Government ‘Budgeting’ Finance Capital Growth

Anil Rajimwale

Modi government will present the first budget of its third term on July 23 in the budget session from July 22 to August 12. The BJP-led government is widely expected to continue its policy direction claiming ‘reforms’. The dialectics of budgets and economic policies over last decade have only served to strengthen the already massive stranglehold of financial corporates on the Indian economy. On our public sector oriented independent economy, there is massive assault by Adani-Ambani, aided and abetted by the Modi government. Though it spells doom for our vibrant economy, this time it may not be that easy, as the BJP is in a minority and its allies from Bihar and AP are at its throat to extract concessions. The finance minister will have to indulge in some tight-rope walking.
In the joint address to both the houses of Parliament last month, our President claimed that the budget would be ‘marked by many historic steps’. The BJP-led governments, in states and Centre, have definitely made ‘historic shifts’ towards the corporate finance capital at the cost of people and the country.
Which direction?
Since the election results on June 4, there is only one talk in the official economic and political circles: equity and share markets going mad with ‘bullishness’. The big business is gripped with the mania of massive speculative opportunities. Nifty and BSE rose sky-wards after NDA alliance led the elections. Papers are full of data on share markets and profits of the business giants, with the near complete exclusion of production and manufacture, reflecting the fact that nothing is going to be done for the people and productive economy. Problems of boosting capital expenditure (capex) on infrastructure and urbanization and other, removal of trade barriers, problems raised by the misuse of the GST are some of the headaches that the government is facing.
Reports suggest that the NIFTY could rise to 25000 mark. Stocks recommended include Reliance Industries, L&T, Apollo, ONGC etc.
Finance minister Nirmala Sitharaman met representatives from the infrastructure and energy sector as part of pre-budget consultations. The big industry wants the government to take steps to accelerate ‘urbanisation’. This is reflective of the productive capital going in a big way into the urban land and estate speculation to the exclusion of the MSMEs and other manufacturing. Another section of industry, particularly the MSMEs, is simultaneously complaining about high and complicated rates of GST, affecting the industrial production and sale.
‘HDFC Capital Advisors’ is betting big on housing plans to invest more than two billion dollars over two years across 15 cities.
Productive investments down
A natural corollary at the opposite pole of economy is the rapid and big fall in investments. CMEI data analysed by Bank of Baroda show manufacturing investments falling to a 20-year low in quarter ending in June, to Rs 44300 cr only. The previous lowest level was in June 2005. This despite tall claims of all round economic ‘growth’.
Yet, Indian big companies have raised a record Rs 2.5 lakh cr (30 bn dollars) in equity market in first half of this year, highest ever figure for January-June period. It is double the amount for the same period last year.
Adani and Ambani have become the symbols of the financialisation and speculative nature of the Indian economy. Billionaire Gautam Adani is getting ready to start building ships at the Group’s Mundra port, the country’s largest, with the government at his service. India ‘wishes’ to become one among top ten ship builders, and government finds no better alternative than Adani, at the cost of the public sector. Presently India is ranked 20th in the world.
It is interesting to note that Adani’s ship-building schemes have gone unreported previously, being hidden in the Rs 45000 crore expansion plan for Mundra Port. Environment will be destroyed extensively but environmental and coastal regulation zone clearances have already been managed. Adani has taken advantage of the fact that the yards in China, S Korea and Japan are booked till 2028, forcing global players to look at India. But Indian government has used the situation to side-track the public sector ports and yards.