Presenting the full and final budget for 2019-20 in the parliament, Finance Minister Nirmala Sitharaman claimed that her government is committed to build a “bright and stable New India”. However, all the policy changes and programs she presented in her budget speech were aimed at ensuring maximum profits for super-rich capitalists, Indian and foreign.
The Finance Minister lauded “India Inc.”, meaning the Tatas, Ambanis, Birlas and other capitalist monopoly houses of our country, as the nation’s wealth creators and job creators. She presented the vision of rapid economic growth driven by Indian and foreign capitalists investing in production for a rapidly growing export market.
The budget has set the highest ever target for the privatisation of central government owned assets, of over Rs. 1,00,000 crore. In spite of opposition by workers’ unions, communist parties and other concerned citizens, the privatisation of Air India has once again been placed on the agenda. The strategic sale of many public sector undertakings (PSUs) will be carried out. Before the Budget itself, the Niti Ayog had drawn up a list of 34 PSUs for strategic sale. The privatisation of Indian Railways, which has been pursued in a stealthy manner so far, will now be pursued more openly under a 100 day plan to hand over the operation of two train routes to private companies. Public private partnership (PPP) will be the preferred mode of investment in three sectors – roads, railways and metro train services.
A number of measures have been announced to fulfil the demands of American and other foreign monopoly capitalists, who are eager to expand their share of the Indian market and their share of ownership of Indian assets. The limit on foreign direct investment in insurance and airline companies is proposed to be raised above 50%. The requirement for foreign single-brand retail companies to purchase 30% of their goods from Indian sources is going to be relaxed. The minimum proportion of public ownership of shares in listed Indian companies is planned to be raised from 25% to 35%, so as to make a larger pool of capital available for foreign portfolio investors to make speculative investments. The limit for foreign portfolio investment (FPI) has been raised from 24 percent to the FDI limit for the sector.
In the name of “equity”, the Finance Minister announced a surcharge on income tax for those whose individual incomes are more than Rs 2 crore per year. The additional revenue to be collected in one year through this measure is estimated at about Rs 2700 crore. This is only a small fraction of the additional revenue of Rs. 25,000 crore which is expected to be collected from the people as a whole, through additional indirect taxes on petrol, diesel and other commodities. Far from being equitable, the tax system will continue to squeeze much more from the working people than from the wealthy capitalist class.
Like in previous years, more than half the tax revenue of the central government will be spent on two items which add no value to the society - paying interest to financial institutions (Rs. 6.6 lakh crore) and defence expenditure (Rs. 4.3 lakh crore).
A decision which was proudly announced was that the Government of India will for the first time issue long-term bonds, denominated in US Dollars, as one of the forms of financing its deficit. Such borrowing from abroad carries a relatively low interest rate but a high level of currency risk. If the exchange rate of the Rupee falls, the burden of servicing such debt could rise rapidly. It means that debt servicing could absorb an even larger share of public resources in the future.
As much as Rs. 70,000 crore has been allocated for financing the waiver of bank loans owed by capitalist defaulters, in the name of recapitalisation of the banks. In previous two years Rs. 2,06,000 crore of public money has already been spent to recapitalise banks due to large waiver of loans. Bank loans of Rs. 1,97,000 crore were waived off in 2018-19 while Rs. 1,25,000 crore were waived off in 2017-18. This is yet another massive expenditure of public resources which adds nothing to the productive forces or the living standards of the people.
The overriding theme of the budget, and of the Economic Survey which was presented a day earlier, is the aim of achieving a 5 trillion dollar GDP (Rs. 350 lakh crore) in the next five years. This is roughly equal to a doubling of the current national income. Indian and foreign monopoly capitalists expect to much more than double their profits, by ensuring that the workers and peasants are exploited to the maximum degree possible. Real wages in rural India actually fell instead of growing 2017-18. Doubling of peasant incomes by 2022 remains an empty promise So does the promise of development for all.
In spite of the tall claims about a “New India”, there is no change in the capital-centred orientation of central government policy. Economic growth will continue to create enormous wealth at one pole, concentrated in very few hands, and widespread poverty, unemployment and misery at the other pole. The toiling people, who are the real creators of India’s wealth, will continue to be deprived of the right to enjoy the fruits of their toil.