India: The politics of ‘Austerity’

Covering Up The Policies And Priorities Of The Congress Government

By Kavita Krishnan

(September 24, New Delhi, Sri Lanka Guardian) Daily papers nowadays are carrying headlines about the HRD Ministry declaring cuts in Universities’ funding, ordering them to hike fees, levy user charges etc to mobilize their own funds even to procure chemicals in labs and books in libraries. All this in the name of ‘austerity measures’.

Earlier this year, the Prime Minister Manmohan Singh prescribed wage cuts for workers in times of recession.

For the Congress-led Government, the recession is a handy pretext to push through all the pet policies of a neoliberal regime. Privatisation measures, wage cuts and job cuts – all can be virtuously blamed on the fund crunch in times of global recession. And when people protest, the government can fall back on the plea of ‘austerity.’

No wonder, then that the Congress is dismayed at media revelations of the ostentatious flaunting of wealth by External Affairs Minister S M Krishna and his junior Shashi Tharoor, and at Tharoor’s indiscreet ‘cattle class’ tweet that revealed contempt for the aam aadmi. A red-faced Congress rushed into damage control mode. Both the Ministers shifted to more modest accommodation on request from their party leadership; Congress leaders from Sonia and Rahul Gandhi downwards are now competing to display conspicuous ‘austerity’ – wearing khadi, travelling by economy class flights and even by train; and Congress has reprimanded Tharoor for his tweet.

Read between the lines: the Congress leaders’ song and dance of ‘austerity’ is a danger signal of the Government’s plans to intensify its liberalization offensive in the name of ‘austerity’.

Class Character peeps out – From beneath the Aam Aadmi mask

The Congress is aware that Krishna’s and Tharoor’s protestations that the 5-star bills were paid out of their own pockets rather than the government exchequer might not reduce the political cost of the episode. The fact that Ministers can afford 5-star comfort even as the Government has been preaching ‘austerity’ and prescribing wage-cuts for workers in times of acute drought, price rise and hunger, smacks of double standards, no matter which way you look at it. The Congress correctly recognised it as an instance of the aam aadmi mask having slipped, and hastened to position the mask in place once again: carefully crafted to display the correct expressions of sincerity and sacrifice.

But once someone has recognised the Emperor to be naked, attempts to persuade people that he is magnificently clothed tend to be in vain. Unfortunately for the Congress, the mask keeps slipping. Every day it revealed how other Congress Ministers too are living it up like modern day maharajahs – demanding Italian tiles, Spanish marble, and even vaastu-aligned toilets – all at public cost! These expensive tastes stand revealed as the natural lifestyle of the Congress netas.

Princes and Paupers…

The Government’s awkward and unconvincing attempts to cover up this revelation of its real class character with gestures of ‘austerity’ only serve to rub in the cosmetic and theatrical nature of such gestures. Consider: why should it be big news that Rahul Gandhi spends a night at a dalit’s house or makes a single journey by train? Precisely because such events are orchestrated exceptions. It’s like a Prince dressing up as a pauper for a day. An event that only serves to emphasise his princeliness – “See how great is the prince – he is willing to come down to our level and share our food.” There’s nothing democratic about these gestures: they are the very essence and spirit of feudal hierarchies.

Gifts and Giveaways for the Super-rich; Peanuts for the Poor

Recall that a couple of years ago, the Prime Minister had suggested that CEOs avoid conspicuous consumption, saying that “Such vulgarity insults the poverty of the less privileged.” That is precisely the hypocritical sentiment reflected in the Congress’ conspicuous austerity now: pursuing policies that promote the rich and punish the poor is fine – as long as this attitude is not ‘vulgarly’ displayed in a manner that might provoke the poor! Of course the very same papers which revealed the Congress Ministers’ lifestyles, are now writing editorials defending conspicuous consumption as a way to rescue the economy in times of recession. Spending sprees, if one believes them, is a patriotic duty.

The ‘austerity’ measures only serve to re-emphasise the fact that the Government’s priorities and policies are all tailored to serve the super-rich. The Union Budget’s ‘Statement of revenues foregone’ is revealing. It tells us that in 2008-09, Rs. 68,914 crore of revenue due from corporate taxation was “foregone” (due to special tax rates, exemptions, deductions, rebates, etc). And if we take a closer look at the corporate tax collected, we can see that bigger and more profitable companies get away with more exemptions while smaller companies pay more by way of corporate taxes. 67398 of the most profitable private companies, which had 44.60% of the share in total corporate profits, were taxed at an effective rate in the range of 0-20%, and therefore formed just 21.89% in the total tax payable. The smallest companies, those with profits less than Rs 10 Cr, had the largest effective tax rate.

It is also well known that indirect exemptions like concessions in excise and custom duties are also largely cornered by the corporate sector with little benefits being extended to actual consumers. Income foregone in 2007-08 on excise duty was Rs. 87,468 crore and on customs duty Rs. 1,53,593 crore. Even if we assume that 50% of these concessions are passed on to consumers, the total concession enjoyed by the corporate sector through direct tax exemptions and indirect duty cuts add up to more than Rs. 1.5 lakh crore. In other words, the corporate sector gets a concession of nearly Rs. 20 crore an hour – and this does not include the numerous tangible and intangible subsidies showered on the super-rich by way of cheap land, cheap power and so on and so forth.

Compare these enormous yearly handouts to the richest of the rich with the allocations for the poorest of the poor, struggling for survival: a mere Rs. 39,100 crore was allocated for the NREGS in the 2009-10 Budget. The priorities are clear: the neo-royalty of this country, who earn obscene salaries several thousands of times larger than the wages of the poorest Indians, are the ones whom our Government favours with huge gifts and giveaways. The poor are given mere peanuts – and on top of it all being made to shoulder the burden of recession in the shape of back-breaking prices, retrenchment and wage cuts.

The politics of ‘austerity’ and the true priorities of the callous and cruel Congress-led Governments must be challenged and exposed by militant mass movements of the poor.

Kavita Krishnan is the Editor, Liberation, Central organ of CPI(ML). kavitakrish73@gmail.com

-Sri Lanka Guardian