The Union BJP Finance Minister (FM) had claimed that, this year she would present a ‘‘never like before’’ budget of the century. So, the media was abuzz with speculations as to how would that look be. With the economy already stricken with severe and growing crisis, and having further tumbled following Covid 19-induced lockdown and draining life of the toiling millions to the dregs, quite a number of well-known economists and commentators advised the government to provide enough fiscal stimulus (meaning providing direct cash assistance) to the needy countrymen to stimulate demand and roll out recovery process. With the wealth of the corporate tycoons recording a fabulous growth of 35% while the average income of common households dipping to just Rs 3000 a month during the pandemic, several experts and reports had also advocated to impose additional tax or cess on the richest individuals and 50 companies whose assets rose by Rs 3 lakh crores and thus raise resources to provide relief to the suffering multitudes facing increasing difficulties in meeting their minimum basic needs and protecting their livelihoods. Imposition of just 2 to 3% additional tax on 1% of the super-rich would have fetched several lakh crores of rupees as additional revenue which could be used to give cash subsidy to the hard-hit poor and improve healthcare, education, public hygiene etc. But the government did not traverse that way. Because this BJP government is not just a caretaker of the bourgeois state, it is totally servile to the vested class interest of the ruling monopolists.
Gimmick of GDP growth
It has become customary with the bourgeois economists, columnists as well as the ruling party leaders to anyhow prove that a growth of GDP would in its wake clear the economy of all glitches and hitches. But, as we have shown several times in various articles published in Proletarian Era, a growth of GDP, ipso facto, does not indicate health of the economy. GDP, as is known to all, reflects the total value of a country’s production and services arrived at by multiplying all final finished goods and services in volume terms by their market prices. But merely stating GDP figure does not give any idea of distribution of the produced wealth and hence, in fact, suppresses rising inequality. When GDP was shown to be moving up, economic condition of 90% of the countrymen went on deteriorating. Moreover, the government has also been indulging in cunning manipulation to inflate GDP growth figures. One would recall that after coming to power, the BJP government had changed its methodology of calculation and thus made a sluggish economy transformed overnight into the world’s fastest-growing major economy. A squalid 4.9% transmuted into glittering 6.7% reminding one of how the fairy godmother changed poor Cinderella’s old clothes into a beautiful new gown foxing everyone! The National Sample Survey Office (NSSO) also found loopholes in the Ministry of Corporate Affairs database used to calculate India’s GDP series under the Narendra Modi government, bringing the controversial figures under fresh scrutiny. The same has been the story of current year’s budget as well.
During the pandemic, GDP went down by 7.7% indicating that production came to a standstill. In the Economic Survey 2020-21 tabled in the parliament before budget, it was optimistically stated that GDP would bounce back in post-Covid period and post a record growth of 11%. But there is a catch. A 7.7% dip means GDP figure dropped to Rs 134.4 lakh crore. Even if it increases by 11%, the actual figure would be Rs 145.7 lakh crore which would be just a 2.4% rise compared to GDP of 2019-20. Moreover, the Economic Survey itself said that it would require at least two years for GDP to reach pre-Covid figure. That means even in 2024, the picture would not improve.
Incidentally, an impression had been sought to be created as if Covid 19 has been the culprit. But what the government and its lackeys wanted to shield is that GDP has been plummeting continuously from last quarter of 2017-18. In fact, the GDP growth, even as per revised calculation method, in the three quarters of 2019-20 i.e. before pandemic was just 3.1%. Moreover, when the BJP government assumed office for the second term in 2019, unemployment recorded highest jump in last 45 years. After six months, it came to light that consumption expenditure also dipped for the first time after 1973. So, the claim of the ruling quarters is far from truth.
