P. Rajeeve on budget

March 19, 2015

P. Rajeeve on budget.

March 19, 2015

SHRI P. RAJEEVE: Then I request all Members to stand …(Interruptions).. Sir, I was coming to that point. …(Interruptions)… Sir, I request all the Members that while taking on the legislation for the corporatization of the country, they should stand against this type of policies by voting. I expect all colleagues to do this for this important legislative process. Sir, I tried to read the Budget Speeches of the UPA and speeches of then Opposition Leader and other opposition Members. Sir, this Budget is a continuation of the policies of the UPA Government, that is, they are trying to carry forward aggressively the 1991 neo-liberal policies. They tried their best to carry forward them. Sir, I tried to get the copies of the speeches of the then Leader of the Opposition, Jaitleyji. We had several wonderful speeches by Mr. Arun Jaitley in this House, particularly, on Budget. But I could not find out the speech for 2013-14 because at that time nobody could speak on Budget because we in the opposition jointly obstructed the Budget discussion. The word ‘obstruction’ is the new terminology used in the Budget discussion. It is obstructive or it is constructive, it depends upon the perspective. If you look through the eyes of the corporate, then obstruction to the policies is obstructive, if you look through the eyes of the common man of this country, then this obstruction is changed into a constructive approach.

Sir, this protest, agitation, obstruction, is a part of democracy. In our concept, this obstruction is entirely different from obstructive policies. If we try to obstruct a Budget, which intends to protect one per cent super rich of this country, then, it is constructive for the common man of this country. It is constructive to protect the interests of the country. I recall the speech of Shri Arun Jaitley on Budget, 2012-13. In that speech, Mr. Jaitley quoted paragraph 106 of the Budget Speech of Dr. Manmohan Singh. The reason is, we have witnessed an excessive reliance. …(Interruptions)… We can speak at any time because there is no chance to sit that side, at least, in the near years. ‘But, Sir, recent years have witnessed an excessive reliance on indirect tax for additional resource mobilization. This escalates cost, fuel inflation, and is regressive in its impact. Therefore, I have not relied on the indirect tax as a major source of resource mobilization.’ This is from the Budget Speech of 1991. And, Shri Arun Jaitley had demanded that this should be implemented. I have the full text of Jitleyji’s speech on 2012-13 Budget. But, what is the trend of the Budget presented by Shri Arun Jaitley in the Lok Sabha. The Budget proposal will reduce direct tax by Rs. 8,315 crores. That is benefiting the rich. And, it will increase the burden of the people through indirect tax hike of Rs. 23,383 crores. Apart from direct tax benefits, some of my colleagues have already mentioned, wealth tax has been abolished, corporate tax has been targeted to reduce from 30 to 25 per cent, greater concession and access to FDI and FII are absolved of capital gains tax, and minimum alternative tax. A progressive taxation implies that individual and corporate pay taxes according to their ability to pay. The composition of indirect and direct tax is an index to evaluate the structure of the taxation of a country. The direct tax is different from indirect tax. In the case of fuel, the petrol, around 50 per cent of the total cost is indirect tax. And, I went through the entire speech. It mentions several types of impacts of indirect tax on economy. For every 100 rupees, collected as tax revenue, approximately 30 rupees come from direct tax and the rest come from indirect tax. The hon. Finance Minister, while trying to reduce the corporate tax has mentioned the international experience. I would like to draw the attention of the hon. Finance Minister to the composition of international tax structure. In India, the direct tax is only 30 per cent. In the case of China, it is 34.4 per cent; Indonesia, 45.8 per cent; Russia, 50.3 per cent; Brazil, 55.3 per cent; South Africa, 59.6 per cent; Mexico…(Interruptions)… This is direct tax. You are talking about the corporate tax. I am mentioning about the component of direct tax in the total tax. You are thinking about the interests of corporates that is why you are…(Interruptions)… In the case of Mexico, it is 64.1 per cent. This is the international experience. Why is the Minister not trying to implement this? This is time to raise the direct tax. Instead of that, the Minister has tried to increase the indirect tax and decrease the direct tax. This is totally against the interests of the country. Now, I am coming to another international experience. During the last discussion on the Budget, I had also tried to mention the tax-GDP ratio. Our country is the lowest among the G-20 countries. And, in the BRICS also, our position is very low. The tax-GDP ratio in the case of China is 22.4 per cent; South Africa, 28.2 per cent; Russia, 30.6 per cent; Brazil, 33.7 per cent.

