Sunday, January 16, 2011

TUs Demand Reversal of Pro-Corporate Economic Policy Regime

ALL the central trade unions of the country presented a joint memorandum to the union finance minister on January 12, during the pre-budget consultation held by the latter. The memorandum pointed out that “This economic policy regime has only created a few highlands of prosperity, while plunging the people at large into the quagmire of impoverishment and unmitigated sufferings.” The trade unions therefore demanded reversal of the pro-corporate pro-big business economic policy regime and urged for a “truly people oriented budget to address the issues of poverty, unemployment and social infrastructure.”

During the consultation, the leadership of INTUC, AITUC, CITU, HMS, BMS, AIUTUC, TUCC, UTUC and other unions spoke in one voice urging for a paradigm change in the present economic policy regime which is promoting price rise to increase the speculative profit for corporate traders, and is increasing unemployment and poverty despite GDP growth. This is also leading to repression on the working people, denying even the statutory minimum wages to Anganwadi, ASHA and mid-day meal workers, pushing up privatisation and deregulation of the public sector industrial and financial institutions and public utility services to the detriment of the working people and self-reliant development of the national economy.


While responding to the claim of the Finance Minister on inclusive growth and higher GDP numbers, CITU general secretary Tapan Sen stated that rising levels of unemployment and sharp declines in the share of wages in the gross value added clearly portray the utterly jobless character of the economic operations besides the sharp decline in the average wage levels. This means that the gains of GDP growth are wholly appropriated by the capitalist class, perpetrating a loot on the working people. Sen demanded that along with GDP figures, employment data must be regularly published on quarterly basis for a transparent assessment of the inclusiveness of the economy.

While referring to the phenomenon of continuing rise in prices of the essential commodities, which is further aggravated by rise in prices of petrol and diesel during the intervening period, CITU referred to the trade unions’ unanimous demand for universalisation of public distribution system and complete ban on the speculation and futures trade of all essential commodities. The government’s refusal to take these measures is tantamount to an ongoing joint venture exercise of promoting price rise to facilitate speculation in commodity market and the continuing windfall profits of the corporate traders.

About resource mobilisation, the CITU stressed the urgency for recovering huge unpaid tax arrears and huge unpaid bank-loans from the corporates, both increasing in a geometric progression every year. It also demanded unearthing of the black money and taxing the affluent and the rich while minimising the tax burden on essential commodities and industrial inputs. Lamenting about resource crunch and selling out the shares of blue-chip public sector companies at heavily discounted rates, while simultaneously shelling out huge concessions to the corporates and big businesses, both domestic and foreign, at an increasing rate of around Rs 5 lakh crore plus every year cannot go together. The CITU demanded a top to disinvestment in the PSUs forthwith.

The CITU also pressed for removal of restrictive provisions on poverty line in respect of eligibility coverage of social welfare schemes under the Unorganised Workers Social Security Act, and for allocation of adequate fund for universal coverage of the unorganised sector workers and contract/casual workers for the benefits under the Act.

Along with other issues mentioned in the joint memorandum, the CITU pressed for an employment guarantee scheme for the urban unemployed, regular upward revision of minimum wages and its automatic linkage with price index, extension of the statutory minimum wages and basic social security benefits to the Anganwadi, ASHA and mid-day meal workers, restructuring of the employees pension scheme with increased contribution from the government and the employers to ensure minimum guaranteed pension linked with movement of price index, scrapping the new pension scheme proposal and the PFRDA Bill, scrapping of the proposals and bills for deregulation of the financial sector including the Insurance Laws Amendment Bill, raising of the income tax exemption ceiling for the salaried persons to Rs 3 lakh and augmenting the public investment for agriculture, education, healthcare and revival of the sick PSUs in a big way.


