THE union government’s submission in the Supreme Court on the question of compensation to families of Covid victims is both characteristically brazen and callous, and completely unsurprising.

Following PILs filed in the Supreme Court in May of this year seeking a compensation of Rs 4 lakhs per Covid victim to the bereaved families, the Court sought the response of the union government.  On June 11, the centre told the SC that issues raised in the pleas, seeking directions for ex gratia of Rs 4,00,000 to the families of those who have died of Covid-19, are "genuine" and are under consideration of the government. Subsequently, however, the union government has, in an affidavit filed some days later, informed the Court that it cannot pay any compensation to Covid victims. It has cited severe resource constraints as the reason. It says in its affidavit : “…. if ex-gratia of Rs 4 lakh is given for every person, who lost life due to Covid-19, the entire amount of SDRF (State Disaster Response Fund) may possibly be spent on this alone, and indeed the total expenditure may go up further…"

The union government’s response contradicting its own earlier comments is of course unsurprising. Equally, its argument that the State lacks the resources to compensate families of Covid victims arises solely from its fiscal policies. These policies are not only based on fiscal fundamentalism and an obsession with limiting the fiscal deficit, but seek to limit the deficit solely by expenditure reduction as opposed to mobilising resources from the rich and the super-rich. But, even its emphasis on expenditure reduction is selective. While refusing to compensate families of Covid victims and ignoring the state governments’ legitimate demands for fiscal support from the union, this government thinks nothing of spending Rs 20,000 crores and more for the entirely unnecessary Central Vista project.

The seven years of the Modi-BJP-RSS led union government have seen the disastrous demonetisation move of November 2016 and the very badly designed and implemented GST Act, both of which enormously weakened the informal sector and contributed, along with the ultra-neoliberal policies of the government, to slow down the growth of the Indian economy significantly while also destroying livelihoods and sharply increasing wealth and income inequalities even prior to the pandemic. When the Modi regime returned to office in June 2019, it presided over a severe economic slowdown in the months that followed. How did it respond? The periodic labour force survey of 2017-18 had already shown the severity of the unemployment crisis. The continuing crisis of the agrarian and rural economy continued to take heavy toll on the lives of farmers and rural manual workers including agricultural labourers. The consumer expenditure survey of the NSS had shown an absolute decline in per capita monthly consumer expenditure in rural areas across all expenditure classes between 2011-12 and 2016-17, a decline that continued through the rest of the decade. It was clear as day that the economy was facing a severe demand crisis. Big business said as much when it complained of being unable to sell even biscuit packets. But instead of addressing the triple crises of unemployment, lack of purchasing power of the people and the agrarian crisis, the government showered big capital, Indian and foreign, with huge tax breaks and other concessions, arguing that the incentive to invest had to be enhanced! Fearing outflow of foreign portfolio capital, it annulled the surcharge on the tax on capital gains in equity markets imposed in the budget just a couple of months earlier, involving a loss of Rs 10,000 crores of revenue by its own reckoning. It provided additional export subsidies to the tune of Rs 50,000 crores and concessions to housing and real estate amounting to Rs 20,000 crores. Then came the big bang reduction in the corporate tax rate to just 22 per cent, which the finance minister announced would cost the exchequer Rs 1.45 lakh crores of revenue. On top of all this, around Rs 65,000 crore worth of concessions in direct taxes were announced in the budget of February 2020. Leaving aside the credibility of the official figures, the intent was very clear. It was not mere fiscal fundamentalism at work, but a massively pro-rich, pro-corporate taxation policy, the counterpart of which was the continued and relentless increase in indirect taxes, especially in levies of petroleum products. As Subodh Varma has pointed out (Peoples Democracy, June 20, 2021), the central government’s revenue from excise duties on petroleum products increased by 138 per cent since 2014-15. The other instrumentality to manage deficits following the give-aways to the corporate sector and the super-rich (who had been freed from having to pay taxes on wealth already in the union budget of 2016-17) was to set a disinvestment target of Rs 3.1 lakh crore in the disastrous and ultimately utterly failed budget of February 2020.

During the entire pandemic period, the government’s fiscal stance has been ultra-neoliberal, with its persistent refusal to provide even minimum relief to the four-fifths of the population that has suffered loss of incomes and livelihoods in the last fifteen months. The union government has ignored massive popular mobilisations by the political opposition as well as mass organisations of working people for substantial relief. It has instead been focused on taking away hard-won rights of the working class and subordinating the peasantry to corporate interests. Total government expenditure on Covid related relief programmes has been barely 2 per cent of GDP, in contrast to much larger direct fiscal spending in many developed capitalist countries and several developing countries.

In short, the union government’s submission to the Supreme Court that it could not afford to pay compensation to families of Covid victims is not merely because of fiscal fundamentalism and an obsession with limiting fiscal deficits, but arises also from seeking to achieve self-imposed deficit targets solely by expenditure reduction while continuing with its largesse to big capital, domestic and foreign, and to the super rich on the specious argument that this would stimulate growth and employment through enhanced private investment.