The Central Budget 2014-2015

The orientation of the budget presented by Arun Jaitley, the Finance Minister of the Narendra Modi government at the centre has, quite expectedly, been to serve the corporate tycoons, who had thrown their entire weight behind Narendra Modi on the occasion of the recent parliamentary polls. One major thrust of the budget is the emphasis on SEZs (Special Economic Zones). It is clear from the experience of the last two decades that the SEZs, which are alternatively called Slave Economic Zones or Special Exploitative Zones, have fattened the big business, both foreign and domestic, at the expense of the workers as well as of the state exchequer. The workers have got no rights and have been compelled to work at low wages owing to lack of alternative job opportunities, while liberal concessions have been granted to the 'developers'. The result is a multiplication of the number of billionaires (in terms of dollars). Now Narendra Modi's government is going to expedite the process; more tax concessions and other reliefs, e.g. forcing the workers to toil at lower wages for longer working hours. Those economists who have called the earlier regime a subsidy regime, were apparently not satisfied with the facilities given by Manmohan Singh's government to the corporate houses, they wanted more freebies to be given to those whose interests they were serving. Now they should rejoice; Narendra Modi has done what they wanted him to do.

There is no allocation for the MGNREGP (Mahatma Gandhi National Rural Employment Guarantee Programme), although it has been said that wage employment could be provided under NREGP through more productive and asset-creating works. The NREGP had increased the bargaining power of the rural labourers and also somewhat expanded the domestic market for mass consumer goods. The running of the NREGP is, however, very much unplanned in many areas and it should be accepted that it has not been able to create rural productive assets to the desired extent and to that extent the supply constraint in respect of mass consumer goods has remained. But it is a quite logical proposition that with some quantities of capital and intermediate goods like bricks, cement, iron implements etc, this programme can be used for the construction of rural assets, as Professor Amit Bhaduri and some others have persuasively demonstrated. Those who, on the other hand, want the NREGP to be abandoned have a hidden agenda; they want the money thus saved to be used to subsidize the investors. They are deliberately deaf and dumb; otherwise they would have taken the Bhaduri thesis seriously. They are also silent on the findings of the Arjun Sengupta Commission, which drew attention to a matter of serious national shame, namely that about four-fifths of the population go undernourished from year to year. Arun Jaitley's virtual abandonment of the NREGP must have provided these deaf and dumb persons a ground for rejoicing. Another aspect of the budget is the emphasis on the Foreign Direct Investment. In the insurance as well as in the vital defence sector, the legitimate share of the FDI has been raised to 49%, instead of the current 26%. In the other sectors too, there has been liberal concessions to FDIs. The patent argument is that with more investment, the unemployment problem will be wiped out. Those who have some acquaintance with the international economic situation can well understand that the enterprises that foreign companies build in India give more emphasis on reduction of labour costs in order to increase the competitiveness of the goods produced by them. So, it is highly unlikely that the problem of unemployment, which is really staggering, will be reduced in any significant way. Abandonment of the NREGP on the other hand, will definitely intensify the problem of rural unemployment. So, one will not be utterly mistaken if one suggests that the central budget is patently anti-people. Obsession with growth in a milieu in which billionaires hold sway must increase inequality.

Some sops have been given to the well-to-do sections of the middle classes in the form of income tax concessions in order to encourage household savings, which is likely to ease the situation in the capital market. But this has nothing to do with the conditions of the lower strata of the society. It is interesting as well as intriguing to observe that what the Finance Minister has done has not satisfied all the parties that had placed a great deal of hope on Modi. For example, the share market has responded negatively. In the case of raising the FDI to 49% in defence manufacturing, one lobby is arguing for 51% FDI with control vested in the investors. It is also curious that the allocation for the purchase of military hardware is nearly twice the allocation on health and education combined. They are now interested in more IITs and IIMs. India presently has 16 IITs and 13 IIMs. Mr Jaitley is going to add more IITs and IIMs, possibly five in each category. But school education, however, has got about a 10 percent increase compared to the previous year—to be specific, Rs 55,115.1 crore has been allocated for this, inclusive of literacy programmes and other schemes.

An amusing feature of the budget is the allocation of Rs 200 crore for constructing a 597 feet high statue of Sardar Vallabh Bhai Patel in Gujarat. This is understandable. Patel was not a leader of the Jan Sangh or RSS but among the Congress leaders of immediate pre partition India, his proximity to the ideology of Hindutva was greater than that of all others. Besides, he was possibly closest to the Indian monopolists than other prominent Congress leaders. To sensible and reasonable Indians, however, this may well appear a totally wasteful expenditure.

Vol. 47, No. 3, Jul 27 - Aug 2, 2014