'Last opportunity for UPA to redeem its CMP pledges'

OPINION: Sitaram Yechury

This year's Budget is the last opportunity that this UPA government has to effect a mid-course correction to redeem its own pro-people pledges in the CMP.

An important feature of such a course correction must necessarily be radical measures to address the continuing agrarian distress. The CMP promised to substantially increase public investment in agriculture. This has not happened to the desired levels. To arrest the continuing distress suicides, it is necessary to liberate the farmers from the caprices of private moneylenders and their usurious interest rates. This requires the flow of institutional credit to the farmers to increase substantially. Yes, under the UPA government, institutional credit to the agricultural sector has more than doubled. Yet, nearly two-thirds of our farmers still need to depend, by force, on the private moneylender. Further, loans to farmers were to be given at the minimum interest rate. This was reduced from 11 per cent to 7 per cent by the UPA government, but not to 4 per cent as recommended by the M S Swaminathan commission.

Unless the access to credit is drastically increased, at the minimum interest rates, the continuing agrarian distress cannot be addressed, leave alone arrested. This would require a radical expansion and restructuring of the rural banking system.

Further, relief to the farmers would also require a rise in the minimum support price (MSP) that is assured for their produce. Under pressure from the Left, which highlighted the fact that the government was paying anyway between Rs 1,200 and 1,600 per quintal for wheat we are now importing, while paying only Rs 850 to the Punjab farmers, the government has now reluctantly raised it to Rs 1,000. However, in the case of paddy, it is still dithering. The MSP must be increased and the list of products assured of this support must be expanded.

In addition to tackling the agrarian distress, the CMP had promised increased public expenditures in various social sectors. Expenditure on education was to increase to 6 per cent of our GDP and on public health to 3 per cent, at least. Neither has happened.

This is, indeed, unfortunate since the 'lack of resources' argument no longer applies. The last four Budgets have seen, on an average, governmental revenues growing at at least 20 per cent more than the projected targets. This year, pre-Budget estimates indicate that this target could well exceed by a whopping 40 per cent. The UPA government, hence, had resources at its disposal to massively expand public investment.

Instead of utilising the surpluses accruing through higher tax returns to finance public investment, the preoccupation is to reward the corporate sector with further tax concessions in return for the higher revenues that they have contributed. As a result, the effective tax rate for the corporate sector is substantially less than the declared tax rate.

Two things happen as a result of this neo-liberal mindset. First, through tax concessions, benefits of higher revenues are returned to the rich instead of using them for improving the welfare of the poor. Secondly, to the extent of tax concessions, potential future tax revenues are foregone.

It is the same mindset that delayed the implementation of the NREGA by nearly three years. Similarly, the tribal land rights Bill has now become operational, after four years of this government.

Finally, one big hope that the people have from this Budget is relief from the current relentless price rise. The two most important measures to achieve this is to prohibit all essential commodities from speculative forward/futures markets and to strengthen the PDS.

(Excerpts from an editorial in the latest edition of CPI(M) mouthpiece People's Democracy)