Union Budget 2011 – in the service of the capitalists

The Union Budget was presented by the Finance Minister on 28 February 2011 against the backdrop of the severest crisis of credibility of the UPA government.  

The Union Budget was presented by the Finance Minister on 28 February 2011 against the backdrop of the severest crisis of credibility of the UPA government. 

The exposure of the current system of parliamentary democracy through various scams has brought home to the working class that the real rulers of the country are the big bourgeoisie of the country behind the façade of the UPA or NDA. The working class is also seeing that the pursuit of the policy of globalization through liberalisation has left the price of food to the mercy of ‘market forces’ and speculators and that the government is not willing to do anything about rising food prices. Many steps announced in the budget will lead to further misery for people due to increase in the prices of goods of daily use by people. On the other hand, the Budget has been warmly appreciated by the big bourgeoisie and their lobbying associations due to proposals to cut subsidies and fiscal deficit besides reducing direct taxes.

  • People will be required to bear additional burden of as much as Rs. 11,500 crore more by way of indirect taxes
  • The total amount of subsidy, small relief given to working people, is proposed to be reduced next year by, Rs 20,000 crore, nearly 12.5% from the current year
  • While subsidies to people are being cut and taxes on goods used by people are being increased, tax concessions and exemptions to rich and their companies have risen to Rs 5,70,000 crore in the current year
  • Expenditure on the oppressive machinery of the state – defence and police continues to rise year after year. The defence expenditure will rise by 12% to Rs 1,64,415 crores while the budget of the Home Ministry, which spends bulk of the money on central police and security agencies, will rise by 16% to Rs. 39,600 crores
  • Interest payment to finance capital institutions will continue to absorb a substantial part of the taxes paid by the people at Rs. 2,67,986 crores

The agenda of privatisation will gain further speed in the coming year, as disinvestment targets are being maintained in the name of reducing the budget deficit. So the agenda of the big Indian and foreign bourgeoisie is being pursued with even greater vigour while the working people and toilers are being asked to pay an even bigger price.

Freeze and cutbacks in subsidies

Subsidy amount on food for the year 2011-12 has been maintained at the same level. With rising food prices, quantum of subsidized food will actually decline. So much for the talk of the government ensuring “freedom from hunger” for the people.

The budget proposes to transform fertilizer subsidy into targeted cash transfers. Not only has the fertilizer subsidy been reduced, there is no mechanism in place to ensure the cash transfer to the so called targeted population. The present subsidy which was available to all farmers will now be used to divide the farmers on the basis of who is eligible for the cash transfer and who is not. This budget is therefore thoroughly anti-farmer while claiming to be friendly to them.

Reduction in subsidy for petroleum by nearly 40 percent when crude oil prices are at the highest level of the last two years means all increases in the cost of petrol and diesel will be passed on to people. So prices of all goods used by the people will only rise further. The government collects the largest amount of duties and taxes from the people through petrol and diesel but the Budget had no proposal to bring down these taxes/duties so that some relief could be given to people by lowering prices.

The Finance Minister announced the government’s intention to replace fertilizer, fuel and LPG subsidies with direct cash transfers from March 2012. Under the Direct Cash Transfer system, the government will give cash equivalent of the subsidy amount to a family and the family will buy the goods at market prices from wherever they wish. The proposal for Direct Cash Transfer is actually a step towards completely dismantling the present PDS. Kerosene is presently purchased by the largest number of people in the country. There is no justification for its removal from the PDS. The government has, on the one hand, itself admitted that the BPL estimates have excluded lakhs of families that require assistance and on the other hand, it wants to continue to use this stratification to identify those who will be the recipients of the cash transfer. 

Freeze on budgets for livelihood and education

Providing livelihood is the responsibility of the state to everybody who needs it. It claimed to launch MNREGS with the objective of providing 100 days of work to one person in every rural family who needs it. The government sometime back announced revision in the wages paid under MNREGS to partly compensate for the inflation. Yet the budget provision for MNREGS has been kept at the same level of Rs. 40,000 cr as last year. This means less number of people will be provided jobs or for lesser number of days in the coming year. 

The Right to Education (RTE) Bill was passed in 2010 implying that the State is obliged to provide education facilities to every child along with enabling mechanisms to get educated. The revised Budget for the Sarva Siksha Abhiyan in the current year was Rs. 19000 crore. The budget for the coming year has seen a paltry increase by 10% to Rs 21,000 crore, when crores of children are still out of schools or dropping out of them. So the state has no intention to fulfill its obligation under RTE; its intention was only to fool people by passing a law.

While there is no illusion that the Budget will change the orientation of the economy, it has belied any expectation of even the smallest relief for the working people. The orientation of the economy must be changed fundamentally in order that it addresses the concerns of the people and fulfills their needs of the people. This change in orientation requires people to take political power in their hands.



2010-11 (Revised Estimates)

2011-12 (Budget Estimates)














(All figures in Rs crore)

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