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print versionGambling on the private sector at the cost of the working class
1 March, 2013, New Delhi: The UPA government is clearly preparing for an election. It has sought to use the Union Budget 2013-14 as an instrument for that advance. There has been a careful attempt to appear to be visibly reaching out across sections of society. In the treachery of its detail the budget hits the working class. The budget while making small money increases in a range of programmes of social provision and protection, offers no programme for job creation or any substantive policy measures to contain inflation that continues to erode the real wage while it commits itself to cash transfers and cuts in subsidies all of which will contribute to further worsening the economic condition of the working class.
The increased tax on the ‘super-rich’ (incomes of above Rs. 1 crore) and companies is made in the spirit of charity and therefore comes with the promise of being imposed for one year alone. There is no effort to address the long-term ‘structural and institutionalised increase in inequality that has come to be built into economic policy over the last decade. There is indeed an increase in taxes on luxuries such as large cars (SUVs). Yet, much of budget making has in fact been taken out of the budget process. In the months preceding this budget government has already put in place a mechanism of reducing subsidies on diesel and cooking fuel (LPG) all in name of fiscal prudence. While so doing, apart from reducing the quantum of subsidised LPG, government has squarely placed the burden on the working class by raising the price of diesel for the railways and state transport services at a rate much higher than for the retail prices. Hence while the increased cost of diesel for bulk goods and public transport is already feeding into the inflationary system by raising the cost of both travel and freight. In contrast the owners of large cars, the tractor owning large farmer and the newly emergent agri-corporation continue to get diesel at a subsidised price. This fundamental inequity cannot be corrected by a one-year tax increase or a 3% increase in the tax on large cars.
What remains unchecked is inflation especially food price inflation, which both the Finance Minister and the Government’s Economic Survey 2012-13 released yesterday, confirm, to be still in double digits. Inflation remains unchecked even though the rate of growth of consumption has halved from 8% in 2011-12 to 4% in 2012-13. Rampant inflation has, by the government’s own admission, seriously eroded real wages affecting even more the already perilous state of the working class. In addition it augurs poorly for an economy whose growth model is predicated on expanding demand.
The failure after four years in government to legislate a National Food Security Act with universal reach is stark. The budget promises no increase for the PDS (with only an additional Rs. 10,000 crore for administrative costs) signaling that when it legislates it can only be a targeted programme and not a universal one. Furthermore, the budget reaffirmed its commitment to cash transfers which if it replaces provision of food and other basic needs through the PDS it will further inflationary pressures by placing cash in a non-monetary public provision. The inflationary pressure will in turn erode the value of the transfer, making it impossible for the working class to afford what they could under the PDS.
While recognising falling real wages and continuing inflation, government has little to offer the working class. The rates of increase in expenditure in both education and healthcare have only just kept abreast with the rate of inflation. The only promise for social security is to streamline the schemes under various ministries but with no increase in level of fiscal support. The money for the MGNREGS has been frozen at the same level as last year at Rs. 33,300 crores which when in real terms works out to half the real value of the provision in the year 2006-07. The proposal of extending the MNREGA to railway construction also means that government is looking at for reducing its wage bill through the MGNREGA. This in fact would mean a reduction in the number of aggregate jobs available and would create lower wage jobs on government construction projects. This in fact marks the demobilising of employment guarantee.
The budget also lacks provision for regularisation of employees under the ICDS, NRHM, SSA and other programme. The several million employees under the social protection programmes are in fact the only net new jobs, in any sector, that have been created in the last 20 years and the majority of them – Anganwadi workers, ASHAs, ANMs, MDM workers, Para Teachers and such other - who are primarily women who work on honorariums that are way below the legal minimum wage.
