[Marxistindia] Speech of Com. Brinda Karat in the RS on the Budget

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SPEECH OF BRINDA KARAT ON UNION BUDGET-2011 

IN RAJYA SABHA

 

10TH MARCH 2011

 

Sir, I thank you for giving me this opportunity to express my party's view on the Budget.I stand in opposition to the general direction and the intent of this Budget which is to further the neoliberal agenda which has been set out in the Economic Survey. And it is regretful that this Government seems to have learnt no lessons at all from the global events of the last three years. 

 

This Budget and the Economic Survey present a blueprint to further deregulate the Indian economy, to further open up crucial sectors of the Indian economy such as agriculture and the entire retail sector for FDI and the big corporates. My friend Abhishek Manu Singhvi was saying that the opposition stands for the sake of opposition. But we stand because we believe that the direction of this Budget is going to intensify the world of inequalities.

 

Sir, I was going through the Budget Speech of the Finance Minister and it was striking that in this entire speech the word 'poverty' does not exist. This is not a question of semantics. It reflects the understanding of the Government that poverty is no longer a problem for the people of this country; it is not poverty, which is a problem, but it is probably the poor which are a problem, because according to this Government's arguments they are eating more or consuming more. 

 

This Budget favours the rich, the corporates and their interests as opposed to the interests of the mass of people in this country at a time when this country and its people are facing the unlegislated tax of price rise which has picked the people's pockets for the last three years, particularly food inflation, alongwith increasing unemployment, increasing under employment and low purchasing power. There are forty-three crore people in the unorganized sector with fluctuating incomes. The Budget cannot be a magic wand to solve all the problems of this country. But, certainly, it has a redistributive role. And in that, Sir, I believe this Budget has failed the country and it marks the distance from the hut of Kalavati, the homes and lives of dalits, the adivasis, the minorities, and the women of this country and the UPA-II government. I, therefore, oppose this Budget.

 

Some of the untenable arguments for price rise given in the Economic Survey have been referred to by my colleague.If you explain and understand the reason for price rise wrongly, then, naturally the prescription you are going to give is going to be equally wrong. And one of the arguments given is - learn to live with inflation because we are committed to growth and when there is growth, there is bound to be inflation; so, learn to live with it. The recent IMF report which was quoted yesterday shows conclusively that growth and inflation need not necessarily move in the same direction. But, I just want to quote from the Economic Survey itself. On page 2, it shows that in 2007-08, whereas growth rate was 9.3 per cent, the average inflation was 6.2 per cent; in 2008-09, the growth rate was 6.8 per cent but the inflation rate had gone up to 9.1 per cent; in 2009-10, the growth rate was lower than that of 2007-08 at 8 per cent but the inflation rate was higher at 12.4 per cent. Therefore, this argument will not hold.

 

The second argument that they give is, it is the social sector policies of this Government which have given more purchasing power to the people; so, consumption has increased and, therefore, demand has outstripped supply. The MGNREGA has been cited to make this argument. Sir, what kind of an argument is this? At a time when India is home to the largest malnourished population of the world, you are talking about MGNREGA. We are committed to MGNREGA. We have fought for MGNREGA. Unfortunately, it is not working as well as it should. Today, even if you go by official calculations and take an average of 48 work days a year for a household and put the wage at Rs.100 per day, which it is not, what do you get? The households' income has gone up by a princely sum of Rs.13.15 a day on average. Can this lead to a huge increase in consumption?

 

Therefore I would request the Finance Minister to kindly look at the inequalities which exist in the consumption patterns of India and not to blame the poor for eating more. This is Bush's language. We can understand Bush saying it, but we do not expect the Indian Government's spokespersons to speak in that language.

 

Sir, the actual reason for price rise - we have said it again and again in this House and I have to reiterate it - is the obdurate refusal of the Government to reverse its present policies; refusal to put a ban on future trading in essential commodities; refusal to universalise the Public Distribution System, refusal to stop the manipulation of imports and exports which deliberately cause shortages as we have seen in wheat, sugar, onions, etc. which help the big traders. Change those policies and then, you will find a difference in the rate of inflation in this country.

