The Union Budget 2020-21

It was hardly expected that a government that refuses to recognise the gravity of the economic situation would do something spec- tacular to lift the economy out of trouble, but one could at least expect that it would take some steps to boost the purchasing power of the majority of people. But that has not happened. The actual figures of revenue collection has fallen short of the revised estimate by more than half a trillion rupees, and hence the government, in order to make both ends meet, has enforced large cuts in food and public distribution, agriculture and transfers to state governments. The MNREGA was a crucial variable in boosting rural income and had the potential for increasing rural productive assets, if implemented with a little judiciousness. But the allocation for it was already inadequate and has this year been further reduced. They are determined to wipe out whatever the so-called 'welfairism' exists.

Taken as a whole, the crisis is a crisis of demand that can be solved only by large doses of public investment with less capital-intensive technology. Such a measure can increase the income of the poor and underprivileged who spend almost everything they earn just to survive precariously. A short time ago, the government announced a large cut in corporate taxes, hoping that this would significantly raise private investment and create more employment. But private investment did not rise at all, let alone creation of employment. The reason was lack of demand for goods and services, and private capitalists are not going to spend their increased wealth and income on consumption of goods. When the employment situation is grim and many of the already employed are suffering from a sense of uncertainty about the future, the propensity to spend on essential commodities is bound to fall. This under consumption riddle is bound to affect the employment situation further in an adverse manner. Yet the government sticks to the same foolish position obstinately.

Of this, no better evidence is provided than by the allocation for irrigation, which is only Rs 50 crore. Maybe it is a big joke for a country like India. This is certainly a grand plan for doubling farmers' income within two years! Taxing the super rich is also a horrifying and 'anti-national' idea—after all they matter in every policy framing.

The budget offers massive cash support to banks that are suffering from the liquidity crisis caused by non-performing assets. But it has not yet shown any real intention to punish big bank defaulters. Rather it wants to hand over institutions like the Life Insurance Corporation of India, which has over time established a good record in serving the interests of customers, to private hands, who want superprofits.

As a well-known English daily, in its editorial of 2 February, aptly comments, "There is no evidence in the budget that those who are unable to buy biscuits or other essentials are going to have more incomes or transfers to spend from".

Now the rulling official party, in order to cover their failures and silence their critics, will spread their fake nationalism and intensify their war hysteria. Their bovine economic ideas had established their credentials as true sons of 'good days and growth for all'.

This budget is long on words but short on numbers. The government seems to have devised a plan to remove all Income Tax exemptions in the long run and it will adversely affect the lower middle-class people and senior citizens; for all practical purposes Modi's 2020 budget exercise is totally corporate friendly.

Meanwhile Kerala, Telengana, Andhra Pradesh hit out at Modi government over tax share decline. But the Modis have decided to do the way the corporate houses scripted the pattern of development. The hard reality is that people are increasingly losing interest in Budget because it does hardly serve their interest.

02.02.2020

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Frontier
Vol. 52, No. 33, Feb 16 - 22, 2020