In fact the government admits in its Economic Survey that far too many workers are bound to agriculture which cannot sustain them while manufacturing and services are simply not throwing up new jobs. Government, of course, limited by its ideology, sees the lack of skills as the source of the employment gap rather than the failure of capital to create jobs. Agriculture continues to remain in the doldrums with a lack of investment that has caused endemic low productivity. Hence government is left with little choice but to look for ways to promote self-employment through skill development and micro-finance under the National Rural Livelihood Mission without being able to address the vulnerability and unsustainability of self-employment at the bottom of the economy.
While the prospect of new jobs is frozen, government has increased the expenditure or defence equipment by 25% to the tune of Rs. 17,000+ crores or two-thirds the increase in the total health, education and housing spend. The direction of government appears clear that it would rather warmonger in the sub-continent and use the armed forces to put down voices of dissent in the North-East and the Kashmir Valley rather than addressing the causes of dissent.
Government perhaps has little choice but to stoke nationalism since the burden of this growth model has hit both the working- and middle-class. Government seeks to pass the blame for declining rates of growth on to the global economic crisis. Reality is that this government led the integration into the global economy without even addressing the structural constraints of the domestic economy. Not just is the agriculture sector in near permanent regression, the last year - 2011-12 - brought out bottlenecks in the growth of the manufacturing and construction sectors placing excessive reliance on the service sector to maintain the economy on a growth path. This year – 2012-13 – the decline in the real economy has caused deceleration in the expansion of the service sector too. In the absence of an expansion in the real economy the service sector cannot remain evergreen. If India is to regain its rates of growth then it has to address the inherent constraints of private capital in the manufacturing sector.
Nothing exemplifies the structural weakness of the economy as does the external current account deficit (CAD). Even the Finance Minister appears to recognise this. At close to 5% of GDP this is simply unsustainable. In recent years the CAD has been financed primarily by short-term foreign inflows. Export growth has for the most part dried up. Despite the economic slow-down imports have not slowed down. Both oil and gold import growth remains high. Worse still capital goods imports have not slowed down either. The deficit has been further worsened by the spurt in demand for gold that reflects insecurity about the stability of the economy and the resolute lack of confidence in government policy that cuts across class lines. As a result government is dependent on financing the deficit primarily through short-term foreign inflows.
This continued dependence on imports reflects two things: first, the lack of technological capability; and second, the substitution of domestic capital goods by imported capital goods. This latter aspect – substitution of domestic capital goods – largely explains why the domestic capital goods sector has contracted and has become the driver of sharply decelerating manufacturing growth. Therefore increased import competition has dampened both expected corporate profitability and therefore the willingness of the private sector to invest. And no amount of tax-breaks on capital goods expenditure will change that.
Although over some 20+ year industrial production has been restructured in a way that the share of wages halved with a corresponding doubling of the share of profits. This has not translated into a stable expansion in private corporate investment. Large corporates have used continued profitability to successfully reduce their debt-burden and are now cash surplus but are unwilling to invest despite the enormous investment subsidies made available to them. Hence the economy’s most stable source of investment has come from the savings of working- and middle-class households that constitute two-thirds of aggregate domestic savings.
In turn government planned capital investment has fallen short in excess of 20%. Government has failed to meet its investment promises ranging from minor irrigation works to heavy industry and infrastructure including electricity and roads. Government has not just been bogged down by charges of corruption, large investment projects have met with resistance since government has failed to address livelihood needs of citizens, most of all the rural proletariat. While government has relied on private sector to drive economic expansion, the private sector has consistently sought to ride on the back of government investment. This is a vicious cycle that government can only hope to change but it lacks the political will to do so.
