs, at least of wages through introduction of ‘wage code’ and so called labour reform.

 

Taxation, MSME-friendliness and fuel price

The FM has not given any tax relief to the individual investors. But he has announced slashing the tax rates from 30 to 25% for Small, Micro and Medium Enterprises (MSMEs) with a turnover of upto 250 crores. Apparently, it would seem that he has tried to soothe the frayed temper of the MSMEs who have been worst hit by demonetization and GST. But it is not that simple or liberal. In fact, those with a turnover upto Rs 50 crores i.e. the category of small and micro firms will have to shell out more in taxes (29.12% as against present 28.84%), while firms with revenue of more than Rs 50 crore upto Rs 250 crore will pay less (29.12% in place of 34.61%). So, there could be a tendency on the part of many big companies to split business into smaller units and then control those units through a holding company. Secondly, the kitty of indirect tax which is paid by all countrymen in the form of load on the end-prices of all items is going up after imposition of GST. GST is supposed to remove the cascading impact of indirect taxes through input credit mechanism and hence reduce the final indirect taxes borne by the consumers. But the budget 2018-19 does not show any such impact. The tax/GDP incidence is expected to rise from 11.2% in 2016-17 to 11.4% in 2017-18 and to 12.1% in 2018-19. In fact, the manufacturers are availing the input tax benefits but are not passing that on to the consumers. Moreover, over the years, service tax network has been infinitely widened (from 3 services to all but a few) and has come to bite the poor and middle-class Indians more deeply. The government has no concern for that but takes pride in rise in tax collection which is mostly recovered from the common toiling pauperized masses while the top monopolists, corporate behemoths, rich and affluent are reaping benefits of waivers, concessions, evasions, manipulations, window dressing and so forth.

There is another anomaly. The budget says that the year 2016-17 ended with a growth of 12.6% in direct taxes and in the current year, the growth in direct taxes up to 15th January, 2018 is 18.7%”. This current year’s estimate is provisional since the year is yet to be over. It also came in the media that the government ordered the Tax authorities to hold back the refunds till budget date so that the collection figure could look healthy. But when compared to years 2012-13 and 2013-14, the rate of 12.6 % is lower.  The tall claim of demonetization resulting in a leapfrog jump in the number of taxpayers and an overall broadening of the tax base is quite perplexing, if not falsified. What the FM leaves out is that the first two financial years of the BJP government actually saw dramatic shrinkage in direct tax growth, around 7%-8% mostly due to large scale reliefs and concessions granted to the big industries and corporates and large scale tax defaults by the rich and affluent.  We had shown in our budget analysis for 2017-18 that if we take into account revenue foregone in the case of corporate tax, Special Economic Zones (SEZ) not taken off, deduction of export profits of units located in SEZs, deduction of profits of undertakings engaged in generation, transmission and distribution of power as well as deduction of profits of industrial undertakings derived from production of mineral oil and natural gas and non-recovery of direct tax, the figure of tax loss would be a whopping Rs 9,38,827 lakh crores (Rs 9.38 trillion). A similar calculation for the current year would show the figure to be still higher. May be for that, many relevant numbers have been craftily manipulated or suppressed in the form of statistical jugglery.

Another aspect needs to be brought to the notice. The government while decontrolling retail fuel prices said that it would be linked to the international crude oil prices and would dip or rise in tandem with international crude price fluctuation. But when international crude oil price had plummeted below $30 a barrel, the BJP government reaped an oil bonanza by increasing central excise duty on diesel by more than 380%, and on petrol by more than 120% over the last three years. No benefit of falling crude price was passed on to the people. This time, to hoodwink people, the government has reduced basic excise duty on petrol-diesel by Rs 2 and cut additional excise duty on the fuels by Rs 6. But, simultaneously, a new record cess of Rs 8 per litre has been imposed to offset the shortfall. What a trickery! The Prime Minister often brags that free gas connections have been provided to 5 crore odd poor households. But what he does not disclose is that the LPG cylinder, the price of which is jumping with every passing day, is not available free to any of these households. In a country where 77% of the population do not earn even Rs 20 per day, is it possible for them to bear such high cost of LPG? But, citing this free connection of LPG, subsidy on kerosene has been reduced by almost half to Rs 4,555 crore and ration quota of kerosene has also been slashed.

