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Ever since the 1990s
all the budgets -whether by Manmohan Singh of the Congress(I) or Chidumbrum of
the UF or Yeshwant Sinha/Jaswant Singh of the BJP/NDA - they have all had a
common direction. The direction is that of economic reforms as dictated
by the imperialists and their multilateral institutions. The basic framework of
the policies have already been set by the WTO/IMF/World Bank agenda, and with
close monitoring by their representatives, their agents in India have been
faithfully carrying out the neo-colonial policies, no matter which party is in
power. The focus of this policy can be summed up in a single sentence: rob
the poor and middle-classes that comprise 90% of the population; fatten the TNC/Comprador
big-business combine; and pamper the elite.
So through this
budget, on the one hand, the price of Scotch whiskey is reduced by Rs.1,200 per
bottle; car prices from Rs.10,000 to Rs.75,000 on a single car; roughly Rs.2,000
on air conditioners, refrigerators and high-end colour TVs; on the other, the
price of edible oil has been raised by 8%, kerosene by Rs.1 per litre, LPG by
Rs.25 per cylinder and fertilizers by Rs.12 per bag (50kg). But this is only the
tip of the FM’s budgetary iceberg; we shall now look below the surface by
interviewing a cross-section of the people.
I first met a
slum-dweller, Kishore, earning Rs.3,500 to 4,000 per month in a semi-permanent
job at a factory.
Arvind : Kishore,
tell me, are you pleased with this budget?
Kishore :
Firstly, I must inform you journalists that it is not the Central budget that
effects the poor like us most but those of the state government and the
municipality. Over the last two years the house tax (even in slums, where no
facilities are provided) has been raised; electricity and water charges
increased; cost of my children’s education has increased, my ration card is
worthless as the open price is nearly the same, and the grains through the
ration shop are sub-standard; bus/train fares have increased; and even medical
charges which were previously free have gone up like anything. This is on the
one hand. On the other, though my employer is making big profits, he is refusing
to raise our wages. In fact when we demanded for a small increase, he threatened
to throw us all out, saying there is no shortage of labour. So you well
understand how our conditions have worsened in these few years.
Arvind : But do
you not have a union?
Kishore: Yes we
are all members of the CITU. Every month the leader comes and collects the
membership dues from us. Sometimes, he comes and takes extra amounts, saying it
for some of their causes, like elections in one state or another. But they have
done nothing for us. The leader has very good relations with the ‘malik’.
Since he lives a good life, many workers say he is in their pay. We have thought
of changing the union, but they are all the same.
Arvind: But
coming back to this budget; what impact will it have on you and your family?
Kishore: If at
all it has an impact, it is negative. The price of our main cooking fuel,
kerosene, has been raised yet again due to the reduction in subsidy. This rise
has been going on every year, and the present Rs.1 hike amounts to over 10%
increase. Then, our main cooking medium, oil, will rise by a minimum of 8%, most
likely much more. The 8% is merely the increased tax put on edible oil, but the
25% drop in production this year will probably push prices much higher. Then,
instead of reducing the cost of public health service, they have, in this budget
reduced the expenditure on public health, and instead introduced a fake
insurance scheme and given big concessions to private hospitals- in other words
institutionalizing the privatization of health. That means we can expect a big
increase in costs health care in the future. Also, the rise in the cost of
diesel by as much as Rs.1.50 per litre, means that transport costs are likely to
go up. These were just raised a year back. Now again it will be raised. Part of
this is for the so-called ‘Calamity’ fund. For all the big government doles to
the IT sector and big business, it comes from the normal funds; then for those
stricken by calamity, what is the need for a separate tax, that too on an
essential commodity?
Arvind: But is
there no benefit to you at all through this budget? After all, in his budget
speech the FM said that his main orientation was towards the poor.
Kishore: That is
a hoax always played by each FM. Even though an election is due, they cannot
displease their bosses sitting abroad. So, besides some window dressing, likes
sops to senior citizens, there is nothing really for us. On the contrary we have
been left even poorer. This has been the process each year. Besides, there is
nothing for employment generation. With the lakhs of jobs being lost each year,
our children are going to face a horrendous future. It is difficult to even
imagine how they will survive. For dalits like us, it will be even worse with
the present Hidutva/Brahminical wave.
After that, I moved
to the rural area and first spoke to an agricultural labourer. Here conditions
are even more horrifying. Inspite of one of the worst droughts in the last three
decades and a huge stock-pile of foodgrains the government did not reduce the
rationed price by even a paisa. Most of the schemes announced were only on
paper, and the bulk of this huge population was living on barely one meal a day.
