The BJP, like all parties of the far right, claims to serve the peoples’ interest. Its success lies in getting its slogans right. In reality it serves only the rich. In the last two years, the wealth of India’s richest 1% population increased from 58% in 2016 to 73% of the total wealth generated in the country in 2017, according to a new survey by an international rights group.
WORLD’S LARGEST OPPORTUNITY FOR PRIVATE INSURANCE COMPANIES
In the BJP government’s Budget Statement 2018-19 (BS) it has promised ‘the world’s largest government funded health care programme’ for secondary and tertiary healthcare, through health insurance, that will reach 10 crore families or 50 crore individuals. What the mountain of budget papers do not tell us is where the money for this will come from, how will it be funded and how will it all work. It is also widely accepted, including by government, that the problem with the heath system, including from the primary stage, is the lack of infrastructure, affordable healthcare and access to medicines. Yet there is no increase in government expenditure on healthcare. Hence while creating the opportunity for private insurance companies to make more money from common people, the BJP is looking at this as its 2018-19 election campaign slogan.
EMPTY PROMISES ON JOB CREATION, NOTHING ON WAGE INCREASE
Electoral politics apart, the BS leaves no doubt that the BJP is committed to the most extreme form of economic conservatism which holds that if you fix the supply side of the economy everything will fall into place. This effectively comes from the understanding that economic growth can be achieved by lowering taxes and decreasing regulation which will benefit the rich who will buy more goods and services at lower prices and thereby employment will increase. However, there has perhaps been no point earlier when there has been such wide political consensus that for the country’s economic revival, government policy must foster more investment, job creation and stability of the agricultural sector. This in effect is the wish list of the BJPgovernment’s own Economic Survey 2017-18 (ES) tabled in parliament on 29 January 2018. Both investment and job creation are at levels lower than when the BJP came to government in May 2014.
Saving and Investment: From May 2014, wage growth has been low. Nominal wage rate growth had fallen sharply after 2014 to 5 per cent per annum from a high of more than 15 per cent during 2008-2013. As a result working people are spending a larger part of their earnings and saving less. The structure of our economy is that savings of working people are an important contributor to investment. In effect the BJP has pushed the economy into a downward spiral of declining or low wages, low savings, low investment and therefore no job creation leading to unsustainable economic growth. To add to this, the private sector, whose investment is low, are investing less in plant and machinery, which creates jobs and raises earnings, and more in real estate and the financial sector, which does not contribute, in any significant way, to job creation and better wages. Worse still Micro, Small and Medium Enterprises (MSME) too are investing less in plant and machinery than they were doing before the BJP came to government.
Social Security and Social Protection: The urgent task before the BJP government was to stimulate earnings of working people. A clear mechanism of doing so is by increasing government expenditure on social security and social protection. With the exception of the Anganwadi programme which has received an increase in expenditure after a gap of three years, government expenditure on the NREGA, healthcare, housing and education (including the Mid-Day Meal programme) have declined when adjusted for inflation. Again the BS promise of ‘a house for every family by 2022’ is not supported with budgetary allocation. Further, the rate at which houses are being built, every needy family may get a house by 2166, if at all.
Further, the BS promises a reduction to 8 percent in the employees’ contribution to PF for newly employed women workers ‘in order to enable higher take home pay’ for the first three years. This undermines the retirement benefits of women workers’ increasing their dependence on men in their old age. It also plays on the sentiment that women workers are sent out to work by men in their families to bring in more disposable income. Higher ‘take home pay’ could even encourage employers to lower women wages. This is being introduced despite the ES’s admission that India has amongst the lowest women’s participation rates in the workforce and some of the widest pay disparity between men and women workers.
Job Creation: On employment, the BS claims that the BJP government created 70 lakh jobs in the organised sector. This is based on provident fund data which does not tell us about the continuity of employment, or even on continuity of PF payments by employers. In contrast the same study also confirms that only 5 lakh workers were newly registered under Employment State Insurance. It is more likely that this is a more accurate figure of new jobs created in the last year.
