Volume 5, No. 8, August 2004

 Arvind

The human face is given to dupe the public that overwhelmingly voted against economic reforms, whether pushed by the BJP or the Congress or other state-level satraps. The ‘human’ face was also necessary to appease the CPI/CPM constituency on whose support the present government depends. If pro-poor demagogy was not there the revisionist leadership would get thoroughly exposed before their rank-and-file.

Quite naturally the pro-CPM newspapers were euphoric about the budget. The Hindu in its banner headlines (July 9th) on the front page blared "Taking off from CMP — Budget with a difference"; & "Emphasis on Agriculture, Social Sector". Not surprisingly, the major business houses were also as happy about the budget except for some stock-brokers who did not want the 0.15% tax on all share transactions.

The only difference with the BJP’s earlier budgets and the present one was that the BJP was crude and direct about its ‘economic reforms’; the Congress/CPM combine is more subtle and devious about it. The essence of all the budgets have been the same — i.e. massive concessions to big business and further opening out the economy to foreign capital, and further taxing of the poor and vulnerable. The peo-ple’s lives will, as a result, continue to deter-iorate, while the rich make even larger sums.

The Congress government has gone and opened up the economy even in those areas where the BJP was hesitant, as with the airports and insurance sectors. The airports were opened up immediately after coming to power. Now, in the budget it has taken the unbelievable step, of further facilitating the handing over the country’s savings to the foreign robbers by increasing FDI cap in insurance from 26% to 49%. The very opening up of the insurance sector was debated for years before the BJP brought in the IRDA under immense pressure from foreign bankers. Ever since, these imperialist sharks have been demanding a hike in their capital. Now this has been granted by the Congress in its very first budget after taking power.

But this is not all. In Civil Aviation too the FDI cap has been hiked from 40% to 49% and in telecommunications it has been hiked from 49% to 74%. In addition huge concessions have also been given to speculative capital — FIIs. The budget has raised the FII ceiling in debt funds from $1 billion to $1.75 billion. It has also removed the bulk of the restrictions that existed on FIIs entering the country; now they can enter freely without any permission and questions being asked. This speculative capital has had disastrous effects on numerous economies of the world as was seen in the 1997 S.E.Asia crisis yet the Congress is going ahead with allowing their open penetration of our country. As it is huge amounts have flown in during the last year. Now this will only increase, making the economy extremely vulnerable.

Ofcourse the CPI/CPM will make their standard noises of opposition, when, in fact, they would have been well informed before hand of the expected proposals in the budget. What has happened to its ‘great’ CMP (Common Minimum Progreamme)?

Rural India outright rejected the India Shining slogan of the BJP. It became a joke in fact much like Indira’s "garibi hatao". Since then the media has been full of suicide deaths in the countryside and now even starvation deaths as in Melghat, Mahrashtra. The situation in rural India has been going from bad to worse particularly during the period of ‘globalisation’ and economic reforms, where the entire thrust is towards hi-tech, info-tech, and the ICE (info-tech, communications and entertainment) sectors.

So, quite naturally the CMP, to befool the people had its focus on this sector and the FM began his speech from the CMP and the agrarian sector. The media too tried to portray as though rural development was the main focus of the budget.

Though the bulk of the rural population has been hit by the present crisis the worst hit were the agricultural labourers, poor and middle peasants. Does this budget address any of these sections?

As for the poorer categories the CMP promised as its main goal employment for this sector. What does the budget do? It announced that at some future date it will bring in a National Employment Guarantee Act (that will guarantee 100 days employment to one person of a family per year — as though today each family does not have one person working a mere 100 days; if they do not have even this they will be unable to survive!!!); while, for the present, the budget has drastically slashed the Sampoorna Gramin Razgar Yogna (or Rural Employment Programme which had created 763 million mandays last year) from Rs 9,640 crores last year to a mere Rs.4,590 crores this year — i.e. by more than half. Is it really serious about rural unemployment when even half-baked schemes, like the SGRY, is cut by half. A reduction of over Rs.4000 crores in the SGRY is an indication of its seriousness in this regard.

Also, while it has targeted 150 of the poorest districts for the "food for work" allocation it has not kept any funds or it, saying that this will be drawn from the other schemes like SGRY, SGSY, SGSRY, etc. So if this is to be implemented , funds to the other welfare schemes will get drastically cut.

Also the budget makes a statement that it will increase the number of families under the Antyodaya Anna Yojna (where rice and wheat are supplied cheap to the poorest of the poor) from 1.5 crores to 2 crore families. The budget has once again not allocated any funds for this and says the amount will come out of the food subsidy. But as the food subsidy is the same as last year this would mean a virtual cut of Rs.3,700 crores (which is the amount planned to be spent on the AAY) of the food subsidy for the other sections of the poverty-stricken people like BPL, etc. In other words the allocation for the PDS scheme has been cut even further.