Macro and micro economic indicators also attest to people’s spiralling hardship
Those who are acquainted with basics of capitalist economy know that the country’s GDP now euphemised as economic growth is spurred by spurt in industrial production, creation of more jobs, gush in agricultural output and increasing consumer spending. But if the prevailing economy, both before the pandemic and after it further worsened thereafter, is measured in terms of official tools of measurement called macro and micro indicators, the economy would be found to be in a tailspin. Escalating unemployment, burgeoning job loss, large scale wage cut and wage freeze and depriving the peasants of minimal remunerative price are robbing toiling masses of their purchasing power and thereby are further squeezing the market for the capitalists. Recession has set in long back. Swelling inflation is reflected in skyrocketing of price line. Has the FM touched any of these issues in the budget? No. In fact, in her budget speech, she carefully excluded mention of terms like economic slowdown, unemployment, job loss, price rise, inflation, recession or stagnation.
During lockdown, shutters have reportedly been downed in as many as 2.7 lakh industries and 6 to 7 crore small and cottage industries. This is over and above declared closure of 6.8 lakh industries in the pre-lockdown period. Only in the last three months of lockdown, over 11 crore people were estimated to have lost jobs. Of these, 9 crore were daily wagers and around 2 crores were salary earners. Assuming that each person now having lost job was spending at least Rs 8,700 per month less than they were earlier, the crash in demand from them was close to Rs 100,000 crores a month. Millions of migrant workers had to trudge alongside highways at night with barrows, bundles and children in their arms. Some of them died midway because of unavailability of food and water as well as of fatigue But no acknowledgement of this hard reality did find any place, neither in the trumpeted ‘corona rescue package’ nor the budget. The FM did not address a single people’s issue.
Instead, the budget speech, in fact, teemed in propaganda of concocted achievements of the BJP government, questionable statistics, sickening sycophancy of the Prime Minister (PM) and was thus virtually devoid of any meaningful information. Rather, “Atmanirbhar Bharat” (Self-reliant India) which the FM called to be “an expression of 130 crores Indians” has in fact been a blueprint of handing over each and every sector of the economy to the corporate houses and private operators. The FM claimed in her speech: “The Atmanirbhar Packages accelerated our pace of structural reforms. Redefinition of MSMEs, Commercialization of the Mineral Sector, Agriculture and Labour Reforms, Privatization of Public Sector Undertakings, One Nation One Ration Card, and Production Linked Incentive Schemes are some of the notable reforms carried out during this period. Faceless Income Tax Assessment, DBT and Financial Inclusion are the others.” Even a furtive glance would reveal that privatization and commercialization have been the main thrust point of the package. That is why, in his quick reaction to the budget 2021, Comrade Provash Ghosh, our beloved General Secretary, called it a roadmap for establishing a ‘Corporate-reliant India’ (Corporate – Nirvar Bharat)
Prescripts of wholesale privatization
The budget has clearly stated that almost all sectors starting from key industries like Steel, Mining, Manufacturing, Electricity, Petroleum, Railways, Road transport to Shipping, Aviation, Banks, Insurance, Healthcare, Education and other service industries would be more liberally open to the corporate houses, both domestic and foreign. “Minimising presence of Central Government Public Sector Enterprises including financial institutions and creating new investment space for private sector” is the objective of the government, the FM said in her budget speech. FDI limit has been raised from 49% to 74% in Insurance Companies, and allow foreign ownership and control. Two nationalized banks and one General Insurance company would be privatized. LICI would issue IPO (Initial Public Offering, meaning selling stake to private houses through offer of equity shares).
Notably, even the family jewels like the profitably run PSUs, once created with public fund, are to be handed over to the monopoly houses. In 2018-19, the PSUs booked a net profit of Rs 1.42 lakh crores from where they paid hefty dividend to the government. Rs 35, 543 crore was paid as such dividend in 2019-20. Yet these are handed over to private monopolists. Even assets like the National Infrastructure Pipeline (NIP), a whole-of-government scheme with 7400 projects, which was announced in December 2019 would also be monetized. That means, these projects would either be leased or sold to private houses for generating cash revenue. The FM has also said: “Railways will monetise Dedicated Freight Corridor assets for operations and maintenance, after commissioning. Airports will be monetised for operations and management concession. Other core infrastructure assets that will be rolled out under the Asset Monetization Programme are: (i) NHAI Operational Toll Roads (ii) Transmission Assets of PGCIL (iii) Oil and Gas Pipelines of GAIL, IOCL and HPCL (iv) AAI Airports in Tier II and III cities, (v) Other Railway Infrastructure Assets (vi) Warehousing Assets of CPSEs such as Central Warehousing Corporation and NAFED among others and (vii) Sports Stadiums. “What is left then? And moreover, what a novel (!) renaming of backdoor privatization– “asset monetization”– just like PPP (public-private partnership). Earlier, the word disinvestment was replaced by strategic sale. These are all purported to befool people.