The tax-GDP ratio of China is 24.4 per centage; South Africa, it is 28.2 percentage; Russia, it is 30.6 percentage; and, Brazil, it is 33.7 percentage. Sir, increase in one percentage means increase of one lakh crores to the revenue of this country. If the tax-GDP ratio is as same as of China, then, India would get an additional revenue of Rs.9.87 lakh crores. If it is as same as of Brazil, then, we would get an additional revenue of Rs.22.56 lakh crores. Then, there will be no question of these types of deficits. The Government is trying to give more concessions to corporates. It has already been mentioned by my learned colleagues; I would not like to go into the details. Then, I come to abolishment of wealth tax. From the Finance Minister’s speech, I quote: ” Should a tax which leads to high cost of collection and a low yield be continued or should it be replaced with a low cost and higher yield tax?” This is the logic for the abolishment of wealth tax by the Finance Minister. Sir, in 2001- 2002, the cost of wealth tax collection was 53.8 per cent of the actual wealth tax. That is true. But what is the reality now? This cost of wealth tax collection is decreased to 9 percentage. That is true. This logic was true only for 2001-02. At that time, it was 53.8 percentage. Now, it has been reduced to 9 percentage. That logic does not suit to 2015-16 Budget. This is only for giving more benefits to corporates. Then, you have imposed one super tax, that is not coming to the tax component, which is, giving share to the States. There is no constitutional liability of the Centre to give a share from this to the State Government. That is what our understanding says. Sir, our Finance Minister follows Mr. Chidambaram’s path in the GAAR, which has already been mentioned. In 2012, that House and this House passed the Finance Bill with GAAR along with retrospective implementation. At that time, Jaitleyji had taken the same position; he is against retrospective taxation. But the two Houses of Parliament passed a Finance Bill with retrospective taxation. The then Finance Minster, Mr. Chidambaram, constituted a single-man Committee, Parthasarthy Shome Committee. On the basis of his recommendations, he deferred the decision, the decision of the Parliament, Parliament of the country, representing the nation. On the recommendation of a single person, Mr. Chidambaram deferred that decision, the implemention of GAAR. At that time, what was the reason? The reason was, administrative machinery was not ready for its implementation. I quote: “Administrative machinery was not ready for its implementation and will only result in scaring away the foreign investors.” In 2015, the same reason is there. Is this maximum governance? Why this Government could not make the administration ready for implementation of GAAR? That is not the valid reason. This is to protect the interests of the corporate. Brazil introduced GAAR in 2001; China introduced GAAR in 2006, and the UK introduced GAAR with retrospective taxation. I had mentioned in the last Budget speech also. Also, the G-20 and OECD have taken the initiative on the Base Erosion and Profit Shifting. This is in tuning with the BEPS, that is, with the international scenario. Then, there is no valid reason for deferring the implementation of GAAR for another two years. This is only to protect the interests of the multi-national corporations. The Finance Minister repeated that the reduction in corporate tax is considering the international scenario and for attracting investment. This is only in developing countries. Next year, some countries are ready to reduce the corporate tax to 20 percentage. Then, what is the end? The end is this country should become a tax haven. India should take the leadership against these types of policies, reducing the corporate tax, looking to the developed countries. Why are these developing countries competing for giving more concession? We have a very good tradition in the international scenario as the leader of third world countries. We should take the leadership against this type of decreasing corporate tax for the benefit of the multi-national companies and finance capital.

Sir, if you are looking at the international scenario, why is the Minister not ready to increase the direct tax component as per the international scenario? Why is the Government not ready for increasing the tax GDP ratio? Why is the Government not ready to implement the GAAR? They are not ready for implementing the GAAR. They are not ready for implementing these types of things because this is in the interest of the common man of this country; this is in the interest of the nation. This corporate tax reduction is to protect the interest of the finance capital. Sir, actually, the genuine investors are not scared of the tax. I would like to quote an American business magnate — not a Left economist – Mr. Warren Buffett. I quote, “I have worked with investors for 60 years and I have yet to see anyone — not even when capital gain rates were 39.9 per cent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain.” These are the words of Warren Buffett in 2011 in New York Times. This is opinion of the capitalists. Then why are you trying to give more and more concession than they want? …(Interruptions)…

SHRI SUKHENDU SEKHAR ROY: This is neo capitalism.

SHRI P. RAJEEVE: Yes. But this is for the new type of FII and other type of business. Sir, for investment, we always quote the World Bank. But as per UNICAP, MNCs report, “India is within first four.” Some other reports are here. I would not like to quote all these things. But how can capital come to a country where the communal riots are the order of the day? How can capital come to a country where ‘Ghar Vapasi’ things are happening? How can capital come to a country where the churches are burning every day? The capital comes to a country where the Government itself determines good habit in the society. This attracts the investment. Sir, inflow of capital or investment, depends upon several factors. You are giving more and more tax concessions to the corporates. That is not the right way. Then, what is your tax collection? It is fallen short by Rs.1.13 lakh crores from the Budget Estimates. But we should consider it. In addition to this Estimate, the Government collected more than 25,000 crores of rupees, as per the answer given to this House, through the hike in excise duty on petrol and diesel. Even though the GDP growth rate is high, the total tax collection is reduced by Rs. 1.13 lakh crores. Then, Sir, the Government is not ready to pass the full benefits of the fall in oil price to the domestic consumers. The logic of the Minister – I heard the speech of the Minister which he made in the other House — is not convincing. It is the repetition of the old theory of under-recovery. Two Parliamentary Standing Committees recommended to review the international parity pricing of petroleum products. Why is the Government not ready to do it? Now the Government is de facto regulating this market giving more and more concessions to the companies? Sir, Jaitleyji changed the term ‘revenue foregone’ to statement of ‘revenue impact — tax incentives under the Central tax system.’ It is good. But what is the reality? Sir, are we always against our concerns? This is given as an incentive to give more dynamism to the economy. Yes. But what is the logic for this? The revenue foregone is estimated to be Rs. 43.2 per cent of the total tax revenue for the year 2014-15. What is the logic? Then, Sir, the tax exemption of corporate profit gain to industries located in SEZ are estimated to Rs.19,000 crore. Is it an essential thing for boosting the economy? Sir, customs duty exemption given to the gold and diamond traders is Rs.75,592 crores. Jaitleyji explained in his reply to the last Budget speech that by importing gold and doing some work, we are creating employment. But can we compare it with MGNREGA, the employment created under MGNREGA?

This is double the money allotted to NREGA. The custom duty exemption on gold and diamond is double the total money allocated for NREGA, which created crores of jobs. I would request the hon. Finance Minister to give a comparison of employment created under this to gold and diamond traders and that under NREGA, or give specific figures on the employment you have been able to generate by giving these types of tax incentives to different sectors. Sir, I now come to the issue of black money. The intensifying inequalities is a very important issue. One per cent of the world’s super rich control 47 per cent of the global wealth. That is the latest report of the Global Wealth Database, 2013. On black money, the proposal for a new legislation to address this issue is a welcome step. But, Sir, this is the era of Ordinances. The Prime Minister had given an assurance to do something about it within hundred days. Now, you are promulgating Ordinances, one in every 28 days. Then, why are you not ready to issue an Ordinance on black money, if your words are sincere? Then, Sir, why are they not cancelling the double taxation treaties? Recently, Indonesia cancelled the DTA with Mauritius. Why are you not ready for that? Sir, most of the FDI, about 40 to 42 per cent, is coming from Mauritius. That is the Indian money coming through the Mauritius route. You have not taken any steps to control that. Then, Sir, there is staff shortage in various agencies. This is a serious issue. As per the Finance Ministry’s report, there is staff shortage. This is not a political issue. This problem of staff shortage is echoed through various agencies, such as the CBDT, ED, FIU, etc., which has been estimated to be 30,000. I would now quote the ADB report — not our Left report — “India has the most under-resourced and under-staffed revenue bodies in proportion to the size of its population”. Do you have any plans to fill up these vacancies, Sir? I now come to disinvestment, the temples of our modern India. You are expecting to raise Rs. 70,000 crores from disinvestment. That is de-nationalisation. We are totally against that. Then I come to a very important point — cooperative federalism. Some points have already been made by our learned colleagues here and I do not wish to go back to those points. Now, increasing the transfer of 42 per cent of the Divisible Central Tax to the States is a good step. But our demand was to make it up to 50 per cent. Sir, on deeper examination, we find that the total share of Union resources transferred to the States has been drastically decreased. It is true that the States’ share of taxes and loans to the State have been increased, but the Central assistance to States has been drastically decreased. Then, Sir, the State’s share in the total Union resources, as a percentage of the GDP, has been decreased from 6.2 per cent to 5.9 per cent in this Budget. This is a decrease in the State’s share as a percentage of the GDP. Is this cooperative federalism? You are trying to mislead the country by saying that they are implementing the financial discipline. It is a constitutional mandate. That is a progressive step. We support that. But, de facto, consider this point too. Last year, budgetary transfer was to the tune of Rs. 7.75 lakh crores. Now that was BE, but how much was the real transfer? It was only Rs. 6.83 lakh crores, which implies a shortfall of Rs. 92,000 crores, in the Budget Estimates. If you take this into account, it would be again decreasing. This is not cooperative federalism. Sir, in addition to this, the Central Government transferred the burden of several Central schemes upon the State Governments. The Government has decided to discontinue eight Central schemes and the Government changed the pattern of sharing in 24 schemes. The Government is also going to stop incurring revenue expenditure on several schemes; de facto, the Central schemes are effectively getting transferred to the State Governments. Sir, another major issue pertains to the social services sector. (Time-bell) Sir, I would take five minutes more. MR. DEPUTY CHAIRMAN: Take two minutes more.

SHRI P. RAJEEVE: Sir, while intervening on the Motion of Thanks to the President’s Address, the hon. Finance Minister blamed Kerala for their revenue deficit. Now, what is wrong with us? That is a difference in perspective. We spend more money on education. We spend more money on health.

As per our opinion, that is capital investment — the investment on human capital, the investment on human resource. That is our perspective; that is capital expenditure. But your own perspective is revenue expenditure. You are thinking only of physical capital; we are thinking about the human capital. That is more important. We are getting benefit. Hon. Deputy Chairman is always well aware that one-fourth of the State Domestic Product is coming from Keralite Non-Resident Indians. That is our benefit. Yes, we are facing some problems, that is, the second-generation crisis. We are giving education, that is quantitative change but we have to make it a qualitative change. We have made the land reforms. Yes, we have to change it to productivity. Yes, that is second-generation crisis. Our health index is very high. But we are facing, in Kerala, the elderly issue. That is second-generation crisis. But we do not consider Revenue deficit is a sin and we don’t consider it a wrong activity of our State. You are considering the growth rate. Our growth rate is very high compared to other State Governments. Sir, actually this Government is neglecting the social service sector. As our colleague already mentioned, one-fourth of our population is poor. We are a country where the largest number of malnutrition children are living; we are a country where the largest number of anaemic pregnant women are living. In this type of country, this Budget is a total change, from the concept of welfare State to total marketoriented State. As Misraji correctly stated, it is a corporatization of a country, corporatization of a republic to protect the interests of business. We are all against this concept.

MR. DEPUTY CHAIRMAN: Please conclude.

SHRI P. RAJEEVE: Sir, I would like to make two or three more points.

SHRI DEREK O’BRIEN: Sir, he is talking about your State. Give him time.

SHRI P. RAJEEVE: Sir, education Budget has been reduced. Misraji has mentioned that. Total subsidy component has come down from 2.1 per cent to 1.7 per cent. Sir, then I come to amendment to Land Acquisition. Actually, for National Highways, the land to be acquired is 1,85,702 sq. kms.; for State Highways, it is 2,63,798 sq. kms; for Railways, it is 1,26,056 sq. kms. So, it comes to 5,75,556 sq. kms. That means, 31.9 per cent of the total cultivated land, the Government is going to, not acquire, take away without any consent from the land owners. That would happen if we implement the Land Acquisition Act. I have all details. Sir, if you want it, we can sit together. Then, Sir, the allocation to agriculture sector was Rs.19,000 crore in the last year but this year it is only Rs.17,400 crore. It was reported in the media that 4,000 farmers committed suicide in the first five months of Modi Government. It was reported in media. That is always continuing. Farmers are in a very serious crisis. But the Government reduced the allocation to the agriculture sector. This Budget is totally against the interest of farmers. The growth rate in agriculture sector is only 1.1 per cent. In the industrial sector, the growth rate is 2.2 per cent. Where do you expect more? Is it the service sector? What is your employment scenario? In IT sector, TCS retrenched 30,000 employees. Most of the IT companies have started to retrench very experienced employees. How are you going to create employment? In agriculture, there is no chance; manufacturing sector is decreasing; in service sector, retrenchment is going on. Where is the new avenue for creating employment for unemployed educated youth in this country? The Budget has failed to address the serious concern of this economy.

Sir, allocation to ICDS has declined. It has already been mentioned. I would not like to go into details. The allocation for Mid-Day Meal Scheme has come down from Rs.3,965 crore to Rs.2,771 crore. This is a serious issue.

Sir, I would like to quote from the Budget debate by Shri Arun Jaitley in 2012-13. I quote, “The schemes, such as the Mid-Day Meal Scheme, which are external aids to remove poverty, have been taken into consideration in order to determine the decline. So, these are the people who still don’t have enough to feed themselves, they are still poor, but because of schemes like this, external aids like this..” Sir, I request the Finance Minister to please consider his own words. How can he decrease the allocation to the Mid-Day Meal Scheme as per his Budget estimates? (Time-bell) Sir, I would not like to take more time.

MR. DEPUTY CHAIRMAN: Please conclude.

SHRI P. RAJEEVE: I will only pinpoint four points regarding Kerala, that is, increase of import duty on rubber which is your own point, Sir. You have always been demanding this. The Commerce Ministry had submitted a note to the Finance Ministry. Earlier also, it was under Mr. Chidambaram’s table for more than one year. Now, it is under his consideration. Please try to increase the import duty on rubber. Then, there is a pending package for FACT (Fertilizers and Chemicals Travancore Limited), the largest public sector fertilizer company in this country. One package is pending before the Finance Ministry. I request him to sanction this. I also request one AIIMS for Kerala and one cancer centre. We demand for establishing a cancer centre, which was the dream of Justice V.R. Krishna Iyar also. At that time, the then Government had given some assurance. I request the Government to declare one international cancer centre for Kerala. (Time-bell) I am trying to conclude, Sir. Sir, this Budget is totally meant for protecting the interest of the microscopic super-rich minority of this country. This Budget is totally against the majority of the people of this country. This Budget is against the farmers. This Budget is against the unemployed youth. This Budget is against the children. This Budget is against the SCs and STs. This Budget is against the minorities. With these words, I conclude. (Ends)