Economic Highlights

New Delhi, 9 January 2010

Subsidising The Rich

ROLL BACK STIMULUS PACKAGE

By Shivaji Sarkar

It is a strange country! The poor man’s night shelter is demolished in the national Capital, Delhi in the height of a cold wave. Subsidies for the poor are considered a burden. Rising prices deprive the poor of the little food that he could have afforded. Farmers, whether growing sugarcane or food grains, are denied prices that could help them get back their investments. In contrast, the rich corporates demand the continuance of the Rs 60,000 crore stimulus – subsidy – packages so that they can pay the ridiculous and unrealistic high salaries to their top executives, fleece the working class and increase their profits further.

Enough is enough. It is time now for rolling back the stimulus so that the poor can benefit and the budgetary deficit is utilized on projects for the needy and not greedy people. The Government must not succumb to the pleas of the business leaders to sell its precious silver – PSU stocks – to manage the 6.8 per cent budgetary deficit.

These are the same corporates who took the maximum advantage of the so-called meltdown and sacked about 5 lakh workers in different sectors across the country. Even the supposedly thriving IT industry laid off thousands of its employees or what they euphemistically said “sent on leave or a sabbatical”. Workers and their families bore the maximum brunt of the “meltdown” that is said to have hit this country the least.

Even those who were fortunately retained had their salaries frozen for the last two years. In effect, it meant their salaries were reduced by over 20 per cent if the inflation figures are taken into account. The dearness not only remained non-neutralized but in effect the workforce was penalised so that their top bosses could earn a fatter packet and the companies they were serving could earn higher profits. (Not a single corporate boss took a voluntary pay cut).

Even Infosys has laid off workers without naming it so. It has offered the employees to take a sabbatical from the company and receive 50 per cent of the wages. If this is no a lay-off what is it then? More so, when no company can lay-off workers without the permission of the labour commissioner. Likewise, some of the large companies like the Tatas and Mahindra & Mahindra sacked employees who were working as casual for years together. It saved the company’s money as it did not have to seek any permission to remove casual workers.

The law of the land, particularly those pertaining to the labour, is being violated blatantly by companies of all sizes. The so-called ‘pro-poor and pro-worker’ Government has turned a blind eye even though it is empowered to take action. Sadly, its machinery wastes no time to harass and book an employee even if he has not committed a mistake. At the same time, it virtually encourages the corporate to violate the law with impunity. Not one corporate is known to have been sued.

The figures available so far prove that hardly any corporate has suffered a loss during the period of the so-called meltdown. In many cases their profits have increased manifold. Direct tax collections bear testimony.  It has risen 44 per cent from December 2008 to December 2009 and during April-December 2009 it rose by 14 per cent. Accruals from the corporate jumped from Rs 37,002 crore to Rs 53,923 crore - an increased of 15 per cent. Just the opposite is on the personal income-tax front. It has come down by 19.7 per cent to Rs 13,117 crore from 16,345 in the same period last year.

This testifies what is being feared the most. It is the working class, whose earning capacity has suffered enormously that they are unable to pay even the taxes. Clearly, it is a warning that the country’s crores of workers’ happiness index is nose-diving for the benefit of the few corporates, who are trying to exploit the people.

It is just not the tax indicator that suggests withdrawal of the stimulus package but also their actual performance. Reason enough for scrapping the stimulus directed towards the corporate. The head of research of Motilal Oswal Securities, Rajat Rajgarhia, says that the third quarter, October-December, profit after tax (PAT) for the companies registered with the Bombay Stock Exchange (BSE) has risen by 18 per cent. Some other estimates say PAT is much more. The metal companies’ PAT rose by 38 per cent, pharmaceuticals 20 per cent, fast-moving consumer goods (FMCG) 26 per cent and cement 25 per cent. Textile and media stocks are expected to post a strong performance at 147 and 53 per cent, respectively. Even the IT sector is to have a minimum of 6.8 per cent growth.

Indeed, it is a sorry state of affairs that the Indian corporate has not come out of the 50s’ mindset. Then too they had refused to contribute to the growth of the country. And now they are more cartelized and unionized. They are bamboozling the Government to give them what is not their due. Take the sugar lobbies as a pointer. They pay the least to the farmers but have hoarded stocks to jack up sugar prices from Rs 12-13 a kg, 18 months ago, to Rs 48 a kg; the corporate food grain dealers have more than doubled wheat and sugar prices and almost three times the prices of pulses. To top it all they are now manipulating the vegetable prices. Shockingly then the profit has gone to the large corporates and the grower, with the farmer only getting further impoverished.

Not enough, the corporate are trying to maximise their gains further. While on the one hand they are lobbying against giving farm subsidies, on the other many have garbed themselves as “farmers” to further hoodwink the Government on their tax payment.

All this must stop. The Government should ask the Assocham President Swsati Piramal, who recommended the Finance Minister to disinvest PSUs, why it should do so. Importantly, when the disinvestment is going to benefit the corporates as they alone would be buying these shares.

Undoubtedly, the time has come to suggest to the corporates to hand over some of the profit-making units to the Government so that the nation’s poor can have a slice of the pie. They should be sternly told to keep their evil eyes off the PSUs – the people’s, and not just the Government’s wealth. The stimulus that is aimed at the corporates must be scrapped. Indeed, the corporates should be told in no uncertain terms to stand on their own feet and not look for crutches. --  INFA

(Copyright, India News and Feature Alliance)