On 29 February 2008, while presenting the Union budget for the year 2008-2009, the finance minister, P Chidambaram, said, “Our work in government is, every day and every hour, a discovery of the path to reach our goals: full employment, abolition of poverty and elimination of inequality.” Reinforcing Pandit Jawaharlal Nehru, he added, “These goals can only be achieved by a considerable increase in the national income and our economic policy must, therefore, aim at plenty and equitable distribution. We must produce wealth, and then divide it equitably. How can we have a welfare state without wealth?”

Various opinions have been expressed across the country before and after the pronouncement of the budget 2008-2009. On 9 January 2008, the finance minister called representatives of all the central trade unions to talk about their expectations of the proposed budget. According to H Mahadevan, Deputy General Secretary of All India Trade Union Congress (AITUC), “Pre-budget consultations are only an eye-wash. The government just wants to be sure that they met the unions before the budget is announced.” The All India General Secretary of AITUC, in a letter the finance minister on 9 January 2008, stated, “In our view, the meeting is a fruitless exercise. We give our views; in most cases, these are cynically rejected. There is no interaction. We are not given the reasons for the rejection. Even though the government lives on our support, our opinion is hardly considered.”

Being an election budget, many considered the budget as a delicate act of camouflaging the long-term policy document to the government, as enunciated in the pre-budget economic survey, rail budget, etc. MK Pandhe, President Centre of Indian Trade Unions (CITU), says, “The budgetary proposals for the year 2008 essentially reflect a continuation of the same policy of globalisation despite some sops.” Criticising the government on its privatisation policy, he further stated, “The basic thrust of privatisation, pushing public sector companies to share market, remains the main guiding principles of this budget. Several proposals are there to ensure the greater role of private sector in country’s economy.”

“The General Budget examined in the background of Economic Survey is nothing but a sugar coating for the bitter pill of intensifying the IMF-World Bank dictated neo-liberalisation and a loot of the country’s resources,” stated the All India State Government Employees’ Federation (AISGEF).

Employment, Social Security and Labour Rights

The Economic Survey 2007-08, the real policy document of the government announced on 28 February 2008, included among its policy reforms hiking the 48-hour work week mandated under the Factories Act to 60 hours, and the daily limit from 8 to 12 hours, as well as  pushing for privatisation or FDI or both across a wide range of sectors. Though the budget does not specifically follow the steps of the Economic Survey it does not have any  concrete section on employment

The budget announced that in its third phase, the remaining districts of the country will be covered under NREGA with effect from 1 April 2008. “Rolling out the NREGS to all 596 rural districts in India with provisions of Rs 16,000 crores is indeed a welcome initiative,” said RA Mittal, Secretary, Hind Mazdoor Sabha. However, the funds allocated for its implementation are much below what is required. Addressing this, the finance minister has categorised NREGS under its flagship programme and has assured that more money will be provided to meet the legal guarantee of employment as the demand rises. More generally, the total budget allocation for rural employment has increased only by Rs 1,000 crores. “Even after 8 per cent growth of the economy, there is not a single word about lifting the ban on employment. This means contractorisation and outsourcing will continue. No rise in interest rate on PF and Post Office savings, no support is there for senior citizens to increase their income,” stated Pandhe.

According to CPI(M) Politburo, the budget 2008-09 fails to provide an adequate fiscal stimulus to the Indian economy at a time when the world economy is poised for a downturn and the rupee has appreciated against the dollar, adversely affecting growth and employment generation. For the Democratic Youth Federation of India (DYFI), it has failed to address the burning problems of spiralling unemployment in the country because there are no concrete proposals or allocations for employment generation for crores of educated, unemployed youth. According to Hotel Association of India (HAI), “There is nothing visionary for the tourism industry, which provides direct and indirect employment to over 41 million people and which earned over US$ 12 billion in 2007 from around five million foreign tourists.”

“For the government employees, the imminent danger is that the Economic Survey pledges to implement the New Pension Scheme immediately for those recruited after 1 January 2004. This is an alarming threat to other sections of employees, who have till now resisted the imposition of New Pension Scheme for them,” says an official spokesperson of All India State Government Employees Federation (AISGEF).

CITU leaders have expressed strong opposition to the stand taken on unorganised workers. They have emphasised that the allocation for social security schemes for unorganised workers is too little and does not touch even the fringe of the problem. “On the whole the budget fails to give any meaningful relief to unorganised sector workers, rural poor and unemployed youths, who constitute 85 per cent of the total population of India. But by all indications, with a slowdown in the growth rate and increased money supply, foreign and domestic, this budget will fuel inflation from day one,” says Tapan Sen, Secretary, CITU.

