PR Economy Desk (02/02/2017): The Union Budget 2017-18 presented by Arun Jaitley on 1st February 2017 was special due to three reasons:
- It became the first budget since the foundation of the Indian republic when the railway and general budgets were clubbed together into one
- The Union Budget 2017-18 is a slightly controlled budget because the BJP had to walk tightrope due to the forthcoming assembly elections in the five states including Uttar Pradesh, which impaired it from announcing pro-corporate measures that could irk the people
- This budget became the first one after the controversial demonetisation drive, which has drawn a wedge between the poor and the rich, with the poor facing the heat of the demonetisation and the rich enjoyed the bytes of the so-called “war against black money”
Jaitley Used Foreign Investment to Measure Economic Performance in the Union Budget 2017-18
Arun Jaitley promised few sops in the Union Budget 2017-18 for the poor people, some being the repackaging of old government projects, while some were reiterating of promises that were made in the last elections.
The Finance Minister claimed that “CPI inflation declined from 6% in July 2016 to 3.4% in December, 2016 and is expected to remain within RBI’s mandated range of 2% to 6%”, which again was a misrepresentation of facts, because as an aftermath of the demonetisation drive there was a drastic fall in demand across multiple sectors of the economy, which eased the inflation.
Arun Jaitley said “India’s Current Account Deficit declined from about 1% of GDP last year to 0.3% of GDP in the first half of 2016-17. Foreign Direct Investment (FDI) increased from ₹1,07,000 crores in the first half of last year to ₹1,45,000 crores in the first half of 2016-17. This marks an increase by 36%, despite 5% reduction in global FDI inflows. Foreign exchange reserves have reached $361 billion as on 20th January, 2017, which represents a comfortable cover for about 12 months of imports.” (sic)
In June 2016, a report in Economic Times the RBI clarified that a decline in the Current Account Deficit (CAD) doesn’t mean a well-performing economy, rather it’s a testimony of the fall in exports and imports. The lower CAD isn’t a proof of a booming economy as Narendra Modi and his coterie would like us to believe.
The Sangh Parivar and its right-wing extremist sycophants always measure the progress of a country’s economy by the amount of incoming foreign direct investment, which has a single focal aim – to extract as much profit possible from the country utilising a favourable investment environment, cheap labour, and cheap raw materials.
The increase in FDI is again, not a yardstick to measure the economic progress of the country, as it is centred on the benefits that a government provides to the foreign monopoly and finance capital investing in core and non-core sectors of its economy. The increase in FDI, unlike Jaitley’s chest thumping, is a symbol of more economic exploitation of the country by foreign powers, which only benefits the capitalists of India through capital infusion and technological support.
The Union Budget 2017-18 did away with the FIPB, which signals the dawn of a free reign for the foreign monopoly capital, which will now try to plunder the resources and labour of the country amidst uncertainties in the West, especially after the US government is trying to build up a protectionist and plunder-only system and Britain is strongly following an isolationist policy, followed by a severe economic crisis that is repeatedly causing paralysis to the capitalist production system ruled.
Hype in Indian foreign reserve happened at a time when the investment inflow increased during the last leg of Obama’s presidency in the US, as the defeated section of the US monopoly and finance capital owned corporations anticipated the victory of the protectionist lobby of the corporations under Donald Trump and tried to park their capital at safe havens from where they could extract profit out for years to come.
India became the global hotspot due to a strong pro-corporate government that didn’t blink before selling off the treasures and resources of the country in return of commissions from the foreign monopoly and finance capital.
As many of these corporations thought to invest more money in the promising and lucrative market of India, the foreign reserves increased (not drastically, though) during this period, however, due to volatile currency market and due to the probability of extensive fluctuation in the world fuel market, this reserve, as shown by Jaitley and his ministry, looks quite a vogue and hollow promise.
Arun Jaitley tried to advocate for the cause of demonetisation that his ministry and the RBI is doing since the move was announced on 8th November last year. Narendra Modi’s government has portrayed demonetisation as a black money slayer, friend of the poor, and a powerful magic wand that can transform the country’s economy into one of the biggest in the world.
Demonetisation drive of the Modi government was a well-planned move that aimed at providing a fillip to the electronic payment gateways and electronic wallets; it was implemented at the behest of the US government’s agency USAID and the brainchild begotten from its womb – Catalyst. The ‘surgical strike against black money’ cliche was a cruel joke on the people of the country, while the rich smirked, the poor reeled under the juggernaut of the huge cash crunch, whose effect is still felt all across the economy, especially in agriculture.
