Left Parties’ Proposals for Budget 2008-09:

A Summary


The UPA Government is going to present its fourth budget in February 2008. Some of the crucial commitments made in the National Common Minimum Programme have not been adequately met so far. Budget 2008-09 should make a wholehearted attempt in order to tackle the persisting problems faced by the people — the agrarian crisis, unemployment and price rise. Resources have to be mobilized by taxing profits and capital gains, which are increasing at rates many times faster than the overall growth of national income. Myriad tax concessions to corporates and affluent sections, which are nothing but subsidies to the rich, should be progressively eliminated in the backdrop of growing income inequalities. Rather than being obsessed with the growth rate, Budget 2008-09 should concentrate on redistributing the benefits of growth to all sections of the people, particularly the socio-economically weaker sections.


Expenditure Priorities


1.Steps have to be initiated in the Budget 2008-09 to constitute a Farmer’s Debt Relief Commission, which will write-off the debts for small and marginal farmers across the country. The interest rate on farm loans has to be brought down to a simple interest rate of 4%.


2.Food Subsidy should be raised in Budget 2008-09 in order to expand procurement operations and revert to a universal PDS in order to ensure food security.


3.The allocations for education and health need to be stepped up in Budget 2008-09, especially for Sarva Shiksha Abhiyan, Mid-day Meals, National Rural Health Mission and expanding capacities in higher educational institutions and setting up new universities, as envisaged in the Eleventh Plan.


4.Expenditure on all the component schemes under Bharat Nirman programmes needs to be stepped up sufficiently for their completion as per the original plans. Budget 2008-09 should specifically indicate the progress achieved so far and the steps to be taken to achieve the targets by 2009.


5.Budget 2008-09 should allocate the necessary resources for a comprehensive social security scheme for the workers in the unorganised sector.


6.The NREGA must be extended to all the districts of the country and its proper implementation ensured. Budget 2008-09 should also make a beginning by allocating resources for extending the employment guarantee to the urban areas.


7.A threefold increase in the budget allocation for ICDS is required in Budget 2008-09 to meet the commitment towards its universalisation made in the NCMP. Greater fund allocations have to be made for women specific schemes.


8.Budget 2008-09 should take decisive steps towards implementation of the recommendations of the Sachar Committee. The allocations for focussed literacy campaign and building primary schools in all villages in the Minority Concentration Districts (MCDs), building one residential girls’ school in each of the Minority Concentrated Blocks and the modernization scheme for madarsas need to be enhanced substantially.


9.Higher allocations have to made for schemes with 100% provision for SCs and STs. Commitments made in the NCMP regarding a comprehensive national programme for minor irrigation of all lands owned by dalits and adivasis and endowing land to landless families need to be initiated in Budget 2008-09.


10.Budget 2008-09 should substantially increase the allocation for the urban housing schemes for the socio-economically weaker sections. The Housing and Urban Development Corporation (HUDCO) should be strengthened with budgetary outlays.


11.Budget 2008-09 should substantially enhance the allocation for small-scale industries, especially in credit support, technology support and cluster development programmes.


12.Budget 2008-09 should address the debt problem of the States and provide some relief. The interest rate on Small Savings loan to the State governments should be reduced.


13.Lending rates of banks and financial institutions should be brought down. Budget 2008-09 should also take concrete steps to provide subsidized credit for the Self-Help Groups.

Budgetary Resources and Taxation


1.Fulfilling the commitments made in the National Common Minimum Programme would require much higher levels of expenditure than what has been undertaken in the successive budgets of the UPA Government. Budget 2009-09 should increase the Gross Budgetary Support (GBS) for the Central Plan by at least Rs 60000 crore over last year.


2.The Rules framed under the FRBM Act sets a target for zero revenue deficit to be attained by the end of the fiscal year, 2008-09. The Eleventh Plan document has already warned about the problems that will arise while trying to meet this irrational target and pointed out that development expenditure in crucial areas like health and education can be seriously affected. The Left parties have always opposed the unjustified and anti-development provisions of the FRBM Act. Under no circumstances should the FRBM deficit targets be allowed to constrain Plan expenditure in Budget 2008-09.


3.The initial efforts undertaken to do away with the myriad tax concessions, especially those enjoyed by corporates, have not gone anywhere. The UPA Government is yet to amend the SEZ Act, as per the recommendations of the Standing Committee on Commerce, doing away with the exorbitant tax concessions in Special Economic Zones. This should be done without further delay and other corporate tax concessions curbed.


4.The reintroduction of the long-term capital gains tax and an increase in the rate of the short-term capital gains tax will correct the anomaly in the taxation structure, which has led to inflows of speculative capital in the stock market causing high volatility. The rate of the Securities Transaction Tax should also be increased.


5.Rather than increasing the retail prices of petro products, the Government should initiate the long pending restructuring of the indirect tax structure on petroleum. The bottomlines of the oil companies can also be improved if Budget 2008-09 does away with the ad valorem duty structure and replaces it with specific duties. A price stabilisation fund for petro products should also be set up with the resources generated through the oil cess.

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