On The Union Budget

February 28, 2013

The Polit Bureau of the Communist Party of India (Marxist) has issued the following statement:

On the Union Budget

The 2013-14 budget fails to address the major concerns of the people and economy in the current context. The Economic Survey underlines the fact of rising prices especially food inflation, widening current account deficit, low investment and savings and increasing dependence on foreign funds. The potential workforce in the waiting should be provided gainful employment that demands public investment in sectors such as in agriculture, small scale sector and rural development. The budget however lacks imagination to think beyond the neoliberal prescriptions and relied exclusively on reducing fiscal deficits by curbing expenditures and on unrealistic projections on revenue mobilization in the context of lower growth.

The finance minister has expressed concern about the fiscal deficit whose revised estimate is Rs. 5,20,925 crore. But this is lower than the revenue forgone figure of Rs 5,73,630 crore. This implies that the fiscal deficit is primarily caused by the sops given to the rich in terms of revenue foregone and the burden of meeting this deficit is passed on to the poor by means of cutting expenditures. The revised estimates for 2012-13 shows a 4 per cent decline in total expenditure compared to budget estimates of 2012-13 which is indicative of a severe expenditure contraction. Given the overriding obsession expressed by the finance minister on keeping fiscal deficit at 4.8 per cent of GDP the proposed rise in expenditure in the current year is not likely to materialize in actual terms.

It is also a matter of grave concern that the consumption expenditure which grew on an average of about 8 per cent in the last three years has only grown by 4 per cent this year as recorded in the economic survey. Despite such a contraction in consumption expenditure there has not been any check on inflation. Total subsidies declined compared to last year’s revised estimate by about Rs. 26,571 crore. The rise in the subsidies in food in the context of much touted food security is only miniscule. The Finance Minister announced an additional allocation of Rs. 10,000 crore. Last year food subsidy was Rs. 5,000 crore less as reflected in revised estimates of 2012-13. Therefore the budget actually proposes an increase of a mere Rs. 5,000 crore. There has been a sharp decline in petroleum subsidy by more than Rs 30,000 crore compared to last year’s revised estimate which would hugely burden people and cause further inflationary pressures. There has not been any additional allocation on MNERGA compared to the previous year despite the fact of rising unemployment in the backdrop of an economic slowdown. The government on the other hand proposes disinvestment of the Public Sector to the tune of Rs. 50,000 crore.

In social sectors such as health and education the budget proposals are far from what was needed. As proportion to GDP the budgetary allocation this year in health is less than the allocation as proportion to GDP last year. Similarly in the case of education the allocation as proportion to GDP, budget estimate has declined compared to last year’s budget estimates. As far as rural development is concerned figures show similar decline as proportion to GDP. In the tribal sub-plan the allocation is roughly short of Rs. 20,900 crore compared to that mandated in the constitution as proportion to planned expenditure. The special component plan for SCs has more than 50 per cent (Rs. 47,000 crores) short fall from the amount mandated by the Constitution.

Therefore the budget does not adequately respond to the urgent needs of the people. Instead it has provided sops to corporates and criminally neglected increasing public expenditures. The CPI(M) sees this Budget as patently anti-poor and unable to address what was urgently required to get out of the situation of low growth, high inflation and higher unemployment.

The CPI (M) calls upon the people to protest against the anti-people aspects of the Budget.

Union Budget

August 7, 2009

Press Statement

The Polit Bureau of the Communist Party of India (Marxist) has issued the following statement:

Union Budget 2007-08

In the context of the inflationary crisis affecting the economy, Budget 2007-08 comes as a disappointment. The Finance Minister has not exploited the many opportunities for additional resource mobilization, especially by taxing the rich whose income shares have increased. He has kept expenditure increases under a tight leash while restructuring it in a way that goes against the interest of the working people and the State governments. The Budget fails to seriously address the problems of unemployment and inflation. While the ban on futures trading in wheat and rice is welcome, the Budget has failed to do away with the ad valorem duty structure on petroleum products which would have helped in bringing down fuel prices.

While the need of the hour was an extension of the public distribution and an enhancement of food subsidy, the actual increase in proposed outlays on food subsidy is just 6.2 per cent which actually implies a cut in real terms when inflation of 6-7 per cent is taken into account. Likewise, the increase in purchasing power of the poor delivered through special employment schemes is almost negligible. Total expenditure on rural employment is budgeted to rise by just 3.5 per cent. Even the sum total of expenditure on the three flagship schemes – NREGS, SGRY and SGSY – is just 7 per cent which amounts to stagnation in real terms. The number of districts covered by the NREGS is proposed to be increased to 330 from 200, but the outlay has been increased from Rs 11300 crore last year to only Rs 12000 crore this year.

The claim that the focus of this budget is the agricultural sector, which is in the midst of a crisis, is also not justified in terms of allocations. Central Plan outlay on agriculture has hardly been increased as a proportion of GDP. Moreover, no effort has been made to provide price support to distressed farmers. In the absence of price support, the reduction in customs duties on a range of agricultural goods would depress agricultural prices and farmers incomes further. It appears that the Finance Minister is choosing to combat inflation by adversely affecting the livelihoods and incomes of the farming community.

In the social sectors, the one area where the government does propose to increase outlays is education. The total allocation for education has risen by a creditable 33 per cent. Higher education outlay is also budgeted to rise by 29 per cent. This is welcome given the commitment to enhance capacity in higher education to ensure reservations of seats for backward classes. What is surprising is that in the midst of these increases the outlay for the Sarva Shiksha Abhiyaan programme has been cut. The allocation for ICDS has been increased by only Rs. 674 crore which is totally inadequate to meet the goal of providing an anganwadi in every settlement. While there is an increase in total expenditure on health by Rs. 3925 crore, this is still well below what is required to meet the NCMP commitment. The allocation for the National Rural Health Mission is still less than Rs. 10,000 crore. The entire provision for social security for labour has increased by only Rs. 1 crore and there is nothing in the Budget for workers.

Gross tax revenue is expected to increase by only 17 per cent which is the same as the expected growth of nominal GDP (assuming 9 per cent real GDP growth and 8 per cent inflation). Many opportunities to tax capital have been missed, such as the re-imposition of the capital gains tax and an increase in the Securities Transaction Tax. Further, the reduction of peak customs duties on non-agricultural products to only 10 per cent will adversely affect small producers and damage employment prospects.

Many of these failures are the result of the inability to mobilize additional resources. Overall, the Central Plan Outlay is projected to increase by 22.5 percent. Seen in light of that fact, the Finance Minister’s claim that the States have never had it so good is belied by the fact that Central Assistance to State Plans is expected to rise by just 8 percent. Even in terms of their shares in central taxes and loans and grants from the Centre to the States are expected to rise by 16.7 and 13.1 per cent respectively, which is less that the projected increase in nominal GDP.
In sum, the government has failed to deliver resources to warrant its rhetoric that the Budget serves the cause of a crisis-ridden peasantry, the working people and the poor. It has also failed to provide the required impetus to the Eleventh Five Year Plan. The Polit Bureau of the CPI (M) demands that the Finance Minister should enhance the Plan Outlay substantially in order to meet the pro-people commitments of the NCMP with regard to agriculture, education, health, employment generation, rural development and public distribution system. Resources for enhanced Plan outlays should be mobilized by taxing the affluent sections.