Union Budget 2015-’16 : ‘Comprehensive Bankruptcy Code’
Union Budget presented by Finance Minister Arun Jaitley displays total lack of concern for the concerns of the poor and labouring people while granting largesse to the corporate, domestic and foreign. The Budget has lived up to its billing of being corporate friendly. To prepare the ground for this, the GDP growth was shown to be high by changing the methods of calculation and the base year. Growth rate has been slated 7.4% due to these changes despite lower tax collections and sluggish domestic demand. All this is done to please foreign and domestic corporate. The Indian ruling classes throw the burden of difficult times on to the shoulders of the poor and middle classes while showering benefits during better times on the rich. Through this Budget Modi Govt. has tried to pay back its corporate patrons. The repeated moan of the Finance Minister of “drastically reduced fiscal space” has not prevented him from showering these benefits on the corporate.
The Govt. has made a lot of noise of development particularly of infrastructure sector. However, its execution has largely been left to private sector through PPP mode. PPP mode in infrastructure being an utter failure has been admitted by the Union Finance Minister who has now come up with the Govt. taking the major part of the risk in PPP enterprises. It was known to be private profit and social deficit, and now the Govt. has officially moved to make it official. With profits guaranteed and risks covered it would virtually amount to raising of loans at high interest rates. For the foreign corporate, the distinction between portfolio investments (Share market) and direct investments is being obliterated thereby allowing foreign corporate to milk the existing enterprises rather than investing in new ventures. The lowering of corporate tax (from 30% to 25%) which had been a longstanding demand of the corporate, has been announced. Further sops have been given to Foreign Institutional Investors (FIIs). Though Finance Minister has not spelled out disinvestment target in his budget speech but he referred to necessity of strategic disinvestment, showing the intent of the Govt. He also mentioned about public sector undertakings like ports to include private players, a new route for privatization without formally privatizing. All these measures are in the service of the corporate. This has been the major thrust of this Budget.
The concerns of the poor like rise in prices of food grains and other essential commodities, generation of employment, lack of housing and backwardness have been given short shrift in the Budget. The question of job to at least one member per family and houses for all has been postponed to 2022 i.e. into the next term. Despite sharp drop in the international prices of crude oil, Central Govt. has not passed this to consumers instead raising taxes to realize higher income. There has been no attempt to address the rise of prices of the essential commodities. On the other hand tax burden on the poor labouring masses has been increased as evidenced in increase of indirect taxes (by Rs. 23,383 crores) and decrease in direct taxes (by Rs. 8,315 crores). The increased taxes include increase in service tax to 14%. No concession on taxes has been announced for the common people and the income tax slabs have also been kept unchanged.
Union Budget 2015-’16 also shows that ‘Make in India’ is a mere slogan. Finance Minister noted decrease in the share of manufacturing from 18% to 17% of the GDP but no steps have been produced to spur growth. Rather excise duty has been increased in the name of rounding off. With no plan for industrial growth job generation has been left to the self-employment. Workers have been given a raw deal in the Budget. While no relief is given to govt. employees, ESI and EPF has been made optional for workers. This is despite the fact that overwhelming majority of the workers are not covered by PF and ESI and Govt. is further downscaling the machinery to get these implemented. Some tears were shed by Mr. Jaitley on MSME which account for bulk of industrial employment but meagre allocation (Rs. 3000 crores) for redressing the problems faced by them shows that Modi Govt. is totally non-serious in addressing the problems of industrial sector.
Rural India, particularly rural poor have been given a raw deal. With farm credit being increased (Rs. 8.4 lakh crore) Govt. has shown utter callousness in deepening crisis in the agrarian sector where small and medium peasants are committing suicides due to rise in indebtedness. Allocation for MNREGS has not been increased despite rise in wages which will result in lowering the coverage. Total Rural development budget is 79 thousand crores which is a pittance considering nearly 70% of the people are living in rural areas. The problem of rural poor and backwardness of the countryside has been left unanswered by Modi Govt.’s budget. Meagre allocation to irrigation and other development works in rural areas also point to the same. This gross disregard of the peasant masses along with serious drive of Modi Govt. to forcibly displace them from land and livelihood is a big attack against peasants and agricultural labour.
For the energy sector Finance Minister announced five ultra large power projects which are known to cause big displacement and serious environmental damage. The emphasis on solar power and other renewable sources of energy was missing.
Arun Jaitley, voicing concern about “rationalizing subsidies”, has sought to target them through cash transfer. This puts a lot of pressure on poor who have to first pay the amount before receiving the same in their accounts besides harming the food intake by the poor. Modi and Jaitley shamelessly talk about subsidies’ burden but remain silent over huge sums involved in revenue foregone. In the year 2013-’14 this concession to rich amounted to Rs. 5 lakh 72 thousand 923 crores while total subsidies for that year were only 2 lakh 20 thousand 972 crores (Fertilizer 65972 crores, Food 90,000 crores and Petroleum 65000 crores). Total silence on the concessions to big capitalists exposes the real nature of Modi Govt. not unlike its predecessor Manmohan Singh Govt.
The utter disregard of the social sector and other issues concerning the common people of the country is also evidenced by meagre allocations to education, health, women and child development, ICDS, minorities. The issues relating to health and education can not be addressed by promoting profit seeking privatization but only through Govt. hospitals, medical care centres, schools and colleges. Finance Minister has only announced exemption on premium or such measures without addressing the basic ills affecting health care and education systems in the country.
Modi had claimed that his Govt. would bring back black money stashed abroad. In this Budget speech, Arun Jaitley has virtually ruled this out instead rolling out measures to prevent black money generation through a proposed act. He repeated the Congress Govt.’s refrain about agreements with foreign countries, a bogus alibi to protect owners of such black money. Further in this Budget, Jaitley proposed that off-shore companies will not forego such status even if they operate from the country. Putting such defenders of black money in charge of recovering it will surely bring no black money back to the country.
Union Budget shows deep economic crisis with revenue deficit alone running to 2.8%. Non-plan expenditure of 13.12 lakh crores is more than central share of taxes and non-tax revenue of the Govt. The plan expenditure of the Govt. (Rs. 4.65 lakh crore) is same as that of Revised Estimates of last year. This comparison with RS in place of BE is tested mechanism of Indian rulers when they wish to lower the allocation. So much for intellectually honesty which has been in particularly short supply with this Govt.
Union Budget has been an orchestrated exercise to serve the foreign and domestic corporate. It marks abdication of the Govt. in addressing the social concerns. This particularly at the time when there is increased opposition to neo-liberalism and increased opposition to leaving addressing the problems of the people to the market forces. Modi Govt. has demonstrated its comprehensive bankruptcy in meeting the aspirations of the people of the country.
February 28, 2015