The United Progressive Alliance's Budget, like some of its political actions, is a balancing act, which does little justice to the spirit of the National Common Minimum Programme. The Alliance should correct its course by reaffirming an unflinching commitment to the poor.
THE sight could not have been more bizarre: screen after television screen beaming near-identical coverage of the Union Budget (typically from the premises of the Confederation of Indian Industry or the Federation of Indian Chambers of Commerce and Industry) with dark-suited businessmen belting out well-rehearsed passages suffused with concern for the unwashed masses (much in the fashion of Miss World contestants singing praises of Mother Teresa), and with anchors presenting every corporate executive or investment banker with a conflict-of-interest relationship to policy as some kind of objective economic expert gifted with selflessness and exceptional wisdom.
July 8 was a painful reminder of how quickly our television channels have tried to erase the lessons of May 13, when the results of the Lok Sabha elections left the media dumbstruck. The mood was one of critical, humble, introspection; and admission that many of those who organise and report news are hopelessly out of touch with reality, in particular, flesh-and-blood people. They must change or become irrelevant.
Television's Budget coverage showed that there is not even an iota of change in approaches, assumptions or anchors. It is business as usual. We are back to familiar stereotypes: A "growth" Budget is one that gives tax-breaks to the rich. Always "positive" are measures that favour industry or further privilege the privileged. Privatisation is absolutely good, always. Of course, a couple of dissenters must be quoted to "balance" the programme, otherwise dominated by 26 businessmen and stockbrokers. But they must be introduced as jholawalahs, perpetual whiners, or Leftists wedded to outdated ideas like equality and justice.
The media's assumption that neoliberalism is "normal" and "natural" and that there is no alternative to it is highly infectious. Indeed, it has affected key members of Finance Minister P. Chidambaram's Budget team. Bluntly put, the Budget largely bears a neoliberal imprint. Although there are positive and worthy components to it, it does not make a clean break with the basic framework of liberalisation of economic activity for capital, India's further integration into the corporate-dominated global economy, and privatisation of public assets.
THIS is not the place to analyse the Budget at length. But five of its features are noteworthy for our discussion. First, it does not attempt a correction of fiscal imbalances through progressive taxation, as it should. Rather, it relies on supply-side assumptions about low rates leading to high compliance and hence greater collections. Thus, one crucial assumption behind pruning the revenue deficit from 3.6 to 2.5 per cent of gross domestic product (GDP) is a hefty 25 per cent rise in tax revenue, including a 26.5 per cent rise in income-tax collections despite the raising of the threshold to Rs. 1 lakh and even more optimistic, a 40.4 per cent increase in corporation tax collections (with no significant change in indirect tax rates/collections).
Second, the Budget does not significantly, structurally, change the pattern of expenditure. The shares of major items of spending interest payments, defence, subsidies, annual Plan support, assistance to States and so on remain basically unaltered even in relation to Jaswant Singh's Interim Budget (IB) of February 3. The 20 per cent additional funding for agriculture might seem impressive, but it is lower than in the IB. The 2 per cent education cess is welcome, although it cannot absolve the state of its basic responsibility to provide free education to all children as part of its normal task, to be funded in a routine manner. Yet, the "highlights" of the annual Plan for the social services are mostly identical in the two Budgets.
Third, the Budget favours private capital in numerous ways. It continues the policy of disinvestment of public enterprises, while slowing its pace. It plans to raise Rs.4,000 crores through disinvestment, in comparison with the Rs.15,000 crores-plus last year. Nevertheless, the direction remains the same. The Budget also encourages foreign investors, especially in telecom, insurance, aviation, as well as portfolio investors. It pampers speculators who play the market by lowering the short-term capital gains tax from 33 to 10 per cent. No less important is the de-reservation of 85 areas marked for small-scale industries. This will further promote concentration of capital. Already, Indian industry bristles with monopolies.
Fourth, the Budget jettisons some major commitments made in the original National Common Minimum Programme (NCMP) for example, employment guarantee of 100 days' work to one able-bodied person in "every rural, urban poor and lower-middle class household" and greatly dilutes some others.
Under the Budget, funding for rural employment programmes has fallen from Rs.9,640 crores [Revised Estimate (RE) 2003-04] to just Rs.4,590 crores. For rural development as a whole, the allocation is 39 per cent lower than last year's (RE). The Budget is abysmally weak on the public distribution system for foodgrains, and fails to extend it to the entire country. It only starts food-for-work programmes in 150 "most backward" districts, ignoring the remaining 450-plus districts. But the poor are everywhere!
The additional allocation for the social sector is unacceptably small, indeed paltry Rs.10,000 crores. This might appear large in absolute numbers, but it is not even a quarter of the magnitude of subsidies or half of the huge amounts profitable industry-groups manage to avoid paying in taxes thanks to various underserved exemptions. It is less than the mere increase in the non-Plan expenditure on defence alone. This will not be enough to reverse the social services' severe erosion in recent years.
The allotted Rs.10,000 crores corresponds to just 0.4 per cent of the GDP too minuscule a sum by any standards to make a real difference. What is more, the money has not been allocated to specific Ministries and Departments, but parked with the Planning Commission. Its disbursal will almost certainly involve wrangles, rivalries, procedural delays, and arbitrary decisions. (Former Revenue Secretary S. Narayan also predicts this.) The funds may not actually reach the departments concerned in time for them to be used this fiscal year. The States have already finalised their annual Plans and will find it hard to absorb the money.
Finally, as if all this were not bad enough, the Budget allocates Rs.77,000 crores to defence services an 18 per cent increase over the 2003-04 Budget Estimate and a shocking 27 per cent over the Revised Estimate. Even this high figure is misleading. If "Defence Pensions" and "Ministry of Defence" expenses are added to the Rs.77,000 crores, the military Budget as a whole works out to Rs.89,082 crores almost three times higher than social services spending. This is an obscene distortion of our priorities.
