The UPA pledged to continue with the National Common Minimum Programme of 2004, which promised among other things 7 to 8 per cent growth such that “each family is assured of a safe and viable livelihood”. The NCMP promised “greater technological, investment and marketing support” to employment-intensive household and artisanal manufacturing.

It importantly pledged a National Rural Employment Guarantee Act to provide “at least 100 days of employment … on asset-creating public works programmes every year at minimum wages for at least one able-bodied person in every rural, urban poor and lower middle-class household”; to double rural credit, especially to small farmers; to raise public spending on health “to at least 2-3 percent of GDP over the next five years …”, and spending on education “to at least 6 percent of GDP with at least half this amount being spent on primary and secondary sector”.

Some of these commitments were diluted. The NREGA was launched in 2006, not 2004, in only 200 rural districts (of about 600) and excluded lower middle classes as well as urban households. It took a lot of people's mobilisation to get the minimum wage of Rs 100 included in the NREGA. The Left parties, whose support the UPA needed until July 2008, acted as a pressure group. Yet, the UPA was expected to aim for inclusive growth in its second coming.

UPA-II's economic policies and its latest budget comprehensively belie this expectation. It has continued with generous handouts and tax breaks to corporations and exporters even after the Indian recession ended and exports became competitive with a 25 per cent devaluation of the dollar to Rs 47. It also persisted with Special Economic Zones and other pro-corporate measures which transfer large amounts of India's mineral, forest and hydroelectricity resources to private capital.

Predatory corporations in extractive industries or in dam construction are disfiguring and destroying large tracts of the central-eastern tribal belt, and whole swathes of the eastern and northern Himalayas. Meanwhile, agriculture is in acute distress and farmers' suicides are rising sharply. A nearly 20-per cent rise in food prices—and an even higher 30-per cent-plus spurt in the Consumer Price Index for Agricultural Labourers—is adding to the burden on the poor.

The latest budget strengthens these trends. It is brazenly pro-rich and discriminates against the poor in an “in-your-face” manner, and further widens wealth and income inequalities and regional disparities in an already highly unequal society. It will accelerate the transfer of vast amounts of public property into private hands to create an Indian oligarchy, like that in post-Communist Russia, which is all-powerful and beyond democratic control.

First, consider the two measures claimed to be the budget's “positive” features: fiscal consolidation, and increased social spending. The government will tighten its spending to reduce the Centre's fiscal deficit from 6.7 to 5.5 per cent of GDP. Total expenditure will only grow by 8.5 per cent. This means it will stagnate in real terms—despite the bonanza of Rs 40,000 crores through disinvestment of public sector enterprises (PSEs), Rs 30,000 crores from the sale of telecom spectrum, and Rs 70,000 crores in additional indirect taxes.

The real priority was to cut the government's unproductive expenditure, namely, the revenue deficit, and raise capital expenditure, besides social spending, to boost investment and growth. This hasn't happened. Worse, the revenue deficit will only fall from 5.3 to 4 per cent of GDP. So, 73 per cent of the government's borrowing will go to finance its own wasteful spending.

Social sector expenditure has only been raised insignificantly or not at all. This will fail to deliver real services to the people. For instance, the flagship NREGA has been allotted a paltry Rs 1,000-crore increase, only 2.5 per cent above last year's Rs 39,100 crores. This won't even meet the impact of inflation, leave alone match the expected 12.5 per cent increase in GDP in nominal terms.

Central spending on health has fallen marginally from 0.37 to 0.36 per cent of GDP. If the states' expenditure remains stagnant, as is likely, national public spending on health will be under 1.4 per cent of GDP, a far cry from the promised 2-3 per cent by 2009. This will accelerate the privatisation of healthcare, which makes it unaffordable for the majority. Already, 68 per cent of hospitals and 75 per cent of health-related technological resources are in the private sector and out of reach for the poor. This represents one of India's gravest social crises.

Similarly, spending on literacy and primary education, rural development, agriculture, and women and child development won't rise in real terms. Non-plan spending on social services as a whole will fall by 16 per cent. The rural development budget will only rise by 6.3 per cent—thus declining in real terms.

The additional allocation to agriculture, which is in dire need of help, is a paltry Rs 900 crores. Much of the additional funding, including agricultural credit, will go into supporting cold storage projects by Big Business or loans to corporate farming, each exceeding Rs 10 crores. The budget promises private banking in every village with a population of 2,000. But private banks are just not interested in financing small or marginal farmers and bear no “social obligations” unlike public sector banks. The budget has also put on hold the promised Food Security Act and new social security schemes.

All this amounts to reneging on the pledges made to the underprivileged who have been largely excluded from the benefits of high GDP growth for two decades. Even in the period disparagingly described as “the Hindu rate of growth” of 3 to 3.5 per cent, employment would increase by about 2 per cent. Now, with 7 per cent GDP growth, employment only increases by 1.3 per cent.

As if this weren't bad enough, the budget has written off Rs 5,40,268 crores through various subsidies and exemptions for the rich. This comes on top of “revenue forgone” of Rs 4.59 lakh crores last year and a total of Rs 8.75 lakh crores in the preceding three years. The private corporate sector gets concessions worth Rs 79,554 crores although it pays among the lowest corporate tax rates in the world, just 22 percent of profits—compared to the 27 percent that PSEs pay.

Yet, many in the media moan about the one-off farm loan waiver of Rs 70,000 crores in 2008 as if it were a huge undeserved concession. This only shows their shameless elitism. As does their celebration of income-tax concessions to India's upper crust, amounting to Rs 26,000 crores. The beneficiaries of this are the minuscule minority of 30 million income-tax payers in a population of 1,100 million. So, a person who earns 10 to 20 times the average per capita income will now pay just 6 to 10 percent of his income (after deductions) as tax. The super-rich will be gifted Rs 51,500 each.

The rich in the developed countries pay taxes totalling 40 to 70 per cent of their income. India's elite gets away with a mere 10.6 per cent (for all assessees in 2002, the latest year for which official data is available). In general, the richer you are in India, the less tax you pay. And the poor increasingly bear the burden of indirect taxes like excise duty and sales tax. This is a total obscenity—and a recipe for social chaos.

With such low tax collection, there's little wonder that the government's expenditure as a proportion of GDP has dropped from a peak of 22.2 per cent in 1987 to just 15.5 per cent. This cannot finance public services adequately. Given their reluctance to tax the rich, neoliberal governments look for shortcuts such as disinvestment from PSEs. The latest plan to raise Rs 40,000 crores thus makes no sense—just when the PSEs' market capitalisation is down to its lowest level in five years. This amounts to selling the family jewels absurdly cheap.

The tragedy is that the government is in a better position than ever before to do some good by the people, in particular, the underprivileged. But it doesn't give a toss for fulfilling its duty by the poor. Central revenues have risen 2.57 times since 2004 from Rs 2,65,000 crores to Rs 6,82,000 crores.

This money can be put to great use to create a comprehensive system of social security, including provision of affordable food, healthcare, education, employment at reasonable minimum wages, modern energy services for all, labour welfare and old-age pensions. This could transform India into an inclusive and cohesive society. If only the government had the will! (IPA Service)