Indian Budget 2017 – All Words, No Substance


What does Budget 2017 of India hold for everyone?

The BJP Government has mastered the art of using the words to its political benefits. There is an ongoing campaign on TV where the bunch of Bollywood stars laud remonetisations. They roar Lets Remonetise India. As if remonetization is the nationalism. The first questions that they should have raised is why there was demonetisation.

After the Trump’s inauguration of the presidency, the best-selling book is Orwell’s 1984. It is a political satire on the authoritarian state in which the Ministry of Love is actually the Ministry of hate. The BJP government is using the words to convey exactly opposite of what they mean. A look at remonetization and its dialectal pole demonetisation completely forget that there has to be monetization.

Budget? Where is the money? What is the source of money?

The Government is the regulator and creator of money. It gets money from various sources. We all pay money to the Government through indirect taxation. The direct taxes (which are mainly income tax and corporate tax) are not paid by all, but through indirect taxation, we all pay money to the Government.

The receipts and the expenses are the two important components of the budget. It is constitutionally called the “Annual Financial Statement”.

The budget 2017 talks about two major policy decisions, which are long-term in nature: demonetization and GST. They may be useful to the economy in the future, but what we need is a long-term economic planning that will ensure social and economic justice. The economic policy should not just create a few High Net Individuals, but the gains of the economy must reach to all. Therefore though economic development is important, but the goal of the economic development is human development, which is captured in three important terms: growth, equity, and democracy.

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The economic development is only seen in terms of growth. The growth in the economy is measured in terms of growth rate of the GDP. The demonetization has shrunk the growth rate by 1 percent, which means, the growth is stunted. The Indian economy is mainly service-oriented now and Indian manufacturing sector is not globally competitive compared to its main economic benchmark, China.

How to increase the competence in this area?

The only answer is innovations. India is bullish on extending perks to companies like Apple to manufacture in India by giving it special concessions. It is fine to invite global manufacturers in India and India is still having the advantage of lower wages and what is called demographic dividends will continue to add to the economy.

The most important step will be raising the quality of education in India. This will be the single most important step to boost the economy in the medium and long range. Access to education at all levels is perhaps more important that the digitalisation of the economy.

While the budget talks about Asset Reconstruction Companies (ARCs) and managing them through what is called the “Bad Bank”, which will deal with Non-Performing Assets, it hardly talks about regulations that will stop the defaulters from using the banking system for their benefits.

Mallaya got easy loans without substantial paperwork at the tune of 150 crores and he defaulted. Access to loans is important, but there should be level playing field in the banking sector.

The Brahmin-Bania capitalism makes it easy for people from these categories easy accessibility to funds.

The strong regulatory framework will be more useful than creating a meta-structure to deal with bad loans. This large scale financialization of assets is detrimental in the long term. The reconstructing of the bad loans is toxic.

On the political funding issue, the budget talks about the “Bonds” which will be released by the RBI and these “political bonds” will be bought by the corporates and the corporates will donate these bonds to the political parties and the political parties can “monetize” it for their electoral purposes.

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The buyer and the donor of the bonds will remain “anonymous”. This is the political funding issue that is highlighted in the budget. It is the mockery of the political funding reforms. The Brahmin-Bania capitalists will only benefit the Brahmin-Bania led political parties.

What about the political parties led by the SCs, STs, OBCs, and Minorities? Instead of this James Bond style political funding, the Government can bring in the state-funding of the elections.

The SCSP and TSP were the paper policy to target the SCs and STs. This budget entrusted Niti Ayog (the so-called Policy Commission) to manage it. Effectively, the SCs and STs led body should manage it. [It is not the first time that SC/STs have been ignored by governments, in past also BJP/Congress governments have ignored SC/ST.]

Author – Mangesh Dhaiwale, Human Rights Activist

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