People's Democracy

Little To Cheer, Concerns Aplenty: CITU

The CITU secretariat has issued the following statement:

THE budget 2005-06 presented by the finance minister of the UPA government is high on its emphasis on ‘assault on poverty and unemployment’ but seems to be low on allocation of resources, needed to take on the immense challenges on these scores. There is no attempt to correct the dilutions in the Employment Guarantee Bill in keeping with the commitments in the CMP. The trade union movement has all along been articulating that any attempt to tackle the pressing problems of the people, keeping within the confines of the Fiscal Responsibility and Budget Management (FRBM) Act will only be futile. That the finance minister had to press the ‘pause’ button on the FRBM Act is a vindication of this. Also welcome is the restructuring of the duty regime on petro-products. The budget has not targeted ‘disinvestments’ as a captive source for revenue generation as in the past and this should be maintained notwithstanding any revenue constraints that may surface later on.

But the hefty reductions made in the custom duty on imports are in line with the WTO imposed ‘obligations’, which will prove to be harmful for the domestic industry, particularly the manufacturing and capital goods sector. The new tariff regime will also hit hard our agricultural sector. On the direct tax front, the budget has continued its softness in the arena of corporate income tax measures, while in the area of personal income tax the proposed slabs offer some relief; but the withdrawal of standard deductions, the tax on fringe benefits other than transport and canteen facilities, elimination of rebates and more importantly treating all savings instruments at par are matters of concern. The totally inconsequential proposals in the matter of unearthing black money and the reluctance to tax the securities market transactions even at the rate of 0.15 per cent as originally proposed last year, shows the lack of political will to embark on a ‘targeted’ resource-mobilisation exercise. The issue of banking sector reforms has been left for the RBI to unveil and this needs a vigilant watch, more so in the context of changes proposed in the banking regulations and RBI enactments. The announcement to open up mining, pension and trade sectors for the FDI has ominous portents.

The finance minister has chosen to persist with the new pension system and the regulatory legislation proposed thereof, overlooking trade union dissent. This, together with the move to treat all savings instruments, public and private on par, will cause a dent on small savings mobilisation, adversely impacting the state governments as well. The administered rate of interest has not been enhanced, even in consonance with the recent announcement by the government to restore at least the 9.5 per cent interest rate on EPF, which will cast a long shadow on the returns to subscribers of provident funds. 

The CITU calls upon the working people to extensively campaign on these aspects, to bring pressure on the UPA government to address these concerns of the trade union movement and incorporate appropriate correctives after necessary dialogue.