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All sound, no fury

The UPA’s economic policy has failed to pull many out of the poverty trap. This budget, the UPA must cut the rhetoric and ensure tangible benefits, writes Sitaram Yechury.

india Updated: Feb 22, 2010 23:04 IST

The budget session of Parliament has begun with the customary address by the President. This address constitutes a balance sheet of the government’s work in the past year and its projections for the coming year. This naturally would require a stricter scrutiny in the days to come.

It’s only natural that the country’s expectations revolve around the forthcoming budget. The foremost question that preoccupies most of India is whether the budget will be able to contain the runaway rise in prices of essential commodities and provide relief to the people. The budget, in fact, has very little to do in this direction. The government’s failure to control this price rise is not because of any budget proposals. It is because of its refusal to undertake the obvious measures that are needed. For one, much of this price rise is due to speculative commodity trading. Trading corporates have reported profits ranging from 150-300 per cent while foodgrains prices have been rising at an annual rate of nearly 20 per cent.

Further, this rise in prices, particularly in the case of sugar, has been due to extremely injudicious decisions taken by the government. When all projections showed that sugar production would be much less than the anticipated demand, the government decided to export sugar instead of keeping a buffer stock. Worse, it has now decided to export 10,000 metric tonnes of sugar to the European Union (EU) despite the fact that sugar is selling at more than Rs 50 per kg at home.

One sure way of containing prices would have been to strengthen the public distribution system and sell foodgrains at controlled prices. Acting quite to the contrary, the government decided to reduce the release of foodgrains for above the poverty line population (APL) to the tune of nearly 70 per cent — for instance, Kerala was receiving 1.13 lakh tonnes at Rs 8.90 per kg, under this category which was reduced last year to a mere 17,000 tonnes. Now, all states are being offered to procure rice at Rs 17 per kg. Far from reducing prices, this will only compound the problem further. The people’s expectation that this budget will provide relief on the price front will remain unrealised as the decisions have to be taken elsewhere, outside the budget.

Another expectation is on the continuation of the stimulus packages that are widely believed to have protected India from the global recession. The Rs 2.18 lakh crore stimulus in various packages was seen by the Reserve Bank of India as having increased the money supply in the economy, which provided grist to the inflation mill. It has, therefore, set out monetary policy measures aimed at reining in Rs 36,000 crore.

Concerns over the burgeoning fiscal deficit may well dampen the continuation of the stimulus packages.

While we will have to wait for the budget to see how the finance minister will address these concerns, the majority of the people are preoccupied with seeing if the budget will initiate a new process of inclusive growth that would be a departure from the last two decades of liberalisation. When Manmohan Singh as the finance minister ushered in the neo-liberal regime in 1991 with the budget that year, it was officially estimated that 34.5 crore of Indians were below the poverty line — or nearly 41 per cent at that time. In 2009, according to the latest Suresh Tendulkar Report, 37.2 per cent of India or 43.8 crore are below the poverty line today. While percentages may serve academic analysis, the real world sees absolute numbers. These two decades of neo-liberal economic reform have seen nearly 10 crore more Indians sliding into poverty.

The World Bank, however, estimates that India is home to one-third of the world’s poor, with nearly 46 crore people or 42 per cent under the global definition of poverty. Forty six per cent of the world’s malnourished children are Indian. In 1991, India ranked 121 out of 160 countries in the Human Development Index. Two decades later, we are at 134, among 182 countries. Therefore, the findings of the PM-appointed National Commission for Enterprises in the Unorganised Sector, which showed that 77 per cent of Indians survive on less than Rs 20 a day, are no surprise.

The big question for India before this budget is whether it will change the trajectory of the last 20 years and move meaningfully towards an inclusive growth path. While the images of an ‘emerging’ India rubbing shoulders with the G-20 at the high table dominate media attention and raise aspirations among people of a superpower status, a vast majority of our people continue to aspire to just get the next meal.

The takeover of public utilities and till-recently state-supported social sectors like education and health by the market forces have added to the woes of the people. The latest data of the National Sample Survey Organisation shows that nearly 4 crore people have been pushed into poverty due to expenditures on health alone. Will this budget attempt to reverse these trends? Mere rhetoric of flagship programmes of Bharat Nirman and concern for the aam aadmi will not provide any tangible relief to the people.

Sitaram Yechury is CPI(M) Politburo member and Rajya Sabha MP.

The views expressed by the author are personal.