Budget 2020: Robbing People to Pay Corporate Cronies

In the Union Budget presented before Parliament on February 1, 2020, a vivid and shocking picture of how the Narendra Modi-led Bharatiya Janata Party government has destroyed India’s economy emerges. It also reveals exactly how a rich man’s sarkar goes about brutally increasing the burden on people in order to continue handing out concessions to the corporate world and turning the whole country into a source of profit.

Decoding the Destructive Slowdown

Due to neglect, mismanagement and perversion of priorities, the Modi government created a slump in the Indian economy. This has led to a massive dip in the government’s revenue. Gross tax revenue fell by Rs.2.98 lakh crore in a single year, a decline of over 12% over the target kept in Budget last year. Revenue from customs and excise duties fell by Rs. 30,904 crore and Rs. 51,988 crore, respectively. That’s a staggering dip of nearly 20% for customs and over 17% for excise duties. The goods and services tax collections fell by Rs.51,000 crore, an 8% decline.

In the face of this devastating slump, and knowing that revenues were sliding relentlessly, the Modi government announced a cut in corporate tax in August last year. Due to this, the revenue from this only major direct tax on corporates fell by Rs.1.56 lakh crore! That’s an unheard of dip of over 20%.

In a shameless attempt to hide these tax revenue declines and balance its books, the Modi government took an even more unprecedented step. It refused to pay states their share of revenues, as statutorily required. This cut amounted to Rs.1.53 lakh crore. This means that states were now bearing the burden of the Centre’s policies, including the corporate freebies. With this ‘saving’ the Modi government managed to cover up a chunk of the losses and show in its books a total decline of only Rs.36,740 crore. Meanwhile States were grappling on how to go about fulfilling their responsibilities without these mandated funds.

In such a way, the government covered up its partisanship towards the corporate sector and cocked a thumb at the people and the state governments. It also covered up the devastating effect of the slowdown in the process.

Spending Cuts

The Expenditure Budget for last year presented in this Budget reveals how the Modi government passed on the whole mess to the people. Remember: people across the country were already reeling under massive unemployment, price rise, loss of existing jobs, and cuts in income as a result of the slowdown. In such a dire crisis, not only were they expecting a strong move from the government to provide some relief, but increasing government spending would have also been a good way of tackling the crisis. More money spent by the government could have pumped up buying power in the hands of people, which, in turn, would have increased demand for goods and services, thus pushing up the economy.

But, blinded by its dogmatic belief in neoliberal policies, and ever sensitive to what global capital would like or dislike, the government adopted the very opposite policy. Over the year, it reduced spending on Central sector schemes by around Rs.97,600 crore, while funds for Centrally sponsored schemes (like MGNREGA, PMGSY, etc.) were cut by Rs.14,794 crore. In addition, various other central expenditures were cut by Rs.30,580 crore.

The impact of this was that diverse schemes and programmes suffered – work in rural job guarantee scheme, MNGREGA to house building under PM Awas Yojana, to rural road building under PM Gram Sadak Yojana) and so on. Directly or indirectly, this squeeze added to the misery and distress of people.

What it showed to people was that the Modi government doesn’t care for them. It is willing to sacrifice them for the benefit of corporate (both domestic and foreign) sections.

For getting a clearer picture of the all-round nature of this policy of funds squeeze, take a look at the chart below.

Food subsidy, which ensures that foodgrain reaches people at affordable prices, was cut by over Rs.75,532 crore. Spending on health went down by Rs.1,169 crore. Even spending on agriculture and allied sectors (like fisheries) suffered a squeeze of Rs.30,683 crore. These are cuts that would affect large number of people and on life and death issues.

That the Modi government was willing to do this so that it could fill up corporate pockets is a bitter lesson being learnt by Indians. It’s a great betrayal for those who voted Modi back into power just a few months back. Combined with all the other disastrous decisions recently taken by this government to fan communal flames and encourage strife among people, the Modi government’s record stands tarnished.