 

The actual strategy behind this Budget is the discredited trickle down theory - follow a policy to make the rich richer and ultimately it is going to help the poor. And, that actually is what this whole slogan of inclusive growth means. There are five important aspects of this Budget which form part of this trickle down theory. The first is, the strategy adopted in this Budget in the name of fiscal consolidation. In actual fact, in the name of fiscal consolidation and controlling the deficit, what we have seen in this Budget is a compression in expenditures. You boast of 8 per cent GDP growth rate but your increase in total expenditure despite that growth rate is just 3 per cent. As a proportion of GDP, total expenditure has actually fallen. When we talk about 'inclusive growth', we talk about expenditures, particularly for the social sectors, and also because we believe that public expenditures are essential for the generation of employment. It is absolutely essential in the context of unemployment in this country. There, we see, Sir, as far as total expenditures are concerned, as a proportion of GDP, it is to fall from 15.4 per cent in 2010-11 to 14 percent in 2011-12. 

 

The second point is that this Budget shifts the burden of resource mobilization from the profits of the corporates to the frayed pockets of the working people and the poor in this country. Thirdly, it cuts subsidies in the most important commodities which are essential for the common people, in fuel, in food, in fertilizers. Fourthly, instead of public expenditures, it depends on investments by the corporates, both Indian and foreign. How do you want to attract them? By offering them a slew of concessions in infrastructure, in agriculture, and in other sectors. As far as the volatility of the stock market is concerned, we have not learnt any lessons. Even mutual funds are going to be opened up for the FIIs to come, to allow more hot money to come and to further make the Indian economy vulnerable to speculative practices. Fifthly, it seeks to raise resources through disinvestment to the extent of Rs.40000 crores in profit-making public sector units, including the financial and oil sector.

 

The Finance Minister said that the Indian economy has withstood the economic tsunami of the last three years. I would once again like to reiterate and remind him that it was the robust stability provided by the public sector institutions - the public sector banks and the insurance companies which gave that stability to the Indian economy at that time, which prevented the kind of big impact that we saw in other countries. Now, what are you doing? Sir, there was a speech being made by Shri Pranab Mukherjee himself, in this very House, in 2003, when he moved a resolution against the disinvestment of public sector companies.He had said, "Owing to your own inefficiency, your own incompetence, your own inability to control the deficit, don't sell the profit-making public sector companies. It will not be in the national interest." Sir, I repeat those words and I would request Shri Pranab Mukherjee and the Government to look at the same issues that you had raised when you were in the Opposition.

 

To go into some of the details, even if you accept the false assumption that the main issue of bringing stability to the Indian economy is to, somehow, control the deficit, which way are you going to do it? How are you going to deal with it? This is where, the class bias of this Government, as far as resource mobilization is concerned, becomes absolutely apparent. Just look at the way they are mobilizing resources. As we all know - I am not an economist but even then I know - that when talk about Direct Taxes, it is Direct Taxes on those who can afford to pay on their incomes; when it is Indirect Taxes, those Indirect Taxes, actually, are being taken out of the pockets of the people by making goods more expensive. If you look at this whole aspect in this Budget, the additional resource mobilisation is through indirect taxes while direct tax concessions have been provided. When we look at the Indian economy today, we see a huge concentration of wealth. This concentration of wealth is being created by the taxation policies which the Government is following. Sir, an amount of Rs.5,00,000 crores in tax has been foregone last year. You please look at the Budget Receipts and you will find those figures. Out of that, Rs.88263 crore is just for corporates! The surcharge on corporate tax is reduced from 7.5 per cent to 5 per cent. 

