CPI-ML New Democracy

Decoding Five Tranche : Attacking the People While Feigning Help

For five days i.e. from May 13 to 17, the Finance Minister made daily announcements to translate the PM’s announcement of a relief package into concrete steps. These announcements were marked by singular absence of any significant relief to the people. With the now well practiced and also well known dexterity, the Minister tried to fool the people. She failed to assure the people of any sincerity of the Govt. and this is well demonstratedby the growing number of migrant workers, who have emerged as the barometer and also epic characters of this Himalayan tragedy unleashed by the Govt. on the people, desperately walking to their homes. There was nothing for the poor and needy in the package. That side of the packet was empty.

But theother side of the package was not empty. Modi led RSS-BJP govt. has sought to turn this tragedy of the people into festivity for the corporate- foreign and domestic- and landlords. It has unleashed reforms which it could not have pushed through in ordinary times, utilizing this crisis as an opportunity. It has rammed through labour law changes long sought by the corporate and most importantly sought to usher in changes in Agriculture which ruling classes have long dreamt of but could not implement.

First let us take the broad picture. The so-called Relief package was no relief. Finance Minister claimed that the package amounted to Rs. 20,97,053 crores which is roughly 10% of the GDP. Her calculations were like that of the village mahajan who enslaved a poor peasant for his whole life for a mere “sawa ser gehun”. Howsoever hard you try to decode the Package, the figures do not add up. There is hardly any expenditure by the Govt. Included in the Package are facilities to increase loans by RBI to banks, measures meant to encourage banks to give loans, loan guarantees that too of partial amounts. Also included in the Package are the expenditure of the Govt. on ongoing schemes, expenditures which will take years to be made and expenditures which are part of the already planned schemes. Govt. has sought to portray that it is engaged in tackling Corona and hence all expenditure made by it are Corona relief. The whole exercise shows political distancing by the Govt. from the people lest Corona relief infects the interests of wealthy and powerful.

The two most important and glaring aspects of the Package announced over five days were the very small amount of expenditure for the relief of the people and total avoidance of measures to boost demand to revive the economy. The two are also overlapping to an extent. The package is singularly devoid of any measures for relief of migrant workers. The total amount laid out for providing them food and ration is an abysmal 3500 crore rupees. The decision is to provide 5 kg of wheat per person per month and 1 kg of chana per family per month for two months. Besides, FM even forgot to provide how these peanuts will be fried i.e. oil and fuel. Govt. has taken the number of such migrant workers who need this assistance to be 8 crores which is much less than their real number. Even then it works out to be a only about Rs 400 per head. Modi govt. has announced it is subsidizing 85% of the fare of migrant workers returning home, but that is what Govt. claims it subsidizes in all passenger fares and has nothing to do with migrant workers returning home. That is a cruel joke.

The second aspect is total disregard to boosting demand. In fact, Govt. of India has been in denial mode about the demand deficit which was at the root of the pre Corona economic slowdown, which has now gone into contraction. It is pursuing worn out supply side economics i.e. attracting investments. In the times of decline in domestic demand and no hope of boosting exports, this is a failed strategy for even pursuing growth. But increasing domestic demand is the last thing on the mind of the Indian govt. This would involve increasing purchasing power of peasants, agricultural labourers and workers, the overwhelming majority of the people. Without increasing domestic demand no amount of easy loans or interest subvention will address the decline of economic activity, after all, for whom will they produce?

With these glaring weaknesses, the Relief package should be analyzed for what it has done. Nearly half of the package is postdated. It included FM statement on March 26 as well as RBI decisions between February to April, 2020. RBI decisions were in the nature of liquidity enhancement meaning increasing the availability of money to Banks, cheapening such borrowing, increasing the amount they can keep etc. (Statement ‘On Modi Announcement’ dated 13.5.2020) These measures, amounting to over 8 lakh crores, do not put one paisa of burden on the Govt. nor involve any investment at all. The ostensible purpose of this is to increase availability of money for industries and other occupations but with no prospect of market recovery in view of collapse of demand no loans will be taken except by those who wish to simply defraud. RSS-BJP have many friends with that expertise. This fact is amply borne out by the growing money that banks have parked with RBI, after liquidity enhancement steps money so parked increased from Rs 3 lakh crore on March 27 to Rs 8.4 lakh crore by the end of April.

