Tapan Sen, general secretary, CITU

‘Burden on honest taxpayers’

Print edition : April 01, 2016

Tapan Sen. Photo: C.V. Subrahmanyam

Interview with Tapan Sen, general secretary, CITU.

Tapan Sen, general secretary of the Centre of Indian Trade Unions (CITU) and Rajya Sabha member of the Communist Party of India (Marxist), is surprised that the Budget proposals offered amnesty to tax defaulters by offering them a compliance window for a limited period to declare their undisclosed incomes. Excerpts from an interview he gave Frontline:

What is your reaction to the Union Budget? The government had a fiscal deficit to meet and has set for itself a target now.

Successive Budgets of this government have been exercises in fraud and deception. The government that claims to be facing a severe resource crunch, which has been aggravated by the Finance Commission recommendations and the devolution of funds from Central tax revenues, is rewarding defaulters and imposing further burden on honest taxpayers instead of mobilising resources from potential sources. This time an amnesty scheme has been given to tax defaulters in that they can make their own declaration of their so-called undisclosed income and the government would tax that amount. The government thereby is giving a big rebate to the defaulters.

On the one hand, pilferage from the public exchequer in connivance with the government is getting legitimised. On the other hand, they have increased the pressure of indirect tax on people 20 times more than the concessions they have given in direct tax. In direct taxes they have given a concession of Rs.1,060 crore, and in the case of indirect taxes they have increased the burden by Rs.20,670 crore. And this is how they are claiming they have met the fiscal deficit target. If you see the Budget Estimate last year and the Revised Estimate, the direct tax collection was much below target. Their target was Rs.7.91 lakh crore; they collected Rs.7.44 lakh crore. The collection of indirect taxes was much more. The Budget Estimate of indirect taxes, on commodities and services, was Rs.6.48 lakh crore, and the Revised Estimate was Rs.7.03 lakh crore, which was collected as indirect tax. They have expropriated the favourable situation arising out of the consistent fall in international crude oil prices. They have neutralised the major part of the fall by enhancing the excise duty on petroleum products. This is to the tune of around Rs.60,000 crore.

They claim 7.5 per cent GDP growth, but all registered companies have shown a decline in profits and sales turnover. They claim that manufacturing has grown by 9.5 per cent, but the Index of Industrial Production shows a growth of 3.5 per cent from April to December. This questions the credibility of their data.

The Budget seems to have provided an increased allocation to some social sector schemes.

If you take inflation into account, there is a decline in real terms. They claim to have given a boost to the agricultural sector. But last three years we have had successive droughts. In that sense they have done something to manage the collapse. But if it is averaged out, in real terms, the allocations have been stagnant. And particularly at a time when the agricultural sector is in crisis, the need is to increase allocation; the increase is a pittance. Most of the old schemes continue to exist in different names. The Aam Aadmi Beema Yojana was changed to Pradhan Mantri Jeevan Jyoti Beema Yojana. The former was a statutory scheme; it was in the schedule of the Unorganised Sector Workers’ Social Security Act. The new scheme is not statutory. The minute the changeover happens, the government can discontinue the scheme without any judicial hurdle. Even the budgetary allocation as well as the allocation for the administration of these schemes are so meagre that people will not be able to benefit from them.

What is your opinion on the proposal to sell idle public sector assets as part of the disinvestment initiative? The government plans to set up a committee as well.

This is a form of aggressive privatisation. They plan to collect Rs.56,500 crore out of disinvestment and Rs.20,000 crore by strategic sale. This means not only the sale of piecemeal shares of public sector holdings but a sale of majority stake, and it is also about handing over the management to private hands. They have short-listed the most lucrative and most efficiently run public sector units in the strategic sector of the economy for sale. They have targeted petroleum, engineering, oil and electricity sectors for such strategic sale. All the oil companies, BHEL, and NTPC are in the list.

While tax defaulters will be rewarded with an amnesty scheme, concessions are being planned for defaulters in the financial sector too. The banks have huge NPAs [non-performing assets]. People are defaulting on bank loans and are being allowed to do so. The same people are being given some relaxation through asset reconstruction companies. This is pilferage of public money through a different route. The government is recapitalising public sector banks through an allocation of Rs.25,000 crore. This time recapitalisation has a particular meaning as they have included the banking sector too in their strategic sale scheme. For strategic sale of a bank, its balance sheet has to be cleaned up.

There are a lot of commitments for employment generation and skill development.

These are only sound bites. The whole concept of skill development is an instrument for channelling public money into private hands. As of now, 70 per cent of the Industrial Training Institutes are in the private sector. The government is only certifying training schemes through the Labour Department. The whole scheme of Skill India will be operated and channelised through the private sector. The government should have directly played a role. ITIs supply the industrial workforce for the private and public sector. Even skill development is not going to make them fully skilled. They will be made apprentices. In Gurgaon, 30 per cent of the workforce in big companies are apprentices working on the production line. Now there is a shift from contract employment to apprentice form of employment. For contract workers, the minimum wage has to be given, but for apprentices it need not be so.

The Budget contains commitments to social sector schemes such as health insurance, for instance, for BPL families. The government has also decided to roll back the proposed tax on the EPF.

The Rashtriya Swasthya Bima Yojana for BPL families and unorganised sector workers provides for an insurance cover of Rs.30,000. Now what does this additional cover of Rs.1 lakh mean? Is it per head or for the household? These appear to be a repetition of the schemes already in existence. The government has already brought an amendment to the Provident Fund Act by opening a door for subscribers to move into the National Pension Scheme. We had opposed the amendment. Similarly, for ESI [Employees’ State Insurance], the government brought in an amendment to make it optional for a mediclaim product. ESI covers outpatient treatment too, while mediclaim covers only hospitalisation. Until now it is in the stage of an option. The tax on EPF was a natural culmination.

The unions have been demanding a rollback of several labour law reforms. The Finance Minister was silent on that in his Budget speech.

All unions rejected the proposals for labour law reforms unanimously at a tripartite discussion. With the tripartite exercise now over, the government can bring in those reforms. The Labour Minister replied in Parliament that stakeholders had discussed the issue of tax on EPF. I told him that no stakeholder had been consulted and in this case not even the employers. But labour law reforms are very much on the agenda.

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