J John, a member of Social Security Now, a network alliance of 500 organisations campaigning and mobilising workers for demanding comprehensive social security of unorganised and informal workers in India said, “The budget 2008-09 of UPA, to our dismay, has completely ignored expenditure on social security of unorganised workers by allocating only 5 crores. The allocations for welfare and charity type of social assistance schemes turn out to be only big frauds on deprived workers. The allocations for socially excluded classes for welfare, education, training, etc., are only charity and do not establish any right of social protection against any contingencies from which our working people continuously suffer. The government is bound to provide social security protection through a legislation and adequate infrastructure, which require the allocation of minimum of  75,000 crores.”

In line with J John, the representatives of All India Democratic Women’s Association (AIDWA) stated that the announcement that every worker in the unorganised sector falling under the BPL category will be provided a health cover of Rs 30,000 under the Rashtriya Swasthya Bima Yojana should be reconsidered, since the current BPL criteria are so fraudulent that they effectively exclude most of the poor. Moreover, it is incumbent on the government to provide budgetary support for social security rather than depend on insurance companies to provide these services.

The finance minister has announced an increase of Rs 500 and Rs 250 in the monthly remuneration of the anganwadi workers and helpers working in the Integrated Child Development Services (ICDS) scheme. The members of the All India Federation of the Anganwadi Workers and Helpers (AIFAWH) have expressed their disappointment in the increase since the prices of all the essential commodities have increased several times and there has been no increase in the pathetically low remuneration of Rs 1,000 and Rs 500 for the anganwadi workers and helpers in the last six years. There is no mention of the provision of any social security benefits and pension for the anganwadi employees, particularly those being forcibly removed from service on reaching 58 years of age.

Agriculture Loan Waiver

When the number of reported suicide cases among farmers grew alarmingly, when the prices of food reached its peak and when agricultural growth stagnated, budget 2008-09 came as a relief to distressed farmers. Viewed in this context, the agricultural loan waiver seems like a boon. But it has serious drawbacks and exclusions. The loans taken from the public sector banks are the ones which have been waived; there is no provision for support to a farmer who owes money to the moneylenders. According to The Economist, private debt accounts for more than two-thirds of total rural debt. The implications of this debt are very high among women farmers and those cultivators who do not have land titles. Waiving off debts is temporary relief for the farmers. It will be good if the government evolves strategies so that such a situation does not arise in future.

Many trade unions and political parties welcomed the announcement of debt relief for farmers, since everyone considered it long overdue, but they are also critical of its form. According to the CPI(M) politburo, “Though a positive initiative, the relief measures proposed are deficient in some aspects, since they would exclude the bulk of the small and marginal farmers of dryland areas, who typically own more than 2 hectares of land. The measures also do nothing to provide relief against the debt owned by the peasants to private moneylenders, which is estimated at more than two-thirds of total farm debt. Moreover, the actual increases in Plan outlays on agriculture have not matched the pro-farmer rhetoric with the allocation for irrigation actually witnessing a fall over last year`s budget.

“If we take into consideration the need for massive investment by the government on irrigation, one would realise that the budget proposal and the allocation for agriculture is totally inadequate. So, private initiative, private indebtedness, failures and suicides will continue,” said Tapan Sen. “There is no move to strengthen rural market systems, which are in danger because of globalised operations; poor farmers and small producers are suffering. The finance minister has failed to attend to the uneconomic operation of small and medium farmers,” he added.

In addition to these points, the All India Kisan Sabha (AIKS) was disappointed that there is no provision for adequate credit on 4 per cent interest as recommended by the MS Swaminathan Commission to protect the farmers from future debt trap.

Meanwhile, All India Democratic Women`s Association (AIDWA) expressed its satisfaction that the finance minister has finally taken cognisance of the huge agrarian crisis in the country and taken steps to bring relief to farmers, which include a large number of women. At the same time, it said that the measures for debt waiver and debt relief do not address the critical loans taken from private moneylenders. “The crucial question of the reduction in the rate of interest to 4 per cent on agricultural loans has been ignored,” stated a release by AIDWA.

 “The massive loan waiver, to the tune of Rs 60,000 crores, announced for the farmers will serve its purpose only if parallel reforms are undertaken in the agriculture sector,” states a press statement issued by FICCI. According to it, increasing agricultural productivity, strengthening agri-marketing infrastructure and rejuvenating extension services are essential to ensure that the farmers do not fall back into another debt trap in a few years’ time.

For the Indian Merchants’ Chamber (IMC), “The announcement of farmers’ debt relief to the tune of over Rs 60,000 crores was in line with demands raised by all political parties in the country. But more emphasis could have been given to make agriculture truly viable.”

“The budget has put a lot of emphasis on the agricultural sector by actually setting a target for increasing gross capital formation in agriculture. Massive allocation for irrigation is very welcome and much overdue,” said CII.  It further stated, “The loan waiver aimed at removing agricultural indebtedness is welcome as long as it does not hurt the public sector banks.”