Budget 2018-19: A Neoliberal Blueprint

J S Majumdar

Finance minister Arun Jaitley presented the union budget 2018-19 in Lok Sabha on February 1 as a budget for ‘generation of employment, health protection of country’s 50 crore vulnerable people and huge relief to farmers’. The opposition dubbed it as an election ‘jumla’.


No doubt, the finance minister’s budget speech was ordained for the next Lok Sabha elections, by carefully choosing words for election propaganda. But, the union budget 2018-19 is also a blueprint for big-ticket neoliberal reforms under the guise of popular issues; and is a step forward for attaining a unitary market for the corporates, which weakens federalism.

After self-praise for achieving a high rank in the World Bank’s report for ‘ease of doing business’; this budget is said to be aimed at providing ‘ease of living for common men’. The circulated copy of Arun Jaitley’s speech has a misprint. In the place of ‘ease of living’, it is printed as ‘ease of leaving’. Aptly so; because in the big push for neoliberal labour reforms in favour of the corporates, the budget outlines the ‘ease of leaving’ employment.


The budget speech claimed creation of 70 lakh ‘formal jobs’ this year on the basis of steps already taken by the Modi government during the last three years. And it is stated that, “to carry forward this momentum” of creating more ‘formal jobs’, the budget proposes introduction of ‘fixed term employment in all sectors.”

To prepare ground for this budget proposal, a gazette notification was issued on January 8, 2018 on a draft of amendment to the Industrial Employment (Standing Order) Central Rules, proposing the introduction of ‘fixed term employment in all sectors’ and gave a 30-day public notice.

This proposal of ‘fixed term employment in all sectors’ has an added proposal, which is that the government would provide financial incentives to the employers by paying an amount equivalent to 12 per cent of wage of each new employee for three  years as EPF contribution.

These two combined proposals give a clear message to the corporates that ‘regular employment’ till retirement age be replaced by recruitment of ‘fixed term employment’ for three years in all sectors of industries and services; and for this the government will give financial incentives. This is the model of employment generation designed by the Modi government.

The union labour minister has called for a tripartite meeting of the government, employers’ organisations and trade unions on February 15 to discuss this issue of ‘fixed term employment in all sectors’.  All the ten central trade unions, except RSS-affiliated BMS, submitted a joint memorandum to the labour minister and walked out of the meeting rejecting the government’s proposal of ‘fixed term employment in all sectors’ on merits and for making this meeting only a formality as the issue was already introduced in the parliament through the budget.           

After a massive agitation in the apparel industry in Bangalore, mainly by women workers on the EPF issue, the government introduced, for the first time, ‘fixed term employment’ in apparel and footwear industries. Opposed by the trade unions at that time, the government clarified that the apparel and footwear industries are seasonal in nature, the employment is ‘casual’ and the industries are unorganised. Now, the government is extending it in all sectors including the organised sector employing regular employees in permanent employment. The Economic Times dated February 2 headlined this news item as “Hire & Fire: A Boost for Job Creation.”


The budget speech announced two healthcare programmes as Modi government’s “flagship” programmes.

One is a proposal, with allotment of a measly Rs 1200 crores to 1.5 lakh primary health units across the country, renamed as “Health and Wellness Centres” (HWC); to take comprehensive healthcare and “provide free essential drugs and diagnostic services” to a vast number of our people!