Fiscal deficit and disinvestment
The budget has pegged fiscal deficit at 9.5 per cent for Financial Year (FY) 20-21 (Rs 18.48lakh crores). When compared to the Budget Estimate (BE) figure, the Revised Estimate (RE) of fiscal deficit for FY 2020-21 has increased by 2.3 times. According to the FM, this has been financed “by Government borrowings, multilateral borrowings, Small Saving Funds and short term borrowings,” though she did not mention the respective figures. Common assumption does not preclude possible printing of fresh currency notes as well. Now in, FY 21-22, the deficit is estimated to be 6.8% (Rs 15.06 lakh crores). But if we include off-budget borrowings of Rs 1.3 lakh crore and Rs 30,000 crore, respectively the deficit would be 6.9 per cent. The FM declared that this deficit would be met by borrowing around Rs 12 lakh crores by “planning to continue with their path of fiscal consolidation, and intention to reach a fiscal deficit level below 4.5% of GDP by 2025-2026 … (and) increasing the buoyancy of tax revenue through improved compliance, and secondly, by increased receipts from monetisation of assets, including Public Sector Enterprises and land.” In FY 20-21, disinvestment target was Rs 2.1 lakh crore with 23 public sector companies on offer for sale. But most of the target remained unachieved as there was no taker. This year the sale window has been widened to bridge the gap. So, progressive sale of government asset is envisaged to be a key tool to finance budget deficit.
Jugglery of figures and astute camouflage of facts
But what has been found that the government has been juggling with data to manipulate budget numbers. For example, the FM has claimed that government expenditure in FY 2020-21 was as high as Rs 34.5 lakh crores. But she herself admitted that out of Rs.34.5 lakh crore, ‘the Atmanirbhar Bharat’ or the ‘Covid rescue’ packages accounted for Rs 27.1 lakh crore. But the fact is bulk of the ‘Atmanirbhar Bharat package’ amount included represented credit easing or liquidity enhancement measures by the RBI – that is, making more money available to the banks for lending. So, these figures were not direct government expenditures meaning do not come under the category of wage or other subsidies, direct benefit transfer or payment of salaries or any other means in which money necessarily reaches the people. Calculation showed that when a Rs 20 trillion package was announced in May 2020, the actual additional and direct fiscal spending less than Rs 2.5 lakh crore. In fact, the actual figure of fiscal stimulus would be around Rs 2. 1 lakh crore and that too including earlier announced amounts like Rs 75, 000 crores under PM-KISAN scheme under which every peasant family having cultivable land upto 2 hectares was to receive Rs 6,000 per year (meaning Rs 16 per day). So why this trickery to show that the government expenditure had increased? Moreover, this package was, as the FM’s words, was supposed to provide much needed relief from the pandemic to small and large businesses and she would not hesitate to take more steps to support Indian businesses. In tune with this, the PM himself, in his address to the “Confederation of Indian industries” had no qualms in revealing his government’s pro-industrialist stand when he assured the monopoly houses that he would be with them and “if they would take a step, he would take four steps”. So, that package was not meant to help people but reach out more loans to the corporates. It is also pertinent to mention here that the FM has further admitted that earlier, with a view to lowering the deficit figure, the government had shown a part of food subsidy as loan to FCI. Is it not fooling the countrymen?
