People's Democracy

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


No. 10

March 07, 2010

Union Budget 2010: Pro-Rich and Anti-People


The Polit Bureau of the Communist Party of India (Marxist) issued the following statement on February 26, 2010.

THE Union Budget 2010 presented by the UPA government will neither stimulate growth nor bring down inflation. The budget is premised upon a flawed strategy to meet the budget deficit by increasing indirect taxes across the board, especially on diesel and petrol, which will hit the common people, primarily the poorer sections. In contrast, direct taxes on the affluent sections have been reduced. This anti-people strategy will further fuel inflation in the backdrop of an already high food inflation rate of 20 per cent.

As per the finance minister�s own estimates, there will be a revenue loss of Rs 26,000 crore in 2010-11 due to the direct tax concessions doled out to high-income earners as well as real estate developers, hoteliers and other commercial establishments. This comes in the backdrop of nearly Rs 80,000 crore tax concessions to corporates in 2009-10. In contrast, the finance minister has proposed to raise an additional Rs 60,000 crore in indirect taxes over the last year. The most objectionable aspect of the increase in indirect taxes has come in the form of a 5 per cent increase in customs duty on crude petroleum along with a Re 1 per litre increase in central excise duty on petrol and diesel. Raising the prices of diesel and petrol will further fuel all round inflation in the economy.

On the expenditure side, while there is a 15 per cent increase in the central plan expenditure, the increase in central assistance for the states is merely 8 per cent, which implies a squeeze in real terms (the nominal GDP growth rate is 12.2 per cent). The budget also incorporates the recommendations of the 13th Finance Commission for only 32 per cent share of the states in the sharable central taxes against the demand to allocate 50 per cent. On elementary education the paltry increase of Rs 5,000 crore falls far short of the requirement of universalising the Right to Education. The central plan outlays for agriculture, irrigation and rural development shows stagnation in real terms, reflecting the government�s waning commitment towards the rural population.

It is also shocking that food subsidy has been reduced by over Rs 400 crore despite the commitment to enact a food security legislation. Fertiliser subsidy has also been cut by a whopping Rs 3,000 crore from what was spent last year. These moves to reduce subsidies in the name of targeting comes at a time when inflation is galloping and agricultural output growth has become negative. The anti-people approach of the government in reducing subsidies was laid bare in the Economic Survey which has prescribed the dismantling of the PDS and initiating a �coupon system� for food and fertilisers.

The finance minister has announced a Rs 40,000 crore disinvestment programme for 2010-11, following the Rs 25,000 crore disinvestment earnings in 2009-10. This has been justified in the budget speech as �unlocking� the value of the central public sector enterprises (CPSEs). However, the latest Public Enterprises Survey 2008-09 clearly shows that the market capitalisation of all listed CPSEs, taken together, fell by 27.41 per cent between March 31, 2008 and March 31, 2009. The finance minister is therefore resorting to a specious defence of disinvestment, which is solely meant to appease the stock market speculators. The announcement that the RBI will issue bank licenses to more private sector players including non-bank finance companies reflect its intent towards further liberalisation of the financial sector.

The Polit Bureau of the CPI(M) calls for the withdrawal of the indirect tax proposals which will fuel inflation and adversely affect the people. The increase in petrol and diesel prices to the tune of over Rs 2.50 per litre must be summarily rescinded. The cuts in food and fertiliser subsidy also need to be reversed. The Polit Bureau calls upon all its party units to launch protest actions against the anti-people proposals of the budget.