Nov 22, 2014

Oxfam India Expresses Disappointment to Budget 2013-14


No Effort in Budget to Close the Gaps 

Mr Chidambaram recognizes in the opening paras of his speech that “owing to the plurality and diversity of India, and centuries of neglect, discrimination and deprivation, many sections of the people will be left behind if we do not pay special attention to them. As Joseph Stiglitz, Nobel prize-winning economist, said, "There is a compelling moral case for equity; but it is also necessary if there is to be sustained growth. A country's most important resource is its people." We have examples of States growing at a fast rate, but leaving behind women, the scheduled castes, the scheduled tribes, the minorities, and some backward classes. The UPA does not accept that model. The UPA Government believes in inclusive development, with emphasis on improving human development indicators. I hope this Budget will be yet another testimony to that commitment.”

However, according to Oxfam India, the Budget that is actually presented fails completely in being a testimony to that commitment.  Mr. Chidambaram recognizes himself that the resources currently raised are totally inadequate to deliver on inclusive growth and human development  “In 2011-12, the tax GDP ratio was 5.5 percent for direct taxes and 4.4 percent for indirect taxes. These ratios are one of the lowest for any large developing country and will not garner adequate resources for inclusive and sustainable development. I may recall that in 2007-08, the tax GDP ratio touched a peak of 11.9 percent. In the short term, we must reclaim that peak.”  And yet no efforts are made to do so.  Even some of the measures that are included to raise more resources from the rich are measures just for one year, rather than any effort to collect adequate taxes for the medium and long run.  “I believe there is a little bit of the spirit of Mr. Azim Premji in every affluent tax payer. I am confident that when I ask the relatively prosperous to bear a small burden for one year, just one year, they will do so cheerfully.”  

Why only for one year?  There is no effort to raise more taxes through a number of measures such as widening the tax base, reducing corporate tax exemptions, or introducing taxes such as wealth and inheritance taxes that could have begun to close the gap between the rich and poor in India on a more long term basis and to start to deliver on a more inclusive development path.  According to Nisha Agrawal, CEO Oxfam India, “One of the biggest disappointments of the Budget is the failure to introduce the Inheritance Tax.  An Oxfam India and Center for Budget Governance and Accountability (CBGA) study has found that the revenue potential of inheritance tax and wealth tax in India is about Rs 63,539 crore per annum or 0.8 per cent of GDP of 2011-12, roughly equivalent to current combined (Centre + States) expenditure on health care – 0.9 per cent of GDP.” 

The second area that the Budget misses completely is the opportunity to close the gap between women and men.  Again, it recognizes the importance of doing so and yet fails to do so. “Women belonging to the most vulnerable groups, including single women and widows, must be able to live with self-esteem and dignity. Young women face gender discrimination everywhere, especially at the work place. Ministry of Women and Child Development has been asked to design schemes that will address these concerns. I propose to provide an additional sum of Rs 200 crore to that Ministry to begin work in this regard.”  

According to Agrawal “This Budget introduces many more piecemeal schemes that no one will know about and no one will implement.  There are several good laws that have already been passed that need to be implemented for the empowerment and safety of women that, several years later, remain just on paper with no budgets behind them.  That is where the funds need to go.”  These include the very important laws such as the Protection of Women from Domestic Violence Act (2006), the Hindu Succession Act (revised in 2005) that would give equal property rights to men and women, and the recently passed (on February 26, 2013) Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Bill, 2012.  Agrawal adds “Instead of mainstreaming women’s rights and entitlements, and ensuring there is no discrimination against them in their access to goods and services, what is proposed instead is the really backward step of providing a separate Women’s Bank for them!  What should be happening is that land and property titles should be in the names of both men and women so that women can not only access credit from mainstream banks but also feel secure and empowered through property ownership.”

The Finance Minister ends his speech by saying: “Any economist will tell us what India can become. We are the tenth largest economy in the world. We can become the eighth, or perhaps the seventh, largest by 2017. By 2025, we could become a $ 5 trillion economy, and among the top five in the world. What we will become depends on us and on the choices that we make.”  Agrawal sums up by saying “The choices presented in this budget might eventually take us to the top five economies in the world by 2025.  But there are no signs that they will move us in a direction that will also help us eradicate extreme poverty, reduce gender inequality, reduce discrimination against the socially excluded, or “end the centuries of neglect, discrimination and deprivation” as Mr Chidambaram aspired to do in his opening remarks.”

Credit: Nisha Agrawal

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