February 07, 2021

Budget 2021-22: Neither for the People nor the Economy: Yechury

“PEOPLE are suffering from a double whammy; the pandemic has worsened the lives of the people and the budget proposals will further accentuate their miseries,” said Sitaram Yechury, general secretary of CPI(M), while addressing an online press conference on February 2, 2021.

He said the much-professed V-shaped recovery of the economy by the central government is absolutely false, and if at all there is going to be a recovery, it will be K shaped, meaning that the rich will become richer and poor poorer.

He made five important points while deriding the budget as a ‘pro-corporate gift’, robbing the poor people of the country.

•        The first point that he raised on the budget is that the much-trumpeted claim that this is a self-reliant budget is absolutely wrong, it is a budget for self-subservience to corporate capital, both foreign and domestic. Why? Because this budget targets selling Indian peoples’ assets and raise Rs 1.75 lakh crore through it. This is a complete loot of our national wealth. Our national assets are going to be privatised. Foreign investment ceiling in the insurance sector has been raised to 74%; Indian banks are targeted to be sold to foreign banks. This is a surrender of peoples’ assets to foreign finance capital. Then after taking over, this wealth may not be invested back in India but anywhere in the world where the foreign finance capital gets higher profits. Hence this is a budget not good for either the people or the economy of the country, he denounced.

•        Lakhs of kisans are in the midst of protests on the streets. They demand relief. But instead, the government reduced the subsidy on fertilisers by crores of rupees. Food subsidy was reduced substantially. This will affect the ration shops and PDS badly. When there is inflation and overall price hike, petrol and diesel subsidy is reduced; left to just one-third of the previous year. Tax increased on petroleum products and amassing wealth out of it is the direction to be followed. Unemployment is increasing, but the MGNREGA budget reduced by 42 per cent. This will further increase unemployment. Health crisis; but the budget on health reduced. The aspirations of the people are belied, he said.

•        The relief to the people can only come when there is greater expenditure on the part of the government so that greater demand can be generated and as a result, the economic recovery is back on track. But the total government expenditure remains stagnant. On top of this, the government is hoodwinking and says that the increase in fiscal deficit is a sign of greater government’s expenditure. But the truth is that it is a result of revenue contraction in the previous year and not because of greater expenditure of the government. In real terms, expenditure would be much less than last year. Instead of reversing this recession, we may end up in worsening the situation. The corporate tax is further reduced. There may be a fall of one lakh crore rupees from the corporate tax. During this period 100 billionaires increased their wealth by Rs. 13 lakh crore in the last one year. So, we know the direction of this budget.

•        The fourth point is that all this is happening when the government is saying that more concessions to capital will mean greater investment and more economic development. But this is not true; it is 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 the production is absorbed. But there is no demand. Hence. this form of investment widens the gap further amongst the people. Hence it is not a desirable model of development. More government expenditure would mean more employment and greater demand generation.

•        The last point is concerning the federal structure. What is divisible between the centre and the states is the tax revenue. Cess and surcharges are not divisible and this remains with the centre. In this budget, there is a cess on petroleum products on the name of agriculture. There will be an increase in the cost of petro-products and FM said that excise duty will be reduced, which would mean that the state’s 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 crore. The states are going to be starved. This will badly hit their finances. The states will have to come with a begging bowl to the centre. This effect the dignity of the people and the state governments. This is very regressive.

Finally, he said, “In the given situation this is not only a regressive and retrograde budget but also a callous and criminal one, where it does not meet the double whammy attack on people’s livelihoods. It is a loot of our national assets. Under British rule of India, there was a ‘drain of wealth’, under this government it is a loot of our wealth.”