Their plight was ten times worse than even that of Kishore. I then went on to
speak to a small farmer. Atul has 4 acres, which supports the families of two
sons and the parents.
Arvind: As you
take out two crops, you must have enough food for the year?
Atul: It is only
March, and already our entire stock of foodgrain is exhausted. Though we had a
better crop than most people in this region, because of the drought, everyday we
have to look for work, or else there is nothing to eat. Though we have had the
worst possible drought, the concessions announced to the rural sector in this
budget are a mockery. This year foodgrain production has fallen by a massive
13.6% over the previous year - the sharpest decline in over a decade, amounting
to 3.1% of the GDP. Production has dropped from 212 million tones (mt) last year
to an estimated 183 mt this year. Edible oil production has dropped by an
unbelievable 25% from last years 20.5 mt to barely 15 mt in the current year.
The production of pulses too has dropped drastically. Crores more have, this
year, been pushed to a subsistence level of existence. All this has resulted in
the food import bill rising drastically from $1.8 billion in 2000-01 to $2.3
billion in the current year - a rise of nearly 30%, mostly of oil and pulses.
So, the Indian farmer is hit twice - first it was the massive crash in the price
of nearly all agricultural commodities (see earlier issues of PM….Editor),
now, over and above this, we are hit by the drought and a massive drop in
production. The agriculturist in the country, except for the very big farmers
and landlords, are being pushed to rack and ruin by government policy that seems
only interested in hi-tech and multinationals. This budget faithfully follows
the WTO prescription of not increasing import duty on agricultural produce. So,
the flood of cheap imports will continue, and the prices will continue to be low
leading to more suicides of cotton growers, sugarcane growers, etc. There is
also total silence on the thousands of crores due to the agriculturists by the
sugar mills.
Arvind: How do
you say this, the FM began his budget speech saying this year’s budget is
agriculture oriented. Those too were the headlines in many newspapers.
Atul: It is
laughable. It is all a mirage, trying to dupe the public for votes. Let us look
at the facts. First, with much fanfare he announces an expansion of the
Antyodya Anna Yojna "to cover another 50 lakh ‘poorest of the poor’ with
concessional foodgrain", granting a pittance of Rs.507 crores. (This
amounts to a few rupees per family per month. Compare this to the huge
amounts given to various sections of big business, seen in a later part of the
interview. Ambani alone in just one reduction of duty, on, for example PFY, has
been gifted Rs.510 crores…… Arvind). Everyone knows that barely 10% of such
funds finally reach the people. But even assuming that they do, this amount
given has been balanced by cutting by one-third the allocation of rural
employment under the Sampoorna Grameen Rozgar Yojna. In the newspaper
headlines you will of course only see the former reported, while the latter will
be hidden in the fine print. Then he raised the price of fertilizers by about
Rs.12 a bag, taking a good Rs.700 crores out of the farmer’s pockets. (Since
removed due to pressure from the farm lobby, in view of the elections, but sure
to be re-introduced after the elections.) He has raised the price of diesel
taking yet another Rs.600 to 800 crores from our pockets (Total extracted
from the duty hike in petrol and diesel is Rs.2,600 crores ……. Arvind) Next,
he has reduced the subsidy on kerosene, which means prices will probably rise by
about Rs.1 per litre. Then the price of edible oil has been hiked by 8%. On the
other hand there has been no reduction whatsoever on the BPL or above BPL price
of foodgrains, in spite of the huge stocks. So, what has the budget given us -
nothing, in fact through the above measures it has extracted roughly Rs.1,300
crores from us (after removal of the increased charge on fertilizers), that too
in a year of drought and famine. This is similar to what the British did when
they ruled the country.
Arvind: You mean
there were no sops at all for agriculture?
Atul: Firstly, in
real terms, the outlay for ‘agriculture and allied activities’ has
dropped compared to the previous year. The increase of Rs.133 crores to Rs.3,866
crores will be less than the inflation for the year. But, like the last year
even this amount will not be actually spent - last year over Rs.500 crores lay
unspent; i.e. a good 14% of the budgeted figure lay unspent. This is the type of
‘emphasis’ given to agriculture by the government. Just compare this amount to
the Rs.2,345 crores allocated to write off the bad debts (i.e. frauds) of just
two major banks - the IDBI & IFCI. Besides, the actual ‘sops’ announced in
agriculture is more geared towards big business, finance and exports. The
beneficiaries from these will only be the big landlords and big farmers. Those
announced are: encouragement to private banks to open branches in rural areas;
Rs.50 crore technological inputs to promote hi-tech horticulture and precision
farming; and Rs.50 crores to rehabilitate traditional pastures in Rajasthan
(probably in the FM’s constituency to help him win the elections, which he lost
the previous time). So, you tell me what is there for the rural populace in this
budget, except more misery! Do you know that food availability has been
dropping sharply, and is now less than 142kg per head per year - the lowest
since the 1960s.