 

Unproductive defence budget

While productive investment in core sector for creating permanent remunerative jobs and rejigging economy has been scrupulously avoided by the government ignoring people’s demand, unproductive defence budget continues to soar beyond the sky. This time it is augmented by 7.81% over last year’s allocation and fixed at Rs 2, 95, 511 crore which is as high as 12.10 % of the central expenditure. Even after that, there is cry for more increase. What a logic! The common people of the country would die out of starvation, lead a sub-human life and beg for relief while the bulk of tax revenue is spent on manufacturing of destructive arms. Echoing the government’s policy of increased involvement of private sector including foreign monopolists in arms manufacturing, the FM has declared that Government will bring out an industry-friendly defence production policy to promote domestic arms production by public and private sectors as well as MSMEs’. It means that apart from opening crucial defence sector even to foreign capital, the government would also place orders for arms, arms equipments and raw materials for arms production like steel to the private operators allowing them to swell their coffers with public money collected as tax.  Moreover, there is large scale corruption in arms procurement involving corrupt dealers, high level military officers, ministers and ruling party leaders. Scams involving purchase of Bofors guns soldiers’ coffins and Rafale jets are already known to people. Who knows how many more are under the carpet.

In the present decaying stage of capitalism, militarization of economy has been a general feature of all capitalist-imperialist countries to artificially stimulate demand of some basic industries. Now, it is also a convenient route to channelize public fund to private arms manufacturers. To cunningly justify this colossal defence spending, the imperialist-capitalist leaders and their servitor governments and parties are creating as well as sustaining a war psychosis and inciting national jingoism. Ruling Indian monopolists with the help of their subservient ruling parties are also pursuing the same policy and thriving on the hunger and destitution of the millions.

 

Reducing budget and increasing privatization for the Railways

From last year, railway budget has been merged with 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’. It was clear that in tandem with increased privatization of road transportation, aviation and shipping, the move was afoot to gradually privatize the entire railway service considered to be the artery of 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. Earlier, there was an obligation on the part of the government to place before Parliament some details of operation of the railways, the surfacing problems and measures contemplated to tackle those while presenting separate railway budget. Even revision of passenger and freight charges needed approval of the parliament. Now, all such obligations and stipulations have gone. In the entire budget speech, hardly 5 minutes were devoted to the railways.  Last year, a separate independent railway regulator called Rail Development Authority (RDA) was constituted to determine tariffs and significantly enough, modify and suggest investment requirements as well as policies for private investment. RDA has already raised railway fares and tariffs several times out of the budget neglecting wholly and solely the all-important issues of ensuring true passenger safety, passenger amenities and punctuality. On the other hand, the government budget for railways has been cut down from Rs 55,000 crore to Rs 40,000 crore in the current budget. The Indian Railways’ capital expenditure for the year 2018-19 would be Rs. 1,46,500 crore. Out of this, just Rs. 53,060 crore will come from budgetary support by the government. The rest is supposed to come through internal resources and Extra Budgetary Resources (EBR) details of which are not given. It is also alleged that the FM made incorrect statements on the floor of Parliament in regard to doubling of tracks and gauge conversions. Abject neglect of critical issues like safety in journey for which track renewals and installing proper security measures are necesssary, is glaringly manifest in progressive reduction of budget allocations and avoiding filling up of substantial number of vacant posts of safety personnel.

The process of privatization is already on in full swing. The RDA is stated to be permitting “fair access” to the private operators. It is also reported that the railway ministry is working on a scheme to set up rail lines for running passenger and goods trains by private players. “We need more and more private participation in the safety and passenger amenity sector”, said the union railway minister in a post-budget interview. It is clear that the government and the ministers have taken upon themselves the ‘august’ duty of being spokespersons for the private houses.

