CPI-ML, New Democracy, Ruling Class

CC Statement on Union Budget 2018-‘19

Jugglery of figures, tax increases around the year and pronouncements of welfare schemes not backed by budgetary allocation or simply recycling old ones have robbed the Budget presentation of the seriousness associated with it. Despite all these shortcomings, one can discern the state of economy and the direction proposed by the Union Govt. from the Budget presented by Finance Minister Mr. Arun Jaitley on February 1, 2018. This is the last full Budget presented by the present RSS-BJP Govt. and hence, it was expected to be its last economic policy statement to the people of the country.

Indian economy is in deep crisis as shown by the Union Budget and Economic Survey. Economic growth, despite all attempts at dressing up, is slowing down. Moreover, the export led growth model which has been pursued by successive govts. is itself in deep crisis. American and European markets which this model targeted hold no promise with rise of protectionism in these countries with globalization, which was being promoted by imperialist powers led by USA, being undermined in these very countries. Indian ruling classes have to address this reality and have to rescue the new economic policies from this setback. Despite this scenario there is no let up in concessions to foreign and domestic corporate and this Budget has further dose of privatization and liberalization.

Modi Govt. has taken pro-imperialist new economic policies further and has gone all out to woo foreign investors. Foreign Direct Investment has continued to grow. While it was 36.05 billion US $ in 2013-14, it grew to 45.15 billion $ in 2014-15, 55.6 billion $ in 2015-16 and 60.08 billion $ in 2016-17. Foreign Portfolio Investment by foreign institutional investors rose very sharply from Rs. 13.3 lakh crores in 2013 to Rs. 53.3 lakh crores in May 2017. Foreign companies repatriate tens of thousands of crores every year and this amount has grown rapidly during RSS-BJP Govt. period. Total foreign debt on this count has risen to US $ 417.98 billion. Foreign capital is mainly exploiting the ongoing production and extracting their profits from Indian market. With demand in foreign markets stagnant or declining and domestic demand rising very slowly, the Indian economic growth has sharply slowed. In this scenario after decades in this Budget there has been increase in custom duties though these also target products of companies based in China.

Modi Govt. has been showing its pro-corporate measures to be in the interests of the common people. Such was the case of projection of Demonetization and GST which were both to serve the interests of corporate. Now Long Term Capital Gains tax is being shown as Modi Govt. not only hurting the poor but also rich. But this is not the case. Govt. has announced to implement it for gains after January 31. In the last year, 2017, top 1% have cornered 73% of the wealth generated in the year. Under RSS-BJP rule, NPAs have continued to rise despite periodic waiving off. Lakhs of crores are given to big capitalists in the form of revenue foregone. On the other hand, Govt. has increased tax burden on the people. It has presented estimates of tax revenue far higher than the projected growth. While direct taxes are expected to grow by 14%, indirect taxes which already constitute nearly two third of the tax revenues are expected to rise by whopping 19%. High taxes on diesel and petrol are keeping the prices of these essential items very high despite low prices of crude in the international market. There has been widespread criticism of this burden on the people. While the Govt. has announced lowering of taxes on these petroleum products by 8 Rs. per litre it has imposed Rs. 8 per litre as infrastructure cess thereby keeping the same burden on the people but depriving the states of their share in taxes.

Despite such a heavy tax burden on the people and meagre expenditure on social sectors, Govt. finances are in a mess and fiscal deficit exceeded the target and rose to 3.5% of the GDP in the year 2017-18. In the Budget for the coming year it has been pegged at 3.3% of the GDP. Govt. has sold the shares of PSUs to meet its routine expenditure, even through juggling the shares among PSUs. It is targeting to net further Rs. 80,000 crores this year. Govt. borrowing increased by 35% in the past year. Due to higher cost of living and declining incomes, investment to GDP ratio has declined from 36.5% in 20017 to 26.4% in 2017.

