FINANCE MINISTER’S PRE-BUDGET CONSULTATION

FINANCE MINISTER’S PRE-BUDGET CONSULTATION

UNION finance minister P. Chidambaram invited the central trade unions for pre-budget consultation on 3 January. All central trade unions and, on behalf of CITU, its general secretary Tapan Sen and secretary Swadesh Dev Roye participated.

Finance Minster, giving overview of the economic situation, pointed out about burgeoning fiscal deficit and stressing upon his priority on containing the same; about economic slowdown and declining GDP rates; and about dwindling investment situation. Of course, he did not fail to express optimism on soon overcoming the critical situation.

Trade union representatives, almost in one voice, expressed concern over the miseries of the working people due to anti-people and biased economic policy of the government; opposed the banking reform bill; opposed increasing FDI limits and disinvestment in insurance and FDI in pension; FDI in retail; about continued non-response of the government on the basic demands of the entire trade union movement in the country despite repeated persuasion; conveyed their unanimous resolve to go in for two-days countrywide general strike on 20-21 February; and wanted the government to take appropriate remedial actions.

Intervening in the discussion, Tapan Sen, reiterating the unanimous demands and suggestions of the trade unions for a directional change in the economic policy regime; said that no democratically elected government should resort to drastic cut in providing relief to common people in the form of subsidies on food, fuel etc for containing fiscal deficit. Such subsidies accounts for only 1.78 per cent of GDP. On the contrary, the government should reign in the huge subsidies being doled out to hardly one per cent of population — the big business and corporates - in the form of tax concessions and indulgence to tax defaults, which has been continuously increasing every year reaching almost 4 per cent of GDP at present. A directional change in attitude as well as policy regime is required in this regard.

Sen strongly opposed disinvestment of PSUs, deregulation, privatization in financial sector, entry of foreign agencies in pension and in bank/insurance in the interest of national economy.

He also demanded adequate financial allocations through public investment in agriculture, health and specifically for providing statutory wages and social security for the workers deployed in various central government schemes like ICDS, ASHA, Sarb-siksha, mid-day-meal, National Child Labour Project etc.

All central trade unions submitted a signed joint memorandum containing their unanimous suggestions for incorporation in the forthcoming budget. The trade unions also demanded post-budget consultation on budgetary proposals as the government is usually holding every year with the industry/business organizations.

Excerpts from the joint memorandum

Proposals for toiling people include –

- Effective measures to arrest spiraling price rise and contain inflation; ban on speculative forward trading in commodities; universalisation and strengthening PDS; rationalization of tax/duty/cess on petroleum products with a view to reduce the burden on people;

- Massive investment in infrastructure by the government; more budget allocations in plan and non-plan provisions to create more jobs and guarantee consistent income;

- Minimum wage on the basis of the recommendations of 15th Indian Labour Conference (ILC);

- All investments towards income generation and to create permanent assets, with retention and increase of jobs;

- Creation of a welfare fund for unorganized workers, including the agricultural workers;

- In view of huge jobloss and mounting unemployment, lifting of ban on recruitment in governments departments, PSUs and autonomous institutions (including recent Finance Ministry’s instruction to abolish those posts not filled for one year) as recommended by 43rd ILC;

- MGNREGA be extended to urban areas; minimum 200 day work; guaranteed statutory minimum wage as was unanimously recommended by 43rd ILC;

- ICDS, Mid-Day-Meal ASHA, Vidya Volunteers, Guest Teachers, Siksha Mitra and all other scheme workers be regularized, statutory minimum wages be paid and social securities provided; universalisation of ICDS, as Supreme Court directed, with adequate budgetary allocations;

- Removal of all restrictive provisions in eligibility coverage of schemes under the Unorganised Workers Social Security Act, 2008; allocation of adequate resources for the National Fund for Unorganised Workers to provide social security to all unorganized workers, including contract, casual, migrant workers, in line with the recommendations of Parliamentary Standing Committee on Labour and also the 43rd ILC;

- Remunerative prices on agricultural produce; substantially augmented public investment in agriculture as a proportion of GDP and total budgetary expenditure ensuring benefits of the increase to reach the small cultivators;

- Budgetary provisions for essential services including housing, sanitation, water, schools, crèche etc. to workers in the new emerging industrial sites; setting up working women’s hostels in areas of concentration of women workers;

- Strengthening and expanding PSUs; immediately stopping disinvestment of profit making PSUs; budgetary support for revival of potentially viable sick CPSUs;

- Requisite budgetary support for addressing crisis in traditional sectors like jute, textiles, plantation, handloom and coir etc;

- Increasing budgetary allocation for elementary education in implementing ‘Right to Education’ to effectively combat child labour;

- Review present Consumer Price Index computation system as it is causing heavy financial loss to the workers;

- Raise Income Tax exemption ceiling to Rs.5 lakhs per annum for salaried persons and fringe benefits like housing, medical and educational facilities be completely exempted from the income tax net;

- Bring down Threshold limit of 20 employees in EPF Scheme, as recommended by CBT-EPF; pension benefits under EPS, unilaterally withdrawn by the government, be restored; Government and Employers contribution be increased; and make provision for reasonable minimum pension;

- Make proper policy for protection 4.5 crore people engaged in retail sector / street vendors (in the light of the onslaught of FDI in retail trade);

- Statutory protection and social security of the domestic workers in line with ILO Convention on domestic workers;

- Announce in the Budget about constitution of VIIth Central Pay Commission, as revision of wages and other service conditions of the government employees is due;

- Rectify irregularities in collection and proper utilization of cess for construction workers by the finance ministry, being responsible for its management under the Act.

For resource mobilization –

- Direct tax on the rich and affluent sections; broader and higher tax net for corporate service sector, traders, wholesale business, private hospitals and institutions etc; increase taxes on luxury goods;

- Reduce indirect taxes, constituting 86% of current revenue, on essential commodities for overwhelming majority of the people;

- Concrete steps to recover huge accumulated unpaid tax arrears crossing Rs 2 lakh crores on direct and corporate tax account alone; discontinue liberal tax concessions already given the corporates in last two budgets;

- Effective measures to unearth huge black money including in tax heavens abroad; bring back the illicit amounts flowed out of India which is more than twice the current external debt of $ 230 billion; and utilize this money for social security;

- Concrete measures for recovering NPAs of banks from the willfully defaulting corporates and business houses;

- Tax on long term capital gains and higher taxes on the security transactions;

- Expanded and enhanced rate of wealth tax, corporate tax, gift tax etc;

- Inconsistencies in present tax regime be corrected as present effective tax rate of companies having profit before tax over Rs 500 crores is less than the companies having profit before tax is below 1 crore; discrimination against small business and PSUs, who are paying more than the private corporate, be removed;

ITES, outsourcing sector, educational institutions and health services etc, which run on commercial basis, be brought under service tax net.