“Dream Budget” for Corporates,

Savage Attack on the Poor

Concluding his budget speech, Mr. Yashwant Sinha termed his budget proposals as a “new deal”, paraphrasing Franklin Roosevelt. It was apt as it acknowledged that Indian economy was undergoing recession, and secondly and more importantly, like its original, it was part of an attempt to help US economy emerge from its slowdown.

Sinha’s Budget was widely acclaimed by the MNCs and corporate world as the “dream budget”. They, surely, could not have asked for more. The proponents and apologists of the MNCs in India started pouring praises to cloud out its impact on the people. It is a stride towards WTO dictated policies, giving more and more concessions to foreign companies and hitting at the domestic industry and agriculture, along with the Govt.’s increasing withdrawal from the arena of development and welfare. The Budget displayed callous and criminal disregard for the poor and declared a virtual war against the working class.

The Budget has been hailed as “growth oriented”, but such promotion of growth has only led to progressive decline in the country, so much so that all the ruling class politicians, including the ardent supporters of imperialist globalization are forced to admit that the country is passing through a most difficult phase. In the name of growth promotion, the interests paid by banks, on small savings and on PF accounts are being slashed, so as to make Capital available to corporates and force the middle classes into the share market to become easy prey to the speculators and big players.

War Against the Working Class

Through this budget, the BJP led Govt. has declared a virtual war against the working class. Working class in Govt., public sector and organized industries is being made the scapegoat to be sacrificed at the altar of growth to appease the high gods of finance capital – the MNCs. Mr. Sinha announced the Central Govt.’s intention to virtually abrogate Chapter V-B of the Industrial Disputes Act 1947, which makes it obligatory to seek Govt.’s permission for layoff, retrenchment and closure in certain cases – making it applicable to units with more than 1000 workers in place of the current figure of 100 workers. Govt. also announced its intention to change the Contract Labour Act clearing the way for employment through contract labour in place of regular employment. These changes are proposed to bring down the cost of labour by making them more vulnerable in the already anti-worker climate against the workers’ struggles. Its obvious purpose is to further increase the profits of the corporates and to attract foreign capital.

Thus it is not limited to mere proposals, a broad attack has been launched against the organized working class. The unorganized sector, on the other hand, is already taking care of by the Courts. LTC has been frozen for two years, while the interest on PF has been reduced by 1.5%. It was reduced earlier as well by 1%. Further, Govt. has announced change in pension for those joining the service after 1^st October 2001. Govt. has further put a ceiling of 1% on the employment in govt. departments. Taking the retirement rate at 3%, the Govt. aims to reduce the staff by 2% annually or 10% in the next five years.

Union budget carries forward the policy of closure of the ‘loss-making’ PSUs and sale of profit-making ones. It has announced closure of 8 PSUs and sale of 27 PSUs thereby aiming to garner 12,000 crore rupees. This ‘disinvestment’ is a euphemism for the loot and plunder of the industries built with people’s money with those entrusted with the task taking their due share.

The Budget has hit the domestic industry hard. 14 more sectors reserved for SSIs have been dereserved. This is being explained as necessitated by the WTO conditions for opening up of these sectors. The SSIs which generate a large part of employment and even foreign exchange, are being virtually eliminated. On the other hand controls on the investment of FIIs in the domestic industries are being relaxed permitting the FIIs to invest upto 49% under portfolio investment. Even the controls over the Indian companies investing abroad are being relaxed.

The Govt.’s intent becomes even more clear in the context of increasing excise duties in the name of rationalization. On the other hand, custom duties are being reduced along with abolition of 10% surcharge on custom duties. While excise duties are expected to fetch 4677 crore more, the revenue from custom duties is expected to fall by 2128 crores despite increase in the imports, thereby clearly favouring the foreign companies.

Further Hitting at the Peasantry

Last season saw the widespread peasants’ struggles against refusal of the FCI to purchase paddy at the Minimum Support Prices (MSP) announced by the Central Govt. This year the Central Govt. has proposed to totally withdraw from the purchase on MSP. According to Finance Minister “I propose, therefore, to give an enlarged role to the State Governments in both procurement and distribution of foodgrains.” FCI will henceforth only for “maintaining food security reserves” which are virtually overflowing thanks to falling purchase capacity of the people of the country. Considering the near bankrupt conditions of the states, one can visualize the coming state of affairs. The Govt. has announced extension of credit and reduction in the interest on funding the storage of crops. The state of cold storage in different provinces and inability of the peasants to pay back the loans tells its own story. While withdrawing from the responsibilities, the Govt. has not failed to promise review of Essential Commodities Act and withdraw restrictions to benefit its supporters among the hoarders and black-marketeers.

While the govt. has announced increase in import duties on tea, coffee, coconut, crude and refined edible oils it is doubtful whether this increase is sufficient to protect the local producers and there are a number of other produce which will be severely affected. With QRs on the remaining 715 items to go from April 1, 2001, Indian peasantry is being thrown before the imperialist hounds to feast upon. Rather than safeguarding the Indian peasantry and agriculture, the Finance Minister is advising them to take to other horticulture, floriculture and the like. Govt. is smug about overflowing stores despite fall in production of foodgrains hiding the fact that this has been due to declining purchase power.

On the other hand the cost of inputs is going to rise. The prices of Urea are being increased while increase in power tariff is sum and substance of the proposed reforms of the power sector.

Burden on the People to be multiplied

The anti-people thrust of the Budget takes further ominous tone with the announced sharp increase in postal rates and  rate of sugar. Finance Minister’s proposed deregulation of prices of petroleum, sugar and drugs in the coming years will sharply increase the prices of these essential items.

There has been much talk of development of infrastructure. However, little is being done to the development of the infrastructure except to burden the people in its name. While only marginally increasing the plan outlay for central power sector the emphasis is on carrying out the power reforms with its emphasis on “Theft of power must be stopped and economic tariffs levied.” Speaking at the Chief Ministers’ conference, Prime Minister said “time for free or largely subsidized power was over.” Further the Central Govt. has proposed to tag the Central assistance to SEBs contingent on carrying out these reforms.

Govt. has sought to take credit for ‘fiscal discipline’. But this has been achieved partly by fudging the figures and partly by dodging the expenditure on the projects promised in the Budget. This has become a standard practice to make tall promises without any intent to implement them thereby making a mockery of the exercise of Budget.

The Budget is an exercise in attempting to overcome the growing industrial-agrarian crisis in the economy by increasing the credit available on cheaper rates to corporates and inviting foreign capital. The Govt. has demonstrated its willingness to go to any extent to please the imperialist powers and MNCs to attract their investments in the country.

While the Economic Survey has clearly demonstrated a depressed economy, there are no measures to stimulate growth. Rather the Budget proposals will further impoverish the people thereby further diminishing their purchase power and consequently further depressing the demand. The govt. is clueless or rather unwilling to take steps to stimulate the demand by increasing the purchase power of the people, rather it is permitting the industry to invest abroad.

The Union Budget claims to boost the implementation of second generation of reforms. With the first generation of reforms having brought the country to economic ruin and the brink of a precipice, what lies in store with the second generation of reforms can be easily guessed. The ruling classes are unwilling and unable to change the course. The inevitable conclusion is to change the ruling classes to save the country and the people from the economic ruin and destitution.