With the complete collapse of government investment and the withholding of private sector investment beyond household savings, government has placed its reliance on foreign investment. The rush to open up multi-brand retail to foreign direct investment, despite all the averments to the contrary, is driven by this desperation. While government waits for FDI, its followed two roads – first to rapidly increase the short-term borrowings including raising the limits of FII investment in the government bond market. And second to squeeze the public sector. Apart from the veracity of the fact that government indeed disinvested up to the extent of Rs. 16,000 crores in the current quarter (January-March 2013), and coerced the public sector financial institutions, such as the Life Insurance Corporation, into picking up equity in other public sector corporations, it has also extracted another Rs. 5,000 crores in excess of budgetary estimates as dividends from the public sector. What this means is that government has used fiat with public financial institutions, to draw in prudent household savings, into buying discounted public sector equity. It has further jeopardised the public sector’s medium- and long-term viability by soaking up its investable surpluses. Furthermore, in the budget year 2013-14 government has relied on an estimate of Rs, 55,000 crores from disinvestment receipts. This budget estimate is more than double the claimed receipts for 2012-13.
The working class is faced with declining real wages, cuts in social provision and their meagre savings for their future being dwindled away to subsidise capital and meet government expenditure while this government, clothed in the political rhetoric of apka paisa apke haath mein (placing your money in your hands) is by stealth, committing itself to a neo-liberal road far more than any, itself included, of the past.
Gautam Mody
Secretary
New Trade Union Initiative (NTUI)
B-137, First Floor, Dayanand Colony,
Lajpat Nagar IV,
New Delhi 110024
Telephone: +91 11 26214538
Telephone/ Fax: +91 11 26486931
Email: secretariat@ntui.org.in
India is not for sale : Foreign Investments Can’t be the Bedrock of Indian Economy
New Delhi, January 28 : In his budget speech, lasting for 2 hours, Mr. Chidambaram, the finance minister, with undoubted eloquence talked much about the poverty to equity, churned out thoughts and principles of taxing the rich, empowering women and youth, enabling the children, including the poor. However, if one looks at his principles and promises on one hand and the plans, projects and allocations on the other, one finds a very limited redressal of grievances and no fulfillment of dreams of the toiling sections of India.
As expected, Finance Minister’s presentation of budget revolved much around the womenfolk, the question of violence, exclusion and security yet where are new plans to use the contributions of human resource, creativity, perseverance and hard work and the productivity with skills of Women? It is only a small share in the sectoral or schematic budget calculated on the basis of the proportional number of women as beneficiaries, that is projected as ‘ Gender-Budget’ indicator. Is that enough to ensure every girl child will get education, nutrition, health facility and every mother, a shelter and livelihood ? No! With no adequate increase in the budget allocation for health, education or even MGNREGA (Rozgar), human security will not be ensured. It’s unfortunate that while defence has got its due with no increase, yet no curtailment in the huge allocation as always. Security measures, social and economic, is beyond allocating funds for first women bank. Pension, provident fund or any livelihood security measures for women in farming to other unprotected sector would go a long way. No doubt, the first ever “Women’s Bank’ is a attractive gift but cash based approach to almost all welfare schemes now resorting to cash transfer is likely to expand to PDS sector too and no universalisation of PDS is certainly anti-women.
Inequity and inclusiveness have been the aspects of our social and economic scenario, highlighted time and again, by the PM to FM, however the highly inadequate solution is that of a small increase of about 14,000 crores to direct tax collection and 4,000 crores to indirect tax collection. It’s a welcome move to categorise those with income above 1 crore and earning above 10 crores yet the total collection by charging 10% of additional taxes, that too for one year can’t fool us who are challenging vulgar inequities, furthered by move such as 30 lakh crores worth tax/duty concessions granted to the corporates during just 6 years, 2005-2012.
Why not the optimum for Social Sectors?
No increase in allocation to education against 6% as suggested by Kothari Commission in 1966 and demanded by all people’s organizations is once again to be condemned, priority and allocation to not only Sarva Shiksha Abhiyan but with new innovative schemes to reach out to the dropouts, leftouts and thrown outs in millions is needed. ‘Health for all’ too is remaining to be a slogan more than a targeted goal with well planned approach. NREGA in the name of Mahatma also has not got the raise to cover all villages, districts, while there is not even a thought in favour of employment guarantee to the urban poor.