Then I returned to
the town and met up with a middle-class employee working in a public sector
bank.
Arvind: So Kalyan,
how is the budget?
Kalyan: A total
sell-out. It will mean more VRS for us, in order to hand over the banks to some
TNC. At least part of our VRS (up to Rs.5 lakhs) will now be tax-free. In this
budget not only have they raised the FDI limit of private banks in public sector
banks from 49% to 74%, they have allowed the complete transfer of management
into their hands by removing the 10% limit on voting rights of the investor. Now
the investor will have voting rights equal to their share capital. Inevitably
the foreign banks will make a grab for our banks once the staff is reduced. So,
the bulk of us will be kicked out, in preparation for this transfer.
Arvind: Besides
this change in policy, how does the general budget affect you?
Kalyan:
Negatively, all around. The government can no longer squeeze the poor much more
for funds, as they have nothing left to extract from them, so they have now
turned their attention to the middle classes. Of course they have not even
spared the poor by raising the price of kerosene, fertilizers, diesel, etc.
While there was much show of concessions to senior citizens, handicapped, etc.,
it was nothing but a gimmick. What they have done is extract thousands from the
middle-classes and then give back a few hundreds. Surprisingly even the CPM
leader, Somnath Chatterjee, was fooled by the FM’s gimmicks when he intervened
twice during the budget speech to praise Jaswant Singh (was he really ‘fooled’
or is he just part of the gang supporting economic reforms…. Arvind). Once SC
said "a very well written speech". Later he complimented the FM "in
making the budget sensitive to the needs of the physically challenged". The
biggest hit though, has been the further reduction on interest rates on small
savings by a full 1%; now a mere 8%. That means, defacto, no earnings for the
old-aged pensioner, on the provident fund, on fixed deposits of the retired,
etc, as the interest rate is now roughly equal to the inflation rate on consumer
prices. Over just a few years the government has dropped this rate from 12% to
8%, taking crores out of the savings of the middle-classes. Even these savings
today are at risk with the numerous frauds in the banks and even the mutual
trusts like the UTI. By reduction of interest rates the Government will save
about Rs.20,000 crores in one year on the huge interest on its public debt,
big-business will get funds cheaper, but the middle class is being ruined.
Then the budget has once again pushed up the prices of petrol and diesel by as
much as Rs.1.50 per litre, which will result in another major burden on the
middle-class. Then, with a hike in tax on the service sector, cable TV will cost
roughly Rs.300 per month. They have once again hit the small scale sector by
de-reserving another 75 items from the SSI list - none will be able to survive
in the face of competition from big business and the TNCs. Finally, even the
so-called concessions on income tax only benefit those in the higher bracket.
Those earning up to Rs.12,000 a month get hardly any reduction in tax payment.
But as one goes up the income ladder the concessions increase - earnings of
Rs.16,000 per month will get a yearly reduction of Rs.2,000, while a yearly
income of Rs.10 lakhs will get a reduction of Rs.14,000. So, it is clearly a
budget for the rich. Besides, inflation rates are rising, and with the huge
planned fiscal deficit of 5.6% of GDP, the result is bound to be inflationary.
Inflation hits the middle classes and working people the most, as they have
fixed incomes.
Then, finally I met a
businessman, Mr. Ram Joshi:
Arvind: So, how
do you feel about Jaswant Singh’s maiden budget?
Ram: Have you not
read all the business papers; it’s absolutely great. The CII chief, Atul Soota,
explained it all, saying that it went even beyond their own recommendations.
