People's Democracy

Regressive Budget, Greater Burdens on People

The Polit Bureau of the Communist Party of India (Marxist) issued the following statement on March 16, 2012.

THE CPI(M) considers that the union budget 2012-2013 is a regressive budget which will result in pushing up prices and imposing greater burdens on the working people. The bias towards the corporates and the rich in this budget is seen from the fact that while the direct taxes being levied from the rich will result in a loss of 4500 crore rupees, that from indirect taxes, that is through the increase in across the board service and excise duties, is expected to yield a gain of 45,940 crore. While the CPI(M) welcomes taxes on luxury items, it strongly opposes the reliance on indirect taxes for revenue mobilisation as this will lead to a cascading impact pushing up prices across the board.

The CPI(M) also opposes the cut in subsidies on fuel to as much as 25,000 crore rupees. This would inevitably lead to further hikes in fuel prices. The cut in subsidies to fertilisers by 6,000 crore rupees will also lead to further price rise of fertilisers which have already imposed unbearable burdens on farmers.

The government’s concerns about cutting subsidies in the name of controlling the fiscal deficit are hypocritical, to say the least. There is a huge amount of 5.3 lakh crores revenue foregone in 2011-2012, out of which over rupees 50,000 crore were tax concessions to corporates. There has been a shortfall of Rs 30,000 crore in gross tax revenue because vis-à-vis the budget estimates mainly on account of slack collection from corporates.

At the same time the budget gives a slew of concessions to investments in the stock markets. At a time when globally governments are trying to control the volatility in stock markets by a tax regime against speculation, the budget cuts the STT (security transactions tax) by 25 per cent, and a new tax exemption has been announced to encourage retail stock market investors. This has come at a time when the EPF interest rate has been slashed from 9.5 per cent to 8.25 per cent. The requirement for a capital gains tax to prevent speculation has again been ignored by the government.

As far as the people are concerned, the claims of added allocations ring hollow because of the dismal record of actual expenditures. the government may give any figure as the budget estimate but how much does it actually spend of that estimate. In the last year in most ministries, there has been a shameful shortfall in actual expenditures. Crucial programmes like MGNREGA have seen a huge shortfall of over 9,000 crores in the last year, the gap between the budget estimate and the revised estimate. Similarly, the gender budget saw a shortfall of 1,200 crores in actual expenditures. This is also an undeclared method of controlling the deficit.

Given the inflation factor the allocations for most programmes are in any case inadequate. For example, the record of allocations for scheduled caste sub-component plan and scheduled tribe sub-plan, though increased, is still far below the required amount of 16.5 per cent and 8.2 per cent of the plan expenditure and in fact is even lower than last year. It is only 7 per cent and 4 per cent respectively.

This budget fails to adequately step up public expenditure to reverse the growth slowdown. The sharp cuts in fuel and fertiliser subsidy and across the board hikes in indirect tax rates will also fuel inflation further.

The CPI(M) calls upon the people to oppose this regressive budget.