 

The tax-GDP ratio at 10.4 per cent is lower than the 12 per cent tax-GDP ratio attained three years ago. When your tax-GDP ratio is coming down at a time when the concentration of wealth is increasing, you are certainly not following a policy of inclusive growth. On the other hand, there are increases in indirect taxes. What are these taxes? I don't mind if air-conditioned liquor bars are taxed. I don't mind if high-end hotel stays are taxed. I don't mind if big cars and SUVs are taxed. I would support that tax. I would support that kind of tax on articles of luxury. I believe the rich, if they want, can pay for it. We want to curb ostentatious expenditure. I don't mind that. But your indirect tax regime is taxing school children's exercise books, stationery, etc. I am from West Bengal. We eat muri a lot. I don't know whether you ever had puffed rice. You come to Kolkata, Sir. We can give you some very good jhal muri. Even jhal muri will become much more expensive. Then there is the health tax. It can be called "aswasthata kar". That is, under the UPA-2 Government, don't dare to fall sick because even your sickness is going to lead to a tax. Suppose I am a diabetic patient or I am a heart patient or I have got some other problems which need diagnostic test. Even in these cases I have to pay five per cent service tax at a time when we are absolutely incapable of strengthening our health infrastructure to ensure free health services to our people. This is very cruel. I hope that because of the outrage which this particular "aswasthata kar" has invoked throughout the country the Finance Minister is going to withdraw this.

 

A 10 per cent excise duty has been imposed on ready-made branded garments. This word "branded" is really misleading. When I first heard about it, I also thought that if the rich was going to pay for the branded garments why we should bother about it. But when I went into it a little detail I found that our West Bengal Chief Minister had also written a letter to the Finance Minister soon after the Budget. What does it mean? It means that any small garment manufacturing company which has a label to its garment has to pay 10 per cent excise duty. This is an industry which is providing employment to lakhs of people. Therefore, please differentiate between the small and the big manufacturers as far as "branded" garments are concerned. You have FTAs with SAARC countries. What is going to happen? All the big manufacturers will go across the border, manufacture garments there and bring them back. You have no import duty on these ready-made garments. So, the Indian small manufacturers are going to suffer and those who can afford it are going to bring it cheaper through the SAARC 'no duty' route, and it is going to affect the Indian market and shirts, lungis, vests, hosieries and other things are going to cost more. Therefore, I would ask him to reconsider it.

 

The other aspect which I want to raise this is the reduction of import duty on raw silk. Why I say this is because there is a misconception that this is really going to help the handloom sector. It is not so. Handlooms are not using imported raw silk. So, there should be no misconception on that. Yes; it will help certain powerloom units in Tamil Nadu and, to a certain extent, in Uttar Pradesh. I have no objection to that. But what about the sericulture farmers? What is going to happen to them? You know, Sir, in Karnataka, there is a big sericulture industry. I know, in West Bengal, there are so many small farmers involved in sericulture. It is going to wipe them out. Chinese silk is going to come in a big way, and our own farmers are going to suffer. Therefore, I would request the Government to relook at that.

 

Then, I come to a tax which should have been removed, and which was not removed. And, that is the petroleum tax regime. This is very important when we talk about price rise. Petroleum taxes are something about which, I believe, this Government is not giving the full picture. They are very selectively giving statistics to the country and, therefore, misleading the country. We are being told, "What can we do? We are suffering a huge loss." That is simply not true. We are paying 48 per cent in taxes for one litre of petrol. And, on one litre of diesel, we are, approximately, paying 32 per cent tax. What does that mean? It is giving huge revenues to the Government because there is also an element of ad valorem tax on this. So, in a single year, the Government of India has benefited, in revenue mobilization, through this tax regime on petro products, to the extent of Rs.1,11,000 crore. This year, according to the latest figures of the Petroleum Ministry, the revenue is going to go up by another Rs.25,000 crore, that is, to approximately Rs.1,35,000 crore. Therefore, I say that it is completely wrong and anti-people on the part of this Government to continue with this tax regime. Therefore, I would request that the present tax regime on petroleum products be changed and that the people are given relief because, as we all know, high prices of petroleum and the deregulation of petrol prices, have further fuelled inflation. Therefore, remove these taxes on petroleum.

