Union Budget 2012-13: The Well-to-do Must Tighten their Belts

by PANNALAL SURANA

“Great burden put on the people”—was the shrill cry of the electronic media after the Budget for 2012-13 was presented to Parliament. And what was repeated umpteen times? The A/c travel has become costlier, cigarettes, drinks, eating out etc. have become dearer. The gold and silver traders all over the country declared a hartal for three days in protest against the two per cent increase in the service tax.

All that is really amusing, if not exasperating.

One may discuss the wisdom of enhancing all those levies in various contexts. But it cannot be said that all that has made life of the common man more difficult. Any person having touch with ground realities knows it only too well that those are not items in the daily basket of the common man.

That the rise in revenue deficit for the current fiscal year has exceeded the estimated figure and shot up to 5.6 per cent is certainly a cause for concern. Who are responsible for that? It is revealed that the actual travel expenses of the Union Ministers would come to Rs 499.80 crores instead of the budgeted figure of Rs 46.95 crores. The lavishness of the Ministers is certainly deplo-rable. One finds that a Minster’s car is followed by a dozen or so cars of the officials. Why so much costly fuel is spent like water (well, that is also becoming costlier by the day)?The leaders of the ruling clique must be made answerable for that. But the main reasons for huge increase in the revenue deficit are less recovery of taxes and non-tax revenues and lower borrowings by the government in the open market.

The flow of foreign capital has also become slimmer. For the latter, let us not blame ourselves. There is great turmoil in the economies of the USA and European Union. That is beyond our control. We should welcome the decreasing inflow of foreign capital. Self-help is the best policy. Our rate of household saving is in the range of 34-35 per cent of the GDP. That is creditworthy. We can certainly plan our development programmes on its basis and the outcome would be commendable.
Let us give a go-bye to the obsession with the growth rate of 10 per cent. That is really not relevant. Instead, we should concentrate on the indices of human development like infant mortality, maternal deaths, falling sex ratio, rate of illiteracy etc. The rate of savings of corporate and public sectors must increase. Suitable policies should be devised. And the well-to-do sections should shed their craze for luxury goods and high-living. Simple, comfortable living is helpful for contented life and also for cultural creativity.

One Pulapri Balkrishnan, in an article in The Hindu of March 13, 2012, has lamented for the fall in public investment in general and in agriculture in particular during the last decade or so. In his opinion, the slowing down of the growth rate is a result of those two features. Our overzealous loyalty to the WTO prescriptions and imitating the rich North led to the lower public invest-ments. And we should never forget that agri-culture is the mainstay of our economy. If the income of the farmers does not increase, there is no growth in demand for manufactured goods and services. The speed of the whole process would then remain slow.

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WE must give up the TINA syndrome . We must take a bold stand that “there is an alternative to the free-market economy”. The citadels of capitalism for the last two centuries are crumbling under their own weight. Almost every analyst of the recessionary crisis in the USA says that the deregulation of finance capital in the 1970s is the root cause of the malaise. A number of commentators say that it is the greed of the handful operatives of the money market that is the cause of the calamity. As a way out, rigorous discipline is indispensable. In our country, financial institutions are well-regulated by the RBI. And many of the banks are owned by the government.

There is a demand from certain quarters for making the rupee convertible even on the capital account so that the inflow of FDI will grow. It is not desirable to expect foreign capital to help accelerate the rate of our development. The situation today is like this: rich countries are facing difficulties of increasing unemployment, heavy burden of sovereign debt, declining rate of repayment of the loans borrowed from the banks for building or purchasing houses, or defaults in redeeming credit card obligations. The share markets in those countries are facing a steep downturn. Not much capital can be expected to flow from those countries to the developing ones.
Another misconception needs to be corrected. When the protagonists of free market and globalisation ask for more and more privatisation, they mean “corporatisation”. Otherwise what is the justification for allowing 100 per cent foreign capital in multi-brand retail trade in India? For centuries, the retail trade here is being carried on by private traders—small or big. They are private proprietary concerns. Whatever the plus and minus points of that system, are they not private? Then why this clamour for opening retail trade in big cities to the corporate firms like WalMart? It is better to have decentralisation of retail trade and not disturb the employees engaged in it. If any initiative is to be taken, it may be done by promoting the joint cooperative societies of the producers and consumers.
Returning to the theme of Pulapri Balkrishnan, we must embark on an ambitious programme of public investment mainly in the agricultural sector. And we can do it because the rate of household savings is almost stable at the level of 34-35 per cent. The rate of savings of the public sector undertakings has also to be accelerated. A majority of them are earning profits. The case of petroleum concerns is special—because of perpetual increases in the prices in the world market. Sooner than later, we will have to discourage consumption of fossilised fuel as a measure to minimise the gravity of global warming and high proportion of deficit in our foreign trade. More than 30 per cent of our imports consist of oil. We cannot afford to bear the heavy burden of servicing foreign debts. And perpetual traffic jams in all urban areas are taking a heavy toll of the common people’s health and energy.

Pannalal Surana is the Chairman, Central Parlia-mentary Board, Socialist Party (India).