A capitalist budget pretending to be ‘pro-peasant’ and
‘anti-inflationary’

The Union Budget for 2007-08 was presented by Finance Minister Chidambaram in Parliament on 28 th February, at a time when agrarian crisis and rising consumer prices have become major concerns. Chidambaram devoted a large part of his budget speech to agriculture, but the resources allocated remain a miniscule portion of the total expenditure of the central government. He announced one minor concession in the form of a temporary ban on forward trading in wheat and rice. Overall, he maintained the UPA Government’s commitment to facilitate maximum profiteering by monopoly capitalist corporations, Indian and international, through maximum plunder of the land and labour of the country.

Nothing has been offered to the peasantry except more of the same – more districts to be covered by NREGA, a little more money for Bharat Nirman, etc. The minor concession of temporarily halting forward trading, only in two commodities, is like a palliative. It is aimed at preventing the agrarian crisis from developing into a major political crisis for the rule of the bourgeoisie.

It is useful to reiterate the most immediate demands of the working class and people on the question of inflation, which were presented in the previous issue of People's Voice. They were the following:

• Stop RBI purchase of US Dollars to prop up its value and keep the Rupee cheap
• Moratorium on interest payments by central and state governments – redeploying the money saved to provide for people’s needs
• Immediate halt to forward and futures trading in commodities
• Social control over trade to ensure adequate supply of essential commodities at affordable prices for all.

Finance Minister Chidambaram has conceded only one of these four demands, and that too only on a temporary basis. The fact that forward trading has been temporarily banned shows that the rulers are forced to admit that such speculative activity threatens the security of livelihood of the toiling majority. It is aggravating the insecurity of the peasantry and eating into the meager purchasing power of the working people. Why not ban such activity altogether? Why only for the time being? And why only for wheat and rice? The reason why the UPA Government does not want to extend the ban is because it would restrict the space for profiteering by the big capitalists. The workers and peasants must use the minor concession to strengthen their case for demanding a complete ban on forward trading in all commodities.

No change has been announced in the RBI policy of keeping the Rupee cheap by purchasing US dollars, which is adding to excess money in circulation and fueling inflation. This and the fact that the temporary ban on forward trading is restricted only to wheat and rice show that the UPA Government is not really serious about addressing the problem of inflation. It is committed to pursue the agenda of the big bourgeoisie – of globalisation of Indian capital through privatisation and liberalisation.

The Plan allocation for Agriculture & Allied Activities is about Rs. 8500 crore, or just 1% of total expenditure estimated in 2007-08. Another 2% has been allocated to Rural Development. Considering that over 60% of the population depends on agriculture and over 70% live in rural areas, allocating just 4% of Plan outlay for agriculture and rural development cannot be called a ‘pro-peasant’ or ‘pro-rural’ budget. (See Fig.1)

The Budget for 2007-08 continues the tradition of past years as far as the parasitic nature of central government finances is concerned. Out of the total revenues collected and retained by the central government in 2007-08, including all taxes and fees and non-debt capital receipts, 48% will be consumed by interest payments and defence expenditure (See Fig.2). If principal loan repayments are also included, almost the entire revenue will be eaten up by these unproductive outflows. All other spending has to be financed by additional borrowing, which is estimated at about Rs. 150,000 crore in 2007-08 (See Fig.3).

The increased allocation for defence serves the ambition of the Indian bourgeoisie to become a global military superpower. It will finance the new security architecture that the Indian bourgeoisie is putting in place in the South and South-East Asian region. The debt service payments are handouts to big external and internal finance capitalists. Both defence and debt servicing represent a drain – a redistribution of income from the working people to the parasitic money lending institutions.

The Budget for 2007-08 reveals once more that the UPA Government, like the NDA before it, is a government of the big capitalist class. It is anti-worker and anti-peasant. People cannot afford to have any illusions on this score.