Fallacy of huge expenditure for developing infrastructure
Coming back to the current budget, the FM said in her speech that huge spending would be on infrastructure. But has the government expenditure increased? Perhaps not. As per figures given by the Controller General of Accounts’ office till November 2020, compared to FY 2019-20, government expenditure even during such a pandemic was merely 4.7% more. Even in pre-pandemic 2019-20, officially stated government expenditure was 13.5% more than the previous year. Next is MGNREGA. In 2019-20, Rs 61,500 crores were allocated for this rural employment guarantee scheme. In lockdown situation, the government as a part of the stimulus package raised the allocation to Rs 1,11,500 crores (i.e. 70% more than the budget stipulated amount). This time, the amount earmarked for FY 21-22 is Rs 73,000 crores which is 1/3rd less than the actual amount spent. When the FM was presenting the budget, the Centre for Monitoring Indian Economy (CMIE) revealed that at the end of previous month, as high as 1.20 crore fully employable persons have officially lost jobs and an equal number of people are reported to have banked on MNREGA. Had the allocation of MNREGA been kept at the level of last year’s actual expenditure, a good number of rural unemployed could have earned something which in turn would have increased, even if marginally, rural demand and improved village infrastructure.
Enigma of Healthcare budget
Even in healthcare, the FM claimed that the total budget outlay for schemes and measures related to health stands at Rs 2,23,846 crore which is 137% increase from last year’s budget estimate of Rs 94,452 crore. Is it so? Rs 2,23, 846 crores include a Rs 60,030 crore outlay on drinking water and sanitation, a Rs 2,700 crore outlay on nutrition – both of which are handled by separate ministries – nearly ?49,214 crore as Finance Commission grants and Rs35,000 crore toward vaccination. So, actual allocation in FY 21-22 towards Health and family Welfare together with Health Research and Ministry of Ayush Ayush is Rs 76, 902 crores as against budget estimates Rs 69, 234 crores in FY 20-21. These figures are given in Annexure 1 of the Budget 21-22. Is that an increase by 137%?
Separately, in her budget speech, the FM said that a ‘PM AtmaNirbharSwasth Bharat Yojana’, that would be launched with an outlay of about ? 64,180 crore is meant to be spent over 6 years to improve primary, secondary, and tertiary care health systems, detection and cure of new and emerging diseases etc.. That means, this year’s allocation is 64180/6=Rs 10,696. Even if this is added to Rs 76, 902 Crores of budgeted allocation, does it register a 137% increase? Regarding the allocation for vaccine, since the spending is by the finance ministry not health, it will be for actuals, with no scope for utilising savings, if any, for health infrastructure strengthening.
Similarly, Rs 93,224 crore allocated towards education in the budget for FY21-22 as against Rs 99, 315 crore is less by around Rs 6091. The announcement of establishing ‘Higher Education Council of India’ indicates total state control on education subverting academic autonomy- as envisaged in the National Education Policy (NEP) 2020, which is at the same time a blueprint of total privatization of the sector. Above Budget announcement is another glaring illustration of the government’s relentless attack on last vestiges of academic freedom and democratic approach while going ahead with implementation of the NEP 2020 despite widespread opposition.
Banking Sector policies to bail out corporates and victimize common depositors
Next is about growing NPAs or bad loans with banks. Most of the defaulted loans belong to top corporate houses. But the government, instead of taking punitive action has been liberally waiving the loans. Now, in order to cleanse the banks’ accounts of rising NPAs, the budget has proposed that “An Asset Reconstruction Company Limited and Asset Management Company would be set up to consolidate and take over the existing stressed debt and then manage and dispose of the assets to Alternate Investment Funds and other potential investors for eventual value realization.” Again jugglery and trickery !What could be a better manoeuvre to hush up the financial offence of the big corporates! At the same time, the government has raised the deposit insurance cover of bank deposits to Rs 5 lakhs meaning that if a bank would fail, the depositors would get maximum Rs 5 lakhs as compensation while the balance amount of savings, if any, would be forfeited. Obviously, common people, who constitute bulk of the bank customers would be the victims.