Despite a nationwide demand for the disclosure of the facts and figures of the demonetisation exercise, which officially ended on 31st December, the Modi government didn’t make public the data on how much actual ‘black money’ was slain by this operation and how much digitalisation of the economy was achieved.
Rather than addressing the concern of the nation, the Modi government kept shifting the goal post to avoid mass humiliation due to the failure of the entire demonetisation exercise, as most of the currency that the government said will be rendered useless, returned to the banking system.
While Narendra Modi and the BJP, with support from their paternal organisation RSS kept talking about turning the Indian economy into a cashless economy following the diktats of the Catalyst, an organisation formed by the USAID to roll-out cashless projects in the economies of Asia, Africa, and South America, the lack of infrastructure and poor banking penetration made the Modi government to retreat temporarily from its crusade against cash.
The Finance Ministry and the RBI kept passing the buck for the lack of preparedness for the demonetisation exercise and in December the government hastily declared that the political parties will be exempted from declaring the source of the cash when they will deposit it in the bank. As soon as this decision was made public the Modi government faced the wrath of the common people who were reeling heavily under the juggernaut of this adventurism of the regime.
To further hoodwink the people, Arun Jaitley declared during the Union Budget 2017-18 that the political parties can accept cash deposit up to ₹2000. He claimed that the Modi government is taking this step to bring transparency in the political funding.
While talking about bringing transparency, Arun Jaitley avoided putting a cap on the number of cash deposits, which means political parties will be still able to convert black money into white as they can divide their huge donations into several prescribed cash donation of ₹2000 to escape any legal liability.
It’s a well-known fact that the BJP has received enormous donations from the corporate houses of Tata, Ambani, Adani, etc. during and after the 2014 general elections, which enabled them to spend more than their competitors. According to the Election Commission report, the BJP’s expenditure in 2014 was ₹714.28 crores, ₹200 crores more than the nearest rival Congress Party. The amount was only the declared part, excluding the black money, foreign funding, etc. that the RSS outfit used to get through the 2014 campaign.
The Finance Minister knows well that all rhetoric regarding cleansing of the political funding system will be hollow promises until there is a strict law prohibiting corporate and business funding of political parties, which is a bigger threat to the national security and sovereignty as such corporations and business houses tend to become such omnipotent organisations that even the governments cannot curb their illicit pursuit of wealth and profit by exploiting people, stealing resources, and by destroying the environment and people’s livelihood.
Ignoring the agony of the people who waited in long queues to satisfy their whimsical decision that paralysed the economy at large, the Modi government is singing paeans to itself and glorifying its most disastrous step in the last 30 months.
None can find any factual information on demonetisation benefit quoted in Arun Jaitley’s budget speech when he started heaping praise on the government’s immature and adventurist decision, it was all words, as the minister had nothing better than words to hide his government’s failure.
What Union Budget 2017-18 Brought to the Farmers and Rural India?
Promises reiterated, farmers should wait
On the topic of farmers, Arun Jaitley reiterated his last budget’s promise of doubling the income of farmers in a period of five years, which we found quite dubious last year.
Arun Jaitley’s speech on farmers and the farm sector remained centred on the availability of credit and the waiver on the interest for 60 days, as announced by Narendra Modi during his new year’s eve speech. Apart from hollow words there was no other concrete proposal for the farmers in the Union Budget 2017-18.
The Finance Minister also pitched on behalf of the ‘Fasal Bima Yojana’ or crop insurance scheme, which aims at providing 30 per cent of coverage for lost crops in a field due to natural calamities like drought and flood. Arun Jaitley promised to increase the coverage to 40 per cent in the FY 2017-18 and 50 per cent in FY 2018-19.
However, the entire insurance scheme is a scam that has a lot of ambiguity in terms of the determination of crop damage. The crop yield and crop prices are fixed arbitrarily and moreover, the damage is determined by checking the crop condition of a randomly selected field.
The insurance scheme is only applicable in those conditions when the farmers suffer damages to their sown crops, but it’s not applicable for pre-sowing droughts and post-harvest crop loss due to accidents or natural calamities. It’s another Ponzi scheme through which the government of India has duped the farmers of the country.
The finance minister switched to a self-denial mode and kept reiterating that the farm sector will continue to grow in 2017-18, when in reality the lack of cash in the economy and the slow rate of remonetisation has affected the farmers, especially the small and marginal farmers, severely.