Also included in this package were the measures announced by Finance Minister on March 27. That package involved only Rs. 61,380 crore in actual transfers over next three months. It included payments of Rs. 10,025 crore to women holders of Jan Dhan accounts and Rs. 2807 crore for pension of widows, elders and disabled. These were already part of Union Budget 2020-’21. Rs. 16,394 crores announced for the farmers was frontloading of an installment from Rs. 6000 per year being given to peasants under PM Kisan scheme and Rs. 31000 crores marked for construction workers were from their Welfare Fund. Most of the Package reminds one oftheman who, seeing a robber on the highway, promptly hands over money to thefriend walking with him, saying this is to clear an old loan.

Commentators are generally agreed that this package involves sums not more than 1% of GDP.  However, such estimates also include payments which were either already part of existing schemes or fictitious payments like loss of revenue. The actual projected expenditure amountsto much less and that too will occur over a long period of time. Of the five tranches declared by FM, in the First tranche Rs. 25,500 crore was estimated to be spent, Rs. 5000 crore in 2nd tranche, Rs. 30,000 crore in 3rd tranche, Rs. 8,100 crore in 4th tranche and Rs. 40,000 crore in 5th and final tranche. Rs. 40,000 crore in the final tranche is enhancement of the Budget estimate of Rs. 61,000 crores for MNREGA. However, the money spent last year on MNREGA was Rs. 71,000 crores (RE). Further, wages under MNREGA have been increased from Rs. 182 per day to Rs. 202 per day. These two would account for nearly half of the announced increase. The enhancement of allocation will only result in roughly 20% more workdays under MNREGA. There is however, already 65% increase in the people seeking work under MNREGA. Even the media commentators are pegging the whole package at about 0.8% of the GDP. However, a close scrutiny would reveal that the package will cost only Rs. 65,000 crores in expenses in near future- roughly 0.3% of the GDP. It probably is sheer coincidence that the former Director of RBI too had demanded Rs. 65,000 crores to be given to poor- though the head is different, amount is similar.

From the above it is clear that this virtual package is designed to fool the gullible and give corporate media and apologists of the Govt. a sense of something being done. It is ahoax on the people and exposes the rotten, anti-people character of the regime.

First Tranche was avowedly addressed to reviving Micro, Small & Medium Enterprises (MSMEs). They contribute 30% to the GDP, do 45% of the total manufacture, account for 40% of the exports and employ 11 to 12 crore workers. This sector is the backbone of industrial production and is also the supplier of ancillary parts to large industries. These industries were suffering even prior to Corona, the pandemic has just brought them to a halt. Corona any way causes mortality only among infirm, seriously ill people! In a way Corona outbreak has been a mixed blessing for the ruling classes. They are trying to hide the systemic nature of the economic illness under the pretext of Corona which has only brought it into a sharp focus. It should be borne in mind that consumer demand accounts for 60% of the GDP and this is the most critical aspect for revival and is totally neglected by the Govt. in its so-called Relief package. Since the lockdown more than 12 crore have been added to the unemployed, nearly three fourth of them daily wage workers.

First tranche was like a loan mela. Rs. 3.7 lakh crores were marked under different heads- Rs. 3 lakh crore for loan guarantees and rest for tax deferment, cap on interest component etc. 20% of the outstanding loans as on 2.2.2020 could be taken without collaterals for working capital. This loan will have 4 year tenure and no payment of principal amount for first year. Govt. will provide support through Credit Guarantee Fund Trust for Micro and Small Enterprises. Total loans of estimated 45 lakh MSMEs is around 16-18 lakh crores and 20% of it will be more than 3 lakh crores. The definition of MSME has been changed to bring larger owners into its fold. Equity infusion is limited to Rs. 10,000 crores. It is anybody’s guess who will take these loans when there are no prospects of the sale of their goods. As a blow to the workers, PF contribution is reduced from 12% to 10%, no question of PF subvention by the govt. Employee contribution too has been reduced to 10% and it is illogically shown as a relief while all PF money belongs to the workers. On top of it, EPF rate have been cut, giving further blow to the workers.