Besides, tall talk there are no specific increased allocations for agriculture, with the entire focus being on its commercialization. In fact it appears to be more Monsanto-dictated than people-dictated, which is not surprising as the agriculture minister, Sharad Pawar, is a de facto agent of Monsanto (the Maharashtra-based MAYHCO — now bought over by Monsanto — was in fact the pioneer in experimentation of Genetically Modified seeds in India). This is indicated by the fact that the single largest increase to the rural sector has gone for agricultural research which has been hiked a massive 300% from Rs. 225 crores last year to a huge Rs. 1,000 crores in the present budget. The bulk of this will go for research in to GM crops which is the main trend of study these days.

While irrigation has been allocated just about the same nominal amount as last year the prime focus is on credit and agri-business. In fact the Economic Survey, released one day before the budget, goes so far as to call for the winding up of the MSP (minimum support price) scheme to send even wheat and rice pricing to the ravages of the market. This infact is what the WTO has been demanding for years. They have been demanding to switch from foodgrains to cash crops and any deficit in foodgrain production was to be met by the huge US (imported) stocks, while the cash crops are to be processed for cheap exports to the imperialists. The budget talks specifically of organizing credit to the farm sector, and lays stress on diversification of farm activities and agro-processing. Expenditure on agriculture has increased a pittance from Rs.1,081 crores to Rs.1,784 crores. And the better organisation of credit means helping the rich farmers as the rest have been pushed into the arms of the moneylenders who have begun to dominate the bulk of rural credit. Thousands of farmers are taking their lives because of the debt burden; on this the budget says not one word. Bank, NABARD, etc, credit is profit-oriented and will only go to those with security. There is even no mention of reduction on the interest rate (today a car loan carries less interest than that to a peasant). The budget also talks of farm and livestock insurance. This is again a scheme only utilizable by the big farmers. Besides there is no crop insurance against the continuous loss o f crops due to monsoon failure or crashing of commodity prices.

In fact the government is not willing to address one of the main problems facing the farming community — the crash in commodity prices, coupled with a continuous rise in the price of inputs. Studies have shown that in the last five years there has been a huge drop in agricultural incomes. So, for example, in West Bengal, for paddy growers incomes have dropped 28% between the 1996/97 and 2003/04; for sugarcane growers incomes have fallen 32% in UP and 40% in Maharashtra; in North India the average income of the farmer has dropped 10% ?— this at a time when the price of inputs would have risen at a minimum of 7% per year, or 35% in the five year period. The budget does nothing to address this severe structural crissi facing the farming community. In the developed this is solved by huge government subsidies, but here the governments, bowing to WTO press-ures are in fact attepting drastic cut even in the negligible subsidy going to the farmers, thereby pushing them to destitution.

The already deeep destitution in the rural areas can be seen from the fact that while there are mountains of stock the people do not have the money even for their daily meal. This has been achieved by virtually disbanding the PDS scheme and raising its prices to market rates. The present budget has not touched this serious problem and cause for starvation and hunger deaths. The horrifying state of affairs can be seen from the fact that in just the two years from 2001/02 to 2003/04 consumption of foodgrains fell a massive Rs. 34,000 crores, from Rs.1,58,621 crores to Rs.1,24,560.(Sahara Samay, July17 2004)

The budget says it has allocated Rs.10,000 crores to the Planning Commission "to fund various programmes once they are finalized". This is yet another confidence trick of the FM as the schemes have been clearly defined in the budget itself; if it was serious about using these funds they could have been directly allocated to the various schemes here itself. This is yet another gimmick to fool the people, and with the World Bank stooge at the helm of the Planning Commission (Montek Singh Alluhwalia), one can well understand where these vaguely allocated funds will go! To stall the entire process of the utilization of these funds the FM has planned a large number of commission/studies to help work out how the CMP promises are to be met. The Rs.10,000 crores will only be allocated it says once it "completes an exhaustive review of the ongoing schemes."

In fact the entire focus of the budget is only pro-agriculture in words not in concrete fund allocation. And what little has been allocated is basically towards the 5% rural rich — as to how to make them more commercial in order to integrate them with the interests of the imperialist/big-business markets. Except for the AAY (which, till today, is not clear as to how it is being implemented as no mechanism has been set up to identify AAY families) the budget schemes will only further impoverish the 80% rural poor — due to the drop in the PDS expenditure, continuing low investment in agriculture and irrigation, ignoring the role of the moneylender, drastically cutting the SGRY, no reduction in import duties on agricultural produce, no reduction in the interest rates on credit, etc.