As an acute crisis is looming large on the farmers of the country who face several challenges like poor irrigation, reduction of subsidy on fertilisers, less land ownership, and scarcity of money to sow seeds or harvest crops, the government looks indifferently to different directions and doesn’t tell us anything about resolving the issues.
Jaitley touched the topic of irrigation subtly when he declared that Narendra Modi has announced the addition of ₹20,000 crore to the NABARD’s long-term irrigation fund, which will increase the corpus fund to ₹40,000 crore. He, however, refrained from mentioning how this fund will be utilised throughout the nation, especially at those places that are parched due to infrequent rainfall.
Once again deception on MNREGA funds
Last year when Arun Jaitley allocated ₹38,500 crore for the MNREGA, he claimed that the amount was the highest allocation for the erstwhile UPA flagship project that is the last vestige of the welfare state of the yesteryears; however, we soon found out that he was lying in the parliament as the highest allocation was done by the UPA government in 2010-11, when it allocated ₹40,100 crores for the project.
This year too, Jaitley lied again while declaring that he’s making the highest allocation for the rural welfare scheme after allocating ₹48,000 crores.
If we analyse the figures critically vis a vis the growing inflation and the declining value of Indian rupees and the increase of participants in the programme due to lack of rural employment and due to the reverse migration forced by the demonetisation exercise, we will find that not less than ₹70,000 crore is necessary for the healthy functioning of the scheme. The allocation made by Jaitley this year isn’t enough to meet the huge demand of rural employment post-demonetisation.
Recent findings released here, show under the Modi government the MNREGA has suffered huge setbacks in terms of man day creation and providing employment to Dalits and Tribals through the project. The only positive part is that the participation of the women increased than the previous years.
Whom the PMGSY plans to serve?
The Modi government’s Pradhan Mantri Gram Sadak Yojana (PMGSY) is specifically designed to provide better road connectivity in the tribal belts of the country and other areas that are affected by the Naxalite uprisings or are on the verge of a rebellion due to the brewing of mass discontent against the predatory corporate-friendly policies of the ruling clique.
When Arun Jaitley declared allocating ₹19,000 crore for the PMGSY, he clearly mentioned in an implicit way that the money will be spent on a priority basis in the areas that have prominent Naxalite influence.
The reason for building the roads, henceforth, becomes clear – the Modi government is least bothered about providing the farmers with better transport or logistical support to carry their produce to the markets, rather its road building programme aims at providing the central paramilitary forces with durable roads to reach out to the farthest corners of the rural or forest areas where the people are struggling hard to retain the ownership of their land and save it from the corporate aggression.
Rural housing and electrification – tall promises, questionable delivery
The Finance Minister has also proposed a sum of ₹23,000 crores for the Pradhan Mantri Awaas Yojana – Gramin (PMAY-G), a hike of ₹8000 crores from ₹15,000 crores allocated in the FY 2016-17. This rural housing mission will provide, as per the Modi government, concrete houses to one crore houseless people or people living in mud houses in the rural areas.
It’s not clear what was the achievement of the project last year and how many houses were provided to the rural poor under this scheme. Also, the Finance Minister didn’t share any criteria or state-wise plan to implement the project. It remains vague and dipped in the pool of ambiguity like many other so-called social welfare schemes.
₹4,814 crores are allocated to the rural electrification project, which is named under the Sangh stalwart Deen Dayal Upadhyay, and Arun Jaitley has made an unrealistic claim about providing electricity to all villages within 1st May 2018. Even if the Modi government connects all villages with the electricity supply cables, how much assurance can the government provide on power stability in view of the utmost energy crisis that has crippled the country since years?
Peril awaits for the Working Class
For the urban working class, the Modi government is planning something more nefarious than the previous governments and it becomes clear when a corruption accused Arun Jaitley makes the following claim in the parliament:
“We are keen on fostering a conducive labour environment wherein labour rights are protected and harmonious labour relations lead to higher productivity. Legislative reforms will be undertaken to simplify, rationalise and amalgamate the existing labour laws into 4 Codes on (i) wages; (ii) industrial relations; (iii) social security and welfare; and (iv) safety and working conditions.”
Earlier, the Modi government brought amendments to the colonial era labour laws to make them more draconian and to cripple the working class movement by depriving it of those fundamental labour rights that even the British colonial rulers never meddled with.
When a minister of the utmost corporate-friendly Modi government talks about protecting the rights of the labour and to provide “harmonious labour relations”, it becomes evident that they are planning something more heinous than what’s known so far.
