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Saturday, February 28, 2015

Modi government's Budget for 2015-16 carries forward more aggressively the neo-liberal economic agenda of the earlier UPA government: CPIM

Press Statement

The Polit Bureau of the Communist Party of India (Marxist) has issued the following statement:

On Central Budget 2015-16

Modi government's Budget for 2015-16 carries forward more aggressively the neo-liberal economic agenda of the earlier UPA government.  The rich, both foreign and domestic corporates, have been hugely benefited.  The budget proposals will reduce direct taxes by Rs. 8,315 crores benefiting the rich and increase the burdens on the people through indirect tax hike of Rs. 23,383 crores.  Apart from direct tax benefits, in addition, wealth tax has been abolished, corporate tax targeted to reduce from 30 to 25 per cent, greater concessions and access to FDI and FIIs, absolved of capital gains tax and minimum alternate tax (MAT).

Instead of expanding public expenditures to stimulate growth, employment and people's livelihood, these expenditures are being squeezed.  Already in 2014-15, total government expenditure was 7 per cent lower than the last budgeted figure, i.e., 1.14 crore rupees less.  For 2015-16, the estimated gross tax revenue stands at 10.3 per cent of GDP which is less than last year's budget figure of 10.8 per cent. Expectations of  "tax buoyancy" by FM is, hence, pure imagination.

The much tom-tomed higher allocation to the states in the name of "cooperative federalism" is nothing else but transferring the amounts from the Central schemes to the states.  The total transfers to the states, including loans and grants, as a share of GDP will, in fact, be lower than what was budgeted for 2014-15.

With the pre-occupation to contain fiscal deficit at 3.9 per cent, the budget undermines the need for stimulating domestic  demand by targeting social sectors.  The allocations to MNREGA and food subsidy has almost stagnated, in real terms, which shows that the government is not at all serious in implementing food security and generating employment. Total subsidy as percentage of GDP has come down from 2.1 percent to 1.7 per cent (Rs. 2.60 lakh to 2.44 lakh crore). The allocation for health and family welfare has come down from Rs. 35,163 crores last year to Rs. 29,653. The total budgeted figure for housing and urban poverty alleviation has come down from Rs. 6,008 crores to Rs. 5,634 crores. Similarly there is a huge shortfall in allocations for the Tribal Sub-Plan - 5.5 per cent instead of the mandated 8.2 per cent (less by Rs. 5,000 crore compared to last year). For SCs it is 8.34 per cent instead of the mandated 17 per cent (less by Rs. 12,000 crore). Even in absolute nominal terms these allocations have been cut. The Gender Budget too has been severely cut by 20 per cent (less by Rs. 20,000 crore). The ICDS programme has been halved from over Rs. 16,000 crores to Rs. 8,000 crores only.

On the other hand, the reduction in the revenue loss tax concessions given by the Central government to the rich (subsidies to the rich called "tax incentives") are more than the actual fiscal deficit (i.e., Rs. 5,89,285.2 crores for 2014-15 as against the budget estimate of fiscal deficit of Rs. 5,55,649 crores).  Hence, our economy is suffering from a deficit burden primarily due to such subsidies to the rich, not due to subsidies for the poor.

In order to bolster further revenues, the budget has announced an aggressive disinvestment of public sector to the tune of Rs. 70,000 crores.

In sum, this budget while providing a rich bonanza for the rich - foreign and domestic corporates - ensures further widening of the already large income and wealth inequalities amounting greater burdens on the people.  So much for the slogan of achhe din aanewale hein.

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