There was much propaganda that the budget has raised the tax exemption limit from Rs.50,000 to Rs. 1 lakh. This is yet another big hoax — this time on the middle-classes. It says " while everyone will file his return according to the current tax slabs and tax rates, and compute his taxable income and the tax payable, anyone with a taxable income of Rs.1 lakh will have his income tax liability automatically rebated". Even today with Standard Deductions of Rs.30,000 and other tax deductions, roughly Rs.1 lakh is not taxable. So there is nothing new in this. Not only that, the person will have to continue paying the tax which will then be refunded. Over-and-above this, a 2% cess has been levied on all taxes (in the name of education) which will in effect raise the existing tax burden for the employee. So, while the harassment of the income tax authorities will continue, and the red-tapism of filing returns will continue, the individual has little to gain. In fact those earning a little over Rs1. lakh will now be paying more tax than before.

Also much noise has been made about enhanced expenditure on social welfare. In the case of health there is no attempt whatsoever to reduce the ‘user charges’ introduced in public hospitals, increase the network on PACs or reduce the burgeoning cost of medicines. It merely talks of enhancing the BJP introduced health insurance scheme, which in fact had no takers — a mere 11,000 joined the scheme. With existing knowledge of how the ESIS insurance schemes for workers is run no one could possibly think of joining such schemes. The ESIS is so badly run that most workers, though they pay the insurance amount are forced to go for private treatment. Besides, with the govern-ment all set to implement the new patent act on Jan.1 2005, medicine prices, which have been continuously increasing will now go through the roof. So, it will be insur-ance to death. The budget itself says the increased expenditure on health will primar-ily go to meet the huge expenditure on the polio campaigns, promoted by the WHO with funds lent by the multilateral institutions.

And when one turns to education we see nothing but privatization all around. The budget says it is imposing a 2% cess to raise an additional Rs.4,000 crores for education. Why need it take the money from the people through this and not come out of the ordinary expenditure of the government? When it can raise the expenditure on the police by a huge Rs.1,609 crores (from Rs.8,331 crores last year to Rs. 9,940 crores in the present budget) why cannot it just allocate more for education. In fact even what was earlier being allocated for the mid-day meal scheme will now come through this increased cess. The proposal for 500 new ITIs is only to provide a trained labour force for big business and the imperialists.

The budget has not even spared the small scale sector by the de-reservation of 85 areas from the purview of the SSI, bringing the number of items for the small scale industrial units to 485 from the current 570. The Economic Survey went so far as to say there was need to end the system of reservations to the small scale sector.

Never before has the defence budget been hiked so drastically as in this budget — a huge 28% from Rs.,60,300 crores last year to Rs. 77,000 crores this year. This indicates the continuing militarist designs of the Indian expansionist. With the peace process proceeding with Pakistan the military expenditure should in fact drop, not increase so radically. This is a clear indication of its expansionist designs against neighbouring countries and the need to be part of the strategic alliance with the USA. More and more the Indian military is being used by the US to police the straits of Mallacca and the Indian Ocean Region. Also the might of the Indian army is being pitted against the people in ruthless anti-insurgency operations — obviously this too is planned to be increased. For all such anti-people, anti-India needs the expenditure on the military is being continuously increased.

Of the total expenditure a gigantic Rs33,484 crores has been allocated for capital expenditure ( compared to Rs.20,953 crores last year) — a bonanza for arms dealers and the politico-military top brass.

There have been other forms of attacks on the poor and middle classes in this budget. Interest rates on savings and provident funds continue to be kept low at 8% while pensioners have been allowed to invest in bonds at 9%. This will not even cover the cost of the yearly inflation (the actual figure, not the cooked up government figure).

The petroleum subsidy has been virtually halved — from Rs.6,573 crores to Rs.3,559 crores. This means there is to be further increases in the rates of LPG and kerosene; over and above the June 15th hike.

Customs duty on edible oil has been increased making cooking oil more expensive.

The allocation for SC/STs have virtually been kept the same ( in absolute terms there would be an actual drop if inflation is taken into consideration) and a pittance of Rs.50 crores has been allocated for the National Minorities Development & Finance corporation.

Though there has been much hype on this budget it is actually nothing but a continuation of the policies of ‘economic reforms’ being dictated by the imperialists — against the poor, rural population and the middle classes and in favour of the money-bags. It is therefore not surprising that the associations of big business have come out supporting it. The only difference between this and earlier budgets is its attempt to put on a human face — or to put it more accurately a mask of humanity. There is need to tear off this mask and expose the bitter truth.

Whichever parliamentary party is in power they are bound to implement economic reforms as none dare annoy their imperialist masters. It is only a broad, wide and militant anti imperialist movement that can effectively fight back the pro-imperialist policies of these traitors and prevent the continuous and deepening sell out of the country’s even nominal sovereignty.

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