The Budget for the Rich
The rich and the upper middle class of the country had their own catch in the Union Budget 2017-18; Sensex shoot up soon after the Finance Minister declared his intention to do away with Foreign Investment Promotion Board and give free reign to foreign monopoly and finance capital to rule the country.
The clique of bankers, stock brokers, angel investors, corporate tycoons, etc. hailed the Union Budget 2017-18 as a realistic budget that has scrapped ‘populism’, which these corporate sharks consider the enemy of their kingdom. Arun Jaitley did everything possible to appease their appetite.
To boost up the investor’s confidence in the Indian market, Arun Jaitley walked the same disinvestment route that the finance ministry has taken since the official inauguration of the neo-liberal economic drive.
By promising a compulsory listing of all central government owned public sector enterprises, including the Indian Railways’ owned IRCTC, IRFC, IRCON, etc. in the stock market, the Finance Minister gave a green signal to the international investors to get ready with their wallets to claim stake in the corporations that were built with public money.
The shameless advocacy for neo-liberal economic regime ruled the Union Budget 2017-18. Though it’s evident that the future trading on agro commodities is mainly responsible for the high amount of hoarding and stocking of such commodities, which results in skyrocketing prices, the government is still reluctant to further liberalise the commodity trading.
By bringing forth a framework, which will include rich farmers and feudal landlords for contract farming of commodities, the government is determined to carry forward the most devastating programme that is a fuel to the unchecked inflation in the country.
With no words uttered on the Prime Minister’s much popularised Bullet Train programme, the total allocation for the Indian Railways in the Union Budget 2017-18 was ₹1,31,000 crores out of which the government is going to provide ₹55,000 crores. The Finance Minister, during his maiden rail budget (clubbed in the Union Budget 2017-18), didn’t announce any new trains for the people; he also didn’t provide any relief to the passengers who are now facing over charging due to Tatkal rules and surge pricing formula applied by the Indian Railways.
Arun Jaitley followed the footsteps of the Railway Minister’s budget last year and laid stress on developing the safety and security system for the railway network. However, with lot of accidents, deaths, and mishap in the FY 2016-17, such promises doesn’t look credible anymore.
Fiscal priorities of the Modi government
The total expenditure of the Union Budget 2017-18 is ₹21.47 lakh crores. Defence gets the lion’s share of the expenditures among all other heads as it’s allocated ₹274,114 crores for the FY 2017-18. The spike in the defence allocation in the Union Budget 2017-18 at a time when the welfare schemes are running supply from dry pools is quite a signal regarding the focus of the government in the immediate future.
The revenue deficit of the government, after the reduction of the major welfare expenses, stands at 2.3 per cent, which the government is aiming to reduce to 1.9 per cent in the present year. The success of such reduction will depend upon how tight the purse strings of the government remains in the FY 2017-18. It’s evident that rather than following an austerity exercise in government’s non-planned expenditures and cutting tax sops given to corporates, the Modi regime will try to plug the deficit by culling the poor, i.e. by reducing the allocations and by delaying the expenditures in the welfare schemes.
Subsequent government’s in New Delhi had toed the line of the IMF and World Bank, and uncritically followed the prescription of globalisation and liberalisation. However, as the international finance and monopoly capital underwent a deep crisis in which it could not sustain the pressure, it tried to impose the burden of its failure and the burden of oppression on the people of countries of Asia-Africa and South America.
Though the government’s in New Delhi, of the BJP and its bete noire Congress, placed few of the so-called ‘populist’ budgets to win over electoral support, the implementation of promises made in such ‘populist’ budgets never saw the same amount of thrust and enthusiasm that the ministries and the bureaucracy exhibit while implementing pro-corporate measures. Thus, different welfare schemes of the government, advertised by spending millions of rupees from the public exchequer, didn’t bring any qualitative change in the lives of the poor and the marginalised people.
The Union Budget 2017-18 became another ‘balanced’ and ‘realistic’ budget that neither promised big nor even showed any concern for the cause of the poor in the country. Alike all budgets of the past, the Union Budget 2017-18 gave the same assurance to the big foreign monopoly and finance capital and their Indian accomplices regarding safety and security of their investment along with a promise to pay-back huge returns on investment.
Share your feedback on the story by commenting below or write to us firstname.lastname@example.org
Unsigned articles of People's Review are fruit of the collective wisdom of their writers and the editors; these articles provide ultimate insight into politics, economy, society and world affairs. The editorial freedom enjoyed by the unsigned articles are unmatchable. For any assistance, send an email to email@example.com