Peasants Duped Once Again

In his Budget speech, Mr. Jaitley tried to show case his Govt.’s commitment to rural areas and agriculture probably due to setback suffered by RSS-BJP in rural areas of Gujarat. People are increasingly realizing that despite its rhetoric, Modi Govt. has been serving only the corporate and suffering of the people of the country, including peasant masses have only increased further. There has been an upswing in the peasant movement demanding waiving of peasant loans and minimum support price for crops at one and a half times the cost of production as per the recommendation of Swaminathan Committee which has recommended comprehensive determination of costs referred to as C-2. Mr. Jaitley claimed that RSS-BJP Govt. has already implemented this cost plus 50 percent for rabi crops and would do so for kharif crops. He did not specify what according to the Govt. would the method of determining the cost. Without that it is hollow assertion, rather deliberate act of deception. It should be kept in mind that the same Govt. had told the Supreme Court its inability to implement the recommendation of Swaminathan Committee on the issue of MSP. Modi Govt. has demonstrated that it has no intention of meeting its election promise of doubling the peasant income in five years. Rather peasant incomes have declined. And how does Mr. Jaitley wish to enforce this MSP? He has kept only Rs. 200 crores for Market Intervention-cum- Price Support Scheme showing the real intention of his Govt. For most of the crops no MSP is declared, it is declared for only 24 crops. Most of the peasants complain that they are not able to get even the MSP declared by the Govt. and the market price at the time of sale by peasants is far lower than MSP. According to Economic Survey, agriculture has recorded only 2.1% growth over the past year and it is set to decline to 0.9% in the present year. Economic Survey has also predicted a decline of 25% of peasant income, albeit blaming it on climate change while it is the economic policies pursued by the Govt. which are depressing the peasant incomes.

RSS-BJP Govt. has totally disregarded the concerns of rural population. Expenditure of MNREGS has been kept stagnant. Keeping in view the increase in wages, coverage is bound to shrink even further. Expenditure on several other schemes covering the rural areas like Drinking Water Mission, Mid-day Meal Scheme, Gramin Jyoti Yojna has been either stagnant or declined. Allocation for Rashtriya Krishi Vikas Yojna has been cut. There was much talk of improving irrigation but a paltry sum of Rs. 9,247 crores has been kept for the purpose while over half of the cultivated land is without irrigation. So much about their push for the rural areas. Only the funds for credit scheme have been increased. These only benefit the landlords who use these funds to further enmesh the peasant masses in their web of loans. Even otherwise, peasant indebtedness is growing and peasants are demanding loan waiver. Peasant debts stood at Rs. 12.6 lakh crores. There has been an increase of 55 percent in the loans on peasants over the last three years.

Those for whom this Govt. announces help should be wary of its help. PM Crop Insurance Scheme (Fasal Bima Yojna) was announced amidst much fanfare. But it has been a bonanza for insurance companies only which saw an increase of 131% in their collections. While premium worth Rs. 22,004 crores were collected in 2016-17, only Rs. 12,020 crores were disbursed as compensation. Govts. tries to sell the dream of exports of agricultural produce but this has declined over the last year. On the other hand, agricultural imports have increased from $16.5 billion in 2013-14 to $21.4 billion in 2015-16. Modi led RSS-BJP Govt. is a total disaster for the peasantry and rural masses in general.

No push for Jobs, Push for Contract Labour

Modi Govt. has been claiming to push creation of jobs. But it has been an abysmal failure on that front. It has flaunted data of increased PF coverage to claim higher employment but this does not say whether the new jobs have been created or PF coverage of existing jobs has improved. ‘Make in India’ launched with much fanfare has not taken off, and a large number of start-ups have closed or facing closure. There has virtually no new job creation in the organized sector. The youth of the country which was promised creation of jobs has been betrayed. Now Modi is asking the youth to be satisfied with whatever they are doing to eke out mere existence and forsake any thought of job creation by the Govt.

During the years of RSS-BJP Govt. rate of growth of wages has fallen sharply. There has been a sharp rise in the contract labour in Govt. departments and in organized sector. Modi Govt. has been planning to abolish the provisions of Contract Labour Act to further facilitate the employment of contract labour without any check. Mr. Jaitley in his Budget Speech has spoken of extending fixed term contracts to all sectors and giving tax incentives for creating such jobs i.e. contract jobs. Thrust on contract jobs demonstrates the challenge before the workers. This is bound to lead to further depression in wages and other benefits, further job insecurity and moreover further attacks on workers’ right to organize.

Central Govt. has also hit the salaried employees. Despite price rise, income tax limit has not been raised. Finance Minister has announced Standard Deduction to the tune of Rs. 40,000 but nearly 35,000 allowed for medical and transport bills have been included in this.

