Sitaram Yechury
The budget for this year presented by the first BJP-led government to the country represents a frontal attack on the livelihood of millions of working people. This budget is neither “Swadeshi” nor growth oriented. It contains proposals that will unleash an inflationary spiral undermining the real earnings of the people. Apart from all such anti-people proposals, the budget has a heavy dose of Saffron agenda which has the most dangerous potential for disrupting our social harmony.
Let us first take the impact of the budget proposals on prices. It must be borne in mind that these proposals come in the background of the hike in railway fares, which has a cascading inflationary impact on all commodities. The price of petrol has been increased at a time when the international prices are sharply falling. Unprecedented confusion prevailed on this petrol hike. Unable to withstand a near unanimous anti-BJP opposition to a hefty hike of over Rs. 4, the Finance Minister, the next day, announced a rollback to effect a hike of Re. 1 only. The prices went up by Rs. 4 because the budget proposed two additional levies — a Re 1 per litre cess and an 8 per cent increase in excise duty. If the Finance Minister’s announcement is to be seriously considered, then the entire excise hike has to be withdrawn. The government has, however, chosen a combination of decreasing the administrative price of imported petrol alongwith a decrease in excise duty hike. The reduction of the administered price of petrol will increase the oil pool deficit in the future. This will mean another price hike shortly. In the meanwhile, the poor consumers had to pay the increase of Rs. 4 per litre for more than 24 hours all across the country. Hundreds of crores of rupees, thus, have been looted from the people.
An eight percent countervailing customs duty on all imports accompanied by a six per cent devaluation of the rupee following the Pokhran nuclear blasts, will push up the prices of all items containing imported components. In addition, the budget has announced a hike in duties on basic items such as steel and paper.
In the sphere of excise duties, an eight percent increase is there on basic items such as tea, butter, ghee, milk powder, spices, and edible factory preparations. This is bound to push up the prices of all items of daily consumption.
Most importantly, the budget, while expressing mock concern for the agricultural sector, has hiked the prices of urea, an important component of fertilisers. Like in the case petrol, the Finance Minister, a day later, has reduced the hike by 50 per cent. Nevertheless, this hike will push up the cost of production. Pressures to increase the minimum support price will naturally grow. If this is done, the consequent impact on the issue price of foodgrain will set in motion an inflationary spiral in all items of essential consumption. Such a price increase, coming in an year of uncertain monsoon and in the background of falling rate of growth of foodgrain production, will have serious repercussions on the country’s food security.
Bombastic plans have been announced with regard to expanding credit facilities in the rural areas. It must be kept in mind that nearly 200 kisans (in Andhra Pradesh, Karnataka, Maharashtra, Madhya Pradesh and elsewhere) had recently committed suicide because they were unable to return the loans taken from the private moneylenders due to the failure of the cotton crop. Mere expanding of credit facilities will not solve this problem. What is necessary is to provide the poor kisans with proprietarial rights which can be pledged as a security to receive loans officially. Unless this is done, no amount of schemes will redress the basic problem plaguing the bulk of our peasantry. For this, of course, what is needed is the implementation of land reforms. Though this is a state subject, the Centre could well suggest its direction in this matter. This budget does not have a single reference to this important issue. The union Minister for Agriculture has, in fact, gone a step ahead and dismissed any need for land reforms while addressing a press conference on the impact of the budget on the agriucltural sector.
Let us come to the BJP’s claims of “Swadeshi”. By now it is become apparently clear that this slogan, alongwith many others, was yet another mask to hoodwink the people. If “Swadeshi” means strengthening India’s self-reliance, then the budget has done the exact opposite. The frontal attack on India’s self-reliant basis comes in the opening up of the insurance sector, and the massive plans for disinvestment and privatisation of the public sector.
The Finance Minister has taken the specious plea that the insurance sector is being opened only to domestic private industry and not to foreign companies. That this is a misleading subterfuge can be understood by the fact that a foreign company can have majority equity in an Indian firm and thereby operate through the Indian firm. Hindustan Lever, for example, is fully owned by the multinational giant Unilever. Does Hindustan Lever qualify to be a “Swadeshi” domestic company? In a move to mislead the Indian people, the insurance sector has virtually been opened up to the plunder of international finance capital. The BJP-led government either has not learnt any lesson from the recent East-Asian experience or has chosen to barter away India’s self-reliance in the name of “Swadeshi”.
