Finance Minister Jaitley is preparing to present the central government budget for 2018-19 on 1st February. People must be careful not to be misled by the budget speech. Past experience shows that the speech of the Finance Minister is always designed to create a false impression about the class interests motivating the Union Budget.
Given the present political situation, it can be predicted that the Finance Minister will pretend that the Government of India is trying to address the concerns of peasants about non-remunerative prices. He will probably claim that his budget is aimed at creating more jobs. His real preoccupation, however, is to address the concerns of Indian monopoly capitalists and foreign investors and fulfil their greed for maximum profits.
Every year, the Finance Minister chairs various so-called consultative meetings starting about two months prior to the budget presentation. An impression is created that the Government is consulting with all classes of society.
This time, Shri Jaitley started this process on 5th December, 2017. He chaired one meeting with representatives of workers’ union federations and another meeting with representatives of some peasant organisations on that day. Over the following two weeks, the Finance Minister and his officials chaired numerous meetings with representatives of the capitalist class, headed by the monopoly houses.
Even the allocation of time reveals the class character of the budget process. The Minister and his team spent less than 5% of their time in consultations with the representatives of workers and peasants, who together make up 95% of the population. They spent over 95% of their time in consulting the owners of capital, who make up a tiny minority of the population.
The central State and its budget process serve the process of accumulation of capital in the hands of a wealthy minority, through the exploitation and robbery of the workers and peasants.
Private ownership of the means of large-scale production enables an exploiting minority of capitalist owners to pocket the surplus value produced by the working people. The State defends the concentrated private ownership of the means of social production and intervenes to rob the toilers even further.
The Government of India incurs largely unproductive expenditures in the service of capitalist monopolies and collects onerous taxes and non-tax levies from the people to finance its spending. Every year, it spends in excess of its revenues and finances the deficit by accumulating public debt at commercial interest rates and by expanding the money supply. All these actions lead to further robbery of the working people in the interests of the owners of capital.
Demands of the big capitalists
One of the major demands of the big capitalists has already been addressed by the central government, well before the budget. That is the demand to “recapitalise” government-owned banks to enable restructuring and further waivers of bad loans owed by capitalist defaulters. On 24th October, the Finance Minister announced the government’s plan to spend Rs. 2,11,000 crore over the next two years to “recapitalise” the banks. The first instalment will be reflected in the 2018-19 budget. The people as a whole are being made to bear the burden for which big capitalists are responsible.
Another major longstanding demand of the capitalist monopoly houses which has already been implemented is the introduction of the Goods and Services Tax in July 2017. Changes in indirect tax rates on all commodities except petroleum products are now decided by the GST Council, outside the budget process.
In the pre-budget meetings, the big capitalists have raised the demand for reduction of corporate tax rates. They have pointing to the huge tax concessions recently announced by the Trump administration to capitalist corporations in the US and demanded that the Government of India must follow that example.
Monopoly capitalists want the Government of India to borrow more and step up public investment in infrastructure projects, to make up for the lack of growth in private investment. At the same time, they want the Government of India to avoid excessive borrowing and maintain “fiscal responsibility”.
Fiscal responsibility is a concept that has been created by the biggest money-lending institutions of the world. Its aim is to provide a guaranteed source of income for the money lending institutions. According to this concept, the State should be a “responsible” borrower. It should service its debt promptly. It should not get so highly indebted that it is unable to repay. It should not also stop borrowing altogether. It should stick to an agreed level of deficit, an agreed level of borrowing every year. In other words, the concept “fiscal responsibility” is based on the anti-people outlook that the State’s primary responsibility is not to provide for its citizens but to satisfy the money-lenders.
The demands of the big capitalists imply further drastic cuts in the already insufficient allocations for education, health and other basic needs of the people. It also implies an escalation of monies raised through privatization and disinvestment. It is only through such measures that the Government can fulfil the demand for stepping up infrastructure investments and the demand to maintain fiscal responsibility.