Gimmick with Health, Neglect of Education & Research

Mr. Jaitley has announced insurance coverage for 10 crore families (50 crore people) to the tune of Rs. 5 lakh for hospitalization. This announcement has been hailed by the corporate media as ‘populist’, even called as “Modicare” while it is worth nothing. It is only an extension of the already existing schemes, increasing the coverage from 37 million families to 50 million families. It is also propagated as big push by Modi Govt. to improve health care in the country. This has been the most talked about jumla in the budget speech marked by a plethora of them. But if we look at the budgetary allocations, the deception of this perception becomes clear. There has been only marginal increase in expenditure on health that too in nominal terms, it is actually a decline if one takes into account inflation over the year. Expenditure on health for 2017-18 (Revised Estimates) has been Rs. 51,550.85 crores while the Finance Minister has allocated Rs. 52,800 crores for the Budget for 2018-19 which is less than 0.4 percent of GDP. Mr. Jaitley has targeted to improve 1.5 lakh health and wellness centres in the country and he has allocated Rs. 1200 crores for that which means Rs. 80,000 per centre. What wellness to these centres this paltry sum can bring! Though Jaitley Govt. has announced insurance cover for 50 million families, he has only increased the Budget for Rashtriya Swasthya Bima Yojna (RSBY) from Rs. 1400 crores to Rs. 2000 crores. This shows the real intention of Modi Govt.

Budget on health amply proves that Modi Govt. has no intention to improve public health care facilities for the people of the country. It has taken no steps to improve the abysmal conditions of PHCs and District hospitals. It has abdicated the responsibility of the state for health care needs. It has sought to provide only insurance whose earlier experience shows that it cannot meet the needs of health care in India. It is only a bonanza for the insurance companies and big private hospitals. These players also dole out care keeping in mind the extent of insurance cover of the patient. Even in this, Modi Govt. has made a surreptitious change by increasing the quota of the states. Earlier in RSBY, share of the Centre was 75% and that of states 25% but now share of the Centre has been reduced to 60% and that of the states increased to 40%. On the other hand Central Govt. has taken cess route to raise finances (Education cess @ 3 percent has been increased to Education and Health cess @ 4 percent), as it is not to be shared with states. Expenditure on illnesses is a big burden for the poor and middle classes. Out of Pocket Expenditure on health contributes to nearly 7% of the people who have been pushed below the poverty line.

Expenditure on Education too has been abysmally low and there has been a relative decline. Expenditure on education in India has been below most of the countries and it is further declining. For example, while 3.2% of GDP was spent on education in 2011-12, it has declined to 2.7% of GDP in 2017-18. Govt. schools are facing closure and in several states these have been merged on account of alleged low number of students. Whole colleges and even universities are working with not even skeletal staff, number of teachers being a small fraction of the sanctioned strength. Govt.’s thrust has been on commercialization of education raising fees and other costs thereby taking the higher education out of pale for the overwhelming majority of the people of the country. There is total disregard for the scientific research. There has been very small allocation and even what is allocated is not spent. Govt. is keen on taking India back to ancient times, obviously sees no need to spend on modern education. Anyway centres of higher learning promote scientific temper and questioning mentality, which the powers that be are keen to crush. Moreover, it can always depend on foreign powers to provide technology.

SC-ST Subplans and Other Social Sectors

Mr. Jaitley has also claimed to increase lay out for SC and ST sub-plans by 12%. But this has been exposed to be only fiscal jugglery transferring expenditure under one head to another. Even otherwise there is no accounting of sub-plan budget being spent to improve the lot of SCs and STs in the country.

Mr. Jaitley has claimed that the Govt. will provide house to every family but this pious declaration has no allocation in the Budget. Such is the fate of several other declarations. Some declarations have been made about the senior citizens, but the Govt. has totally forgotten elderly who are poor and do not pay income taxes. There is also nothing substantive about women. Reduction in PF deduction rate is a joke as labour laws including PF are not implemented for overwhelming majority of working women. Except some more coverage under cooking gas cylinder scheme, there is nothing for the women workers and peasants.

But, Mr. Jaitley has not forgotten his communal moorings in the Budget. This Govt. had announced end to Haj subsidies earlier. In this Budget, Govt. has reduced allocation for minority development from Rs. 3905 crores (which was any way a paltry sum) to Rs. 1440 crores. Sabka Sath, Sabka Vikas is after all only a jumla.

Union Budget is thus cruel attack on the people and total betrayal of the promises made by RSS-BJP during 2014 parliamentary elections. The real character of the Budget proposals should be exposed before the people and they should be mobilized against increasing burden on the people and betrayal of the promises by the ruling party.

Central Committee,

CPI(ML)-New Democracy

February 2, 2018