People's Democracy

IN a joint memorandum submitted to the finance minister on January 10, in the process of pre-budget consultations that the minister holds every year in a ritualistic manner, all the central trade unions have unanimously opposed (1) thoughtless privatisation, (2) change in the labour laws in favour of employers, (3) removal of quantitative restrictions on imports, much to the detriment of industry, agriculture and the national interest as a whole, and (4) policies leading to severe aggravation of job losses. They have also demanded immediate enactment of a comprehensive legislation for agricultural workers.

It is admitted by all that the economy is in a deep crisis; from a slowdown it has slipped into a downright recession. The strategy of jobless growth, coupled with reliance on foreign direct investment and incentives to domestic investment, has not yielded any positive result. The trade unions are of the unanimous view that emphasis must be on mobilisation of domestic resources, generation of employment and increasing the people’s purchasing power. Instead of withdrawing from economic activities, the government must make massive investments in social sector to generate employment. This is the way to halt the recessionary trend and take care of the growing human distress.

Towards this end, the trade unions have demanded the following:

1) The government must scrap the notification that seeks to enlarge the tax-net by bringing in all fringe benefits of workers, extending even upto unskilled level, under taxable income. The income tax exemption limit should be raised to minimum Rs one lakh.

2) The government must take stringent measures to realise the non-performing assets (NPAs) of the banking sector and all the outstanding tax arrears, running into several thousands of crores of rupees.

3) The government must withdraw the recently announced move to increase the excise duty.

4) The government must give up the policies of reckless privatisation and all-out downsizing, and halt the rampant closures in both the public and private sectors.

5) The government must drop the proposed amendments to the Industrial Disputes Act and other labour laws in favour of the employers. The law regarding contract labour must be appropriately amended to remove the lacunae in absorption. Effective measures for progressive improvement and strict enforcement of the existing labour laws must be ensured. All issues related to labour laws must be dealt with by the tripartite body.

6) The government must enact a comprehensive law for the unorganised workers, including agricultural labourers, without any further delay.

7) The government must restore the rate of interest on provident fund, small savings, etc, to the 1998-99 levels. Retrograde moves to undermine the existing social security schemes, including the employees provident fund, must be abandoned and steps taken to strengthen social security.

The memorandum was signed by Gurudas Das Gupta (AITUC), Hashubhai Dave (BMS), M K Pandhe (CITU), Umraomal Purohit (HMS),  Sunil Sen (UTUC), Ashutosh Banerjee (UTUC-LS) and S C Gaur (TUCC).

During the consultation with the finance minister, the CITU submitted a separate memorandum as well. It said the pre-budget discussions with the trade unions have become a ritual, as none of the suggestions made by them in the process during the last ten years or more have received even remotest consideration from the finance ministers while preparing the budget. Absolute reliance on the wisdom of the business and industry lobby and also on the foreign advisors in budget preparation have become the standard practice of the successive governments. The promise made by the finance minister in the pre-budget meeting last year for a full-day discussion with trade unions on economic ‘reforms’ was not implemented. It would be useful if the ministry of finance places a document compiling all suggestions that emanate during the pre-budget consultations from various interest groups, along with the status report on their treatment.

The CITU memorandum analysed various aspects of the economic situation in the country since 1996 in particular. It demonstrated how almost all the economic indicators of development have been showing a declining trend, and how almost all the projections regarding the economy made in the successive budgets since the last half a decade or so have not materialised. Scandals have become a regular affair in the stock market; every scam is followed by more concessions to the manipulators in the garb corrective/regulatory measures. On the other hand, workers, peasants and other common folk are getting a raw deal in a crisis-ridden situation.

All talk of employment generation through the ‘investor-friendly budget’ (2001-02) has ended in loss of several lakh jobs in a span of last one year or so in the government sector itself. During the last three years, more than six lakh jobs were lost in public sector units alone. The track record of employment generation in private sector is even worse. The private corporate sector merrily continued to drastically downsize the workforce, with active patronage of the government machinery, in violation of all statutes in respect of even retrenchment compensation.

The CITU memorandum also pointed to the growing tax evasion as well as default in loan repayments by the corporate houses. Added to this is the perpetual tax holiday to big landlords reigning on rural India. On the other hand, the government is hell-bent on squeezing the workers and the salaried sections to compensate for the resultant losses.

Hence the unanimous demand from the entire trade union movement for upward revision of income tax exemption limit has fallen on deaf ears. Almost all the organised sector workers including the unskilled ones have been squeezed by the income-tax net. Not only that, all the fringe and welfare benefits enjoyed by the workers like education, LTC, free-railway pass, company quarters, house-rent allowance, etc, are being made taxable. The reduction of interest payable on their provident funds and also on small savings is another method to squeeze the workers. The Y V Reddy committee’s recommendation to reduce these interest rates further and impose tax on all withdrawals from provident fund is going to be a severe blow to the workers at large. All these moves are also disincentives to domestic savings in the background of stagnating/falling domestic savings and investment rates.

In this context, the CITU memorandum also pointed to the uncalled-for moves to make retrograde changes in labour laws and warned that the trade union movement would staunchly oppose these moves.

The memorandum urged upon the finance minister to consider the following suggestions while preparing the budget for 2002-03:

1) Concrete steps to augment the demand in the economy. For it, policy must focus on employment generation and improve the earning level of the workers and the people.

2) Employment generation cannot automatically result from giving more incentives to the employers for investment. Such incentives must be reoriented and linked with the stipulated employment level.

3) Provision for widest coverage of the Food for Work programme with special focus on the starvation-prone areas, instead of allowing the surplus foodgrains stock to rot.

4) Stop to privatisation of the profit-making PSUs forthwith. The Disinvestment Manual, providing for an in-built mechanism for undervaluation/distress sale of the PSUs, must be scrapped outright.

5) Concrete expeditious steps for revival of the sick units through pro-active policy support. In regard to sick PSUs, the government must invest as promoter. SICA must be repealed and provisions for liquidation oriented measures in the Companies Act scrapped.

6) Stringent punitive measures against the corporate tax defaulters. Urgent steps for the recovery of the outstanding tax arrears.

7) Customs duties must be revised upwards in general. Any reduction in customs duty on a particular product must be matched with suitable reduction in excise duty of the similar product domestically produced and also in the customs duty on its imported inputs. Import duty on coal must be restored to the 1998 level.

8) Big agricultural landlords must be brought under tax-net.

9) No increase in the indirect taxes on essential commodities.

10) Provisions to clear the unpaid salary and statutory dues of the employees of the sick PSUs, along with concrete steps for revival.

11) The exemption limit for income tax payment must be revised upwards to Rs 1,00,000. The house rent allowance, company quarters and other basic welfare-related fringe benefits of workers must not be made taxable.

12) The interest payable on provident fund must be restored to 12 per cent, and the interest payable on the accumulation of erstwhile family pension fund raised at par with the PF. Any withdrawal from the PF must not be subjected to tax.

13) All ceilings on payment of and eligibility for bonus payment must be removed by suitable amendment of Payment of Bonus Act.

14) The recommendations of the Y V Reddy committee (on the system of administered interest rates and related issues) must not be implemented. (INN)