Modi government has presented its second budget (for the financial year 2020-21) at a critical juncture when the Indian economy is passing through the biggest-ever crisis since Power Transfer. GDP growth rate plunging to 4.5 percent and consumer-price inflation hovering around 7 percent, economists have acknowledged Indian economic situation as a typical case of stagflation — defined as a persisting economic stagnation coupled with accelerating inflation.
This historic economic collapse has been the result of unprecedented concentration of India’s wealth and income with a small number of most corrupt corporate billionaires who having little interest in taking up employment-oriented productive activities are always oriented towards mad rush for making maximum gain from all kinds of speculation within the shortest time possible. And the immediate factor that paved the way for this situation has been the past six years of far-right corporate-fascist policies including the pumping of several lakh crores of public money directly in to corporate coffers by Modi regime. Instead of doing anything to reverse this anti-people and anti-national trend, under the cover of the catchword “Aspirational India”, the very orientation of 2020-21 Budget is to further aggravate this corporatisation-induced stagflation.
Sector-wise, agriculture whose share in GDP is around 15 percent is still the source of sustenance for almost half of the Indian people. At a time when the anti-peasant credit and adverse input-output pricing policies are driving peasants to mass suicides, rather than putting forward concrete proposals for uplifting farmers from growing distress and destitution, finance minister’s talk of doubling agricultural income by 2022 through a 16-point program, that too at a time when agricultural growth rate is negative, lacks credibility and is devoid of required substantiation.
All subsidies and cash payments pertaining to seeds, fertilisers, pesticides and support prices are drastically cut down. Agricultural procurement by government agencies is curtailed and scope of FCI is scaled down. On the other hand, targets of 2.83 lakh crores of budget allocation for agriculture and allied sectors, 15 lakh crore agri-credit availability for FY 2020-21, etc. are intended for the so called “elite” farmers connected with corporate agriculture and agri-business operations. An unprecedented agricultural corporatisation with its orientation on contract and lease farming led by both foreign and Indian agribusiness giants is the running theme in the budget with respect to agriculture. And they are given unfettered freedom for hoarding and futures trading in agricultural produce. “Kisan trains” with refrigerated coaches as well as proposals for launching “Krishi Udan” on domestic and international routes are all in the interests of corporate-agribusiness companies.
The traitorous essence of the pseudo-nationalism of RSS is more evident in the budget proposals regarding industry and infrastructure. Without any qualm, the budget has replaced the much trumpeted “Make in India” program propped up by Modi himself by the new catchword “Assemble in India for the World” in accordance with the “Global Value Chains” hypothesis put forward by World Bank in its latest World Development Report. After all, contrary to the claim of boosting the ratio of manufacturing to GDP from 17 percent to 25 percent through FDI-oriented “Make in India” initiative under Modi-1, what took place has been a further collapse of the manufacturing-GDP ratio to below 13 percent, as whatever foreign capital that came was interested only in money-spinning speculative activities than building up manufacturing industries that require long gestation period.
Accordingly, the budget repeatedly refers to the need for concentrating on transforming India as a cheap-labour link in the “global assembly line” led by MNCs. In conformity with this, the budget has given added emphasis on “ease of doing business” also promulgated by World Bank for attracting FDI not only in industry and infrastructure but in the service sector too. Accordingly, the budget, along with carrying forward a host of tax exemptions to profit repatriation, for quick decision on easing foreign capital inflow, an Investment Clearance Cell is also announced in the budget.
In accordance with neoliberal-corporatisation diktats, PPP projects, which are among the most suitable form of corporate plunder of national wealth and public money today, are unleashed in all infrastructures ranging from highways, railways and airstrips and violating all precedents, even education and hospital construction are opened up for FDI. In continuation of the last year’s budget proposal, a PPP model investment of Rs. 103 lakh crore composed of more than 6500 projects (National Infrastructure Pipeline Projects) across sectors led by foreign and domestic corporates is envisaged up to 2024. Most profitable railway lines are to be privatised and 150 more trains along the most profitable routes and 4 major stations are set apart for corporate looters. 100 new airports are to be constructed based on the same policy. Several express highways, economic corridors, smart cities, suburban railways, etc. will also be developed on PPP basis, such that the whole money required will be provided by government and as loans (which will eventually be converted as NPAs) from public sector banks, even as the projects will be operated and owned by the private party.
