(Weekly Organ of the Communist Party of India (Marxist)
November 13, 2011
PM AT G-20
Appeasing International Finance
imposition of further
burdens on the people with the latest hike in the prices of
minister Manmohan Singh spoke from
Worse, echoing Marie Antoinette during the French Revolution, asking people to eat cakes if they cannot get bread, the PM said that the relentless rise in prices reflected higher demand for these products and was hence a sign of prosperity. “If the economy is going at 8 per cent and the population at 1.6 per cent, then per capita income must be growing at 6.5-6.7 per cent.”
The reality is that
the growth of the
economy is contributing mainly to increase the luminosity of
What is the reality however? The Economic Survey (2010-11) informs us that the growth rate of private final consumption expenditure fell from 8.6 per cent in 2005-06 to 7.3 per cent in 2010-11. Where is the prosperity of the people, Mr Prime Minister?
Having returned to
This apart, such an increased burden on the people is unacceptable. The myth that petrol is only consumed by the rich who have fancy motor vehicles is exposed by the fact that the bulk of the lower middle class which use two-wheelers are major consumers of petrol. Further, the hike in the prices of petrol is bound to have a cascading inflationary impact.
The fact of the matter
is that this
hike will benefit the government’s exchequer the most. More than 40 per cent
of this hike goes to
the government as taxes and duties. With
this hike in 2011-12, the central government expects to earn
about Rs 82,000
crore as excise duty alone. During 2010-11, estimates show that
revenue from the petroleum sector to the central government in
the form of all
taxes and duties exceeded Rs 1,20,000 crores.
For instance, in
however, are advanced
to justify such a
hike and indicate
further hikes through the decontrol of the prices of all
products. One is
that the oil companies
are suffering `losses’ with `under recoveries’ projected to
touch Rs 1.32 lakh
crores in 2011-12, compared to
crores in 2010-11. What
are these `under
to the nationalisation
of foreign oil companies, the pricing of petroleum products in
For instance, the
average price of
crude purchased in the international market by
With the imposition of
economic policies under the neo-liberal dispensation, the APM
and import parity reintroduced for both crude and petroleum
meant that the domestic prices of
petroleum products are determined by the global prices
irrespective of what the
actual costs of production in
There are, in reality, no losses incurred by our major oil companies. The audited financial results for the year ending March 31, 2010 show that the Indian oil company’s net profit was Rs 10,998 crores. IOC had a reserve revenue surplus of Rs 49,472 crores! During April-December 2009, the other two public sector companies – Hindustan Petroleum Corporation and Bharat Petroleum Corporation – have earned profits of Rs 544 crores and Rs 834 crores respectively.
Do not invent myths to impose burdens on the people Mr Prime Minister.
The second argument
advanced by the prime
minister and echoed by India Inc is the concern over the fiscal
deficit. It is
estimated that the budgeted target of
4.6 per cent of the GDP – Rs 4,65,000 crores this year – is
bound to exceed
forcing the government to borrow.
costs of this borrowing will be naturally passed on to the aam admi through higher prices.
Now look at another reality. According to the budget papers, the tax foregone, ie, concessions to the rich was a whopping Rs 4,14,099 crores in 2008-09. This increased to Rs 5,02,299 crores in 2009-10. In 2010-11, this has been estimated to rise further to Rs 5,11,630 crores. In this, the tax concessions given to the corporates and high end income tax payers was Rs 1,04,471 crores in 2008-09, Rs 1,20,483 crores in 2009-10. In 2010-11, this is expected to rise further to Rs 1,38,921 crores. During these three years, a staggering Rs 14,28,028 crores has been the legitimate tax foregone by the government. Of this, Rs 3,63,875 crores have been the concessions to the corporates and the rich.
Compare this concession, Mr Prime Minister, with the estimated fiscal deficit of Rs 4,65,000 crores. If these legitimate taxes were collected, neither would there have been any fiscal deficit nor a shortage of funds to invest in developing our much-needed social and economic infrastructure. This, in turn, would have generated large-scale employment and expanded aggregate domestic demand providing the growth in the manufacturing sector and, on that basis, creating a sustained growth trajectory.
It is yet another myth that is propagated that these concessions have stimulated growth through increased investments that can happen only if the people have adequate purchasing power to consume what is produced. Instead, the prime minister is advancing a path of reduction in subsidies for the poor and increase in concessions for the rich in order to meet the fiscal deficit. This is the character of this aam admi government.
Have these concessions led to any increases in investment? The health of the economic fundamentals is crucially dependent upon the rate of growth in gross fixed capital formation. This fell, according to the Economic Survey, from 16.2 per cent in 2005-06 to 8.4 per cent in 2010-11. The overall investment growth rate fell from 17 per cent in 2005-06 to minus 3.9 in 2008-09 rising to 12.2 per cent in 2009-10. Worse is the fact that growth rate of investment in agriculture fell from 13.9 per cent to 3.4 per cent.
So where have all these concessions gone? Partly they have been laundered to tax havens abroad. Partly they have found their way into speculation including forward/futures trading. Partly they have gone towards the accumulation of valuables and obnoxious `conspicuous consumption’. The Economic Survey informs us that the growth rate of valuables has risen from minus 1.4 per cent in 2005-06 to a whopping 54.2 per cent in 2009-10 and further 19.5 per cent in 2010-11.
In order to propitiate
finance capital and enlarge the avenues for further siphoning
off huge amounts
of our resources, the budget announced
seven new legislations to carry forward financial
is precisely because the UPA-I was
prevented from undertaking such measures by the Left that
This is precisely what the developing countries are seeking from the so-called `emerging economies’ in order to overcome their crisis with the European Union and its currency, Euro, seriously faltering under the burdens of growing sovereign debts of its members like Greece, Italy, Portugal and Spain in the latest round.
imposing further burdens on the people is what is being resisted
today. Such popular
pressures must be
(November 09, 2011)