Just look at the huge concessions we business people have got. In excise duty
cuts: the motor companies (mostly TNCs) have been gifted Rs.800 crores; the tyre
companies, Rs.550 crores; a Rs.510 crore saving on PFY (polyester filament
yarn), mostly going to Ambani. Besides this, excise duty has been reduced from
32% to 24% on soft drinks, airconditioneers, etc. Wont the increased profits to
Pepsi and Coke encourage greater investment in our country, like they are doing
in tea/coffee vending machines, which will wipe out thousands of ‘unhygienic’
chaiwallas. Oh, it is a brilliant step forward. Then by the reduction of the
peak customs duty from 30% to 25%, business gains another Rs.2,100 crores. With
this, imagine we will get good foreign products so cheap that this will help
streamline all those lakhs of inefficient, incompetent businesses in the
small-scale sector. Then one must really congratulate JS for his concern with
the health of our country. After reducing the subsidy on health care and pushing
medical expenditure out of the reach of the poor, in this budget he has given
huge concessions to promote the private health care and hi-tech super specialty
hospitals. Instead of free health care, he has introduced an insurance scheme
which makes sure that all medical facilities will be paid for; what a bonanza to
the health care and pharmaceutical industry. No wonder Pratap Reddy of the
Apollo Hospital Group was ecstatic over this budget, praising the FM for copying
an insurance scheme he had introduced a few years back. He also sees his
hospitals promoting tourism in the country. Not only that, customs duties on
hi-tech hospital equipment has been reduced from 25% to 5%; income tax on pharma
and biotech companies have been put on par with the IT sector; customs duty on a
variety of drugs, appliances and ophthalmic apparatus have either been slashed
or removed; excise duty on medicines and toilet preparations containing alcohol
slashed from 50% to 16%; and sops have been announced on interest payments on
new investments by private hospitals.
Arvind: All this
may increase profits but how does it help growth, which has fallen to the
abysmally low level of 4.4% of GDP in the current year?
Ram: Such
encouragement to industry will give a big boost. Look further at the huge
concessions, for example he has handed out to the tourism sector, which has been
languishing after 9/11. He has totally done away with entertainment tax in this
sector. And LTC (leave-travel allowance) has been brought back to the employees,
not out of any love for the employees, but in a bid to revive the tourist
industry. But there is much more for all business, which you may not be aware
about. The poor diamond merchants like Bharat Shah stand to make big gains as
the duty on rough half-cut diamonds has been abolished and on polished diamonds
reduced to 5%. The IT sector has yet again been given a number of concessions
like: one year tax holiday for satellite telecoms; duty reduction for optic
fibre cables from 25% to 15%; custom duty reduced from 25% to 15% on all capital
goods used in manufacture in the IT sector; and duties on modems, routers and
fixed wireless terminals reduced from 15% to 10%. Also FDI limit in the telecom
sector has been further relaxed. No doubt, these reductions will particularly
benefit Ambani who is investing heavily in this sector. Then in the textile
sector the FM has cracked down on the unorganized sector through stringent tax
regulations, this will help boost the big textile companies and kill the
small-scale units. Also duty on garments has been reduced from 12% to 10% and on
textile machinery from 25% to 5%. In addition, while edible oil has been taxed,
excise duty on sweets, biscuits and chocolates have been halved from 16% to 8%.
(It look like JS is following the principles of the Queen, Maria Antionette,
who said "if they cannot afford bread ask them to eat cake"….. Arvind) I
could carry on and on about the benefits given to big business, but I will end
here with just one more; the 5% tax surcharge on firms has been cut to half - it
is now 2.5%.
Arvind: But what
about social welfare, people in this country you know are starving?
Ram: Oh, they are
lazy, they don’t want to work. But, what is important is that while expenditure
on health care has remained static at Rs.6,630 crore, that on HRD (Human
Resource Development) has gone up significantly and is now Rs.9,625 crores. The
HRD ministry is a main source for pushing Hindutva and that it gets 50% more
than health care is good - after all Hindutva promotes the unity and integrity
of the country. If thousands die of curable disease, what matter, the country’s
unity must survive at all costs.
Finally, I met up
with an MP, Shri Chamcha Lal.
Arvind: Can you
spare some time to tell me your views on the budget?
Chamcha Lal: I
have no time, three contractors are waiting outside. Get out. Anyway what is
this budget-fudget to me; all my money is black; taxes do not affect me, go talk
to the common people.
So, in this budget we
see the impact on the different classes in the country, and the attitude of
these towards the rulers and their budget. Besides, once again, in this budget
military expenditure continues to be the biggest drain on the exchequer (except
for interest charges) at Rs.65,000 crores. But an interesting change in this has
been a drop in the expenses on the army, while that of the navy has doubled.
This indicates a greater policing of the sea, as part of the US’s geo-political
needs in the region, and the Indian rulers hegemonistic and expansionist
designs. In the present US-created war scenario conflict can break out anywhere
and at any time, and the Indian rulers are gearing up for this necessity.
For the people of the
country such budgets continue to have a disastrous impact on their lives. It
requires that the people firmly oppose such policies dictated by the
imperialists to further their (and the comprador) interests in the country.
Besides, the best answer to these rulers, is the advancement of the people’s war
in the country and the setting up of liberated areas where the government’s loot
and tax policies do not reach. In such pockets the entire wealth generated can
be ploughed back for the welfare of the masses instead of being robbed by the
revenue and other departments of the state. This is the only long-term solution
to these budgets.
March 12, 2002
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