The claim that this is a "one-time increase," attributable to purchases of new aircraft like the Sukhoi and the Hawk, is only partly right. The allocation for aircraft and aero-engines for the Air Force has gone up by Rs.7,000 crores, while the rise in the aggregate defence Budget (BE-over-RE) is more than double that (Rs.17,000 crores). Evidently, Chidambaram has yielded many of the armed forces' (usually inflated) demands without critical scrutiny and regardless of the fact that in recent years they have not been able to spend the allocated funds and let thousands of crores lapse.
It is unlikely that this huge rise in the defence Budget will be a one-time affair, given the many deals in the pipeline, including the Gorshkov air-defence ship, numerous submarines, tanks, missile components and other hardware. But let that pass. The question to ask is whether Chidambaram would allow a "one-time" increase of, say, Rs.20,000 crores in social services allocation or even a Rs.10,000 crore budget for employment generation. The likely answer will be no, that will not be "feasible", "responsible", or permitted by the "availability of resources" as if this were an unchangeable given.
The hike in the defence budget is all the more reprehensible because, besides being wasteful, it sends the wrong signals just when India is trying to improve its relations with its neighbours, especially Pakistan.
THE Budget was a unique opportunity to impart a decisive new pro-poor thrust to economic policy and to realise some of the promises held out both in the NCMP and in Manmohan Singh's Address to the Nation, which marked a long-overdue return to the discourse of equity, reducing disparities, and empowering the poor. The Budget was a great didactic opportunity a public education venture to teach the top tenth of the population that it must share its wealth in enlightened self-interest. There will be no security and peace even for the privileged in India without social cohesion, itself premised upon justice and eradication of gross inequalities and entrenched hierarchies.
Chidambaram could have proposed, and secured acceptance for, truly radical measures which set a new direction. Many interest groups, including industry and business, had prepared themselves for progressive Left-leaning changes. No one could have threatened the stability of the government or questioned its legitimacy for doing this.
This unique moment has now passed and a great opportunity has been squandered. One can only hope that the coming parliamentary debate will force some progressive changes in the Budget, and that the newly appointed National Advisory Council on the NCMP will provide some further correction. The Committee has some outstanding members such as Aruna Roy, Jean Dreze, A.K. Sivakumar, Mirai Chatterjee and Madhav Chavan.
HOWEVER, the onus to implant the electoral mandate, itself reasonably reflected in the NCMP squarely remains on the United Progressive Alliance (UPA). So far, it has dragged its feet on a very important, political, component of the NCMP namely, to combat all "obscurantist and fundamentalist elements", and to promote transparency and decency in governance, in keeping with the Constitution. This means fighting the menace of sectarianism and cleansing key institutions of the toxic influence of the Sangh Parivar.
So far, detoxification, which needs to sweep through countless institutions, has been seriously attempted only by a couple of Ministries (most notably, Human Resource Development) and on a few occasions. For instance, the government, after much hesitation, sacked four State Governors on the grounds that they are Rashtriya Swayamsewak Sangh (RSS) supporters. They indeed are, as are two-thirds of the 35 Governors. But that is not a valid reason for removing them. The right rationale, valid in this case, is that they conducted themselves in an egregiously partisan manner, promoting Hindutva, canvassing electoral support for the Bharatiya Janata Party (BJP) and interfering with administrative matters in violation of the Constitution.
The UPA should send even more Governors packing after detailing their misconduct and preparing the constitutional ground. Equally, it must not repeat the mistake of finding sinecures for ageing politicians in the new appointments. It should follow the Sarkaria Commission criteria.
However, to return to detoxification, the UPA must quickly cleanse numerous institutions: All India Radio-Doordarshan, the Sahitya, Sangeet Natak and Lalit Kala Akademis, the Indira Gandhi National Centre for the Arts, the National Museums, the Archaeological and Anthropological Surveys, and numerous advisory committees attached to various departments.
The UPA must also deal with the statutory bodies such as the National Commission on Minorities (NCM), the National Commission for Women (NCW), the Law Commission and the National Human Rights Commission. The NCM failed to act on the butchery of Muslims in Gujarat, and refused to criticise textbooks, which describe the religious minorities as a national "problem". The BJP-packed NCW ingloriously whitewashed Gujarat's explicitly sexual violence involving many more rapes than murders. The NCW is less concerned with women's rights than with glorifying women's status in ancient India. It was compliant in M.M. Joshi's campaign to destroy Women's Studies Centres in our universities. The Law Commission has more Hindutva admirers than thoughtful jurists. The Malimath report even seeks to abolish the fundamental "innocent-unless-proved-guilty" principle. It must be scrapped.
The UPA has made a major mistake in ignoring some core concerns of the Left. It will further compound that error if it cynically calculates that the Left has no alternative but to support it simply because it wants to keep the BJP out of power. The issue is not short-term power balances (which too can be easily misread), but the UPA's political credibility and legitimacy, which derives from the electoral mandate. The same electorate will have no hesitation in punishing the UPA if it betrays the promise of progressive, radical, change.
As for the Left, it will have to mount considerable pressure on the UPA through structured regular consultations and through street-level actions. This last element, including a grand celebration of the defeat of the NDA, has been missing. We must fill the gap.
The UPA does not have all the time in the world to implement the CMP and build the basis of a minimally humane, just and equitable society. It must deliver substantially and quickly. Today, it is called upon to decide whose side it is on: sharebrokers, a rich minority which resists even minimal taxation and is wedded to an inequitable, greed-driven order; or sharecroppers, who live by the sweat of the brow and have a stake in a just society.
COMMents
COMMents
SHARE