Foreign investments won’t boost growth and bridge fiscal deficit
The budget continues the path led out by his predecessors as visible in blind pursuit with the same paradigm based on FDI, FII and CII. Is the confidence that he has expressed in this foreign/corporate investments justifiable? Is it acceptable, given the past experience? The experience is, even a small percentage of foreign investment leads to a large extent of foreign ‘influence not only on the specific projects but policies’. The crucial sectors such as Khadi village industries and the micro, small, medium industries is also left to the World bank and other multinational development banks. But the sops to the corporate or the heavily funded ‘Infrastructure’ is not!
Undue importance given to infrastructure of one kind is obvious in the Budget. It’s establishment of 7 cities and ports under Delhi Mumbai Industrial Corridor and ports like Dholera, Gujrat and Shendra – Bidkin, Maharashtra. But this is not all. It’s known that progress on DMIC which FM specially mentioned, is towards acquiring/ diverting 3,50,000 hectares of land and yet, without impact assessment, necessary clearances, with no guarantee of more employment generation than to be lost, and with Japanese support. No concern is expressed for affected, while so many projects – industries, power to infrastructure are proposed. Without consent of the Gram- Sabhas or local urban unit, this is surely to crush life and livelihood.
The truly necessary infrastructure for the millions of urban poor is that of shelter and neighbourhood amenities. A passing mention of 2000 crores indicates, it is to be left to the private developers and not brought into the plan expenditure. Not a mention about Rajiv Awas Yojana which is the only scheme to usher in slum free cities, is not even mentioned.
We welcome higher allocation for SCs, STs, minorities as non- transferable, we appreciate some priority given to alternatives. India as a country firstly has to secure food, clothing, shelter and livelihood for every citizen before it becomes the 7th largest or fall in the 5 top economies of the world. We surely have to change, till then we can’t claim to have carried out our role within the fiscal regions and other world fora.
Medha Patkar
National Alliance of People’s Movements
National Office : 6/6, Jangpura B, Mathura Road, New Delhi 110014
Phone : 011 26241167 / 24354737 Mobile : 09818905316
Web : www.napm-india.org
Facebook : www.facebook.com/NAPMindia
Twitter : @napmindia
Budget 2013 : Comprehensive Agrarian Reforms Needed not Cosmetic Allocations
- Bring a Separate Budget for Agriculture
- Comprehensive Agrarian Reforms Needed not Cosmetic Allocations
- Indian Coordination Committee of Farmers Movements and National Alliance of People’s Movements to Protest Land Grab and Neglect of Agriculture from March 18th at Jantar Mantar
New Delhi : Finance Minister, in his budget speech talked about spreading the gains of the Green Revolution to Eastern States but also acknowledged the stagnation and loss in fertility and other ills in Punjab and other states and accordingly made allocation for crop diversification. But why is the same scheme not spread out to other states, why would one wait for the same problems to manifest and then start the same prescriptions. The state of Indian agriculture and Indian farmers are critical today. It is not only due to farmers suicide (16,000 to 17,000 year) but those alive are also not better off. The changes proposed by the Finance Minister are cosmetic and will have no impact on the state of agriculture.
The focus on urbanisation, industrialisation and infrastructure will not be able to absorb the large work force which is currently engaged in agrarian sector. They will be worse off, than what they are today. With a huge population base, the push for contract and commercial farming, the food security and employment will be jeopardised.
There has been an increase from 17692 crores to 27049 crores proposed but no change in the Minimum Support price...Whatever was increased last year... so procurement of 1,18,000 crores for the Food Security Act will not indicate any benefit through increased prices, to the farmers. A big amount of agriculture budget and overall focus is on credit - opening of credit network for crop loan, to scheduled private commercial banks beyond public banks and cooperative credit societies and banks. This can open up scope for fraudulent bidding and it need not be true redressal of the problem of indebtedness leading to suicides.