Plan to privatize agriculture at the cost of the peasants
It has been stated that though all sectors are down, agriculture is up by 3.4%. The share of agriculture in gross domestic product (GDP) has reached almost 20 per cent for the first time in the last 17 years, according to the Economic Survey 2020-2021. This has attracted attention of the corporates. And to buttress the profit motive of the agri-giants, the peasants are being pushed to the verge of total ruination. To aggravate their woes further, the government, taking advantage of the pandemic situation, has brought in three black Farm Laws to open up the sector to the monopolist giants and large agri-MNCs. Obviously, the entire peasant fraternity is now in the vortex of a historic movement for over two months in demand for total repeal of the acts. Over 170 precious lives have already been sacrificed during the course of the movement. So, there was an expectation that the government would at least say something about that in the budget. But no. The FM simply bypassed such an important development and instead tried to pretend how much they have been caring for the peasants. So, she declared that in the last financial year, rice growing peasants got Rs 1.74 lakh crore as MSP (Minimum Support Price) whereas wheat growers received Rs 75,060 crores as MSP. This was a chicanery par excellence! The FM tried to show that the government has been procuring crops at MSP. But when the agitating peasants are asking for legal guarantee of MSP, the government is refusing because the design is to abolish government mandis (crop buying markets) and hand over entire procurement to the private players. Then there was customary reference to PM-KISAN, FasalBimaYoyna (crop insurance scheme) and enhanced agricultural credit target of Rs16.5 lakh crores. But fact is that allotment of funds towards PM-Kisan has been reduced from Rs 75,000 to Rs 65,000. Also, the number of farmers’ crop insurance claims that were rejected by insurance companies under the FasalBima multiplied 10 times in just two years, according to data provided by the Union Agriculture Minister in the Rajya Sabha. And who does not know that official credit window is not accessible to the poor and marginal peasants who are forced to go to the moneylenders to borrow at exorbitant rates.
The government claims that it is going to spend Rs 1 lakh crore for developing agricultural infrastructure. And to fund this, additional cess of Rs 2.5 and Rs 4 have been levied on petrol and diesel respectively whose prices are already soaring sky high. Who does not know that this additional cess would push up fuel price, no matter what the government says to the contrary, and the cascading effect would be on cost of agricultural inputs, transportation and general price line. So, both the peasants as well as the other sections of the toiling millions would face increased hardship while the so called developed infrastructure would only help the corporate, ready to make decisive foray in Indian agriculture. If one carefully goes through the budget numbers, it would be evident that overall budgetary allocation to agriculture is down by 8% from last year, and despite such a massive farmers’ protest, their concerns have hardly been addressed.
Corporates are thriving
In fact, everything is aimed at benefitting the corporate sector at the cost of the people’s growing misery and penury. Corporate tax collections have particularly suffered this year with almost a 40% drop year-on-year. In 2018-19, the figure of corporate tax revenue was Rs 6.63 lakh crore which decreased by about Rs 1 lakh crore in 2019-20. In FY 20-021, it has gone down further. When the BJP government was saddled in power in 2014-15, proportion of corporate tax revenue to GDP was 3.4%. In 2019-20, it fell to 2.7%. In FY 2021-20, it is envisaged to be 2.5%. In the July 2019 budget, tax revenue to be foregone for reducing corporate tax to 22% would be around Rs 1.46 lakh crores. The FM has taken pride this time that “Few months prior to the pandemic, in order to attract investments we slashed our Corporate tax rate to make it among the lowest in the world.” But she did not disclose how much corporate funding in productive investment has taken place following such enormous reduction in corporate tax rate.
If one thinks that the corporates are incurring loss because of market crisis, one is sure to be proven wrong. The wealth of Indian billionaires including top industrialists increased by 35 per cent during the lockdown and by 90 per cent since 2009 to $422.9 billion. Mukesh Ambani has doubled his wealth between March and October while Gautam Adani has registered a growth of 61% in his wealth. According to Oxfam report, the extent to which the wealth of 100 billionaires increased during the pandemic was enough to give Rs 94,000 each to 14 crore of Indians. How could the corporates amass such heap of wealth? Apart from drastic cut in tax and benevolent condoning of bank loans, the corporates have cut down their production cost substantially by less procurement of raw material, increased retrenchment and lowering wage. Also some of them have sold partial stake in their industries to foreign companies (like Reliance Industries selling 20% stake to Saudi Aramco at an estimated deal value of $ 15 billion).
Burden on people is growing
Clearly, the government has not touched the financial oligarchs. Instead, it has continued with fiscal savagery of raising indirect tax to make common people trying to eke out a bare living bleed white. During the pandemic, the government went on increasing additional excise duty on petrol-diesel-LPG and mopped up as high as Rs 3.61 lakh crores of additional revenue which has been borne by the toiling people only. This has been Rs 1.2 lakh crore more than previous FY 2019-20.
