[Marxistindia] Budget 2020-2021: Deepening Economic Distress

[news from the cpi(m)]

01 February 2020
Press Statement
 
The Polit Bureau of the Communist Party of India (Marxist) has issued the
following statement:
 
Budget 2020-2021: Deepening Economic Distress
 
The Budget Speech of the Finance Minister reveals that the Government is
clueless about how to address the crisis gripping the country's economy.
Instead of a coherent policy direction addressing the problems head on, what
was delivered was a two-and-a-half-hour monologue in concealing the
realities of a floundering economy. Despite devious attempts to manipulate
data, the economic crisis showed up in the budget numbers. These reveal that
the Modi Government is only interested in providing the corporate sector and
the wealthy relief rather than tackling the increasingly grim employment and
livelihood situations of the working people - workers, farmers and those
forced into self-employment - which is the root cause of the slowdown.
Instead of spelling out a programme for increasing spending to address the
problem of demand and resource mobilization to address the crisis of
revenues, the Budgetary exercise reflects only a commitment to reducing the
fiscal deficit by further slashing government expenditures and selling off
the nation's assets to big corporates, the burden of all of which will be
felt by working people.  
 
The first clear manipulation in the Budget is in the revised estimates of
revenue figures. Revised Estimates (RE) figures show that the revenue
collections in 2018-19 are way below the Budget Estimates (BE), still they
underestimate the extent of the shortfall. The RE figures of Central Tax
Revenues are incompatible with the actual collections reported by the CGA
for April-December of 2019-20. A realistic RE would have shown a further
shortfall of close to 1.5 lakh crores in gross revenues from central taxes.
This act of concealing the real revenue situation has been combined with not
revealing in the RE figures the actual cut in expenditures that would be
finally administered in order to meet the fiscal deficit target when
revenues turn out to be less. This is a repeat of what was done last year
too.  Projections for the 2020-21 financial year reflect the same bias of
inflating revenue projections while allocating expenditures which would not
be met.  
 
Even after the manipulations, the RE revenue figures for 2018-19 are 2.98
lakh crores less than the Budget Estimates, Rs. 1.53 lakh crores of which
will be the hit taken by states in their share in central taxes. States have
also been threatened that transfers related to GST revenue shortfalls will
be limited to compensation cess collections. The RE figures of Central
Government expenditure also show massive cuts in several heads compared to
the levels budgeted. Despite this, the fiscal deficit is higher than what
was budgeted, the tragedy in which is that this is not the result of pursuit
of a policy of expanding demand in the economy. Instead, the expenditures on
Central Sector Schemes in 2019-20 has been slashed by 11 per cent and
Centrally Sponsored Schemes by 4.5 per cent - covering areas like - food
subsidies, agriculture and allied activities, Development of the North-East,
Social Welfare, Energy, etc. In the cuts proposed in 2020-21, MNREGA (Rs.
61,500 crore from Rs. 71,000 crore) and fertilizer subsidies are slated to
join this list. Even the flagship schemes like PMJAY-Ayushman Bharat, Swachh
Bharat and PM-Kisan have suffered major cuts. Allocations for the welfare of
scheduled castes and scheduled tribes, already way below the statutory
requirements, have been cut in 2019-20. The Gender Budget allocation for
2020-21 similarly shows stagnation. 
 
In the tax proposals, the FM announced further tax concessions to the
corporate sector and the rich (This comes when India's richest 1 per cent
hold more than four times the wealth held by the bottom 70 per cent, nearly
100 crore people). The earlier concessions given in corporate taxes have
already resulted in a shortfall of Rs. 1.55 lakh crores in RE as compared to
BE for 2019-20. A growth of 12 per cent over the inflated tax revenues of
2019-20 has been projected for 2020-21. Clearly, this means raising
resources from privatization and disinvestment - an increase from Rs. 65,000
crores (RE 2019-20) to Rs. 2 lakh ten thousand crores in 2020-21. This will
more than neutralize the increase in actual capital expenditure of Rs.
62,000 crores. Such is the desperation that government decided to sell its
shares even in the iconic LIC, the biggest financer of government schemes. 
 
Expenditures for 2020-21 are only 9.2 per cent over the budgeted figures for
last year, even though a 10 per cent increase in nominal GDP has been
assumed. Based on the experience of the last few years, even this amount is
unlikely to be spent to  maintain the fiscal deficit. Therefore, the Union
Budget instead of countering the slowdown will only reinforce the problem of
demand and deepen widespread economic distress.
 
The Polit Bureau of the CPI(M) calls upon the people to intensify protests
against the large-scale sale of our country's assets; the disinvestment of
LIC and insurance sector; unemployment, agrarian distress and further
hardships and miseries being imposed on the vast majority of our people.  
 
 
 
 
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