The joint memorandum of the central trade unions expressed serious concern over the present situation of the country’s economy --- the worrisome agrarian distress, unacceptable levels of inflation leading to sky rocketing prices, and huge job losses in the face of mounting unemployment, among other things. It said the present economic policy regime has only created a few islands of prosperity while pushing the mass of the people into the quagmire of impoverishment and unmitigated sufferings. The memorandum therefore strongly urged that the coming budget should be people oriented and address the issues of poverty, unemployment and social infrastructure.

With this end in view, the trade union memorandum placed some specific proposals. For example, it demanded removal of the ban on recruitment in government departments, PSUs and autonomous institutions, as suggested by the 43 rd session of the Indian Labour Conference, in view of huge joblosses and mounting unemployment problem. Another proposal was that the all stimulus packages funded out of public exchequer must be made conditional to a ban on retrenchment, VRS, layoffs, closures, wage-cuts etc and on creation of employment.

The trade unions also proposed that the scope of the MGNREGA must be extended to urban areas and that employment under it must be for a minimum of 200 days with guaranteed statutory wage. This is also a unanimous recommendation of the Indian Labour Conference.

Further, remunerative prices must be ensured for agricultural produce and public investment in agriculture must be substantially augmented. It should also be ensured that benefits of the increase reach the small cultivators and not the big companies and landlords.

Budgetary provision must be made for provision of essential services including housing, sanitation, water, schools, crèche etc to workers in the new emerging industrial sites. Working women’s hostels should be set up where there is a concentration of women workers.

The financial sector must be encouraged, enlarged and improved instead of imposing on them the so-called reforms which may adversely affect them and weaken their public sector character. Industrial houses should not be permitted to start banking operations.

The memorandum also suggested a stop to disinvestment of public sector units forthwith; budgetary support for revival of viable sick public sector undertakings that are potentially viable; budgetary support for jute, textiles, plantation, handloom and coir sectors that are facing a crisis, etc.

Provision for elementary education must increase, particularly in the context of the implementation of the right to education as this is the most effective tool to combat child labour.

The system of computation of consumer price index must be reviewed as the present index is causing heavy financial losses to the workers. The revision of DA should be done every three months instead of six months.


In regard to resource mobilisation, the trade unions’ memorandum demanded a progressive taxation system to ensure the taxing of the rich and the affluent sections who have the capacity to pay more. The corporate service sector, traders, wholesale business, private hospitals and institutions etc should be brought under a broader tax net. There must be an increase in the taxes on luxury goods and reduction of indirect taxes on essential commodities as at present an overwhelming majority of the population are subjected to indirect taxes that account for 86 per cent of the revenue.

Concrete steps must be taken to recover from the corporate houses the huge accumulated unpaid tax arrears which have already crossed the Rs two lakh crore mark, and has been increasing in a geometric ratio. Such huge tax evasions, over and above the liberal tax concessions of around Rs 1.8 lakh crore on direct and corporate taxes as in 2009-10, must not be allowed to continue.

Effective measures must be taken to unearth the huge accumulation of black money in the economy, including the huge unaccounted money in tax heavens abroad. The finance minister must make provisions to bring back the illicit funds stashed abroad, which are at present more than twice the current external debt of 230 billion dollars. This money can well finance the social security measures.

Concrete measures must be expedited for recovering the non-performing assets of the banking system from the wilfully defaulting corporate and business houses.

A tax on long term capital gains must be introduced and higher taxes levied on the security transactions.

The rates of wealth tax, corporate tax, gift tax etc must be enhanced.

Inconsistencies in the present tax regime must be corrected and it must not discriminate against small businesses and PSUs. At present the PSUs are paying more than the private corporates. Similarly, the effective tax rate for bigger companies with a before-tax profit of over 500 crore is less than that for smaller companies with before-tax profit of less than one crore rupees.

Such IT companies, outsourcing business, educational Institutions and health services etc. as are running on a commercial basis must be brought under the service tax net.

The trade unions’ memorandum expressed the hope that the suggestions made by the central trade unions would receive serious consideration from the finance minister. It also urged the minister to hold post-budget discussions with trade unions as is held with the corporate associations and federation


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