People's Democracy

Reverse Corporate-Centred Approach

CITU Views for Union Budget – 2003-04

THE pre-budget discussion is perhaps the only occasion when the union finance minister provides the central trade unions with an opportunity to articulate their views on matters pertaining to the national economy. This annual event has over the years become just a ritual, where only a hearing takes place but rarely any positive response follows from the government. This is in direct contrast to the frequent interactions of successive finance ministers – in fact the prime minister downwards almost the entire cabinet – with the industrialist lobby. Many a times, announcement of major policy decisions are even made from their platform. All these lay bare a clear bias of the government in favour of the capitalist lobby. This year, the incumbent finance minister has chosen to do away with the only forum available to the trade unions representing the nation’s workforce to have their views heard. The Centre of India Trade Unions (CITU), representing the vast multitude of the working populace of the country, has strongly condemned this unwarranted deviation from the past practice. 

At the same time the CITU highlighted the issues which it felt needed to be addressed with due priority by the government in the union budget. It felt that the economic policies under implementation for over a decade, and reflected in the successive budgets, have turned out to be a disastrous failure on all fronts, so far as the interests of the common people are concerned. In light of this the CITU has called for a total reversal of the policy approach for a people-centred development paradigm instead of the present corporate-centred approach.

Despite the clear admission even in the successive Economic Surveys that it is the severe demand constraint on all fronts that is the major factor for the downslide in the economy, nothing has been done to effectively address this basic problem. Rather, successive budget exercises continued to tinker with the supply side of the economy, resulting in gains only for the corporate lobby at the cost of the mass of the populace, without any tangible contribution to the creation of wealth in the country.

Based on this understanding, the CITU placed the following suggestions before the finance minister for consideration during the ongoing exercise on the union budget 2003-04:

·        Concrete steps should be taken for augmenting demand in the economy for which policies must be focused on employment generation and substantially augment the purchasing power of the workers and the people.  This alone can generate proper climate and inducement for investment.

·        That employment generation would flow automatically by giving more incentives to the employers for investments has proved to be a myth. Such incentives should be reoriented and linked with the specified new employment generation targets.

·        Provisions should be made for widest coverage of the “Food for Work” programme with special focus on the starvation-prone areas instead of allowing the surplus food grains stocks to rot in the godowns.

·        Public distribution system must be strengthened throughout the country, with the provision of more subsidies in the prices of food grains and other essential commodities.

·        Special provisions for relief for the poorest strata of population in the drought-affected areas should be made and properly implemented.

·        The privatisation exercise of the profit making PSUs must be stopped forthwith and the disinvestment manual published by the disinvestment ministry providing for in-built mechanism or under valuation/distress sale of the PSUs must be totally scrapped.

·        A pro-active policy ensuring concrete and expeditious steps towards revival of the sick PSUs, tied up with adequate financial support by the government should be ensured. The repeal of ICA and provisions for liquidation oriented measures in the Companies Act should be reversed.

·        Stringent punitive measures against the corporate tax-defaulters and urgent steps for realisation of the tax outstanding must be taken. In case of any disputes, up front payment of the tax due as assessed by the authority should be made mandatory for the dispute to be entertained, as in the case of electricity, telephone bills and other user charges.

·        Stringent punitive measures must also be taken against the loan-defaulters in the big business lobby responsible for accumulation of huge non performing assets (NPAs) of the nationalised banks. Strict action for recovery of the unpaid loans should also be accompanied by denial of loans to any wing/unit of the defaulter corporate groups and attachment of their assets in the event of their failure to pay-back within stipulated time.

·        Small scale and tiny sector industries must be given protection against unfair competition from the larger units and MNCs. Extension of concessional credit facilities to these sectors should be ensured.

·        Custom duties should be revised upwards in general. Any reduction in custom duty in case of any particular product must be matched by suitable reduction in excise duty of the similar product domestically produced and also on the customs duty on its imported inputs. Import duty on coal must be restored to 1988 level.

·        The quantitative restriction on import of goods, particularly those produced by small scale and agricultural sectors should be re-imposed.

·        Agricultural income of big landlords should be brought under the tax net.

·        The recommendations of the Kelkar Committee on reduction of corporate tax, wealth tax etc, and withdrawal of tax benefit on small savings, housing etc. should be scrapped.

·        The recommendations of the Reddy Committee report in respect of administered rates of interests on small savings have been implemented in the budget for the last year, dovetailing the same with the yield on government securities, of comparable maturity, traded in the secondary market. This has led to serious drop in the return for the small savers. In the coming year this is expected to slide down further. This measure must be reversed. The interest rate on small savings instruments and on Provident Fund/Pension Funds should be restored to 12 per cent.

(February 17, 2003)