No relief for common struggling masses can be expected in 2024-25 budget
By Anil Rajimwale
The NDA-3 government will present the first budget of its third term on July 23 in the budget session from July 22 to August 12. The BJP-led government is widely expected to continue its policy direction claiming ‘reforms’. The dialectics of budgets and economic policies over the last decade have only served to strengthen the already massive stranglehold of financial corporations on the Indian economy.
In our public sector oriented independent economy, there is massive assault by Adani-Ambani, aided and abetted by the Modi government. Though it spells doom for our vibrant economy, this time it may not be that easy, as the BJP is in a minority and its allies from Bihar and AP are at its throat to extract concessions. The finance minister will have to indulge in some tightrope-walking.
In the joint address to both the houses of Parliament last month, our President claimed that the budget would be ‘marked by many historic steps’. The BJP-led governments, in states and Centre, have definitely made ‘historic shifts’ towards the corporate finance capital at the cost of people and the country.
Since the election results on June 4, there is only one talk in the official economic and political circles: equity and share markets going mad with ‘bullishness’. The big business is gripped with the mania of massive speculative opportunities. Nifty and BSE rose sky-wards after the NDA alliance led the elections. Papers are full of data on share markets and profits of the business giants, with the near complete exclusion of production and manufacturing reflecting the fact that nothing is going to be done for the people and a productive economy. Problems of boosting capital expenditure (capex) on infrastructure and urbanization and removal of trade barriers and problems raised by the misuse of the GST are some of the headaches that the government is facing.
Finance minister Nirmala Sitharaman met representatives from the infrastructure and energy sector as part of pre-budget consultations. The big industry wants the government to take steps to accelerate ‘urbanisation’. This is reflective of the productive capital going in a big way into the urban land and estate speculation to the exclusion of the MSMEs and other manufacturing units. Another section of industry, particularly the MSMEs, is simultaneously complaining about high and complicated rates of GST, affecting industrial production and sale. ‘HDFC Capital Advisors’ is betting big on housing plans to invest more than two billion dollars over two years across 15 cities.
A natural corollary at the opposite pole of the economy is the rapid and big fall in investments. CMEI data analysed by Bank of Baroda show manufacturing investments falling to a 20-year low in the quarter ending in June, to Rs 44,300 crore only. The previous lowest level was in June 2005.This despite tall claims of all round economic ‘growth’.
Yet, big Indian companies have raised a record Rs 2.5 lakh crore (30 billion dollars) in the equity market in the first half of this year, the highest ever figure for January-June period. It is double the amount for the same period last year.
Adani and Ambani have become the symbols of the financialisation and speculative nature of the Indian economy. Billionaire Gautam Adani is getting ready to start building ships at the Group’s Mundra port, the country’s largest, with the government at his service. India ‘wishes’ to become one among top ten shipbuilders, and the government finds no better alternative than Adani, at the cost of the public sector. Presently India is ranked 20th in the world.
It is interesting to note that Adani’s ship-building schemes have gone unreported previously, being hidden in the Rs45000 crore expansion plan for Mundra Port. Environment will be destroyed extensively but environmental and coastal regulation zone clearances have already been managed. Adani has taken advantage of the fact that the yards in China, S Korea and Japan are booked till 2028, forcing global players to look at India. But the Indian government has used the situation to side-track the public sector ports and yards.
Another planned ultra-large port is to be located at Vadhavan on Maharashtra coast, supposed to be among the ten largest worldwide. Of the estimated Rs76000 crore project under the PPP, Rs 37,244 crore will be contributed by the private sector. It will extensively destroy the rare mangroves, wetlands etc. No land acquisition is needed as it is ‘sea land’. Adani presently is the richest man in India with111 billion dollars, with Ambani at 108 billion dollars, positions fluctuating. In rupee terms, Adani may be worth around 7,00,000 crore (figure rounded). The richest in the world is Bernard Arnault with 207 billion dollars. Adanis’ daily income Rs 1600 crores (2022 data). The BJP government wants Indians to take pride in this ‘great achievement’, while facilitating the giants to grow bigger still!
While Adani has been accused of stock manipulations, inflating valuations, accounting manipulations etc, no action is contemplated. This at a time when the government is merrily arresting opposition leaders on corruption charges.
Government has targeted Rs one lakh crore for FY 2025 from disinvestments and ‘asset monetisation’, a respectable term to cover up the destruction of the public sector and its handing over to big business. The interim budget in February 2024 had clubbed both of them under the innocent looking ‘miscellaneous capital receipts’! So they are just capital ‘receipts’, and not sell off of hard earned public property?! ‘Monetisation’ is a cover for the destruction of the public sector.
Dalal Street of Mumbai is really sizzling with the equity mutual funds adding a record Rs 40608 crore in June, higher than 34697 in May. Kotak Special Opportunities is a big gainer. The net assets under management (AUM) in MF industry has reached a whopping 60 lakh crore mark. AUM is the total market value of all the assets under management. This money is garnered from the public for capitalization.
The SBI economists have suddenly released a strange report, advising the government to reduce its participation in the public sector banks because their financial health is good! The report also asked the government to clarify its position on the sale of the IDBI Bank.
The government and LIC are selling up to 61percent in the IDBI but the sale is stuck up due to RBI not granting ‘fit and proper’ recognition to any bidder. The interesting fact is that the government has not been able to sell the IDBI Bank despite its being reclassified as a private bank in March 2019.
Sales growth of the FMCG or ‘fast-moving consumer goods’ slowed down both in volume and value during the first two months of the June quarter. The slow-down is more pronounced in the urban areas. The overall FMCG growth fell by nearly half in April and May at 4 per cent. Demand for the daily groceries, essentials and household products is likely to continue to be muted in the present quarter.
The tendency of jobless growth is accelerating, a result of doling out sops to the giant business houses, in particular the Ambanis and the Adanis. It is the direct result of the decade-long policies followed by the Modi governments, accentuated due to the large-scale destruction of the MSMEs. Demonetisation, GST and rising imports created havoc for this sector.
A report by the American investment bank theCitigroup pointed out that India will need to create 12 million jobs every year for the next ten years to provide jobs to its youth. Even a GDP growth of 7 per cent will not create jobs.
Labour law violations are taking place in Amazon warehouse in Haryana (Manesar), electronics major company Foxconn’s Chennai factory, where women workers were discriminated against. Layoffs are becoming increasingly frequent.
The Ministry of corporate affairs (MCA) is contemplating wide-range revisions to the IBC or the Insolvency and Bankruptcy Code as also in the Companies Law. A creditor-led approach is further continued, wherein insolvency resolution would be adopted in favour of the larger firms, helping them cover losses.
Government wants to reduce the ‘compliance burden’ of the Indian corporate by bringing in some 100 amendments in the Companies Act 2013.Doing big business will be eased and the corporate houses will be freed from the ‘burdensome’ procedures putting hurdles in their path.
Wealth tax has already been abolished by the previous BJP regime. Besides, our big business houses and billionaires do not properly pay the taxes they should pay. They for example can indulge in ‘public charity’, which is not taxable. They can concentrate wealth and capital from people and then spend a pittance on their ‘charity’! Government keeps on appealing the companies to remember their ‘social responsibilities’!
It is bleak for the masses and bright for the speculative finance capital headed by the Adanis and Ambanis. Massive transfers of industrial, agricultural and artisanal capital is taking place into speculation and share markets, leading to accelerating emergence of giant billionaires. People have to sit up and take not, and roll back the trend. (IPA Service)