June 05, 2022

Fiscally Neutral UBI & Growing Corporate Tax Concessions: A Deceitful Paradox

Sudip Dutta

THE “State of Inequality in India Report”, by the economic advisory council to the prime minister (EAC-PM), was released on May 18, 2022. The report prepared by the government body itself has highlighted that while the top 10 per cent of the Indian population accounts for one-third of all incomes earned, the income share of self-employed workers who are also the highest in number among the whole employed categories (45.78 per cent), happens to be the lowest. This report has proposed some recommendations including the establishment of a Universal Basic Income (UBI) as an urgent corrective measure to address the miserable state of disparity, distress and discontent erupting.

The concept of UBI came first as a concrete proposal in the Economic Survey for FY17 with a deceitful plan to replace all the existing subsidy transfer schemes. Subsequently, the International Monetary Fund October 2017, endorsed the idea of launching a fiscally-neutral UBI scheme by eliminating food and fuel subsidies. In January 2019, the Congress party also pledged to roll out UBI  in its election manifesto.

In order to understand the process of implementing the so-called fiscally-neutral UBI under the present anti-people dispensation, various examples can be cited. One of the most recent ones can be found in the policy framework of the government in regard to the procurement of wheat. The procurement of wheat by FCI was gradually falling over the   last few years and last year it was 43.34 million tonnes. This year the procurement target has grotesquely reduced to 19.5 million tonnes, clearly directing the government’s devious intention to adjust the expenditure in various cash transfer processes through curtailing down the existing subsidy-income/price support schemes in the greater fold and thus enhancing distress over the population attached to all these petty production processes. Hence the atrocious plan of introducing UBI with fiscal neutralisation is nothing but cruel deception over the existing right of the people.

Actually, the political parties representing the exploiting classes are also becoming compelled to adopt the term UBI for their popular campaigning as their failed project to address unemployment and income inequality through neoliberalism has become the cardinal one in the whole socio-political discussion of today’s India. From 1991 to 2019, the unemployment rate in India fluctuated around 5 - 5.5 per cent. The Covid related lock-down shot up the unemployment rate further, leading to a devastating situation. In February 2022, it reached around 8.10 per cent. On the other side, the labour force participation rate which was more than 58 per cent in 1991, more or less consistently declined and gradually fell throughout the neo-liberal regime; in the last five years, it has significantly reduced by 7 per cent and has shrunk to around 40 per cent in 2021.

Centre for Monitoring Indian Economy (CMIE) in its quarterly report on unemployment in India has published that the categories below ‘the graduation level education’ represent 90.87 per cent of the working-age population and among them, 64.58 per cent are practically unemployed or out of labour force market. Actually, they are compelled to adopt all unregistered precarious, hazardous under-employment or self-employed jobs for mere survival. These features linked with the gradual fall of wage share in the Indian economy are unprecedented and devastating and multiply the degeneration in the economy, almost in every aspect.

To clearly understand the problem of unemployment with all its peculiarities and diversities, we have to comprehend the special characteristics of the development of capitalism along with the sustained and perilously stressful reproduction of petty- production in modern India. Petty production in agriculture, being the largest employing sector in India, had always absorbed an increasing workforce from 1951 until 2001. From 2001, the number started decreasing in absolute terms.  It was the clear expression of the growing agrarian distress. Big corporate completely took over the production of agricultural input items like seeds, pesticides or fertilizers. Monopolies and finance capital had successfully penetrated into the remotest corners of rural India. And agrarian distress with increasing precariousness in employment in all sorts of petty production aggravated.

The World Inequality Report, 2022 has published that per adult average annual income of the bottom 50 per cent of the population of India based on purchasing power parity is Rs 53,610. If a household of two adults and two children is considered, then the average income of the bottom half household will be Rs 8,935 per month. It is far below the 2017’s Central Pay Commission-stipulated minimum wage, the bare minimum remuneration for subsistence, Rs 18,000, with which dearness allowances were added to neutralise the inflation. The meagerly low income of producers, self-employed, under-employed or contractual workers, and unemployed youths locked in various petty and informal production sectors is the most prominent reality today. The call for the united struggle of the whole toiling masses demands a clear understanding of the reasons behind their perpetual miserable and non-escapable condition.

