People's Democracy

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


No. 13

March 25, 2012

 Budget Set to Intensify the Ongoing Crisis, Rich-Poor Divide


IN a statement issued from New Delhi on March 16, 2012, the All India Kisan Sabha (AIKS) strongly condemned the UPA-2 government’s budget proposals for 2012-2013 which will hit the peasantry, particularly the poor peasants, agricultural labour and marginal peasants, very hard. These attacks come at a time when there is an all-round agrarian crisis and acute distress in the country, as a result of the neo-liberal and pro-rich economic policies pursued by the central government over the years.


The AIKS said the latest proposals of big cuts in subsidies on fuel to the extent of Rs 25,000 crore and of Rs 6,000 crore cut in fertilisers by the government, coupled with lack of the government’s control on prices, would push up the prices of fuels and fertilisers in the open market. This the AIKS said would further impoverish the peasantry, accentuate the indebtedness in the rural countryside and add to the miseries of the farmers to a great extent.


The UPA government’s bias towards the rich is evident from various concessions to the corporates while increasing the service tax and excise duties on all commodities. This would directly impinge on the cost of living of the common people and increase the divide between the rich and the poor in our country


The AIKS further noted that there is a huge shortfall of Rs 9000 crore in the expenditure on the MGNREGA programme, which would deprive the agricultural labour and rural poor. Strongly opposing such policies, the AIKS demanded that the must UPA reverse its policies and arrange immediate relief to the poor and  distressed rural folk.


The AIKS urged all its units to register protests against the UPA government’s budget proposals and launch movements all over the country against the disastrous anti-poor and anti-farmer policies of the central government. 



While reacting to the budget 2012-13 proposals, the All India Agricultural Workers Union (AIAWU) condemned the failure of the finance minister to shore up the home market with special stress on rural producers who make up half of India’s population. Every rupee spent on them would have paid a rich dividend as every rupee earned is consumed.


In this context, the organisation noted that the allocation for MGNREGA, which was already cut back from Rs 40,100 crore the year before to Rs 40,000 crore last year, has been further reduced to Rs 33,000 crore. This, taking account of the double figure inflation rate, is less than a fifth of what would be required to provide a minimum livelihood to nearly half the rural population of the country. Clearly, the finance minister has shown little concern for the 84 crore people of the country who spend only Rs 20 per day, and 24 crore of whom are forced to live on a mere Rs 9 per day. To the AIAWU, the failure to provide this basic minimum shows complete unconcern of this government to shore up the home market, despite loud claims to the contrary.

The organisation noted that the expenditure on agriculture, which was Rs 17,695 crore in 2010-11, is only Rs 17,692 crore this year. Moreover, inflation will discount it by a good 15 per cent at least. Clearly, the rural sector would be constrained to sell off its assets to the corporate houses or lose them to banks who would be willing to give loans and take over lands. This is to be expected as a cutback of Rs 25,000 crore in fuel subsidy will adversely affect the farmers who are dependent on diesel consumption for tractors and pumpsets as the electric supply to rural areas is not dependable or available when needed. Further, the Rs 6,000 crore cut in the fertiliser subsidy will raise fertiliser prices still higher while cutbacks on duties on labour saving machinery will still further reduce the days of work in agriculture. It is thus evident that the UPA-2 government intends to make the most vulnerable majority of India, its rural masses, pay for resolving the economic crisis in favour of big money. This is evident from the fact that the billionaires are taxed at the same rate as those earning Rs 10 lakh, with plenty of concessions thrown in, while indirect taxation is to be used to pay for most of the expenses. These indirect taxes can only fuel a further rise in prices.


Nor is this budget likely to spur on development. The AIAWU noted that the budget 2012-13 allocates Rs 50,729 crores for rural development, which covers a major area of the country, while Rs 52,397 crore were spent under this head in 2010-11. A similar lack of concern is visible in the allocation of Rs 11,075 crore for rural housing that ignores the rise in price of cement engineered by the budget itself, making the amount quite inadequate to meet the needs of India’s millions of homeless. Allocations for the sub-plans for scheduled castes and tribes are lower than last year and actual food subsidy is likely to fall far short of the need. The organisation also noted that so-called Rs 3,000 odd crore package for weavers harks back the last year’s budget when the scheme never materialised. While taking note of some other regressive features of this year’s budget, the AIAWU said a similar fate can be expected for a number of schemes mooted today unless people initiate struggles to ensure their implementation.




The All India Democratic Women’s Association (AIDWA) too has rejected the budget placed by the finance minister for the year 2012-13, and condemned its failure to protect the interests of women. While expressing its opinion on several aspects of the budget that concern all sections of society, the AIDWA said the de-acceleration of the economy has ensured that women are eating less and working more for lower wages. This budget would only aggravate the situation, the AIDWA statement of March 16 said.


At the time of the formulation of the budget, the women’s organisations had submitted a representation to the finance minister demanding higher allocations for women. But this budget shows that their voice has been totally ignored. In overall terms, the allocations for 100 per cent women oriented schemes constitute only 1.54 per cent of the total expenditure budget. This figure has remained stagnant since the last budget, and shows that the UPA government has not prioritised the development of women in its vision for the future of the country.


