Say No To Social Sector Budget Cuts - Public Forum
Tags: stop budget cuts, pension rights, inclusive growth, public welfare
Related Issue: Article 21 (Right to Life with Dignity) and Directive Principles of State Policy (Articles 38, 39, 41, and 43)
Dear friends and colleagues,
Yesterday (11 December 2013) the Pension Parishad organised a forum to discuss the proposed “fiscal
consolidation” that will lead to huge social sector budget cuts. The Rural Development Minister Shri. Jayram
Ramesh has described these as “savage cuts” that “will severely jeopardies the implementation of flagship
programmes” (See letter attached). The forum saw the coming together of several eminent economists,
academics, lawyers, politicians and civil society groups.
Prominent members of civil society leading fights for issues such as food, education, health, water, dalit rights,
adivasi rights, and child welfare presented their case and discussed what it would mean to their struggles and to
the larger communities if these budget cuts were to be implemented.
We thank all of you for your support and solidarity. For those of you who could not make it to the event, we once
again request you to please sign/endorse the letter to the Prime Minister attached below. Your endorsement will strengthen this fight and help stop the poor from the suffering that these cuts would
impose on them.
Open Letter To The Prime Minister
It was prominently reported in the media a few weeks ago that the Finance Ministry of the Government of India,
was likely to mandate significant expenditure cuts across the board, ostensibly to rein in fiscal deficit and
wasteful expenditure. Such a move raises several disturbing questions related to both to its underlying
presumed economic wisdom and its procedural propriety.
We do not wish to get into a detailed discussion of the relevant issues here but would like to flag a few pertinent
points in the following letter and urge the Government of India to rethink its reported move. In particular we
strongly feel that the promise of universal old age pension for elderly workers from unorganized sector, which
has been long overdue, should be fulfilled.
1. Such cuts typically occur in social sector ministries and schemes. As reported in the media, the Finance
Ministry has already proposed expenditure cuts amounting to around Rs 15,000 crore for Rural Development
Ministry and Rs 5,500 crore for the education sector which falls under the Ministry of Human Resources
Development. In addition, ministries are reportedly being told to limit their last quarter spending to below the
average of the first three quarters and a further cut of same by around 20 percent might be imposed.
2. Expenditure cuts have been specifically proposed for these sectors in light of surplus unspent funds that they
had accumulated in the previous fiscal year. We must ask why unspent funds existed with these ministries and
whether it relates to implementation failures by the government at various levels.
3. Further, in event of existing surplus funds, what is the rationale for not using same to address the urgent and
pressing issue of universal old age pension across India which can benefit the elderly population coming from
the unorganized sector?
4. The main reason for the present state of the fiscal deficit has been inadequate revenue mobilization in light of
liberal taxation policies followed by the government. Therefore, reducing expenditure to match the declining
revenues receipts on account of liberal taxation policies is tantamount to asking the poor to bear a
disproportionate share of this fiscal consolidation burden. Also, it needs to be mentioned that projecting low
revenue receipts on basis of low tax revenues before the end of the fiscal year might be misinformed as tax
revenue collection increases considerably over the last few months of the fiscal year when many direct tax
collections occur.
5. The Constitution explicitly mandates the democratic oversight of the raising of resources and spending by
government, with the underlying principle for being that resource raising and spending patterns of the
government must be subject to popular scrutiny through a broad consultative process. Thus, in addition, a
consultative mechanism with concerned ministries is strongly desired before going for such policy measures.
6. We must remember that the incumbent UPA government, agreeing with the Pension Parishad demands
earlier this year had assured and promised to universalize (with exclusions) and upscale the monthly old age
pension amount to a dignified level for ensuring economic independency to senior citizens.
7. Suggested policy measures, as reported in the media, also neglect previous statements by the Finance
Minister who had assured a poor-friendly fiscal consolidation roadmap for the next five years.
8. Hence, in light of these observations it becomes pertinent to ask if the present fiscal consolidation strategy, at
the cost of social sector expenditure and by neglect of old age pension, is at all a strategy of “inclusive growth”
as emphasized by the government regularly. Also, it raises a serious doubt about government’s claim regarding
insufficiency of funds and its concern regarding the welfare of elderly from the unorganized sector, many of
whom did not even receive basic minimum wages during their productive years.
We urge you as the Prime Minister:
A. To ensure that no budget cuts are made from any social sector funds and that there is no reduction in the
funds allocated for the social sector
B. To ensure that unspent balances and savings are used to fulfill the promises to universalize pensions and
enhance pension amounts for the elderly with exclusions.
C. To institute a consultative process to deliberate measures for increasing revenues
D. To make sure that all such budgetary processes should henceforth be subjected to a pre-budget consultative
process
Signed: Aruna Roy, Baba Adhav, Akhila Sivadasa, Utsa Patnaik, Prabhat Patnaik, Jayati Ghosh, Ravi Srivastava, Praveen
Jha, Nikhil Dey, Brinda Karat, Poornima Chikarmane, Amrita Chhachhi, Seema Mustafa, National Alliance for Peoples
Movements (NAPM), Madhuresh Kumar, Mary John, Mathew Cherian, Himanshu Thakkar, K.P. Shankaram, Ram Singh
Parmar, Pradeep Priyadarshan, Jaya Bharti, Neha Saigal, J Deshpande, Kiran Shaheen, Sudeshna Sengupta, Rted. Air
Marshal PK Dey, Asha Dey, SWARAJ group, Karnataka