Regarding the public sector, major plans are effort for the virtual dismantling of this backbone of India’s self-reliance. The government has announced the reduction of its share holding of a vast majority of public sector units to 26 per cent, ie, 74 per cent will now be privatised. Further, the Indian Airlines will be privatised to the extent that the government will now hold only 49 percent of the shares. In addition, three navaratnas, blue chip public sector companies like the IOC, VSNL, and GAIL will face disinvestment.
In a completely anti-working class proposal, the government has announced a `restructuring fund’ whose purpose would be to force public sector workers to accept retrenchment. Once this is done, the prime assets of the public sector are to be sold for a song to private business. The proceeds of this sale would go to meet the government’s expenditure. In other words, family silver is being sold to meet immediate expenditures. They can be noting worse than this which undermines our country’s self-reliance.
In an other sphere, the slogan of “Swadeshi” can be seen as being totally hollow. This is in the sphere of government’s borrowings. The interest payments on the government’s debt is estimated in the budget to be Rs.75,000 crores. The precarious state of the economy can be understood by the fact that of every rupee earned by the government in 1997-98, 24 paise went to meet interest payments. On the other hand, 29 paise of every rupee of its revenue came from internal borrowing. In other words, the government is borrowing to pay back the interests on its earlier borrowings. This is the vicious debt trap that the economic policies of liberalisation have pushed the country into. In the name of “Swadeshi” the country is being led on a path of further indebtedness.
The major problems facing the Indian economy in recent years have been related to the slowing down of the economic growth and the consequent recessionary tendency in Indian industry. The main reason for this has been the lack of sufficient growth of domestic demand. With the erosion of the real incomes of the people, their demand for domestically produced products has fallen short of the production of the same. That is, those who need these products do not have the money to buy them. On the other hand, those who have the money, do not need these products since they already possess them. Their demand is reflected in the clamour for imported goods put in pressure on our balance of trade.
The only way out of this situation would be to increase the domestic demand by conferring greater purchasing power in the hands of the vast majority of the Indian people. Instead of taking measures in this direction, the budget has done the exact opposite. The bulk of the government’s revenues are to come from increase in indirect taxes. The bonanza for the rich given in the previous budgets has been continued by the BJP-led government by not increasing a paise of direct taxes. Direct taxes put the burden on those who earn high income and hence are in a position to tolerate the burdens. Indirect taxes are taxes on commodities whose burden falls on the consumer. By increasing the indirect taxes, the BJP-led government has transferred the burden of its revenues on to the shoulders of the common man.
Even in the sphere of indirect taxes, the major share comes not through customs duties but through excise taxes. The former would have discouraged foreign competition. If the BJP’s aim was, indeed, “Swadeshi”, then it should have relied augmenting more resources through customs duties. By relying on excise duties, the government has put greater burdens both on domestic industry and the Indian people.
Greater burdens on the people means a further contraction of their purchasing power. This, in turn, means a further contraction of domestic demand. And this, in turn, implies not a reversal but the acceleration of recessionary tendency. Its impact on the people is directly fell in growing unemployment.
Thus, what we have in the budget, is spiraling prices, growing unemployment, further indebtedness of the country, and further dismantling of our self-reliant basis.
While all these constitutes a major assault on people’s livelihood, the most ominous aspect of the budget has been the stamp of the Saffron agenda. The Finance Minister has virtually announced the nationalisation of the RSS through his proposal to form a “National Reconstruction Corps”. This is a direct fallout of the BJP election manifesto, which talked of such a scheme “to tap the spirit of voluntary service among the youth and channel it for the realisation of twin goals — self growth and nation building”. Given the track record of the BJP and the Saffron Brigade, such a scheme is directed at propagating their inserious communal ideology and the consequent hatred against the minorities which can only undermine our country’s unity and social harmony.
Through these columns in the past, we had exposed the nefarious designs of the VHP and the Bajrang Dal in organising youth centres for conducting inflammatory propaganda and incendiary activities against the religious minorities. This budget, has now given its official sanction to such an agenda.
Given these proposals, it is incumbent on all patriots to rise in unison in struggles against these anti-people policies that impose fresh burdens on the working people on the one hand, and on the other, further mortgage our economy. The communal designs of disrupting of our country’s unity and integrity must be squarely defeated.