The government has argued that though extra cess has been charged on petrol-diesel, the basic excise duties are being reduced by Rs 1.4 and Rs 1.8, respectively. So, there would be no impact on the retail fuel tariff. This is a deception. First of all, states get a share of excise whereas cess proceeds go to the kitty of the Centre only. So, while the states would lose revenue, the Centre would stand to gain. Secondly, without any cogent reason whatsoever, fuel prices including LPG are being hiked regularly to an enormous level. Hence, the government’s verbal assurance is of no use.
Moreover, the government has already started withdrawing subsidies on various items, overtly or covertly. Subsidies on petrol-diesel have long been abolished on the plea of deregulating their prices. The Union Petroleum Minister has said a few days back that there is no possibility of giving relief to the common citizens by reducing excise on petrol-diesel. In fact, during BJP regime, excise duties of petrol-diesel have been increased 12 times. Right now, the total tax incidence in the petrol-diesel prices is about two-third of the retail rate. In the last budget, the subsidies on petro-products like LPG and Kerosene have been slashed from Rs 41,000 crore to Rs 13,000 crore. It would push up prices of both these essential items through the sky. Just n last three months, LPG price has increased by Rs 175. It is estimated that the extra burden on common households because of skyrocketing of LPG price would be around Rs 28 crores.
Subsidies on food have also been drastically curtailed. Already, the government has stopped distributing free rice and wheat through rationing system, thereby saving a subsidy amount of Rs 1.15 lakh crores. Also it is pertinent to mention that FCI procures grains from farmers at an economic cost of almost Rs 27 a kg for wheat and Rs 37 for rice, and then provides it to 80 crore poor people through the public distribution system (PDS) at the subsidised rates of Rs 2 a kg for wheat and Rs 3 for rice. However, for several years, the budgetary allocation for PDS has not been sufficient to cover FCI’s subsidy costs, forcing it to borrow from the NSSF at a rate of about 8%. Its outstanding loans are now well over Rs 2 lakh crore. Over the last year, the COVID-19 relief measure to provide additional free grains under the PDS for 8 months, plus free grains for migrants without ration cards, has only increased FCI’s borrowings. Repayment of FCI’s borrowing is also included in food subsidy allocation.
This is how subsidy figures are inflated, while reality is that subsidies are drastically curtailed. Hence showing food subsidy to have been pegged at last year’s level is actually a reduction. How caring the government is ! When India is ranking 94 out of 107 countries in hunger index, over 7000 Indians die of hunger every day and over 21 crore Indians are undernourished, the aspect of food security has been totally ignored.
Essence of the Budget 2021-brazenly anti-people and nakedly pro-corporate
In earlier budgets also, the BJP government made every possible effort to ensure that the corporate behemoths and monopolist sharks are benefitted in every respect while the workers, peasants and other segments of oppressed people have been at the receiving end. But this time, it has surpassed all limits. Even with such a pandemic having gripped the country and the common people being in desperate need of government assistance, the ruling BJP virtually seized this opportunity of utter helplessness of the people to achieve its mission of selling out the country to the corporate houses, lock, stock and barrel. Over and above, sweeping tax concessions and waivers as well as promulgation of a host of anti-worker anti-peasant laws, this budget has paved the way for complete privatization of all sectors including agriculture and virtually going to banish the word ‘Public Sector’ from Indian economic structure. The whole and sole task of the ruling parties and ministers is now to bootlick the monopoly houses and MNCs, create a green corridor for their unlimited loot and plunder, brand blatant pro-corporate policies and measures as buoying the interest of the country and dole out a surfeit of counterfeit promises and dream-vending to the myriads of countrymen back-broken by ruthless fiscal savagery and brutal economic oppression. So, this annual presentation of the budget has been turned into a mere ritual for the people but a festivity of the corporate houses. People must understand this farce and realize that dying capitalism has nothing else to offer to them other than deception, deprivation, despair, destitution and devastation.
