(We are here publishing an abridged version of an article written by Com. Sudheer in view of a comment on the Central Budget published in the last issue of New Democracy.            – Editor)

  While introducing the Budget in the Parliament, Finance Minister Yashwant Sinha claimed it as a progressive one, which intended to establish equality and lead to development. The Budget has been praised by big businessmen and MNCs, which helps us to understand easily whom it is really going to benefit. Even the World Bank (WB) talks about the need for reforms to have a ‘human face’. But the Govts., following WB’s diktats, show no sign of this aspect in their attacks, proving that the WB’s slogan is only meant to deceive people.

Prior to the Budget announcements, both the Finance Minister (FM) and the Prime Minister (PM) cautioned the people that they have to bear some temporary hardships in order to reap benefits later. In the Budget proposals, the Govt. accepted a decrease in the growth rate of GDP when compared to last year’s rate – from 6.6% to 6.0%. Agricultural and industrial production have both recorded reduced growth rates. Per capita income has declined. International financial organizations are blaming slow implementation of reforms for this, and our FM has also accepted this charge. Thus he has proposed second generation reforms like cutting subsidies, speeding up sale of PSUs, reduction in import tariffs to ‘Asian level’, attacks on labour laws and trade union laws and rights, commercialization of education, de-reservation of many items from SSI, withdrawal of controls on sugar and petroleum industry, etc. The overall impact is to reduce state’s responsibilities and intervention and allow free play of market forces. Some major aspects of the Budget proposals are discussed below.

Attacks on Working Class

Globalization essentially means searching for maximum profits for imperialist capital. It is being couched in all sorts of fancy, pro-people, false propaganda by the ruling classes, and many middle class sections are believing it. In practice, as the WB too has been forced to note, the gap between the rich and the poor countries has widened as never before. Imperialist capital is demanding lifting of restrictions in exploiting our labour power, and the FM has brought proposals for amending labour laws. Chapter V-B of ID Act 1947 will be modified such that permission for lockout or closure will be needed only in companies employing more than 1000 workers. Even presently, illegal closures and lockouts take place, but now the rulers are out to give it a legal garb. With this the working class will lose even nominal legal protection. A second major change is being brought to the Contract Labour (Abolition and Regulation) Act, and will essentially give full freedom to employ contract workers and treat them as virtual slaves.

‘Rationalization’ of Excise Duties

The Finance Minister has sought to impose a burden of Rs. 4677 crores on the people, in the name of this ‘rationalization’ of excise duties. While declaring that no additional taxes will be imposed, prices of all essential commodities have been hiked in this way. Prices of items under PDS have also reached levels of open market prices. Excise taxes for sugar and diesel have been risen to 32% and 16% respectively. Though the Govt. assures that the consumers will not be affected, they will definitely be.

While already 4.5 crores unemployed have registered their names in ‘employment’ exchanges across the country, the Govt. is set to decrease 2% of its staff every year (3% staff will be retiring annually and there will be only 1% recruitment). The FM has proposed doing away with Recruitment Commissions themselves.

The Bank Employees Association has reported that banks have unpaid dues to the tune of rs. 80,000 crores. Most of the defaulters are big industrialists. While mainstream economists are silent on this, they criticize the demand to increase loans to agricultural sector. Reducing interest on Small Savings, PF etc., will benefit private financial sector. This has been done despite so many cases being brought to light of the private finance companies cheating the public.

Proposal to Disband PDS

It should be the responsibility of the Govt. to supply essential commodities at affordable prices to the poor, who constitute nearly 40% of our population. But the FM is winding up the PDS. His argument is that there were food-stocks to the extent of 4.5 crore tonnes. For the sake of food security, 1.5 crore tonnes only need to be maintained, and storage of the rest is “unwarranted expenditure”. Thus states are to directly procure food-grains in future. All these proposals, as also the proposals formulated by various state govts. will finally lead to scrapping of PDS. Money earmarked for subsidies will be pocketed by politicians, and eventually all subsidies will be done away with.

So far fourteen products were reserved for small-scale sector. This sector earns 300 crore dollars worth foreign exchange through exports. Agriculture oriented industrial products used to be with this sector. MNCs have been eyeing these products. Now, complying with imperialist diktats, the FM has lifted these reservations, which will surely lead to closure of SSIs.

Our Agriculture under sway of MNCs

On 1^st April 2001 all Quantitative Restrictions (QRs) have been lifted. The last batch included a majority of agriculture related items. Peasants are going to be severely affected. As the PM is aware of this, and also remembers the struggle of the peasants of Punjab last year, a Committee has been setup to study the effects of WTO on Agriculture. The Budget however assures no protection; rather the surcharge of 10% on imports stands withdrawn from 1^st March. Import tariffs will be reduced in the coming three years. Now cost of coconut import is Rs. 17,600 per tonne despite ‘enhanced’ import tariffs, while open market price of the same in India is Rs. 21,500 per tonne. Thus our ‘enhanced’ tariffs will not help our own produce. On the other hand Japan has imposed 1000% duty on paddy imports to safeguard its own produce.

