The Economic Survey, which reads like a political defence of the Modi Government, has little hope to offer the crores of workers and marginal farmers reeling under the impact of the pandemic. Astonishingly, it actually describes as "humane" the government's handling of the pandemic.
The life-threatening experiences of crores of migrant workers, hundreds of whom did lose their lives, stranded without any help because of the arbitrary manner of the imposition of the lockdown within barely a day of its announcement, is airbrushed out of the Survey. This illustrates why the credibility gap between what the government claims and what the reality is will not be reduced by the survey.
Look at the hype of the projected V-shaped recovery. A -7.7 per cent contraction in FY 2021, followed by an estimated 11 percent growth over this in FY 2022, "the highest since independence." Assuming the estimates turn out to be accurate, it actually translates into an overall growth of just 2.45 per cent in these two years taken together.
Moreover, "Growth" is seen as the panacea for all the ills of the economy without any regard for a scrutiny of the path of that growth. It states: "Economic growth has a far greater impact on poverty alleviation than inequality... redistribution is only feasible in a developing country if the size of the economic pie grows." It is precisely this self-serving argument that the largest mass mobilizations of workers and farmers have described as "pro- corporate."
Inequalities in India are obscene. According to Oxfam's recently-released report, "In January, the richest 1 per cent hold more than four-times the wealth held by 953 million people who make up for the bottom 70 per cent of the country's population, while the total wealth of all Indian billionaires is more than the full-year budget."
There is nothing "natural" about this huge accretion of wealth by the few, including through a set of policies like the generosity in waiving off corporate loans, giving huge subsidies to corporates, and bringing down the effective tax rates through a slew of exemptions, especially for some sectors such as petroleum products and power sectors in which the effective tax rate is calculated to be just 20-21 per cent.
To propagate that busting inequalities will not help poverty alleviation is a justification for not taxing the super-rich, who, even in this period of pandemic, have shown in several sectors an increase in profits. Instead, the Survey makes it clear enough that the government is going to continue policies which, in the name of "growing the economic pie", actually promote corporate interests on the basis of the failed and discredited "trickle down" theories that if the rich get richer through government policy largesse, some of it will trickle down to the poor.
This has not happened in India. The high unemployment rates bely the rhetoric of the demographic dividend once again repeated in the Survey. As is known, though not admitted in the Survey, India was already in recession when the pandemic struck. In this period, the huge loss of jobs and livelihood were well-documented by the Centre for Monitoring the Indian Economy (CMIE). Its latest report reveals that the number of unemployed went up by one crore persons (to 38.7 million people) as a result of loss of jobs between November and December 2020. This is higher than before the lockdown. The CMIE states "the deterioration in labour market conditions was across urban and rural regions" which "raises concerns about the recovery process."
There were, according to the CMIE, 427 million people looking for jobs in December 2020. Will the growth process predicted by the Economic Survey automatically lead to an increase in jobs? The figures available for the manufacturing sector show that labour-intensive industries are not doing well. But employment creation in the manufacturing sector has received no attention in the recommendations of the survey. The emphasis is on tech firms, digital India and mainly capital-intensive industries which may add to growth, but it will at best be job-less growth, if not job-loss growth.
Can there be poverty alleviation without the guarantee of jobs? In the absence of jobs, will the government guarantee any unemployment allowance as part of social security frameworks adopted by many countries across the world? The prescriptions offered by the Survey do not address this central issue of unemployment.
There is an outright defence of the three farm laws. Even though this was expected, what the Survey does is add to the substantive concerns being raised regarding food security by the farmers' movements. The emphasis in the Survey is on how to cut down on food subsidies. It underlines the various reports of the government on farm reforms to make the point that the current policies of guaranteed MSP, open-ended procurement leading to surplus stocks, supplying the PDS foodgrains at low, fixed prices is untenable. The proposal in the Economic Survey is to raise the Central Issue Prices of foodgrains under the Food Security Act. As it is, prices of essential commodities have been going up.
Government revenues through increased cess on petrol and diesel is as much as 3.3 lakh crores rupees, an increase of 94 percent over 2014-2015. But the continuous hikes in petrol and diesel have had a cascading impact on the rising prices of essential commodities, ignored by the Survey. At present, there are over 5 crore tonnes of foodgrains in government godowns, well above the buffer stock norms.
In a country ranked among the lowest in the Global Hunger Food Index, it makes moral as well as economic sense to universalise the system and increase the current allocations to a minimum of 35 kg per family. The present controlled prices of foodgrains of Rs 3 for a kilo of rice and Rs 2 for wheat provide critical relief to crores of families in rural India who spend more than half their income on food items. Any plan to increase prices will seriously impact the lives of the poor and food-insecure households in a country that has the dubious distinction of having the largest number of undernourished people in the world.
The emphasis on cutting down on food subsidies also has a direct impact on the issue of procurement and MSP. In fact, all the "reform" reports quoted in the Survey have recommended cutting down the procurement and doing away with MSP. In so far as the policy prescriptions of the Survey reflect the thinking of the government, it only confirms the apprehensions of farmers.
The Survey makes the argument for privatization of the public sector except for "strategic industries." It boasts of the reform measures towards increasing "ease of business." It is ironic that this is the only area where India has improved its global ranking, while its rank in indices related to hunger, gender inequality, democracy, press freedom are quite dismal. But in any case, which are these "strategic industries?" From defence to space exploration to telecom, power and mining, banks and insurance, everything has been opened up for the private sector. So what is strategic?
It is interesting that on the very day the Economic Survey was released, the Parliamentary Standing Committee on Public Undertakings, headed by BJP MP Meenakshi Lekhi, raised this question of " strategic industries" and, according to press reports, asked for pharmaceutical industries to be included as "strategic" and raised questions about the privatization of "the national airline." The Survey declares that the project of privatization of the Railways has moved forward with an expected investment from the private sector of 30,000 crore rupees. Private trains are likely to be introduced in 2023-24. Soon, there will be 150 pairs of private trains running in India and the private entities "shall have the freedom to decide on the fare to be charged from its passengers." So, an essential lifeline for crores of Indians is to be handed over to private entities who will have full freedom to decide fares. It is these policies which cause inequalities and make poverty alleviation a mirage.
The Survey does an amazing display of acrobatics in wriggling out of its own constructed iron framework of fiscal fundamentalism. Finding that there was no way of meeting their self-imposed fiscal deficit norms, given their estimates of revenue generation, the Survey does a U-turn and states that "the Survey endeavours to provide the intellectual anchor for the Government to be more relaxed about debt and fiscal spending during a growth slowdown and economic crisis." Here is an indirect admission of the crisis. But it is useful to remember that when people most needed the assistance, the government provided a meagre stimulus package, which was less than 2 percent of the GDP, and refused to provide cash assistance to people. Even, now the central government is punishing states by cutting their fiscal allocations in various ways if they "overspend."
The world over, even governments committed to the same set of neoliberal policies as ours, have spent money through cash assistance and employment-generating programmes to strengthen domestic demand and revive their economies. Increasing the purchasing power of the people is critical for economic recovery. But even while shifting from its earlier position, the Survey makes it clear that this is only to "help crowd in private investment" and not to help increase the purchasing power of the people in any direct way.
The prescriptions of the Economic Survey to deal with the economic crisis will not help the people of India. Every chapter in the two-volume survey starts with some famous saying. It should end with a saying attributed to Abraham Lincoln - "You can fool all the people some of the time and some of the people all of the time, but you cannot fool all the people all the time."
Brinda Karat is a Politburo member of the CPI(M) and a former Member of the Rajya Sabha.
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