Who will supply these essential drugs through the HWCs? The budget speech says, “More than 800 medicines are being sold at lower prices through more than 3 thousand Jan Aushadhi Centres.” ‘Jan Aushadhi Stores’ were established by the earlier Manmohan Singh government in 2008 creating the ‘Bureau of Pharma PSUs of India’ (BPPI) in 2008 consisting of the Department of Pharmaceuticals and five public sector drug companies – Indian Drugs and Pharmaceuticals Ltd (IDPL), Hindustan Antibiotics Ltd (HAL), Bengal Chemical and Pharmaceuticals Ltd (BCPL), Karnataka Antibiotics and Pharmaceuticals Ltd (KAPL) and Rajasthan Drugs and Pharmaceuticals Ltd (RDPL) – with its headquarters at IDPL office in Gurgaon and was registered under ‘Societies’ Act in 2010 for “supply, fixing prices and monitoring sale of generic drugs through the network of Jan Aushadhi Stores”. Modi government’s Health Policy 2017 states, Public sector capacity in manufacture of certain essential drugs and vaccines is also essential in the long term for the health security of the country.” But, the same Modi government has already declared an outright sale of all these pharmaceutical PSUs. Hence, the budget proposal of supply of free medicines is for the expansion of private sector medicine market through the proposed 1.5 lakh HWCs.   

The other proposal is “National Health Protection Scheme” (NHPS) providing 10 crore poor and vulnerable families (approximately 50 crore beneficiaries) with insurance coverage of upto Rs 5 lakh per family for “secondary and tertiary hospitalisation”.

Criticism of the NHPS proposal centered round, ‘where is the money’ for the scheme. The budget speech only said, “Adequate funds will be provided for smooth implementation of this programme.” Depending on 1-3 per cent rate of insurance premium, the scheme would require Rs 50,000 – Rs 1.5 lakh crore annually, former finance minister Chidambaram calculated and tried to ridicule the scheme as non-implementable.

But, underestimating the Modi government’s resolve to privatise the healthcare services will be wrong. Both the proposals – for primary and for secondary and tertiary healthcare – have a common objective of privatisation and a countrywide integration of the entire healthcare services, subsuming the existing healthcare schemes in the states and sharing fund allotment at 60:40 ratio. Former union secretary of the ministry of health and family welfare, Sujatha Rao has aptly said, “The NHPS, however, raises a more important issue: The decisive redefinition of the role of the state from being a service provider to a financier.” (India Express, February 13, 2018). Financing whom? - Of course the corporate hospitals and private insurance companies. “This will be a big boost for us. The current insurance schemes were unviable, but with the increase in cover, I think we will see a growth in our state-sponsored scheme patients, said Suneeta Reddy, MD, Apollo Hospital Enterprise,” reported Economic Times on February 2, 2018.

Data released by the Department of Industrial Policy and Promotion (DIPP) shows that the hospital and diagnostic centres attracted FDI worth US$4.83 billion during 2000-17. According to National Family Health Survey-3, the private medical sector remains the primary source of healthcare for 70 per cent of households in urban areas and 63 per cent of households in rural areas. This burgeoning private sector hospitals having substantial FDI must have a growing market. At the same time, high out of pocket costs for private healthcare has led many households to incur catastrophic health expenditure. This also must be addressed to an extent. NHPS is meant for that.

Seeking new investment, the government had relaxed FDI norms in 2016 in insurance sector permitting 49 per cent FDI though automatic route. Further, public sector New India Assurance Co Ltd and General Insurance Corporation of India were listed for disinvestment in 2017. This year’s budget proposed merger of three insurance companies – National Insurance Co. Ltd, United India Assurance Company Ltd and Oriental India Insurance Company Ltd and – and their subsequent disinvestment.

The Manmohan Singh government had already allowed 100 per cent FDI through an automatic route in the Greenfield projects (new ventures) and, under approval by FIPB (Foreign Investment Promotion Board) in Brownfield projects (existing companies). The foreign drug companies that had left India during the pre-neoliberal/early neoliberal stage, have started coming back through FDI’s Brownfield route. To facilitate the process of Indian companies’ take-over by the drug MNCs, the Modi government has taken one more step by allowing up to 74 per cent of FDI in Brownfield projects in pharmaceuticals through the automatic route.

A disciplined, integrated and pan India market has to be provided for this troika of corporates in hospital, insurance and medicine producing business with substantial foreign capital. NHPS is meant for that, not for this financial year alone, but for perpetuity. Don’t just ask ‘where is the money’. It is neoliberal.  

There are other areas having such neoliberal blueprint in this budget. 

Newsletter category: