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

On Union Budget 2001-2002

The Union Budget proposals for 2001-2002 constitute an all-round calculated onslaught on the people. The budget proposes to demolish the public distribution system for the people and abolish the minimum support price for the peasantry. It attacks the workers livelihood through hire and fire policies in industries. The budget leaves the peasantry defenceless in the face of imports of agricultural commodities; it will ruin the small-scale industries and cut down employment. The budget attacks pensions and small savings and provident fund of workers and employees.

As against this onslaught on the people, the budget hands out unjustifiable concessions to the MNCs and big business through excise duties and for the rich through direct taxes. The promise of further privatisation of the public sector will also benefit these sections.

1. The claim made by the Finance Minister that this is a growth-oriented budget is ludicrous. In fact, the capital expenditure that is budgeted in the coming year is less than was budgeted for last year. Central Plan outlay in crucial sectors like rural development, agriculture, industry and minerals is lower in absolute terms compared to last year’s budget estimates. What we are witnessing therefore is a significant compression of development expenditure.

2. It is such a compression which last year enabled the Finance Minister to stay within his fiscal deficit target for the previous year despite substantial shortfall in total tax collection and contributed to the current recession in the Indian economy. In the coming year as well, the actual expenditure compression is likely to be even more severe than what is visualised in the Budget, which will further accentuate the recession.

3. In addition, this Budget is remarkable for initiating a number of measures, which constitute a massive assault on the living conditions of the workers, the peasants and the poor in general. By leaving the task of food procurement to individual state governments and confining the Central Government’s role only to providing cash assistance to cover the subsidy for the BPL population and not subsidised food as earlier, the Finance Minister has effectively announced the dismantling of the Public Distribution System. States, which have been successful in providing a universal PDS to the people, will now find it impossible to mobilise the necessary amount of foodgrain and sell it at a reasonable price.

4. Since the role of the Food Corporation of India is now to be limited only to "maintaining food security reserves" it would no longer be able to provide Minimum Support Prices to the peasantry. A national policy which was a commitment made to the freedom struggle, and which has been in place for decades, to protect peasants from the ruinous effects of price crashes is being completely abandoned at the very time when agriculture is being exposed to international price volatility, and in the background of several years of stagnant or negative growth. Likewise, in years of shortfall and food price inflation, consumers would be left unprotected.

5. Simultaneously the government is launching a blatant attack on the livelihood of the working people. Labour laws are to be amended to enable units employing upto 1,000 workers to retrench them at will. Employment in small scale industries including in such important industries such as leather goods, shoes, and toys will be adversely affected by the proposed dereservation of 14 sectors, while industries like garments will be hit by removal of excise duty exemption on cotton yarn. Employment in government is to be reduced annually by 2 per cent, irrespective of the needs of the people for important public services. In the banking sector, giving freedom to banks to undertake their own recruitment will curtail additional employment generation and puts a question mark over the issue of reservation of jobs on social criteria.

6. The Finance Minister has not even spared old age pensioners. Pensions henceforth would be linked to contribution made by the employees. Meanwhile, there is a reduction in interest on small savings and provident funds.

7. The Finance Minister has belatedly recognised that high real interest rates have contributed significantly to the huge interest burden on the exchequer. But these high real interest rates are an inevitable fallout of the process of financial liberalisation, which is ironically carried forward in the present Budget. Instead of dealing with this problem, the Finance Minister has chosen to attack small savers.

8. The Finance Minister’s tax strategy amounts to garnering resources from union excise duties while doling out concessions on customs duties and on direct taxes to the rich. This is not only regressive but contributes to a deindustrialisation of the economy; while domestic production will attract higher rates of taxation across a whole range of commodities, imports will attract lower rates of taxation. Even the distribution of the additional burden of excise duties is regressive. Automobiles and soft drinks will now have lower excise duties while items of mass consumption will face double the earlier rate of excise duty.

9. In addition, user charges on a whole range of public goods are proposed to be jacked up, adding further burdens on the people.

10. Given the obsession with reducing the fiscal deficit, even to sustain declining real expenditures the government has been forced to launch a hasty and dubious strategy of strategic disinvestment of profitable public assets. What is especially surprising is that even in this financial year, the FM expects to generate Rs. 2,500 crore from such disinvestment. The amount mobilised thus far is a mere Rs. 236 crore. Even the proposed BALCO disinvestment will fetch an additional Rs. 550 crore. This still leaves an amount of Rs. 1714 crore which can only be met by further shady disinvestment deals involving very lucrative public sector undertakings being rushed through.

This is a budget which will destroy food security, self-reliance and which is blatantly anti-worker, anti-peasant and against the salaried employees. The Polit Bureau of the CPI(M) strongly condemns these budget proposals and calls upon all sections of the people to unitedly protest against this new onslaughts on their livelihood.