People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 01

January 07, 2007



TU’s Demand More Allocations For People’s Welfare


Below we publish the joint memorandum the central trade unions gave to the finance minister at the pre-budget consultation meeting at New Delhi on December 29, 2006.


WE thank you for inviting the central trade union organisations for the pre-budget consultations. We trust this meeting would not end as yet another ritual. We wish that our suggestions herein are taken up with all seriousness and find appropriate reflection in the forthcoming budget. 


We are seriously concerned about the present situation of the country’s economy, after the 15 years long pursuit of the policies of economic liberalisation. The crisis has become more profound, impacting adversely the livelihoods of vast sections of the Indian society. The worrisome agrarian distress, the unacceptable levels of inflation leading to sky rocketing prices, huge job losses in the face of mounting unemployment are all there for everyone to see. This economic policy regime has only created a few islands of prosperity, while plunging the people at large into the quagmire of impoverishment and unmitigated sufferings. We strongly urge that the coming budget should be people oriented addressing the issues of poverty, unemployment and social infrastructure. It should make serious attempts at mobilisation of huge additional resources by broad-basing the tax net and targeting the rich and the affluent. We place here our specific proposals with this end in view.

  1. Take effective measures to arrest the spiralling price rise and contain inflation. Ban speculative forward trading in commodities. Universalise and strengthen the public distribution system. Rationalise, with a view to reduce the burden on people, the tax/duty/cess on petroleum products. 

  2. The budget should ensure allocation of at least 25 percent of governmental revenue for social sector, covering education, health and housing, besides utilising the education cess collected over the last couple of years for strengthening the primary education.

  3. Make massive public investment to augment agricultural production. Ensure remunerative prices for agricultural produce through effective procurement system.

  4. Expedite enactment of comprehensive central legislation for agricultural workers.

  5. Expedite the enactment of unorganised sector workers’ bill, factoring in the unanimous inputs of the trade unions, with a budgetary allocation to the extent of 3 percent of GDP.

  6. Target large-scale generation of quality employment in the organised non-farm sector, while extending the Employment Guarantee Scheme throughout the country including the urban sector.

  7. Withdraw the ban on recruitment in government departments, autonomous institutions and PSUs.

  8. Infuse necessary funds and make provisions for rapid development of labour intensive cottage, small-scale and medium industries. Extend liberal tax concessions, subsidies, incentives, concessional credit facilities, marketing assistance and restoration of all the items dereserved earlier in the reserved list.

  9. Take immediate measures to tackle the problems of sickness and crisis in traditional industries such as jute, textile, plantations, handloom, coir, beedi, khadi & village industries etc.

  10. Rescind the new pension system aimed at privatisation of social security. Withdraw the Pension Fund Regulatory & Development Authority Bill.

  11. Enhance the exemption limit for income tax to Rs 2 lakh per annum. Rescind the taxation on fringe benefits extended to salaried class. Extend the benefit of standard deduction to pensioners and retirees. Withdraw the move to introduce EET, subjecting terminal benefits under superannuation, small savings and insurance schemes to income tax.

  12. Open up the special deposit scheme (SDS) for further investments. Hike the interest rate on SDS to at least 9.5 percent to roll back the reduction in interest rates on provident funds and small savings effected since 2005-06. Enhance the coverage under the EPF Act covering all wage earners. Hike the income limit to Rs 10000 on par with that in the ESI scheme.

  13. Drop the proposed curtailment of benefit packages in the EPS 1995. Increase the minimum pension amount.

  14. Meet the legitimate demand for grant of interim relief to the central government employees. Also take immediate measures to merge 50 percent of dearness allowance with pay in the case of PSUs. 

  15. Scrap the National Investment Fund exclusively funded from disinvestment proceeds of the PSUs. Halt privatisation or disinvestment of profit making, strategically important and potentially viable units. Expedite the revival of sick PSUs. Take effective steps to tackle the proliferation of industrial sickness in all sectors.


We are fully aware that all these require generation of adequate resources. We wish to place a few suggestions towards that end:

  1. End the ‘fiscal profligacy’ of showering scores of incentives and concessions upon the corporate industrial houses, MNCs, FDIs, FIIs, SEZs etc.

  2. Increase the tax-GDP ratio by taxing the rich and the affluent.

  3. Enhance the rates of personal and corporate income tax for those in the higher income brackets.

  4. Strengthen the tax enforcement machinery. Curb tax evasion.

  5. Introduce wealth tax in view of the enormous accumulation of wealth by a tiny segment of the population.

  6. Introduce Inheritance Tax on high-value properties bequeathed.

  7. Review the double taxation avoidance agreements to curb the speculative profiteers evading tax.

  8. Reintroduce the long term capital gains tax.

  9. Increase the rate of securities transaction tax.

  10. Increase the tax on luxury goods and imports.

  11. Tax the lavish spending on ostentatious consumerism and social functions.

  12. Take regressive measures to unearth black money.

  13. Set targets for recovery of huge tax arrears and bank loan defaults by the big business borrowers.

  14. Bring under the service tax net the IT and outsourcing sectors, educational institutions, health services and other service outfits run on commercial basis. 


We wish that you also resume the erstwhile practice to have a post budget discussion as well.


The signatory organisations to the memorandum were the AITUC, BMS, CITU, HMS, INTUC, UTUC and UTUC-LS. W R Varada Rajan and K Hemalata represented the CITU at meeting. Both are CITU secretaries.


Apart from the issues contained in the joint memorandum, the CITU representatives raised some other the issues as well. They said though inflation is at a high level, which the minister had himself termed as unacceptable, the price index does not reflect this fact. Therefore there must be transparency in the compilation of price indices.


Secondly, they said, the country is at a very low level on various human development indicators that provide a reliable, even if inadequate, measurement of the progress achieved by a country. 


Thirdly, as the only scheme addressing the needs of mothers and children, the Integrated Child Development Scheme (ICDS) must be made a permanent scheme and the demands of the Anganwadi workers and helpers must be considered.