The Polit Bureau of the Communist Party of India (Marxist) has issued the following statement:
“THE INTERIM BUDGET” FOR 2004-05
1. The Finance Minister’s claim in his “interim budget” speech that the macroeconomic situation today is the best it has been in the last 50 years is a cruel joke. The per capita net availability of foodgrains in India today is down to the level which prevailed on the eve of the second world war, having dropped by over 15 percent since the beginning of the nineties. The situation in rural India is far worse, the per capita rural calorie intake being about 13 percent lower than in 1987-88. Public rural development expenditure, at around 6 percent of GDP is less than half of the level (14.5 percent) that prevailed during the Seventh Plan. Unemployment in the country as a whole, especially in rural areas, has increased so sharply that an average male agricultural labourer gets less than 100 days of employment virtually everywhere in the country today. Never in the history of post-independence India have the workers, the rural poor, and large masses of the peasantry experienced so dramatic and sustained a decline in their living conditions as during the years of NDA rule.
2. The claim of a 7.5-8 percent growth rate signifies nothing, since this rate is calculated on the low base of the previous year which saw a decline in agricultural output and a sharp recession in the industrial sector. The investment ratio which is the main determinant of growth rate has stagnated throughout the nineties, the figures for the years of NDA rule being lower than at the beginning of the nineties. The large forex reserves, which the Finance Minister claimed as an “achievement”, are a millstone around the country’s neck, since the rate of return earned in the country by the speculators whose financial inflows have largely contributed to these reserves is much higher than what the country earns by holding these reserves. In effect, by holding such reserves the country is borrowing at exorbitant rates to lend at 1-1.5 percent (which is what the reserves earn), which shows policy incompetence. Even the “fiscal consolidation” claimed by the Finance Minister is baseless. The real index of fiscal health, the revenue deficit, which stood at 3.5 percent in 1999-2000 is at 3.6 percent in 2003-04.
3. In the face of this acute all-round crisis of the people, all that the government has chosen to do is to give even more concessions to the rich and the affluent. Enlarging the exemptions from capital gains tax, modernizing airports, building convention centers, reducing customs duty on foreign travelers, and reducing stamp duty (whose main beneficiaries would be those engaged in large property transactions) --these are the main thrust of the “interim budget”. The schemes announced for the rural sector are all in the realm of arranging for funds from other sources rather than making any direct contributions from the budget. Since notwithstanding the Antyodaya scheme that is supposed to have covered 1.5 crore below-poverty-line population, the state of the rural poor has deteriorated sharply in the last five years, its extension to 2 crores can scarcely bring any comfort. Likewise when there has been a drastic decline in rural credit from the banking sector, despite the existence of “priority sector” norms, merely asking banks to give more credit to the peasants, means nothing. This “interim budget”, while betraying complete cynicism towards the people, contains all the falsehoods which the NDA government has been propagating, with the shameless use of people’s money, to boost its electoral prospects.
The Polit Bureau of the CPI(M) calls upon the Indian people to see through this fraudulent exercise of the interim budget. Its basic objective is to appease certain sections of the population in return for their electoral support. These proposals are an exercise of irresponsibility by a government that will shortly cease to exist. Clearly the people must be prepared to face a significant dose of economic burdens when all the sops announced so far by this government will have to be accounted for. The desperation with which such sops are being announced betrays the BJP-led NDA’s apprehensions that they are unlikely to return to office after the general elections.