And compared with the previous budget, disinvestment target is more than doubled and is pegged at more than Rs. 2 lakh crore for the fiscal year 2020-21. In continuation of the sell-out of BPCL, Air India, etc., even LIC which having assets worth Rs. 32 lakh crore and that handed over profit share of Rs. 2610 crore to government in the preceding year along with IDBI are also set apart for sale at throw-away prices. In the guise of creating ‘investor-friendly” atmosphere, corporate cronies are given unprecedented tax give-aways, liberal tax exemptions and cut in corporate tax rates. For new corporate entrants, corporate tax rate is further brought down from 22 percent to 15 percent-the lowest in the world today. Corporate companies are exempted from paying Dividend Distribution Tax (DDT) too, which alone will inflict an annual revenue loss of Rs. 25000 crore. Financial speculators interested to fund infrastructure projects will be given 100 percent tax concession. Though audit exemption for medium-small traders having a turnover up to Rs. 5 crore is announced, the benefit is available only for those adapting to cashless transactions using digital tools monopolised by global software giants. For decriminalising economic offences committed by corporate cronies, the budget proposes to amend the Indian Company’s Act altogether.
Obviously, this unprecedented corporate-friendly measures offered to foreign capital should be seen in the context of the utter failure on the part of domestic corporate billionaires to invest in manufacturing in spite of several lakh crores of worth tax exemptions and wealth transfers showered on them during the last few years. Rather than investing this huge amount in job-generating activities, the corporate thugs are using it for gobbling up PSUs at throw-away prices or diverting the amount to speculation and money-spinning activities, leading to economic stagnation. Not only corporate investors, but even banks, financial institutions and mutual funds are reluctant to deploy the immense funds at their disposal for productive investment. It is in this context that, under ‘expert’ advice from neoliberal centres, red carpet is laid down for attracting foreign capital through a number of investor-friendly measures. However, given the logic of corporate capital, the situation is to go from bad to worse.
Thus, while the budget resorts to all efforts including unprecedented corporate tax exemptions to fill the coffers of the most corrupt superrich billionaires, some window-dressing is also done by altering personal income taxes affecting the middle classes. On the other hand, all public investments and social welfare spending including that of MGNREGA are drastically cut down at a time when vast majority of the toiling masses are subjected to unprecedented destitution and devastation. MGNREGA allocation is Rs. 61500 crore compared with Rs.71000 crore in the last budget and in view of rising inflation the real reduction will be much larger. Same is the case with disbursement under PM-KISAN project. For the landless peasants, agricultural workers and even for marginal farmers, these two schemes in spite of erratic disbursement are a source of sustenance in many parts of the country.
Similar is case with budgetary allocations to health and education. While BJP-ruled states like Gujarat and Himachal Pradesh are allotted more central share of taxes and grants, allocations to non-BJP ruled states are withheld or curtailed. Even as the current year GST collection of Rs. 6.12 lac crore is less than the expected Rs. 6.63 lakh crore, the states’ share is yet to be disbursed. At this critical juncture when economy is in stagnation, instead of raising all round governmental spending, Modi regime, at the behest of neoliberal masters is engaged in a downsizing and rollback of the government’s economic intervention. As its manifestation, total budgetary spending for 2020-21 fiscal year at 13.5 percent of GDP is less than the 2019-20 spending of 13.6 percent of GDP, a decline in even in nominal terms. However, on account of the current 7 percent retail inflation, this implies a huge reduction in public expenditure in the coming year.
Of course, since Modi had already dissolved the Planning Commission, there is little meaning in talking about annual plans, etc. or the inseparable and inherent link between planning and budget in India. Consequently, under the far-right Hindutva fascist regime the budget itself has been reduced to the level of a mere Annual Financial Statement. As such, the so called central plan outlay has been steeply reduced by 11% relative to the revised estimates of the previous budget. In the same manner, outlay for centrally sponsored projects has been reduced by 4.5%. Meanwhile, defence outlay is raised to a whopping Rs. 4.71 lakh crore in 2020-21 to 4.3 lakh crore in 2019-20. One-third of this will directly go into the pockets of Western arms manufacturers and dealers, as India is a dumping ground for obsolete weapons as well as a flourishing source of corruption today.
No wonder, there is little mention on the frightening unemployment situation, mass suicides of peasants, sky-rocketing prices, pauperisation and deprivation of the broad masses, horrific levels of inequality and galloping corruption. State of the economy and crucial questions connected with people’s sustenance are camouflaged through statistical juggleries and data manipulation and the only concern of the budget, in the guise of development, is to maintain the profit rates and wealth accumulation by the crony capitalists most closely aligned with the Hindutva fascist regime. Thus under the cover of populist and high-sounding words, Modi.2’s budget is putting still heavier burdens on the backs of working and oppressed people.
While neoliberal-corporate centres and agencies such as the Moody’s investors Service, KPMG, PwC, NASSCOM and so on are eulogising the budget as “positive”, “reasonable”, “focussed”, etc., both in form and content, with this budget, the economic situation is going to worsen further. A few days before the budget, Arvind Subramanian, India’s former chief economic adviser, whose difference with Modi regime was only at the level of implementation of neoliberal policies, has opined that the Indian economy is moving towards ICU. However, Modi.2’s second budget is, in fact, further pushing it from the ICU to the ventilator.