 

I would now like to come to a crucial aspect in this Budget, and that is the cuts in subsidies. We know the chorus of voices from corporate India saying, "Cut subsidies; cut subsidies." And, they have started cutting subsidies on fertilizers and on kerosene; and, on food. What about fertilizers? At a time when farmers of country are in such acute distress - you have two lakhs cases of suicides of farmers staring you on the face - and you are removing subsidies and substituting with the so-called Direct Cash Transfer. I want to come to that later. What exactly is going to happen when this cut in subsidy starts working? The first point is that the prices of fertilizers are going to shoot up. Today, it is Rs.5,300 per tonne of urea. The global price today is Rs.16,000 to Rs.18,000 per tonne of urea. We are importing, approximately, 70 lakh tonnes every year. We are not using our entire installed capacity which is about 200 lakh tonnes. Seven fertilizer units in India are closed down. The Government is doing nothing to open them, and we are importing fertilizers. What does this mean? Once you remove the subsidy on fertilizers, the fertilizer prices are going to shoot up. And, I know, Sir, that this Government wants to introduce private participation in the fertilizer sector. They are waiting for that. They are waiting for complete deregulation of the fertilizer sector. Just as you did with petrol, you are going to do it with fertilizers and you are going to make farmers suffer. Therefore, I entirely oppose this cut in fertilizer subsidy. It is an anti-farmer step and I demand that the Government should withdraw this cut in subsidy.

 

What is this direct cash transfer? We had Abhishekji yesterday saying it is very good, Brazil has done it, Mexico has done it and all Latin American countries are going in for it; what is wrong with it? Please understand what has happened in Brazil. In Brazil, direct cash transfer is a supplementary income to the worker whom they consider is living in poverty. It is a supplement. There, it is not substituting Government's provisioning of essential services. We are not against such direct cash transfer in principle. You give it to a widow; you give it to a disabled person. We are giving it in Bengal to workers of closed factories. That is direct cash transfer. We have nothing against that aspect of it. 

 

What are we opposing? We are opposing direct cash transfer as a substitute and replacement for the Government's responsibility to provide subsidised essential services. That is why, Sir, we know what this direct cash transfer is. What is your BPL line? You are going to give it to BPL families when your BPL estimates are so very dubious! You are going to exclude people from cheap foodgrains. Moreover, suppose you are giving cash for a particular commodity. You give money to a family. In India, in a patriarchical society, do you have any guarantee that the money you give to a family would go precisely for that? If you are going to give money tomorrow for food, do you have any guarantee that it would go only for food and not for something else? Therefore, we oppose direct cash transfer and we ask this Government not to follow this agenda of retreating from the basic responsibilities of a welfare State.

 

I now come to this whole point of cuts in expenditure. I have a whole list here of cuts in expenditure. I know that this Government is claiming that we have increased expenditure on social services it by 17 per cent, etc. If you factor in inflation, then it is not so much. In any case, even according to the Economic Survey, at page 294, if you look at the percentage of GDP, the expenditure on social services has been coming down over the years as growth has been going up. Last year, in 2009-10, the expenditure was 7.27 per cent; in 2010-11, the

expenditure came down as part of the GDP - and I am talking only about social services - to 6.63 per cent. This year, it is around the same as it was last year. So, that is what I said when I mentioned expenditure compression. I would like to share with the House a calculation made by the Centre for Budget and Governance Accountability; they have calculated what the total expenditure on the rural economy - they include agriculture and allied activities, rural development, Special Area Programmes, irrigation and flood control and village and small industries. If you take it all together it has declined from 2.8 per cent of the GDP in 2010-11 to 2.3 per cent of the GDP in 2011-12. Is this inclusive growth? On rural development, you have cut the Ministry's budget by Rs.2,000 crore. Is this inclusive development? On MGNREGA, you are saying that you are

going to link wages with the price index. Yet, the allocation for MGNREGA has been cut by Rs.100 crore. Is this inclusive development? We talk about the food security legislation. We are hearing different versions of the food security legislation. We have been demanding a universal public distribution system. We are demanding that the stocks which are there, 2.7 times over what the buffer stock is, should be distributed to the States. But, what are you doing? You have actually cut the food subsidy by Rs.27 crores. I ask you, is that inclusive development?