Another important component of this tranche was to Non Banking Financial Companies (NBFCs) which in India have been one of the main conduits of robbing the state exchequer. 45,000 crores earmarked for them, again as guarantee for the first 20% of the loss suffered by them and another 30,000 crores for fully guaranteed investment schemes. Finance Minister announced 90,000 crores for power sector to be given by Power Finance Corporation (PFC) and REC, again no expenditure by the Govt. Another 50,000 crores have been marked for reduction in TDS (Tax Deduction at Source) and TCS (Tax Collected at Source) by 25%.

One can see in the first tranche that there was hardly any expenditure and none is due in near future. Even the liability is limited mostly to loan guarantees. It cannot help the sector stand up.

On the other hand, FM approved of the changes in the labour laws by the states and mentioned the Central Govt.’s intention to change labour laws in the country, further squeezing the workers.Along with, no provision was made for payment of wages of workers even for the lockdown period. It was left to the owners to pay the wages and the same order was withheld after the Apex Court, coming out of self-imposed selective quarantine, prohibited coercive action against owners for non-payment. The gimmickry reached some level when rental accommodation for migrant workers was announced under PM Awas Yojana but no funds were allocated for it.

Second Tranche also dealt with workers- again mostly loan schemes e.g. Rs. 5000 crores for street vendors. It provided Rs. 3500 crores for food and ration to migrant workers. Hearts of Modi and Nirmala pain for the migrant workers but with ease! The tranche marked 70,000 crores for housing sector providing credit linked Subsidy Scheme for MIG. It also had a small component of Rs. 1500 crores as Interest Subvention Scheme for small businesses.

However, Second Tranche was mainly for credit to farmers. Rs. 30,000 crores for farmers as additional emergency loans through NABARD. Rs. 2 lakh crores for loans to farmers through Kisan Credit Cards (KCC). KCC has been the main conduit of budgetary allocations for farmers and is a bane for indebted peasantry. This has also been a powerful instrument of serving the interests of landlords and rural elite who monopolize use of these funds. They also use these funds for further lending to poor peasants and other sections of rural poor, strengthening their control over the village life as well as extracting surplus from them.

One of the most sinister aspect of this tranche was allocation of Rs. 6000 crores of CAMPA (Compensatory Afforestation Fund) for employment generation outside the forest areas. This along with cuts in SC and ST sub-plans in the name of Corona pandemic, shows that any crisis is good for the attack on the oppressed sections.

Third Tranche focused on Rural Development Schemes. This was an exercise in subterfuge. Rs. 1 lakhcrore has been earmarked for Agri Infrastructure Fund for projects at farm gates and aggregation points- agricultural co-operative societies, producer organizations etc. to develop infrastructure for harvest mostly for storage and processing of agricultural produce. This has been an old scheme for past six years with NABARD as its nodal agency. Again a loan scheme. FM did not provide any details.

Rs. 10,000 crores have been assured for Micro food enterprises for technical up-gradation, to achieve food safety standards and for marketing. Already a scheme for promoting Food Processing Industry exists wherein loans are extended up to 95 per cent of the project cost for setting up, modernization and expansion of food processing units. This loan scheme too is an extension of already existing scheme. Enhancement of the amount of loans (from Rs. 2000 crores to 10,000 crores) too should be viewed with a lot of suspicion because mostly these are for propaganda and not implementation.

Similarly Rs. 20,000 crores have been announced for fishermen through Pradhan Mantri Matsya Sampada Yojana which is extension of already existing scheme wherein expenditure on development of fisheries and aquaculture is shared by Central and State Govts. This scheme has been going on for several years and is being included in this package. Though allotted amount has been enhanced but no time frame in which this expenditure will be incurred is given.

Rs. 13,343 crores have been announced for National Animal Disease Control Programme to ensure vaccination of cattles and bovines. This too is an old scheme announced earlier with the same allocation which was to be spent over five years i.e. 2019-2024.

