CPI (M) warns government against eco policies

As a result, the effective tax rate for the corporate sector is substantially less than the declared tax rate, says Sitaram Yechury.

The CPI (M) on Friday warned the UPA government of "mightier struggles" of the people against its economic policies if it did not carry out mid-course correction to fulfill its 'pro-people' commitments in the last budget of its five-year term.

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"This is the last opportunity" for the government "to effect a mid-course correction to redeem its own pro-people pledges in the Common Minimum Programme. This is the fifth and final budget of this UPA government," party Politburo member Sitaram Yechury has said.

In an editorial in the forthcoming issue of 'People's Democracy', he said if the government did not take such steps in the 2008-09 budget, then it "must be prepared to face broader and mightier struggles of the people against its policies".

Expressing discontent over the "criminal waste of opportunity to expand public investment" in agriculture and social sectors, Yechury said, "the reason why this happened, and unfortunately may happen again this year, is because of the neo-liberal mindset of our ruling classes.

"Instead of utilising the surpluses accruing through higher tax returns to finance public investment, the pre-occupation 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," he said.

Maintaining it was unfortunate that government was giving the 'lack of resources' argument for not increasing public expenditure in the sectors that affect majority of the people, the CPI (M) leader said this argument no longer applied.

This was because the last four budgets have seen governmental revenues growing on an average by at least 20 per cent more than the projected targets.

"This year the pre-budget estimates indicate that this target could well exceed by a whopping 40 per cent. The UPA government, hence, has the resources at its disposal to massively expand public investment" which would have given relief to a vast majority of the people, Yechury said.

However, as a result of the prevailing "mindset", benefits of higher revenues are "returned to the rich" through tax concessions instead of using them for the welfare of the poor. "Secondly, to the extent of tax concessions, potential future tax revenues are foregone.

On both counts, the divide between the 'shining' and 'suffering' India is bound to widen," Yechury said.