 

There are many other examples. But, I would specifically like to come to the issue of the Scheduled Castes, the Scheduled Tribes and women. Sir, as far as the Scheduled Tribes are concerned, we had met the Finance Minister and requested him to monitor what the Planning Commission's guidelines were on the Scheduled Tribes Plan, the TSP and the Scheduled Castes Component Plan. It is supposed to be population proportionate. Unfortunately, far from being population proportionate, this year also, for STs, it is around 5 per cent, while it should be 8.2 per cent. For SCs, it should be at least 16 per cent but it is only around 9 per cent. The gap in terms of money is over Rs.30,000 crores. In other words, if the entire component as a proportion of their population had been there, it would have been that much more. I request you not to discriminate against these sections. Affirmative action is essential. I had made this point earlier and I would repeat it again that do not divide tribal areas into Maoist-affected and non-Maoist-affected. This is the most absurd proposition of this Government. All tribal areas deserve development. Why are you giving only Rs.25 crores in the name of 'Maoist-affected'? Are you going to give it for the police? Then make it clear that you are going to give it for security purposes. If you are giving it for tribals, do not discriminate between tribals living in Maoist-affected areas and non-Maoist affected areas. It is not going to help the tribal population. 

 

Sir, I would also like to speak about the minority issue. What has this Budget got for minorities? Apart from something for some educational institutions - which is very good and we support that - there is nothing. But, what has it got for minorities? One of the biggest programmes for the minorities is the multi-sectoral

development plan (MSDP) for minority districts because the Sachar Committee has shown that where the Muslims live, it is one of the worst areas as far as civic facilities and infrastructure are concerned. Therefore, the allocation must be increased. Sir, what does this Budget do? The allocation for the most important component of that plan, the MSDP is actually cut by Rs. 100 crore. Is that fair? Is that just? Is that inclusive? 

 

The Prime Minister's 15-point new plan talks about increasing employment opportunities for minorities. The Ranganath Mishra Committee Report is there, they have given their recommendation. They have recommended reservations for Muslims in jobs because a large population of Muslims are socially and economically backward. Therefore, they require that affirmative action. Why do not you implement it? We have tried to implement it. We have taken steps in West Bengal to try and implement it. I hope that the Government of India will take a leaf out of the West Bengal Government's efforts to empower minorities in the field of increased employment rights and I hope that they will do that at the Central level also. 

 

Sir, the last point that I would like to make is a point which is very close to my heart, and that is the issue of women in the Budget. I will say I am happy that Anganwadi Workers' and Helpers' salary has been doubled. I welcome that, and I also hope you will take one step more by giving them a pension. There are 50 lakh ASHAs and Mid-day-Meal Scheme Workers. All of them find no place whatsoever in this Budget. Their work is sewa of the nation. They get only a pittance of Rs.500 per month.

 

I would especially like to mention about the 43 crore workers in the unorganised sector and the home-based sector, a large section of whom are women. Sir, these are those women who are sitting at home. For example, this bindi which I am wearing is made at home. The women are putting this bindi on a cellophane piece of paper and packing it. Sir, for the whole day's work, they are not getting more than seven to eight rupees. They are not at all on the Government's agenda. Their work is not reflected in any calculation. Their work is not reflected in any laws. Therefore, Sir, I demand that the large number of women in the unorganised sector and unorganised sector's workers, in general, who are being deprived of social security should be covered. We do not want these insurance schemes which they are giving, which are only going to help the big private insurance companies, and you are insisting on contributions from these workers. Therefore, we want a proper social security scheme; we want laws for all these women, Sir. These are the working women of India. The Lakshmi that Pranab

Mukherjee ji was praying to. 

 

In conclusion, Sir, I would refer to the last sentence in the Finance Minister's Speech. He had said, "With oneness of heart, let us all build an India, which in not too distant a future, will enter the comity of developed nations." Sir, there can be a oneness of heart only when there is equality and justice. You cannot have a oneness of heart when two-thirds of India lives in the darkness of myriad deprivation. Let the Government reverse its deeply-flawed policies based on the neoliberal framework which has led to crony capitalism, which has created huge social inequalities and concentration of wealth. It is only then that India will indeed have a oneness of heart and be able to advance towards realizing its full potential. Thank you, Sir.  (Ends)