All through the capitalist world, state intervention in economic affairs is back in a big way in the wake of the global economic meltdown. Almost all developed capitalist countries have gone in for major increases in public expenditure, stricter regulation of the market economy, the financial sector in particular, and preferential measures for the domestic industry and work force. The budgets presented by the UPA government, neither the interim February version nor the fuller July edition, do not reflect any such shift in the economic thinking or practice of the ruling establishment. Attracting more and more FDI and promoting PPP (public-private partnership, the emerging pattern of privatization) remain the exclusive mantras for the Manmohan Singh government.

Predictably enough, the government has tried its level best to hide the real thrust of its policies behind the rhetorical mask of ‘inclusive growth’ and ‘aam aadmi’. But the hypocrisy is quite obvious. The budget promises a National Food Security Act under which BPL families will be entitled every month to 25 kg rice or wheat at Rs. 3 per kg. This is way short of the rural poor’s demand for a monthly provision of 50 kg rice or wheat at Rs. 2 per kg. In fact, even the existing Antyodaya scheme provides 35 kg per family at Rs. 2 a kg. On the NREGA front, the Finance Minister claims that the present allocation of Rs. 39,100 crore marks an increase of 144% over the 2008-09 budget estimates. But compared to the revised estimates of 2008-09, the increase is only of the order of Rs. 2350 crore (an increase of only 6.4%) and will hardly be enough to ensure the promised minimum wage of Rs. 100 per day to all rural job seekers! And of course, there is still no word about any employment guarantee act for the urban unemployed.

Indeed, the actual increase in allocation in several widely publicized schemes is absolutely negligible when compared to the revised estimates of 2008-09. Sectors like elementary education, ICDS, Rural Health Mission have got only about Rs. 2300 crore more than what was spent last year. Remarkably enough, the combined increase in all the afore-mentioned sectors is less than the incremental rise in police budget (Rs. 4679 crore). Indeed, the increase in non-plan expenditure is almost exclusively propelled by increases in the three items of debt servicing, defence and police budget. The increase in latter items is approximately of the order of Rs. 64,500 crore, nearly 85% of the total increase (Rs. 77,693 crore) in non-plan expenditure.

Talking of the rapid changes in the structure of India’s economy, the Finance Minister has highlighted the role of external trade and capital flows and the burgeoning service sector. This GDP-centric view of the Indian economy always ignores the actual social or human profile of the economy where 92 per cent of the work force remains engaged in the unorganized sector, agriculture in particular. These are the sectors and people who have been bearing the brunt of the economic crisis, but the stimulus packages of the government have scrupulously bypassed these sectors focusing all attention on private investment and high-income consumers.

The Finance Minister has proposed to introduce generous public funding of private investment in infrastructure sector (called ‘takeout financing’, such funding by the India Infrastructure Finance Company Limited (IIFCL) will support PPPs in projects worth Rs. 100,000 crore) while handing out significant tax rebates to the high-income group (through measures like abolition of 10% surcharge on income tax and the doubling of wealth tax threshold level from Rs. 15,00,000 to Rs. 30,00,000). The total estimate of tax revenue forgone in 2008-09 is a whopping Rs. 4.18 lakh crore, and now corporate political funding has also been made tax-free!

Aware of the overwhelming opposition to privatization in key sectors like banking and railways, the UPA government is increasingly exploring the PPP route to promote backdoor privatization. This year’s railway budget is a clear case in point. The real highlight of Mamata Banerjee’s railway budget is not so much her refutation of her predecessor’s pompous claims regarding the financial situation of the railways (contrary to Lalu Prasad’s loud claim of the railways sitting on a massive surplus of Rs. 100,000 crore, Mamata Banerjee actually put the surplus at a mere Rs. 8700 crore) as her open invitation to private capital to explore the Indian Railways whether by way of building the so-called ‘world class stations’ or managing freight terminals or making commercial use of the lucrative real estate held by the ministry of railways!

The corporate sector of course claims to be disappointed. The Bombay Share Index that had greeted the poll outcome with a stunning single-day rise of nearly 2000 points responded to the budget with a steep fall of more than 800 points. This feigning of corporate displeasure in fact helps the UPA play up its aam aadmi image even as the government silently enforces the whole gamut of pro-corporate policies. For example, while the pre-budget Economic Survey recommended an annual sale of PSU shares worth Rs. 25,000 crore, the Finance Minister has not made any explicit projection in this regard even though 49% of all PSU shares are now up for grabs as a matter of policy. This is the crucial lesson the Congress seems to have learned from the BJP – while the latter had started getting soaked in the wild exuberance of the share market, the Congress administers its business in measured doses and often in deliberate deceptive silence.

Tailpiece: In its second innings, the UPA has ruled out the need for another common minimum programme. Well, Mr. Chidambaram and Mr. Mukherjee have made it clear why the UPA does not need another CMP. It already has one in action – UAPA to discipline the people and PPP to manage the recession-hit economy!