Budget: Deepening Economic Distress
The Polit Bureau of the Communist Party of India (Marxist) has issued the following statement: The Budget Speech of the Finance Minister reveals that the Government is clueless about how to address the crisis gripping the country’s economy. Instead of a coherent policy direction addressing the problems head on, what was delivered was a two-and-a-half-hour monologue in concealing the realities of a floundering economy. Despite devious attempts to manipulate data, the economic crisis showed up in the budget numbers. These reveal that the Modi Government is only interested in providing the corporate sector and the wealthy relief rather than tackling the increasingly grim employment and livelihood situations of the working people – workers, farmers and those forced into self-employment – which is the root cause of the slowdown. Instead of spelling out a programme for increasing spending to address the problem of demand and resource mobilization to address the crisis of revenues, the Budgetary exercise reflects only a commitment to reducing the fiscal deficit by further slashing government expenditures and selling off the nation’s assets to big corporates, the burden of all of which will be felt by working people.
The first clear manipulation in the Budget is in the revised estimates of revenue figures. Revised Estimates (RE) figures show that the revenue collections in 2018-19 are way below the Budget Estimates (BE), still they underestimate the extent of the shortfall. The RE figures of Central Tax Revenues are incompatible with the actual collections reported by the CGA for April-December of 2019-20. A realistic RE would have shown a further shortfall of close to 1.5 lakh crores in gross revenues from central taxes. This act of concealing the real revenue situation has been combined with not revealing in the RE figures the actual cut in expenditures that would be finally administered in order to meet the fiscal deficit target when revenues turn out to be less. This is a repeat of what was done last year too. Projections for the 2020-21 financial year reflect the same bias of inflating revenue projections while allocating expenditures which would not be met.
Even after the manipulations, the RE revenue figures for 2018-19 are 2.98 lakh crores less than the Budget Estimates, Rs. 1.53 lakh crores of which will be the hit taken by states in their share in central taxes. States have also been threatened that transfers related to GST revenue shortfalls will be limited to compensation cess collections. The RE figures of Central Government expenditure also show massive cuts in several heads compared to the levels budgeted. Despite this, the fiscal deficit is higher than what was budgeted, the tragedy in which is that this is not the result of pursuit of a policy of expanding demand in the economy. Instead, the expenditures on Central Sector Schemes in 2019-20 has been slashed by 11 per cent and Centrally Sponsored Schemes by 4.5 per cent – covering areas like – food subsidies, agriculture and allied activities, Development of the North-East, Social Welfare, Energy, etc. In the cuts proposed in 2020-21, MNREGA (Rs. 61,500 crore from Rs. 71,000 crore) and fertilizer subsidies are slated to join this list. Even the flagship schemes like PMJAY-Ayushman Bharat, Swachh Bharat and PM-Kisan have suffered major cuts. Allocations for the welfare of scheduled castes and scheduled tribes, already way below the statutory requirements, have been cut in 2019-20. The Gender Budget allocation for 2020-21 similarly shows stagnation.
In the tax proposals, the FM announced further tax concessions to the corporate sector and the rich (This comes when India’s richest 1 per cent hold more than four times the wealth held by the bottom 70 per cent, nearly 100 crore people). The earlier concessions given in corporate taxes have already resulted in a shortfall of Rs. 1.55 lakh crores in RE as compared to BE for 2019-20. A growth of 12 per cent over the inflated tax revenues of 2019-20 has been projected for 2020-21. Clearly, this means raising resources from privatization and disinvestment – an increase from Rs. 65,000 crores (RE 2019-20) to Rs. 2 lakh ten thousand crores in 2020-21. This will more than neutralize the increase in actual capital expenditure of Rs. 62,000 crores. Such is the desperation that government decided to sell its shares even in the iconic LIC, the biggest financer of government schemes.
Expenditures for 2020-21 are only 9.2 per cent over the budgeted figures for last year, even though a 10 per cent increase in nominal GDP has been assumed. Based on the experience of the last few years, even this amount is unlikely to be spent to maintain the fiscal deficit. Therefore, the Union Budget instead of countering the slowdown will only reinforce the problem of demand and deepen widespread economic distress.
The Polit Bureau of the CPI(M) calls upon the people to intensify protests against the large-scale sale of our country’s assets; the disinvestment of LIC and insurance sector; unemployment, agrarian distress and further hardships and miseries being imposed on the vast majority of our people.