Editorial

Union Budget 2013-14

The Union Budget presented before the Parliament is unique in that it is not read out on the floor of the lower house as in previous years, but was agreed upon as read since the sheets containing the purported budget speech bound as a book was delivered to the members of parliament beforehand and concurrently uploaded on the website for the media to comment on the same without delay. This saved the members from the drudgery of sitting through the entire day-long proceedings that usually last more than 12 hours as well as from the monotony of listening to what they can hardly understand without the help of experts in public finance provided to them by their respective parties at government cost. Such is the state of absurdity to which the ruling class has reduced the parliamentary politics in India by setting this example!

The budget makes provision for an estimated expenditure of 16.65 trillion (1 trillion=1 lakh crore) rupees in 2013/14.The number in the previous year was revised at 14.30 trillion rupees. Non-plan expenditure accounts for 11.10 trillion rupees and the plan expenditure has been put at 5.55 trillion rupees. Rupees 100 billion (1 billion=100 crore) has been set aside for food insurance bill that will be passed possibly in the current session. The government targets revenue earnings in the direct taxes category at 133 billion rupees and 47 billion rupees through indirect tax. Also the government has set a target of collecting 558.14 billion rupees through sale of PSU shares. The government expects to earn revenue of 408.5 billion rupees from airwave surcharge and auction of telecom spectrum license fee in 2013/14. Gross market borrowing is set at 6.29 trillion rupees of which new borrowing in 2013/14 fiscal will be 4.84 trillion rupees. The government plans, in addition, to collect 198.44 billion rupees through short term borrowing. With the implementation of the proposed fiscal measures, the government seeks to narrow the extent of fiscal deficit.

In the external field of India's international trade,export earnings never match expenditure on imports leaving a significant current account deficit. Each year's current account deficit is added to previous accumulation of deficit in balance of payments. The external value of rupee declines regularly as a matter of routine. Agreeing to RBI concern the government admits it needs US$ 75 billion this year and the next year to fund current account deficit. However the fiscal deficit in the current year is seen at 5.2% of GDP and in 2013/14 the figure will be lower at 4.8% of GDP. Faced with huge fiscal deficit India has no choice but to rationalise expenditure, the Finance Minister said. The budget admits that food inflation is a cause of worry.

The budget allocates 2.03 trillion rupees for the Ministry of Defence. It is about 15% increase over allocation in the current year. Agriculture gets 270.49 billion rupees and rural development is set to receive 801.94 billion rupees. Subsidies on account of petrol and diesel which is currently at 968.86 billion rupees will decline to 650 billion rupees in view of phased opening up of petrol prices to international market forces. Allocation for food subsidy has been increased from 850 billion rupees to 900 billion rupees. Allocation for fertiliser subsidy has been set at 659.7 billion rupees.

Income tax rates have been kept at previous level more or less. Only a minor sop of 2000 rupees has been given for annual income up to 5 lakh rupees. A surcharge of 10% has been levied for annual incomes at or above 1 crore rupees. A surcharge of 10% has also been levied on domestic companies having annual income of more than 10 crore rupees. For foreign companies who pay higher rate of corporate tax the surcharge is raised from 2% to 5%. Commodities transaction tax (CTT) for non-agricultural products has been introduced.

The importance that the Defence Ministry gets in terms of allocation of funds and further assurance of more allocation within the fiscal year is significant. The government is at war with its own people in the wilds and wastes. The state and central police forces are not adequate to counter resistance, non-violent or violent, of the people there in the heart of the country for maintaining calm and tranquillity, status quo ante, by not allowing the state power to give away the hidden or known resources to foreign monopoly capital in the name of growth and development. India's army and air force which are meant for defending the country against foreign aggression have already been deployed to combat and crush the resistance of the people by sheer military power. A new variety of military hardware like those employed by the US forces in Vietnam or more sophisticated ones that are being deployed in Afghanistan and adjoining areas of Pakistan are sought to be added to the Indian arsenal for crushing Indian People's War against wanton loot and arson of vital resources for the benefit of profit of global monopoly capital. These hardware and software are very costly but are of foremost priority for the government's service to foreign powers. Hence this new variety of military hardware must be purchased. That is one front of the government's battle against its own people. The other front is to keep the starving people fed along with keeping the middle class happy. The general election can take place any time soon whenever the government finds the mood of the electorate satisfied with the sops allowed in the budget. Another prop on which the budget seems to be erected is the promise that the foreign rating agencies need not be worried about the status of India as an investment destination for foreign imperial capital. All national and regional parliamentary political parties are wooing foreign capital. Even those among the parliamentary parties who resist foreign investment in retail businesses or in other areas camouflaged under the heading of an Indian company are elated to accept direct foreign investment in all varieties of non-retail businesses. Therefore the budget sends the message to the rating agencies as well as to the foreign investors that India will leave no stones unturned to keep the invested foreign capital safe for America and major western powers including Russia.

Mr Chidambaram completely buried the labour issue and, the long-standing demand of trade unions for a social security net for the 43,00,00,000 strong unorganised sector workers was ignored. In the budget scenaio they don’t exist, albeit Unorganised Workers’ Social Security Act was passed in 2008.

Frontier
Vol. 45, No. 35, Mar 10-16, 2013

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