Rs. 15,000 crores for Animal Husbandry Infrastructure Development Fund to support private investment too is an allocation in an already existing scheme meant for dairy processing including value addition and provision of cattle feed. But this becomes part of Relief Package in the wake of Corona! Though some increase in allocation is there but again there is no time frame in which it will be spent. Similar are Promotion of Herbal Cultivation (Rs. 4000 crores) existing since 2008-09. Beekeeping initiative (500 crores) is also an old scheme existing in some form since 1993. So is also ‘Operation Greens’ allotted 500 crores (same outlay as in the Budget) which will now be extended to all fruits and vegetables (earlier only for tomatoes, potatoes and onion). All these existing schemes, that too loan schemes, are included in the package.

The most serious aspect of this tranche, all the foregoing only to make the bitter pill palatable, was to further deregulate markets and pave the way for contract farming thereby making peasants enslaved workers on their land. FM announced plans to amend Essential Commodities Act and Agricultural Produce Marketing Act to provide legal framework for contract farming. This anti-peasant measure being imposed while the people are suffering from effects of Govt. lockdown shows the real intent of RSS-BJP Govt. Commentators have called this as 1991 moment for agriculture. Like new economic policies initiated in 1991 changed the industrial sector, Modi govt. is planning to change agriculture with entry of foreign capital into hitherto un-availed parts of agrarian economy.

FM made much noise about abolishing the food zones permitting inter-state transport. It is not going to in anyway help the peasantry, as small and medium and even rich farmers cannot take their produce to the distant markets in the country. It is going to benefit traders and a small section of landlords besidesencouraging hoarding as it abolishes stock limit. It is also to prepare ground for government withdrawing from purchase of agriculture produce and altogether doing away with MSP. Package is a big attack on the peasantry. It is also anti-consumer as hording will result in higher rates for consumers.

As the presentation continued, it became more and more anti-people and pro-imperialist pro-corporate. While third tranche rolled out plan for contract farming, Fourth Tranche represented large-scale showering of largesse on the corporate- foreign and domestic. Here again Modi govt. has intended to take these measures since a long time and has now chosen to push them when people are grounded under the burden of lockdown and scared of Corona- mostly as like of ghosts. Decision was announced for commercial auction of coal mining blocks to private players. FM also announced govt. plan to amend Coal Mines (Special Provision) Act, 2015 and Mines and Minerals (Development and Regulation) Act 1957 which had provided for the takeover of private coal mines. FM announced e-auctions for minerals.

Finance Minister also announced privatization of fertilizer unit of FCI at Talcher (Odisha).Govt. announced plans to privatize power utilities and distribution companies. FM also announced plans for privatizing six more airports. Air space availability for commercial use is also increased.

Curiously in Fourth Tranche Govt. announced plans for space research and nuclear research reactors. Research reactors for medical isotopes are to be developed on PPP mode. Space research too is to be privatized permitting entry of private players in Indian Space Research Organization (ISRO). One wonders whether RSS-BJP leaders are planning a space stay to evade Corona as they have done little to combat it on ground. However, given initially hiccups in all new ventures of such kind, they better keep in mind that it may well turn out to be one way affair.

Fourth tranche was privatization tranche.

Fifth and final presentation (tranche) announced increase in the allocation for MNREGA which has been dealt with earlier. It is miniscule considering the scale on which pressure on rural employment has increased due to large-scale migration from cities. This was tokenism at its worst. The additions of millions will further deepen the rural distress. There is not even a mention of allotment of land and employment generation through opening of industries suitable to the region, to lessen the distress.

Another important component of fifth tranche was raising the limit to which states can borrow. This limit has been raised from the present 3% to 5% of the Gross State Domestic Product(GSDP) i.e. from Rs. 6.41 lakh crores to Rs. 10.69 lakh crores. While permitting states to raise more loans, the Union govt. has made it contingent on fulfillment of certain conditions by the state govt. i.e. ration portability, steps for ease of doing business, privatization of power distribution companies and relating to revenues of urban local bodies. Only one fourth of the announced increase in permissible limit is unconditional, half of it in four installments subject to progress in fulfillment of these conditions and rest one fourth when at least three of the four conditions are fulfilled. Placing of these conditions is a blow to the federal structure and make state govts. as captives of the Centre. On the other hand, GST compensation is not paid to any state since December 2019.