In any free market, the assumed prices of the commodities are fixed generally by adding the existing average rate of profit over the respective investments made. For higher investment, a greater portion is spent on constant capital, i.e., machines, raw materials and infrastructure. On the other hand, the low investing commodity production is majorly dependent upon the self or hired labour. At the same average rate of surplus production, in the labour-intensive production process, more surplus value of labour will be generated in comparison to the high investment capital intensive sector. But as the price is fixed in the market by imposing the same rate of profit over investment, the low investing labour-intensive commodities, despite possessing higher added value may be sold at a lower price. On the contrary, the high investing one may get a price higher than its original value.

This additional profit of high investing capital actually comes through the transfer of absolute surplus that actually originated at petty producing low capital investing firms. And hence, the population involved in these micro or small productions, practically all being disguised wage labourers, are subjected to inconspicuous exploitation through a complex network of production and circulation of commodities within the market. In the neoliberal economy, the big corporates are accumulating unprecedented wealth, at a time of negative economic growth also, by directly plundering and squeezing the petty-producing and attached classes pushing their lives to an unfathomable state of misery.

In post-colonial India, the development of capitalism has traversed a very non-linear path through primitive accumulation as well as capitalist appropriation; sometimes through direct dispossession from means of production, through expropriation, sometimes through coercion of petty-economy distressfully squeezing the income, through appropriation via a complex network.

India’s employment market is governed by self-employed petty producers. Nearly 95 per cent of firms in India employ fewer than five people.  They worked as disguised wage labourers or with dual characters of investors and workers, exploited, virtually squeezed by the attack of big corporate and monopolies controlling the market and rate of profit. The introduction of ‘gig economy’-induced self-employed jobs has mystified the employer-employee relation more, further disguising the exploitation.

What should be the righteous possible role of the state in this grave situation? The Global Inequality Report, 2022 showed that the progressive income tax rate in mid of the 1970s, in India was more than 95 per cent which has gradually come down to 25.17 per cent today; although the beneficiary corporate class has extracted a bigger accumulation of wealth compared to the actual real value-generation on their account during the same period. In 2021, the direct corporate income tax received was only Rs 7.19 lakh crore. To ensure Rs 21,000 minimum income for the bottom half of households, Rs 28.80 lakh crore will be needed and it can be raised by taxing the corporate at a rate similar to the 1970s. The direct income support schemes hitherto existing or proposed are not only insufficient but also came up to snatch away the present free and subsidised service schemes like PDS, universal health care, mid-day meal or fuel, electricity and fertiliser subsidies.

At the current stage of loot and distress on all fronts, the  struggle for survival  of bottom half of the population cannot be  separated from  each  other.  It  must be  diversified on different fronts, but with a coordinated purpose against the same set of enemies.

The simultaneous struggle for food security, right to education, health and other essential services on the one hand and the struggle for right-based direct cash compensation to guarantee minimum income in parity with the statutory minimum wages as per the adopted guideline of the Indian Labour Conference, on the other, is the most pertinent tactics of resistance against the onslaught of corporate-state nexus of present-day India.

Article 21 of the Constitution of India provides, “No person shall be deprived of his life or personal liberty except according to procedure established by law.” While elaborating on the Article, the Supreme Court of India once explained: “The right to live includes the right to live with human dignity and all that goes along with it, viz., the bare necessities of life such as adequate nutrition, clothing and shelter over the head and facilities for reading writing and expressing oneself in diverse forms, freely moving about and mixing and mingling with fellow human beings and must include the right to basic necessities the basic necessities of life and also the right to carry on functions and activities as constituting the bare minimum expression of the human self.”

On the eve of the 75th year of independence, the workers, underemployed, unemployed, self-employed youths, the petty producers and the peasants have to forge the war, together, for their constitutional right to life with dignity and assurance. The slogans must echo together: Tax the rich, guarantee the minimum income in parity to the statutory minimum wages for every household in India. Ensure minimum wages, ensure MSPs, advance the PDS, regulate the market prices and ensure the right to work. These struggles will build up the organic basis of the alliance of workers-peasants- petty producers-unemployed youths to change the class balance in modern India in favour of the toiling masses.