Economic slowdown is affecting all sections of society. But corporate lobby and the rich are taking advantage of the slowdown to extract benefits and press for favourable structural changes from the government that they have helped to come to power. The government is either clueless about slowdown or was in denial mode for a long time but now has become proactive and extending benefits to corporates and rich, defending its policies by insisting that these concessions will encourage investment and generate employment.
The government has been banking on foreign capital, exports and private investments for development since the advent of new economic policy and reforms that have led to the present slowdown, overcapacity generation due to easy loans and lack of increase in earnings of common man and increase in inequality.
But ignoring this reality, there is a massive tax cut for corporates and investors causing a deficit of Rs 1.45 lakh crore in tax collection. The proposal is there to establish big economic coastal zones like SEZs to attract foreign investors. The government in its anxiety to attract and retain investors has brought down corporate tax to the lowest that around 17 per cent from 25 per cent. Similarly, the construction industry is also offered sops.
It has announced that it would raise more than Rs 1 lakh crore through sale of the public sector. Privatisation of Air India is also announced.
There seems to be a clear game plan by interested private players to compel the government to sell “public sector assets at the lowest price and then to use it for super profit”.
Capital investment by private players is down by 44 per cent when compared to that in 2013-14. Similarly, capital expenditure by the government is falling from 13.34 per cent of GDP in 2013-14 and has now come down to 12.2 per cent of GDP. Same is the case with state government finances which are under stress. Of the total demand in the country, more than 50 per cent is of private consumption. As long as this does not increase inventors will not have the incentive to invest! Just talking about animal spirit will not help.
Same is the story of the agriculture sector which is showing constant fall in its share of GDP and consumption is decreasing or stagnant. Thus there is a strong case for increasing the purchasing power of workers and farmers along with small businessmen who were hit by demonetisation.
No wonder one lakh workers of Ordinance factories went on a week-long strike and five lakh coal workers went on strike against corporatization and FDI in their units. It is hoped that government will backtrack under this pressure from workers and unions. Even the pro-government BMS had to participate in the strike.
Clear class battle is in offing. Corporate and rich are using the economic slowdown to strengthen their position and increase profits, whereas working class and toiling masses are in the struggle to defend their interest and to make the government realize their hardships during the time of economic slowdown.
The pro-corporate and pro-rich RSS-BJP led government is trying to pamper the corporates and foreign investors and neglect the real sufferers, the toiling masses.