The whole announcement i.e. concretization of the announcement made by Modi on May 12, shows that govt. has no plan at all to ameliorate sufferings of the people; on the other hand, RSS-BJP Govt. is keen to utilize this situation for speeding up implementation of anti-people, pro-corporate policies. As Niti Ayog Vice-Chairman put it, “(The PM) is hell bent on turning this crisis into opportunity”.

One should not wonder why Indian govt. has chosen not to take the measures which other govts. have taken. Why Indian govt.’s package is only 0.75% of the GDP (even according to bourgeois economists while it is only 0.3% in terms of actual expenditure in near future). Besides inherently anti-people character of the rulers, it is also grounded in the interests the rulers serve.

Modi Govt. has sought to project the whole package as one for building “Atmnirbhar Bharat”. While the whole package is full of opening more and more sectors to foreign companies, there is a discernable design behind this. Govt. of India has been openly siding with US imperialism in its growing contradiction with China. Corona crisis has greatly accelerated this sharpening contradiction. Indian Govt. has targeted those sectors where imports are mostly from Chinese companies and has further liberalized for foreign capital the sectors where western capital is sought. This drive of Indian Govt. has to be seen in the context of a recent decision by the Govt. to bar companies from the countries who share geographical borders with India from automatic route of investment in Indian companies. It is obvious that target is China. Further Indian Govt. has rejected offers to be part of RCEP claiming it will harm the interests of Indian agriculture, but it was due to opposition of US imperialism. The decision was taken only after US imperialism came out in open opposition to RCEP, the grouping of 10 South East Asian countries, China, Japan, South Korea, Australia and New Zealand. “Atmnirbhar Bharat” is the spin RSS-BJP govt. has given to this and has little to do with building self-reliant India.

Indian rulers have been hoping to attract companies of USA and its allies from China. Indian rulers have been rolling out red carpet in the form of dilution of labour laws, tax laws and exemption from scrutiny etc. They hope with sharp aggravation in contradiction between USA and China post Corona pandemic, a contradiction which was intensifying even prior to this outbreak, companies from US and along with them from other US allies may step on to the red carpet. Thoughavailability of cheap labour is definitely one of the important considerationsfor these companies but they also take into account the infrastructure whose state in India is not comparable despite the recent push and the domestic market. China is estimated to become the largest market in the world by 2030 and some estimates put it by 2025. It is also noteworthy that Vietnam and not India has emerged as the new destination of companies from US and other western countries. But hope rises eternal in the human breast.

To attract foreign companies, and this has become urgent and the only option taken by the Govt., besides changing labour laws, opening up agriculture and retail trade, almost all sectors of economy, govt. is also keen not to incur more expenditure and fiscal burden. Govt. is keen on not worsening the credit rating of India which is already BBB-, just about investment grade. Any further expenditure may worsen this and foreign companies may not come to India, fear RSS-BJP leaders and their corporate friends. Already the state of health of banking sector in India is well known and is creating anxiety among foreign investors. Govt. does not want to take the path which may involve further govt. expenditure that may alarm the foreign investors. That remains their only way to develop India in the image they want. Not a self-reliant India. Not an India responding to the needs of its people. These may be just about tolerated as by-products but the development paradigm should strengthen dominance of economic and social elite and this can happen only as subservient to imperialism and not through independent development.

Modi has told the people that they should be happy to be even alive under RSS-BJP rule (Jan hai to Jahan hai). They should expect nothing more. All Indians are made subjects (not citizens) of the reactionary, archaic rule of ruling classes subservient to imperialism.

Corona has stirred ruling classes but has not shaken them, at least not adequately. It cannot. That can only be done by people through their struggles for which objective conditions have become even better. It is the duty of revolutionary organizations and pro-struggle forces to mobilize the people into struggles against the attacks of the Govt. as well as on the immediate issues of the people.

Central Committee,

CPI(ML)-New Democracy

May 19, 2020