Tuesday, July 15, 2014

Govt of India "subsidy" to corporate houses in 2013-14 could fund rural jobs scheme for three decades

By Our Representative
In a new analysis, titled “Corporate karza maafi at Rs 36.5 trillion”, well-known scribe P Sainath, known for his authoritative reports on rural India, has said that in 2013-14 the former UPA government had “foregone” revenues that could fund the rural jobs scheme, Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS) for three decades, or the public distribution system (PDS) for four-and-a-half years. He suggests there is no change in this, and the movement towards giving concessions to the big and the mighty continues.
“This year’s budget document says we gave away another Rs. 5.32 lakh crore to the corporate needy and the undernourished rich that year”, says Sainath sarcastically in his latest blog. “It says Rs 5.72 lakh crores but I am leaving out the Rs 40,000 crore foregone on personal income tax since that write-off benefits a wider group of people. The rest is mostly about a feeding frenzy at the corporate trough”, he adds.
Pointing out that “the major write-offs come in direct corporate income tax, customs and excise duties”, Sainath says, “If you think sparing the super-rich taxes and duties worth Rs. 5.32 lakh crores is a trifle excessive, think again. The amount we’ve written off for them since 2005-06 under the very same heads is well over Rs. 36.5 lakh crore -- a sixth of that in just corporate income tax”, the amount “wiped off for the big boys in nine years.”
Suggesting what Rs 36.5 trillion meant, Sainath says, it could “fund MNREGS for around 105 years, at present levels. That’s more than any human being could expect to live. And a hell of a lot more than any agricultural labourer would. You could, in fact, run the MNREGS on that sum, across the working lives of two generations of such labourers. The current allocation for the scheme is around Rs 34,000 crore.” As for the PDS, the amount could funit it for “31 years”, says Sainath, adding, “Current allocation Rs. 1,15,000 crores.”
“By the way, if these revenues had been realized, around 30 per cent of their value would have devolved to the states”, Sainath further says, adding, “So their fiscal health is affected by the Centre’s massive corporate karza maafi. Even just the amount foregone in 2013-14 can fund the rural jobs scheme for three decades. Or the PDS for four and a half years.”
Pointing out that it is “also over four times the ‘losses’ of the oil marketing companies by way of so-called ‘under-recoveries’ in 2012-13”, Sainath adds, “Look at some of the exemptions under customs duty. There’s a neat Rs 48,635 crore written off on diamonds and gold.’ Hardly aam aadmi or aam aurat items. And more than what we spend on rural jobs.”
The fact is, he says, “concessions on diamonds and gold over the past 36 months total Rs 1.6 trillion -- a lot more than we’ll spend on the PDS in the coming year. In the latest figures, it accounts for 16 per cent of the total revenue foregone.”
Giving a break-up of the budget’s "revenue foregone" figure of Rs 5.72 lakh crore for 2013-14, Sainath says, “Of this, Rs. 76,116 crore was written off on just direct corporate income tax. More than twice that sum (Rs.1,95,679 crore) was foregone on excise duty. And well over three times the sum was sacrificed in Customs Duty (Rs. 2,60,714 crores).”
Saying that all this has been “going on for many years in the ‘reforms’ period”, Sainath contends, “The budget only started carrying the data on revenue foregone around 2006-07. Hence, the Rs 36.5 trillion write-off figure. It would be higher had we the data for earlier years. All of this, by the way, falls within the UPA period. And the trend in this direction only grows.”
Recalling that even the budget document recognizes that ‘the total revenue foregone from central taxes is showing an upward trend’, Sainath concludes, “The amount written off in 2013-14 shows an increase of 132 per cent compared to the same concessions in 2005-06. Corporate karza maafi is a growth industry, and an efficient one.”

No comments: