On The Union Budget

Thursday, February 28, 2013

The Polit Bureau of the Communist Party of India (Marxist) has issued the following statement:

On the Union Budget

The 2013-14 budget fails to address the major concerns of the people and economy in the current context. The Economic Survey underlines the fact of rising prices especially food inflation, widening current account deficit, low investment and savings and increasing dependence on foreign funds. The potential workforce in the waiting should be provided gainful employment that demands public investment in sectors such as in agriculture, small scale sector and rural development. The budget however lacks imagination to think beyond the neoliberal prescriptions and relied exclusively on reducing fiscal deficits by curbing expenditures and on unrealistic projections on revenue mobilization in the context of lower growth.

The finance minister has expressed concern about the fiscal deficit whose revised estimate is Rs. 5,20,925 crore. But this is lower than the revenue forgone figure of Rs 5,73,630 crore. This implies that the fiscal deficit is primarily caused by the sops given to the rich in terms of revenue foregone and the burden of meeting this deficit is passed on to the poor by means of cutting expenditures. The revised estimates for 2012-13 shows a 4 per cent decline in total expenditure compared to budget estimates of 2012-13 which is indicative of a severe expenditure contraction. Given the overriding obsession expressed by the finance minister on keeping fiscal deficit at 4.8 per cent of GDP the proposed rise in expenditure in the current year is not likely to materialize in actual terms.

It is also a matter of grave concern that the consumption expenditure which grew on an average of about 8 per cent in the last three years has only grown by 4 per cent this year as recorded in the economic survey. Despite such a contraction in consumption expenditure there has not been any check on inflation. Total subsidies declined compared to last year’s revised estimate by about Rs. 26,571 crore. The rise in the subsidies in food in the context of much touted food security is only miniscule. The Finance Minister announced an additional allocation of Rs. 10,000 crore. Last year food subsidy was Rs. 5,000 crore less as reflected in revised estimates of 2012-13. Therefore the budget actually proposes an increase of a mere Rs. 5,000 crore. There has been a sharp decline in petroleum subsidy by more than Rs 30,000 crore compared to last year’s revised estimate which would hugely burden people and cause further inflationary pressures. There has not been any additional allocation on MNERGA compared to the previous year despite the fact of rising unemployment in the backdrop of an economic slowdown. The government on the other hand proposes disinvestment of the Public Sector to the tune of Rs. 50,000 crore.

In social sectors such as health and education the budget proposals are far from what was needed. As proportion to GDP the budgetary allocation this year in health is less than the allocation as proportion to GDP last year. Similarly in the case of education the allocation as proportion to GDP, budget estimate has declined compared to last year’s budget estimates. As far as rural development is concerned figures show similar decline as proportion to GDP. In the tribal sub-plan the allocation is roughly short of Rs. 20,900 crore compared to that mandated in the constitution as proportion to planned expenditure. The special component plan for SCs has more than 50 per cent (Rs. 47,000 crores) short fall from the amount mandated by the Constitution.

Therefore the budget does not adequately respond to the urgent needs of the people. Instead it has provided sops to corporates and criminally neglected increasing public expenditures. The CPI(M) sees this Budget as patently anti-poor and unable to address what was urgently required to get out of the situation of low growth, high inflation and higher unemployment.

The CPI (M) calls upon the people to protest against the anti-people aspects of the Budget.