Its good that atleast now it’s recognised that nutritional crops - millets like bajra, maize with wheat need to be brought back. But only pittance 200 crores for pilot projects. Agriculture biotech management institutions in Chhatisgarh, jharkhand, Karnataka is welcome step but at the same push for BRAI and introduction of bt seeds is leading to complete loss of farmers control over the input. These will continue to make them more dependent on the market.
There is severe drought in the state of Mahrashtra and other states due to poor Monsoon, which needed attention but has been neglected. Budget offers no concrete time bound plans to deal with such situations. Farmers groups have already rejected the budget and feel that this year too the effort has continued to be the same and nothing concrete has been done, since the attempt is only on increasing foreign investment.
Alliance for Sustainable and Holistic Agriculture (ASHA has termed the budget in denial mode about the farmer’s crisis. They added that the Economic Survey focuses mostly on the production numbers and not the net returns to the farmers – and even on the production front the target growth rate of 4% was not met. The MSPs are mentioned but not the fact that in many states they are below the Cost of Production. The Price Support Scheme and Market Intervention Scheme are given lip service, but they were used minimally in just 5 states, that too in just 1 or 2 crops in each state. It is necessary to have a Price Guarantee policy and a Farmers’ Income Commission to make the incomes of farming families as the central concern of the agricultural policy. The Budget should have announced at least Rs.2000 crores for Price Stabilization or Market Intervention fund – that would have incentivized the farmers to meet production targets as well as helped them make a decent living. The farmers’ crisis is strongest in the rain-fed areas which are more than 50% of the cultivated area but receives less than 10% of the benefit of subsidies and support systems. A massive program of focused attention is needed for rainfed areas in a new paradigmatic approach, but it doesn’t find any mention,â€
We strongly feel that there is a need for separate Agriculture Budget to be presented on lines of Railway Budget, every year, which looks at issues comprehensively and makes a sincere effort at addressing the crisis.
The scourge of land acquisition continues to haunt the farmers and the new bill, Right to Fair Compensation, Transparency in Acquisition, Resettlement and Rehabilitation Bill, will not provide any relief to them. The Bill neglects the Parliamentary Standing Committee recommendation that no agricultural land should be acquired.
In light of these impending crisis and government’s neglect of agriculture “Indian Coordination Committee of Farmers Movements and National Alliance of People’s Movements alogn with other groups will hold Kisan Khet Mazdoor Mahapanchayat at Jantar Mantar from March 18th onwards.
- Land rights – no to acquisition for private purpose and a moratorium on land acquisitions until government comes up with a white paper on all the land acquired, utilized and not utilized, status of resettlement and rehabilitation for the project affected people.
- Farmers income – which includes Farmers Income Guarantee Act /Farmers Income Commission, fair remunerative prices of crops and minimum assured income
- Sustainable technologies –NO TO GMO’s yes to Agroecology (agricultural science that valorizes farmers local innovations, natures own processes and traditional knowledge), Stop BRAI bill!
- We oppose all the new legal frameworks that are against food and farmers sovereignty- No to free trade, No FDI In retail, No commodity and futures trading in agriculture, create universal PDS and support local farmers
- Stop farmer suicides – acknowledge them and provide fair relief and rehabilitation to victims, recognize women farmer’s suicides and conduct special parliament sessions on farmers suicides.
Yudhvir Singh (BKU)
Rakesh Tikait (BKU)
K Puttanaiah
Chamarasa Patil (KRRS)
Nandini Jairam (KRRS)
Chukki Nanjundaswamy (KRRS)
S Kannaiyan (SICCFM)
MedhaPatkar, Narmada Bachao Andolan;
Dr. Sunilam, Kisan Sangharsh Samiti (MP)
Suniti S R, Ulka Mahajan,
Vijay Diwan, NAPM Maharashtra;
Madhuresh Kumar (NAPM)
Prafulla Samantara, NAPM Orissa;
J. P. Singh, Rupesh Verma, Kisan Sangharsh Samiti UP;
Bhupender Singh Rawat, Bhumi Bachao Andolan
Sudhir Vombatkere, NAPM Mysore