A word on fiscal and revenue deficits

First of all, the overall resource situation at the time of presentation of the budget was more uncertain than in the past. Statistics are available only up to November 2017. These indicate that overall revenue receipts at this time were only 53 per cent of Budget Estimate for the financial year and this was despite the fact that a lot of GST refunds have become due. The revenue receipts at the same point of time in the previous year were 58 per cent. Only ‘other receipts’, consisting mainly of disinvestment of PSUs, were much higher compared to the previous year (42 per cent compared to 72 per cent). These facts have not been brought forth by the budget. Tax revenue (net) from Integrated Goods and Services Tax was Rs. 70,918 crore in August, Rs 30,395 crore in September, Rs 18,370 crore in October and Rs 18,627 crore in November, 2017.

Revenue receipts in the current year turned out to be about Rs 10, 300 crore lower than what was budgeted while revenue expenditure was nearly Rs 1, 07, 400 crore higher than the estimate made a year ago. What the budget speech did not mention was that the effective revenue deficit in the current year is estimated to be nearly twice as large as the budgeted amount — Rs 2.5 lakh crore compared to Rs 1.3 lakh crore. If fiscal deficit slippage is claimed to have been contained at 3.5% of GDP rather than targeted 3.2%, it was only because the capital expenditure in the revised estimate is around 12% lower than what the budget had provided for. In other words, the government had spent about Rs 36, 400 cores less on creating future assets than it had promised to. Thus, while the FM’s speech may have suggested that the government is investing in the future like never before, the figures tell a different story. Such anomalies, exaggerations, unrealistic projections and proposals to change the methodology as well as base year for calculation of macroeconomic indicators are galore in the budget and government declarations.

Moreover, there is no clear indication as to how the deficits would be met. If it through further borrowings (Debt to GDP ratio is about 74% now), then the burden of servicing that increasing debt (now conservatively estimated to be 25% of the revenue expenditure) would make people back-broken further. If it is through printing of additional currency notes, then that would push up inflation putting people in further distress. If borrowings are warranted to finance deficits caused by way of giving plethora of benefits to the ruling capitalists and affluent, why should people pay the price for that? This, in essence, is the crux of the fiscal savagery going on in the name of budget.

 

Out and out anti-people

So, a closer look reveals that not a single pressing problem tearing the common people apart has been addressed in right earnest. Rather, the killing economic measures like demonetization have been hypocritically praised. “We are enthused by this success of our measures and we pledge to continue to take all such measures in future by which the black money is contained and the honest taxpayers are rewarded. Demonetization was received well by honest taxpayers as “imandari ka utsav” (festival of honesty) only for this reason”, said the FM in his budget speech.

Like any other past budget of the Modi regime, it’s indeed a hard-core pro-capitalist pro-corporate budget packaged in a “populist” way by sweet-coated words and false promises.  The dubious anti-peasant agenda has been projected as a “pro-farmer” one; an insurance scheme branded as an improved healthcare; pious assumption of possible creation of casual jobs passed as employment generation and so forth. These pet talks are nothing but subterfuges to distract the people’s attention from the real issues and deceive people with virtual gains at a time when the government has nothing tangible to offer. No one else but Amit Shah, the BJP President had shamelessly admitted earlier before the electronic media that most of their pre-poll electoral promises of 2014 were only ‘jumlas’ (gimmicks). Going by that, this budget is also full of not just ‘jumlas’ but spurious logics, camouflages, deceptions, misleading figures and wild dreams. That is why there has been eccentric marketing of this anti-people budget by the corporate media, industry barons, a gang of bourgeois economists-columnists and privileged bureaucrats. But there is no opposition, either rightist or leftist, in Parliament to categorically point out these deceptions and catch the government napping by presenting due scrutiny of the budget. All the parliamentary parties virtually give safe passage to such murderous attack on truth. Let common people not fail to notice the ‘jumla’ that the slogan of ‘ease of living’ is in fact the earlier catchphrases like ‘garibi hotao’ and ‘jai kisan’ rebooted.

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