Demands of workers and peasants
Workers’ unions have been consistently demanding for the past several years a halt to privatization and protection of the rights that belong to all workers. In the meeting on 5th December, workers’ representatives also demanded increased allocations for education, health and other basic needs of the people. The central Government has no intention to fulfil any of these demands. It plans to escalate the scale of privatization and disinvestment. It plans to cut back on the already inadequate resources allocated to social services.
Peasants’ organisations are demanding waiver of farm loans and guaranteed remunerative prices for all agricultural produce. They repeated these demands on 5th December. In the name of addressing their problems, the Finance Minister referred to some kind of special compensation fund.
Peasants want to be protected from losses due to unexpected decline in the prices they receive. The government is telling them to first suffer the loss and then apply to the government for compensation. The peasants are demanding their rights while the government wants them to beg
Stable and remunerative prices for the peasants can be guaranteed only if the State invests in strengthening and expanding public procurement. Far from of investing in public procurement, the Government of India is pursuing the opposite agenda of liberalization. It is opening up agricultural markets to private trading interests, including Indian monopolies and foreign multinational companies.
Year after year, the tax burden on the toiling majority of people keeps on rising, with indirect taxes as well as deficit financing contributing to the rise in retail prices of commodities. Central government expenditure gets increasingly dominated by interest payments, defence and police. These three items of totally unproductive expenditure use up more than half of total central revenues. This parasitic character remains intact year
When a bank lends to a private company engaged in some sector of social production, out of the surplus value generated, a portion gets paid to the bank as interest. When a bank lends to the government, which is engaged mostly in activities of a non-commercial nature, the interest it claims is of a thoroughly parasitic nature. It is not a share of surplus value because the government does not generate a surplus. What is being claimed is a share of public revenue. It is a form of robbing the entire people in order to guarantee returns on the loans advanced by the banks.
The debt owed by the Government of India is more than Rs. 70,00,000 crore, of which more than Rs. 60,00,000 crore is owed to commercial banks and insurance companies. It is the most secure part of the portfolio of these institutions because government bonds are considered to be zero risk. The government guarantees regular debt service payments, financed by the revenues collected from the people. Interest payments are the largest item of recurring expenditure in the Union Budget.
While the BJP led government headed by Narendra Modi claims to be following a new and different path from that of the Congress Party, there is no change in the parasitic nature of central government finances. Additional public debt is being incurred, not only for enhancing military might and building roads but also for forgiving loans of big capitalist defaulters.
Slogans change when one party replaces another, while the class content of economic policy and the government budget remains unchanged. From the Congress-led government headed by Manmohan Singh to the BJP-led government headed by Narendra Modi, even the change of slogans is only superficial. “inclusive growth” and “human face” have been replaced with “development for all” and “good times”. The reality on the ground remains the enrichment of a wealthy minority. The toiling majority of Indian people remains among the poorest and most exploited peoples of the world.
The annual budget of the Government of India is a tool to advance the interests of a wealthy minority, headed by the capitalist monopoly houses, at the expense of the majority of people whose toil produces all the wealth. The State remains a parasite sucking the lifeblood out of the toiling people.
We, the hardworking people, must fight for the principle that the State is duty bound to guarantee human conditions of life for all; and that it must finance its expenditures from the surplus that social labour creates. It must tax profit, rent and interest incomes and not tax wage incomes. It must not impose indirect taxes that fall on the entire people, including the poorest.
We must fight for reorienting public expenditure towards guaranteeing adequate and affordable supply of education, health and all other public goods and services. We must demand an immediate halt to the drain of public resources for arms acquisition, for paying commercial rates of interest to banks on the government’s debt and for financing waiver of loans owed by capitalist defaulters. We must demand and fight for the complete abolition of indirect taxes.
We must fight with the goal of establishing workers’ and peasants’ rule, a new political power that would fulfil the above demands. Instead of being oriented to fulfil the greed of monopoly capitalists, the economic system and government budgets will then be reoriented to fulfil the rising material and cultural needs of the entire population.