2021-22 budget claims ‘massive fiscal boost’, another expression for massive boost to finance capital. Fiscal deficit as share of GDP has gone up from budget estimate (BE) of 2020-21 of 3.5 per cent to a massive 9.5 per cent in revised estimate (RE). It is claimed that it will boost growth. Whose growth? Budget and economic policies make it clear that private finance capital and monopoly capitalist corporations are massively converting productive capital into finance capital with state help. Lakhs of crores of rupees are being poured to fatten financialization of capital.

The government has embarked upon ‘strategic sale’ of several public sector enterprises: BPCL, CCI, Shipping Corporation, BEML, IDBI, Neelachal Ispat Nigam, etc are in the pipeline of disappearance. This is nothing but systematic dismantling of PSUs, profit or no profit. Finance minister has rhetorically announced: ‘how long can I go on putting money that fails to perform’, (!) but has tried to hide the fact that successful performers, both public and private are being destroyed.

Government has paved the way for ‘initial public offering’ or IPO of the country’s largest investor and insurer, the state-run LIC (Life Insurance Company). LIC Act will be amended and rules under the Companies Act will be framed for LIC. Government holds 95 per cent stake in LIC, which has assets worth more than 34 trillion rupees. It is now up for sale! After the IPO, the government will hold 75 per cent of stake for five years, which then will be reduced to 51 per cent only.

LIC is a hugely profitable public sector establishment. It recorded new business premium of Rs 1.3 trillion in April-December 2020, double that collected by all private life insurance companies. So, LIC is being ‘punished’ for it!

Yet the government claims that FDI hike will ‘boost’ insurance sector! Private insurers will grow fast and expand presence in India. LIC commands India’s insurance market at 70 per cent its share. Greater capital infusion by big foreign monopoly financial insurers will transfer control to cash-rich foreign monopolies, raising stiff challenge to LIC. This is real face of government’s ‘atmanirbharta’ (self-reliance) and ‘nationalism’.

Government is going to disinvest Air India and Pawan Hans in 2020-21. Air India is in debt, thanks to deliberate government policies. A ‘special purpose vehicle’ or SPV was set up in 2018 to financially ‘restructure’ it, another name for dismantling it. This SPV is Air India Asset Holding Company, which has been allocated 2268 crore only to dismantle AI! So both profit making LIC and loss making AI are reduced to same level.

Government got a massive amount from 49percent dismantling of the HPCL (Hindustan Petroleum Corporation Ltd): 46 378 crore rupees in 2016-17, 100 642 crore in 2017-18, 85 063 cr in 2018-19, 49 828 cr in 2019-20 and 18 223 cr in 2020-21. The financial assault continues.

The finance capital dominated stock market has wildly cheered the announcements of dismantling with Bank Nifty galloping 8.26 percent, Nifty soared 647 points, Sensex up 2315 points in a day. There is no better indicator of finance domination than share markets. They are jubilant.

Finance minister has claimed that investment and asset monetization are government’s priorities. While giving ample description of monetization, in fact of financialization, she singularly failed to point out investments in productive areas, which is what the country badly needs today.

Union government has talked of huge capital expenditure, an increase of Rs 5.54 lakh crore, which in fact is expenditure (waste) of capital without productive returns. The National Monetization Pipeline, a vehicle for conversion of state and people’s capital into financial money, is working overtime. Under its cover anything can be monetized for the corporate.

The expression ‘bad bank’ is being given a presentable face. Banking sector’s bad loans problem is sought to be solved, not by forcing the big business to return them, but by setting up unheard of ‘bad banks’! A respectable name ‘asset management or reconstruction company will take over the ‘stressed assets’ to dispose of them to the interested investors: another way to help the finance capital. Not only this; banks will get equity infusion of Rs 20 000 crore this year to shore up their capital base, in other words will intervene on behalf of the finance capital.

Government has also proposed alternate investment funds or AIFs to buy bad loans. It is supposed to take place for ‘value realisation’, as the finance minister put it, or for realization of profits for the finance capital, to put it clearly. Gross NPAs of banks could rise to 14.8 per cent by September 2021.Therefore they are reluctant to take up valuation, which job will now be shifted to financial sector.

Number of ‘dollar millionaires’ was 50 in 2003, while in 2019 their number increased to 263. Agri share in employment was 62.6 per cent in 1991, falling to 42.4 per cent in 2019. Its share in gross value added was 27.3 per cent in 1991 and 16 per cent in 2019.

A 15 per cent agri infrastructure and development cess has been levied on crude palm oil, crude soyabean and crude sunflower oil. This will increase the cost of soaps, biscuits and certain other packaged items. The cess has been levied on peas (40 per cent), kabuli chana (30 per cent) and lentils (20 per cent). According the category chief of Parle Biscuits, edible oils form 30 per cent of total cost of producing cheap biscuits, and thus will increase its prices substantially.

The prime minister has claimed that the budget reflects a vision of self-reliance! Here is his ‘self reliance’: While FDI flow in 1991 was 129 million dollars, it grew 576 times by 2020-21 to a staggering 74 390 million dollars. Foreign portfolio investment which was a mere 4 million dollars in 1991, stood at 30 542 million dollars on 31 January 2021 despite Corona pandemic. The FDI limit in the insurance sector would be raised from 49 per cent to 74 per cent, with the Indians effectively losing all control over the sector.

While gates have been opened for massive growth of corporate finance, expenditures on even basic welfare measures have been reduced. Government has cut education spending by Rs 6000 crore, and school education has taken the biggest hit. Education budget has been slashed by six per cent from Rs 99 311 crore in 2020-21 to Rs 93 224 crore, lowest in three years. School education has lost Rs 5000 crore and higher education Rs 1000 crore. No announcement has made regarding losses to children incurred during the Covid pandemic.

Moreover, the NREGS, which emerged as a safety net for migrants returning during the lockdown, did not find mention in finance minister’s speech. Allocation for it has been reduced by 34 percent in the BE compared to that in the revised estimates (RE). Over seven crore households availed of NREGS, an all time high. There is an unprecedented demand for unskilled labor in the current financial year. Yet the allocation has been slashed.

Oxfam reports India’s top 100 billionaires had their wealth surge by 35 per cent during Corona epidemic alone. This amount can give 13.8 crore poorest Indians a check for Rs 94 045! Top ten percent now own half of India’s wealth, while the bottom 50 per cent hold only 14.7 percent.

One in seven lost job in the pandemic, yet Mukesh Ambani’s RIL made Rs 90 crore per hour the same period! 1 70 000 lost jobs in April 2020 alone. Yet India has become 7th in market capitalization in world. Stocks are firing up. Wealth of Ambani alone would keep 40 crore informal workers above poverty line for five months. Similar is the story of Adani, Mittal, Jindal, Birla, and other corporate monopolies.

Rapid financialization of capital is emerging as a serious threat to the Indian economy.
(IPA Service)