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Random Reflections

We have come across alcoholics selling the property to have their drink. The Central Govt seems to be doing similar things. Public Sector is like the house constructed with great ambition. But that is being sold in a platter to few favourite corporates and using the money for Central Vista, Eight-way lanes, Discoms, debt servicing etc. The Nasha they get by serving the Corporates seems to be more important. The Prime Minister had been giving statements like “the Government has no business to be in business”, “Public Sector was born to die – in few hours, or few days or few years. Either allow them to die or privatise”.

Already 12 ports and 7 airports are given to Adani. IPCL, Part of Gas basin, telecom, defence etc are given to Ambani’s. Mining of minerals is given to Vedanta’s Agarwal. Thousands of Acres of lands are given to Patanjali’s Ramdev. 

Atma Nirbhar?

FM’s Budget speech says “Redefinition of MSMEs, commercialisation of mining sector, agriculture and labour reforms, privatisation of Public Sector Undertakings, one nation one ration card as notable reforms” as Atma Nirbhar Package whereas these are completely against self-reliance.

Two vaccines of Private Sector are launched and Rs. 35,000 crores allotted but four very successful public sector pharmaceutical companies are killed.

Cricket success in Australia is lauded in the budget speech. I wonder the relevance of it in budget.

The six pillars stated in the budget are:

i. Health and wellbeing
ii. Physical & Financial Capital & Infrastructure
iii. Inclusive Development for Aspirational India
iv. Reinvigorating Human Capital
v. Innovation and R&D
vi. Minimum Govt & Maximum Governance

But the focus seems to be only on minimum Government, the favourite of IMF and World Bank.

A new Centrally sponsored scheme, PM Atma Nirbhar Swasth Bharat Yojana with an outlay of Rs. 64,180 cr over 6 years is announced but the allotment for this year is NIL. Who are you fooling FM?. Similarly for Swatch Bharat Swasth Bharat Rs. 1,41,768 Cr is announced for 5 years.

Is this an Annual Budget or 5 Year Plan? PLI Schemes to create manufacturing Global Champions is provided Rs. 1.97 lakh crores in 5 years. Doesn’t it look like a mockery?

In 2019, FM announced Rs. 102 lakh crores for Infrastructure Development. But now she says Rs. 1.10 lakh Crores has been spent so far. Where is the rest Rs. 100.90 lakh crore? This was to make India a 5 trillion Dollar economy by 2024.

DFI

Rs. 20000 has been allotted to start a Development Finance Institution which we had been demanding for long. The ambition stated is Rs.5 lakh crore loan portfolio in 3 years which is totally inadequate.

Asset monetisation

One major goal stated is monetisation of assets. This includes National Highway Authority of India, Dedicated Freight Corridor, Assets of Railways, Next lot of Airports, Toll Roads, Transmission Assets of PGCIL, Oil & Gas Pipelines of GAIL, IOCL, HPCL, other Railway Infrastructure, warehousing assets of CPSEs & Sports Stadiums.

Without any shame, the Finance Minister states that a special purpose vehicles (SPV) will be created to sell / provide on concession or similar means surplus land with Govt and Public Sector Enterprises.

Is it not the first step to handover these assets to corporates? You are selling everything. 

Do you have the authority FM?

Adani-Ambani

Capital Expenditure of Rs.5.54 lakh crores is welcome but inadequate in the post-pandemic situation. It may go to benefit corporates. Instead of Rural roads and infrastructure, the focus is on Bharat Mala and Sagarmala.

7 projects by major ports are goings to be privatised under PPP. Shipping Companies will be provided subsidy. Both these for Adani’s. An independent gas transport system operator will be set up. For Ambani’s? Govt would support World Class Fintech Hub at GIFT-IFSC-More freebies to Gujarati Businessmen?

A separate Permanent Institutional Network for Corporate Bond Market. For which business House FM?

FDI in Insurance

FM has proposed to increase FDI limit in Insurance from 49% to 74% and allow foreign ownership. Is it not a clear cut plan to sell LIC to foreign companies which have a miserable track record? Relate this to another announcement of IPO of LIC. This session itself will bring amendments in LIC Act to offer Initial Public Offer. That is the beginning of Privatisation of LIC, the only company which provides 95% of the profit as bonus to policyholders, the company which provides money for one-third of the budget, five-year plans and the company with highest claim ratio. 40 crore policyholders will be affected. 

Bad Bank

Bad bank is a bad idea. It is to clean up NPAs of Banks, write off the loans and make their balance sheets clean and of private companies clean by writing off their loan. That will pave the way for them to buy Banks. 

Digitisation to end transparency

FM proposes E-Court system by launching data analytics, artificial intelligence, machine learning-driven MCA 21 version 3.0, which will have modules for e-scrutiny, e-Adjudicating, e-consultation and Compliance Management. This will pave the way for all underground dealings.

Disinvestment and Strategic Sale

By 2021-22- Sale of BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam Ltd among others will be completed. 

Bank and Insurance Privatisation

Two Public Sector Banks and one General Insurance Co. will be privatised. From banks, FM estimates Rs 1 lakh crores. So the banks are likely to be Punjab National Bank and Bank of Baroda with a market capitalisation of Rs. 41,386 cr and Rs. 37,172 cr. Ultimately more banks will be sold.

One General Insurance company is also going to be sold. Earlier, promise was made to merge 4 of them but not done.

Reduction in Govt Schemes.

She also says on the recommendations of the Fifteenth Finance Commission centrally sponsored schemes will be brought down.