Charges of all services like water, electricity, drinking water, education etc. are being hiked. Subsidies on manure are being reduced, so are funds for agricultural research. Earlier both Central and State Govts. used to talk of land reforms, now even such formal lip service is over. It is proposed to exempt MNCs from land ceilings.

Assurances to External and Internal Millionaires

Previously foreign investors could purchase only 40% shares in our companies; now this limit has been extended to 49%. The FM has defended this step as one taken to attract foreign investments. It will only help to hand over our industries to them. The ‘crisis’ in Mexico and later in South East Asian countries has exposed the danger of facilitating such foreign investments. The sudden withdrawal of such shares on any pretext leads to financial disaster.

Reducing dividend tax to 10% from 20% will also help the rich. Capital gain tax has been abolished; investments in electricity, telecom and transport infrastructure sectors has secured a five year tax holiday! Excise on cold drinks and motor cars will benefit compradors and MNCs. Due to concessions in direct taxes, Govt. income will be reduced by Rs. 5,500 crores. Rs. 2,128 crores will be lost by reduction in import duties. All these will benefit national and international millionaires at the cost of domestic production.

By 31^st March, the dues from corporate taxes, custom duties and excise duties was Rs. 62,392 crores. The Govt. is silent on these, but won’t spare the poor and middle class people if even Rs. 100 to Rs. 200 in taxes are due. Thus, there is a parallel economy of black money in our country.

The FM has decided to close 8 PSUs and sell 27 others. From this, he hopes to earn Rs. 12,000 crores. Of this Rs. 7,000 crores will be invested to aid other PSUs. But the profit making PSUs are being sold.

Rise in Unproductive Expenditure

Declaring war on unproductive expenditure, the FM forecast a growth rate of 9% for the GDP. But no concrete measures were announced. In the Budget, planned expenditure is Rs. 95,100 crores and unplanned is Rs. 2,75,123 crores. Interest payments (26%) and defense expenses (14%) along with some others account for 52% of expenses. All these are unproductive expenses. Already total loans amount to Rs. 11 lakh crores. In the last ten years, govt. loans were enhanced upto 275%. The only way to come out of this debt trap is to declare a moratorium on their repayments.

Rs. 62,000 crores have been allocated to Defense sector – this is 13.8% more than last year’s allotment. Last year it was enhanced by 28.2% in the name of Kargil war. The Tehelka exposure has shown how such funds will be used – and this exposure is only a drop in the ocean of corruption. Is it right to divert so much funds to Defense when the country faces a debt trap and 43% of the population is living below the poverty line? Expenses on paramilitary forces are rising, and these forces are used to curb and browbeat people’s movements.

Govt.’s own expenditure is rising. The PMO’s expenses have risen from Rs. 10.76 crores to Rs. 11.33 crores. Ex-PMs’ security expenses have risen to Rs. 36.04 crores from Rs. 24.04 crores. Then where do the FM’s declarations of ‘decrease’ in unproductive expenses stand?

BJP’s Promise and its Practice

When Manmohan Singh introduced NEP in 1991-92, the BJP’s criticism was sharp. Since the last three years, the BJP led NDA Govt. is in power and has been hailing the reforms. FM says since 1991, finance sector has developed on an average of 6.4%, in the 1980s this was 0.58%. He claims that in 1993, poverty level fell from 36% to 26%.

But in reality, the situation of the country has worsened since 1991. In the 1998 Election Manifesto, BJP promised education for all. They promised more funds for rural areas. But over the last three years this Govt. has allocated Rs. 18,730 crores to agriculture, and of that too Rs. 1,502 crores were not utilized. Thus allotment is low, and what has been utilized is still lower. Only 3-4% of funds was allocated to education. From the funds for Human Resource Development Rs. 1,598 crores were utilized out of Rs. 27,741 crores. From Rs. 9,465 crores allocated for primary education, Rs. 527 crores were surrendered. Of Rs. 31,995 crores for rural development, Rs. 1380 crores remained unused. This indicates whom the Govt. has actually worked for.

                                Income per Rupee                                         Expenditure per Rupee                      

All these trends show that while attacks on people are increasing,  the Budget will only help to increase neo-colonial exploitation of our country. For this, people must unite to fight against these policies.

There is no royal road to science, and only those who do not dread the fatiguing climb of its steep paths have a chance of gaining its luminous summits.

       -Karl Marx, Preface to the French Edition of Capital, Volume I