People's Democracy

BUDGET

Strengthen Popular Struggles

EVERY budget, naturally, reflects the interests of the ruling classes and outlines the process by which they consolidate their class rule as well as reap higher profits.  This first budget of UPA-2 does precisely the same. However, it also reflects the contradiction that was born alongwith this UPA-2 government.  That contradiction is the following:  The concerns of the aam aadmi on whose strength they returned to form the government, on the one hand, and the basic desire of the big bourgeoisie to push forward the process of neo-liberal reforms, on the other. 

Already during the first four years of high growth during UPA-1, the number of Indian billionaires in dollar terms increased from 9 in 2004 to 53 in 2008.  The assets of the top ten corporate houses tripled from Rs 3,54,000 crores to Rs 10,34,000 crores.  It is this process that they wish to consolidate through this budget as well. 

This they have done by undertaking many taxation measures. The abolition of surcharge and the increased exemption limit for income tax has given a bonanza of Rs 10,000 crore to the rich. Those earning Rs 1 lakh a month  will now pay nearly Rs 30,000 less tax annually.  Those earning more than Rs 20 lakhs a year will now pay over Rs 53 thousand less.  To that extent, the governmental revenues will be lesser by Rs 10,000 crores.  Additionally, the budget has disclosed that the tax revenue foregone last year as a result of various concessions, was as much as  Rs 4.18 lakh crore. These concessions has now been extended  for 2009-2010.  The fringe benefit tax and the commodities transaction tax have also been abolished.  The latter is bound to impact by further hiking the prices of essential commodities due to speculative trading in commodities.  It is ironic that this tax has been abolished at a time when USA, under president Obama, is considering serious regulation and restrictions on speculative trading in commodities particularly in oil.

Avenues for enlarging profits of India Inc have also been provided in the emphasis on public-private-partnership (PPP) in the development of infrastructure.  The India Infrastructure Finance Company Ltd (IIFCL)  shall now refinance 60 per cent of commercial bank loans for PPP projects.  The budget has announced that the IIFCL and banks are now in a position to support projects involving a total investment of Rs 1 lakh crore.  In other words, the state  will make available resources through the financial institutions for the private sector to borrow on easy and soft terms, so that the latter can collaborate with the government in jointly investing in infrastructural projects and reap handsome profits.  Such are the discrete ways of the bourgeoisie!

The basic issue in this budget was to provide a stimulus for growth in the background of global recession, growing job losses and declining purchasing power  of the people, on the one hand, and to meet the needs of  `inclusive growth' for the aam aadmi.  Unfortunately, as explained in the accompanying CPI(M) Polit Bureau statement  on the budget, neither  is met adequately.  The total expenditure is slated to increase by a mere 2 per cent  of the GDP.  This is too small  to generate the required stimulus.  The allocations for the much tom-tomed flagship programmes are much too less to achieve `inclusive growth'. 

Despite substantial gains, the ruling classes seem to have been expecting more, especially when UPA-2 is no longer constrained to rely on the Left's support for the survival of its government.  This was reflected in the plunge of the sensex as the budget was being presented.  Though international stock market behaviour  would have affected the sensex, it has been widely interpreted by the corporate media that this fall was due to the fact that the budget did not reflect the full-throated advance towards financial reforms and disinvestment as outlined in the Economic Survey.  The latter had targeted a Rs 25 thousand crore of disinvestment of the public sector in the current year.  Though the budget talks about disinvestment, neither the details nor a road-map were presented. 

At the same time, the Finance minister was warning about the high level of fiscal deficit and declaring the government's intention to return to `fiscal discipline'.  It does not need much stretch of imagination to deduce that the proceeds of disinvestment will be used for returning to such a `fiscal discipline'.  This makes neither common sense nor economic sense.  This is like a farmer selling his land to pay his debt.  This is the surest way to ruin.

Whether this will be done or how this will be done will be determined by the manner in which the contradiction we spoke of earlier will unfold.  Corporate India is actively wishing that this contradiction unfolds in a manner that advances the reform process for enlarging private profits.  They seek to further strengthen `shining' India  at the expense of `inclusive growth' and the aam aadmi. 

The manner in which this contradiction unfolds will also define the improvements in the livelihood of the vast masses that constitute `suffering' India.  It is only the strength of the popular struggles that shall ensure that this contradiction unfolds in a manner where people come before profits.  Thus, it is the strength of these popular struggles that shall determine the future of India and the vast majority of its people.