Co-operatives

The Govt will promote multi-state co-operatives and have a separate administrative structure, she says. This is to take these co-operatives out of State Govt Interventions.

Agriculture and Rural Development

On MSP she utters a lie that 1.5 times of cost of production is provided to all commodities and procurement continues. 

The agriculture credit target is increased to Rs. 16.5 lakh crores which is the usual 10% increase and Banks will renew the Kissan Credit Cards with accrued interest and achieve the target. The farmer will not get any cash.

An increase of Rs. 10,000 Crores under Rural Infrastructure Development Fund (RIDF) of NABARD and Rs. 5000 cr to micro irrigation fund is provided which is inadequate.

Start-up India

The margin money to be provided by the borrower under the Start-up India Scheme is reduced to 15% from 25% for SC/ST & Women. But without infrastructure, marketing support and adequate seed money as provided in China, Israel and other countries, most of them are failing because of which Banks are financing existing entrepreneurs instead of real Start-ups. 

MSME

Just Rs. 15,700 crores is provided to MSME sector, which can create the largest employment. Mr. K.E. Raghunathan, a spokesman of MSMEs and Convener of Consortium of Indian Associations, laments that nothing really has been done to the real Micro and Small Industries which are struggling.

Redefinition of Small Companies

The present definition of Rs. 50 Lakh paid-up capital and turnover of Rs. 2 crores, the new definition will be Rs. 2 crore paid-up capital and Rs. 20 crore turnover. This will only pave the way for richer companies to avail benefits and credit at the cost of smaller companies with lesser investment.

Education

The FM says the New Education Policy has good reception which is totally incorrect.

15,000 schools will be strengthened as exemplar schools and 100 new Sainik Schools will be set up in partnership with NGOs/ Private Schools/ states, she says. The exclusion will lead to apartheid as Mr. M.G. Devasahayam IAS (Retd) repeatedly says.

For Higher Education, an Education Commission is going to be set up with four vehicles for standard-setting, accreditation, regulation and funding Innovation and R&D. This is for accommodating the RSS idealouges.

A National research foundation is announced with Rs. 5000 Crore in Five years.

Other Plans

Rs. 1500 Crore is provided for Digital Transactions. Deep Ocean Mission with Rs. 4000 Crores for 5 years is announced. National Commission for Allied Healthcare professionals bills is in Parliament.      

To instil confidence in Private investors and contractors, a conciliation Mechanism is going to be set up.  

Concessions to Foreign Investment

In addition to 100% tax exemption already provided for investment in infrastructure additional concessions are provided. 

Disinvestment Policy Highlights

Minimising presence in PSEs and Financial Institutions is the goal.  

The 4 strategic sectors are
i. Atomic Energy, Space and Defence
ii. Transport and Communication
iii. Power, Petroleum, Coal and other minerals
iv. Banking, Insurance and Financial Services.

In strategic sectors, bare minimum presence of public sector will be there. The remaining CPSEs in the strategic sector will be privatised or merged or subsidarised.

Outright Sale

In non strategic sectors all CPSEs will be privatised or closed. The PSEs provide every year more than the Rs. 1.75 lakh crore target for disinvestment. Why sell the Golden Goose? The interest payments is Rs. 8,09,701 cr and fiscal deficit (loans to be availed) is Rs. 15,06,812 crores. Already our external debt of Rs. 3,82,829 Cr is too high. Its time we come out of IMF & WB and use huge money with banks which are not given as loans.

Huge reduction in essential expenditure

NREGA budget is Rs. 73,000 crores against Revised Estimate of Rs. 1,11,500 cr for last year. National Social Assistance Programme is Rs. 9200 cr against Rs. 4,21,617 Cr (RE). Mid Day Meal Program is reduced to Rs. 11,500 cr from Rs. 12,900cCr. Puritan Mantri Awas Yojana fund reduced to Rs. 27,500 crore against Rs. 40,500 Cr. 

Umbrella ICDS fund is NIL against Rs. 20,038 Crores. Urea Subsidy reduced to Rs. 58,768 cr against Rs. 94,957 cr. Nutrient based subsidy reduced to Rs.20,762 cr against Rs. 38,990 cr. Price Stabilisation Fund is reduced to Rs. 2700 cr against Rs. 11,800 cr. 

Assistance to movement of Intra State Foodgrains reduced to Rs. 4000 cr against Rs. 8000 cr. Food subsidy to FCI reduced to Rs. 2,02,616 crores against Rs. 3,44,077 crores. Food & Subsidy for decentralised food grain procurement reduced to Rs. 40,000 crores against Rs. 78,338 crores. Assistance to sugar mills reduced to Rs.1000 crores against Rs. 3900 cr.

 Direct Benefit Transfer on LPG reduced to Rs. 12480 cr against Rs. 25521 cr.

The budget Clearly shows the following:

1. The Govt is withdrawing from its duties.
2. It wants to hand over national assets in a platter to private corporates.
3. It is withdrawing from agriculture
4. It is privatising banks step by step – ultimately there may be only one Public Sector Bank.
5. It’s withdrawing from insurance and handing over huge assets to private / foreign investors.
6. It is announcing 5 year schemes and missions in a hurry. Probably it knows that its days are numbered.

If everything is for sale and if Govt will not perform its duties to its citizens what for there is a Govt? Privatise Parliament also. What for you collect taxes from all of us? Time for the Finance Minister and her Master to go.  

Thomas Franco is former General Secretary of All India Bank Officers’ Confederation.

 

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