The BS celebrates its proposed amendment to the Industrial Employment (Standing Orders) Central Rules, 1946 in order to extend Fixed Term Contracts (FTC) to all sectors as also the tax incentives to companies for creating new jobs. These tax incentives and FTCs will encourage employers to create more short term jobs turning India into the haven of irregular jobs as confirmed by the International Labour Organisation. Not just would this affect the earnings and quality of life of working people, it would have a boundless impact on skilling and therefore on capacity to innovate of our manufacturing sector and its productivity. This would undermine medium- and long-term competitiveness and sustainability of the entire economy.
NO BUDGETARY ALLOCATION FOR INCREASED MSP
Based on data in the ES, agricultural growth is at less than 2% as compared to the previous year. The only solution the BJP government has for agriculture is a promise that it will fix the Minimum Support Price (MSP) at 50 percent above the cost of production. If that were to be done it would mean that the price of paddy would go up by 45 percent based on current production prices. This would have a significant impact on food price inflation. The increase for the provisions of the National Food Security Act have been raised by 21 percent a real increase of about 15 percent which would be far from sufficient to meet the concomitant inflation. This however should not be our concern, since the government will not increase the MSP by 50 percent as the BS makes no allocation for it. This is merely a case of putting out a slogan and a promise, to ‘double farmers’ incomes by 2022’, in response to the enormous countrywide protests by farmers.
LESS GOVERNMENT MORE GOVERNANCE: STRIPPING THE PUBLIC SECTOR TO BENEFIT THE PRIVATE SECTOR
Despite the BJP governments’ self-claimed sound fiscal management there are two important issues on which the BS failed to draw parliament’s attention leaving the detail in the documents. First, in the current (2017-18) financial year government borrowing has gone up by 35 percent. Second, the BJP government’s claim that it has gained nearly Rs. 100,000 crore from disinvestment is not entirely true. The BJP government has got the public sector financial sector, especially the Life Insurance Corporation, to purchase equity in public sector corporations. In addition, in one single transaction, the Government of India transferred all its shares worth Rs. 40,000 crores in the Hindustan Petroleum Corporation to the Oil and Natural Gas Corporation. In addition, the BJP government has drawn Rs. 107,000 crores as dividends from public sector corporations, banks and the Reserve Bank of India. This works out to nearly 12 percent of government expenditure. Loans and public sector pay outs taken together comprise one out of every three rupees of government expenditure. This is an indication that the BJP government failed to meet the very targets of fiscal discipline it set for itself and therefore had to borrow more than estimated. This puts under question the very stability of our economy since neither can government borrow endlessly nor can the public sector go on making the kind of pay outs it is making and remain viable.
Added to this, the BS has reduced the tax on company incomes from 30 percent to 25 percent for companies with turnovers between Rs. 50 crores and Rs. 250 crores. This is for the apparent benefit of MSMEs offering a rather wide definition of them. This will create an environment in which companies will not have the incentives to increase productivity and gain competiveness through achieving economies and technology of scale but merely encourage them to create subsidiaries and outsource their operations. This also runs in contradiction with the much celebrated BJP government’s ‘Make in India’ efforts for global competitiveness which necessarily requires a critical scale.
The BJP government further believes that it can impoverish the public sector and yet grow a stable economy. In particular this is the case with the public sector financial institutions. The BJP government has placed these institutions in jeopardy by pressing so called global best practice on the matter of non-performing assets or bad loans. Bad loans, all given out to the private sector, are a creation of corruption. Rather than addressing the cause of corruption the BJP government has placed the entire burden of bad loans on public sector banks. Were the BJP government to succeed in passing the Financial Resolution and Deposit Insurance Bill then it will have obtained for itself the instrument to entirely undermine the public sector banks, which are holders of working people’s savings.
SABKA SAATH SABKA VIKAS?
Nothing symbolises BJP’s cynicism about people better, as it prepares for the next general election, with the sharp reduction of budgetary allocation for the Programme for Minorities Development from the already paltry Rs. 3905 crores this year to Rs. 1440 crores for the next year. This is a drop of 65 percent. The BJP believes that it can continue to claim to stand for working people and the working poor while in reality it serves only the rich and sustains its attacks on the labouring, the socially disadvantaged and the discriminated in society.
Defeating the BJP must be our primary task.