Editorial 1st Quarter 2021

 FIRE MAGAZINE EDITORIAL FEBRUARY 2021

                                   Chief Editor: Thota Hanumaiah

 

                                UNION BUDGET FOR THE YEAR 2021-2022

 

 The Orientation of Budget is definitely not in the interest of people and the economy of our country, as can be seen from the budget proposals. The pandemic COVID-19 has worsened the people’s lives and made the already limping economy to nose dive. The Government’s much hyped propagation of recovery of economy is nothing short of falsehood. The truth is that, even if the economy is going to recover, it only boosts the rich to become more richer and the poor to become poorer. It is a “Pro-Corporate Budget”, aimed at robbing the poor people of this country to enrich the corporates. The budget proposals will subject the people to unbearable miseries and to the insecure lively hood.

The Budget, aims at self sub-servience to both Foreign and domestic corporate finance Capital and is not at all a self-reliant Budget. This is because the budget targets a complete loot of our national wealth by selling the Indian people’s assets for raising Rs.1.75 Lakh crore.    As a result, our national wealth and assets are going to be privatised thereby, people lose their right on them. The ceiling on Foreign investment has been raised to 74% in the insurance sector. The Indian banks are targeted to be sold to foreign banks. The crucial point is that the wealth and assets so privatised and held by the foreign finance capital, may not be invested back in India since there is no such mandate to force them to invest in India. As such they may invest anywhere in the world, where they get higher profits. Therefore, the budget cannot be called as a good budget for either the people or the economy of the country.

The country is witnessing the surging protests of lakhs of Kisans on the streets demanding relief to the agriculture. The Government, instead of offering relief, reduced the subsidy on fertilisers, besides reduction in food subsidies. These decisions of Government, adversely, affects the Ration shops and the very Public Distribution System itself. In addition to that, the petrol and diesel subsidy is curtailed, when there is an inflation and overall price hike, besides, increasing the taxes on petroleum products. In spite of ever increasing unemployment the budget allocation for implementation of   M G N R E G Act, to provide rural employment, is reduced by 42%, which will further, escalate the unemployment. It is not all that, but, even in the matter of health care, the aspirations of people are belied, as the allocation for health care is also reduced in the budget.

Unless, the purchasing capacity of people is strengthened the economic recovery cannot be put back on track. This is possible only when there is a greater expenditure on the part of the Government, so that, greater demand can be generated and, in the result, the economic recovery comes back on the track. But, contrary to this, the government expenditure remains stagnant. On the other hand, the government is trying to hoodwink by quoting that the increase in the fiscal deficit is a sign of greater governments expenditure. But it is not at all true. The truth is otherwise. The truth is that, it is as a result of Revenue contraction in the previous year and not because of greater expenditure incurred by government. In reality, the expenditure would be much less than last year. The economic path pursued by the government may instead of reversing this recession, may end up in worsening the economic situation. Another hard stroke to the ailing economy is, the further reduction in the corporate tax rates, which may cause a loss of 1 lakh crore rupees to the exchequer. It is a stark reality that in this period hundred Billionaires increased their wealth by Rs.13 Lakh crore in the last 1 year. Now, we know clearly that the orientation of budget is for the growth of RICH and not for upliftment of poor and needy.

The government is going ahead with asset monetisation and privatisation as two focus areas in the budget to provide space for private sector to play in government sector. The government pursuing the anti-people policies by nationalising loss-making private units and privatising the profit-making government and public sector units.

 

All these worse economic set backs are taking place with government pursuing a logic that more concessions to capital will mean greater investment and more economic development. But it proves to be a flawed logic. Even if there is an increase in investment, and production is increased, then there has to be a demand in the market to ensure that production is absorbed. But, in reality there is no demand, because people do not have purchasing capacity to absorb the produce for consumption. Hence this form of investment widens the gap further amongst the people. Therefore, it is an undesirable model that needs to be dropped immediately. It is need of the hour that the government should pro-actively advance to ensure more government expenditure so as to generate more employment, purchasing power and greater market demand.

 

  Another important issue is what is divisible between the centre and states is the tax revenue. The cess and sur charges are not divisible and these remains with the centre. Peculiarly, in this budget, there is a cess on petroleum products in the name of agriculture. There will be an increase in the cost of Petro-products and the Finance Minister said the excise duty will be reduced, which would mean that the states will lose their revenue from this pool. The sharable pool of the states will be reduced because of this. The GST compensation is reduced by more than Rs. 20,000 crores. The states are going to be starved. This will badly hit their finances. It is a regressive measure, making the states to stand with begging bowls before the centre for help.

By any standards this is a regressive and retrograde budget, and also anti people.