The institutionalisation of the direct cash transfer system proposed by this budget is a regressive step which will undermine food security. This clearly shows that the government is moving one step further towards the dismantling of the public distribution system. No time limit has been placed for the introduction and implementation of food security bill. This and other measures to provide direct subsidies to retailers will lead to further inflation and price rise, the AIDWA warned.


One of the main causalities of this neo-liberal budget has been the MGNREGA whose total allocations have declined from Rs 40,000 crore to Rs 33,000 crore, while the gender specific spending has declined from 1,13,320 crore in 2011-12 to a projected 1,09,989 crore. Thus the overall gender specific spending has declined to 30 per cent. In contrast to this, the allocation for the Ajeevika scheme has been increased from 2,664.63 crore to 3,563 crore with the gender specific allocations increasing from 1,165 crore to 1,757 crore which is approximately 49 per cent of the entire allocation.  To the AIDWA, it is thus undoubted that the government’s efforts to increase self-employment at the cost of the MGNREGA would only put additional burden on women who are already in distress.


Another neo-liberal thrust in this budget which will affect women adversely, is the outlay for the micro-credit sector. The allocations to the Rashtriya Mahila Kosh have remained the same, even while government liberalises the banking sector by expanding the Business Correspondent model. While NABARD has been allocated 10,000 crore for capitalising banks who will work through these agents, the support for women’s self-help groups (SHGs) has only increased from 100 crore to 300 crore. This will put women’s SHGs at the mercy of private players and agents who will work in the name of rural banks and help in the growth of micro-finance institutions (MFIs).


The measures for social security and rehabilitation of women has received a major jolt in this budget. The allocation for the scheme for improving the working conditions of women and child labour have declined from Rs 373 crore to Rs 150 crore, signifying a 40.2 per cent drop. The allocation for the comprehensive scheme for the welfare of women artisans has decreased from 23 crore to 7.80 crore. The home based women workers will be the worst impacted by this decrease. On the other hand, increase in widow pension for BPL families from Rs 200 to Rs 300 per month is mere tokenism and an insult to single women. The rights of deserted and single women have been ignored. Allocation for implementation of gender friendly legislations is totally absent. Hostels for working women have only received an insignificant 10 crore from this government.


In his budget speech the finance minister stated that the responsibilities of workers called Accredited Social Health Activists (ASHA) would be increased under the National Rural Health Mission (NRHM). But payment for this work is still incentive based and the budget makes no provision for payment of regular wages. In overall terms the budgetary allocation for NRHM is only approximately 30,000 crore which is not enough as at least 55,000 crore is needed for its proper implementation. The national urban health mission has been announced without any financial commitment. The government has not been able to fulfil the assurance given for the implementation of the Right to Education Act. Educational allocations for girl children are insignificant and inadequate. The government has failed to make adequate resources available for the social sectors, the organisation added.


The increasing crimes against women demanded that the government make provisions for their physical safety as well as rehabilitation of women victims of violence. Unfortunately the allocations in the scheme for relief of rape victims has come down drastically from 140 crore to 20 crore. Further the scheme for combating trafficking has only received 12 crore. The callousness of the government towards victims of violence is a matter of deep concern.


In his budget speech the finance minister stated that “sometimes you have to be cruel to be kind.” But, the AIDWA said, this budget has been cruel to the working people, to women and other vulnerable sections, while being extra kind to the corporate sector. The AIDWA has therefore asked all sections of society to oppose this regressive neo-liberal budget, and directed its members to raise the voice of protest against the budget independently and jointly. 



In its statement on the same date, the Students Federation of India (SFI) noted that that the spending proposed in the budget on education is far too short of 10 per cent of the budget, which has been a demand of the democratic student movement for a long time. The government’s attitude towards higher education becomes clear by the fact that it has not event spent the amount of money which it had committed in the last year’s budget. While the 2011-12 budget allocated Rs 21,912 crore for it, the revised estimates given in this year’s budget show a spending of only Rs 19,844 crore, which means that the government has not spent Rs 2,068 crore last year which it had allocated for higher education.


The SFI also noted that the grant in aid to the Maulana Azad Education Foundation under the ministry of minority welfare has been cut by Rs 100 crore in this year’s budget. A sum of Rs two crore has been allocated for promotion of education in 100 minority concentration towns and cities, which means only Rs two lakh for each city.  There has been no increase in the allocation for Rajiv Gandhi National Fellowship (RGNF), which was reduced to Rs 123 crore in 2011-12 from Rs 144 crore in 2010-11.


While there has been a substantial increase in allocation for student loans in the budget, the SFI noted that there has been a lot of discussion about reducing subsidies in education and shifting to student loans. There is a need to observe vigilance against any such move toward a fee hike.


The government has unleashed a big move for privatisation of school education by announcing that 6000 new schools would be opened under the public private partnership (PPP) model. While the exact details are not known, it is certain to push up privatisation of education at the primary level, leading to higher fees.


The SFI stressed that the anti-student character of the budget is only a part of the larger anti-people policies which the UPA government has been pursuing during the last two decades. This year’s budget has only reaffirmed the regressive and anti-people character of the UPA government, which has neither taken any steps to increase government investment nor made any bold initiatives to address our poor social sector facilities. The SFI has therefore appealed to the student community to unite against the anti-people UPA government and oppose its neo-liberal policies.