Budget 2015-16

India lives in corporates. That is precisely the message of Narendra Modi government's first full-fledged maiden budget for 2015-16. It was only to be expected that this year’s budget would be pro-corporate, because it was the corporate lobby that had chosen Narendra Modi as its blue-eyed boy. The expectations of the corporate houses have, however, been fulfilled only partly. The Union Finance Minister has reduced the rate of corporate taxes from 30 to 25%, and the corporate lobby should now additionally have many billions of rupees for ‘investment’. Besides, the affluent urban middle classes have been given some additional tax saving concessions, and wealth tax has been abolished. The commodity service taxes having been raised, a host of goods and services will now become costlier. Concessions to the corporate sector may sound peculiar to many, particularly in view of Finance Minister Arun Jaitley's determination to bring down fiscal deficits. Of course, the resolve to going down the fiscal deficits has been taken against the background of considerably lower international oil prices and good monsoon.

But it is not peculiar. While the commodity service taxes have been raised, public expenditure has been slashed. The reduction of overall government spending is not much, but the slash in various social sectors is remarkable. The allocation for school education has been slashed by as much as 23%, which simply means that the government is no longer much interested in improving the state of government-run or government-aided primary and secondary schools, and wants to leave the subject of primary and secondary education to the market. It implies that the under-privileged sections who cannot afford to send their children to private schools will find the already existing burden of inequality more burdensome. The allocation under the Indira Awas Yojana has come down by as much as Rs 80 billions from 180 to 100 billions. The allocation for women has also been slashed by as much as 25 %.

The allocation for child development has been reduced drastically, by as-much as 56%. The allocation for health and family welfare has been reduced by 16%. Those who are familiar with the pathetic conditions of government hospitals, particularly of block-level and primary health centres, of the country—most of the medicines have to be purchased by patients from outside shops and various tests have to be conducted in outside clinics—can understand that what is urgently necessary is an increase in allocation for the official health care system. But the Modi government, by reducing the allocation for child development and health, has shown that it hardly cares for what is called human development. Many more millions of people, thanks to the official policy, will be forced to go to private practitioners and private hospitals, pay exhorbitant fees and thus to be pushed below the poverty line. Its focus is still on growth and the fraudulent ‘trickle down’ theory. The estimated growth rate for 2014-15 has, however, been changed by using different parameters. This is, to be sure, a paper revolution. The example of ‘vibrant Gujarat’ is an exposure of the ‘trickle down’ theory. Gujarat has witnessed trillions of rupees of investment in recent times, but in terms of employment creation its record is dismal, less than 1%. Besides this ‘jobless growth’ it remains a middle-ranking state in terms of physical quality of life index. The genocide in Gujarat in 2002, after which Praveen Togadia, the VHP leader, proudly claimed that their Gujarat experiment had been successful, had taught the BJP that communal polarization, if successfully created, can help them win electoral battles and push their own agenda of growth and saffronism concurrently. But the recent Delhi election has stopped the juggernaut and Narendra Modi and his friends seem to have realized that whatever the real agenda, an outrageous exhibition of it may antagonize a large section of the electorate, who cannot be necessarily won back by corporate-backed propaganda.

Possibly this realization has made the Central Government think twice about the proposed abolition of the NREGA. Although the allocation for rural development has been slashed, that for the NREGA has been increased although nominally. Certainly this has not made the corporate lobby and their ideologues like Jagdish Bhagwati and Ashok Sanjay Guha happy, and they are unlikely to stop their crusade.

That the corporate lobby and those who believe that the policy of wooing big capital is the key to economic growth are not much happier—they wanted more concessions.

However, Prime Minister Narendra Modi is not happy with Finance Minister’s ‘limited’ benevolence to the big business corporations. He expected his Finance Minister to do more to boost industry.

This sense of dejection indicates that Narendra Modi is going to face more corporate pressure in the days to come. How he manages the situation-the Gujarat model cannot be replicated everywhere in the country—remains to be seen.

Vol. 47, No. 36, Mar 15 - 21, 2015