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Cover Story
 
ALTERNATIVE BUDGET
“They can change the whole mining policy”
Prashant Bhushan, Lawyer & Activist
Issue Date - 15/03/2012
 
The Union Budget is an extremely important process for the country, as it not only decides who will be paying taxes and what kind of taxes; it also decides where this money from the government will be spent and the manner in which it will be spent. The budget sets the tone to the economic policies the government wants to follow.

Unfortunately, many things that should have been done through the budget are being done secretly in India. Take the example of the surreptitious tax holiday given to foreign companies by allowing them to deploy the Mauritus route. Strictly speaking, if the government wanted to exempt foreign companies from taxes, it should have been done by way of budget by providing for it in the Finance Act. The government, sadly, has chosen to do so surreptitiously by passing a CBDT circular. Of course, the government does not have the political consensus that is required to pass something of this kind, which is why they have chosen to do it secretly. This secrecy has also been observed to be encouraging many opaque financial transactions in the country in the sense that many countries come into India through the Mauritius route and there is a lot of black money generated through the Mauritius route. Unfortunately, the government is just not bothered; and in fact, seem to be encouraging it. Even in the case of Vodafone, where although the judgment was wrong and bad, it can be easily corrected by means of a legislation, which can be passed along with the budget. The Income Tax Act can be amended with retrospective effect to plug such a leak. Lack of political will on behalf of the government to ensure compliance of laws is one problem. The second problem is that enough money is not being allocated for critical sectors of the economy such as healthcare, judiciary & even education. Even the money allocated in programmes like MGNREGA is largely misappropriated due to lack of accountability and more importantly, lack of institutions to enforce accountability.

Unfortunately, for the past twenty years, most budgets that we have seen are geared towards what the Prime Minister calls GDP growth, even if it is achieved by breaking the backs of the poorest people in this country such as tribals, taking away their lands and livelihood and giving it to the richest corporations in the country essentially for plundering our natural resources. These budgets have also been totally unmindful of the environmental consequences of such growth. Growth for the sake of increasing profits of corporations, particularly foreign corporations, has been the philosophy.

The government can’t be talking policies like giving away your mineral resources to corporations for a pittance, where you get a royalty of 1%, you don’t charge anything by way of lease money and allow resources worth lakhs of crores to be extracted and exported out of the country on the basis of first come first serve, which is the policy being followed in giving out mining leases. In the same way, we have seen a totally dishonest, discriminatory and arbitrary policy by the government in the 2G case. There is much more money involved. There you have several lakh crores worth of natural resources of the country being looted, which should ideally be public resources and public assets. This policy has been unmindful of equity among the poorest people who live on that land and have been displaced, environmental consequences and also inter-generational equity. It is sad to see this government behaving unabashedly as an agent of these multinational corporations.

 
The budget itself cannot fix everything but it can fix some things plaguing this country in the current scenario. They can change the whole mining policy as there is huge revenue involved. Royalty could be 50% or even 75% of the market value of the minerals and you can have a policy of auctioning the mining leases, which is what the Supreme Court has also said. This auction of mineral resources could generate enormous amounts of money just as the 3G auction did.

The government should ideally have its task cut out for the budget if it wants to put an end to unbridled corruption and the huge financial scams breaking the backbone of this country. First, it must plug the Mauritius route. Then it should put an end to the manner in which mining leases are given out. There should be much lesser mining in India. In fact, mining should not be in the private domain at all. Also, the government should scrap the FCFS policy when it comes to allocation of natural resources. This would also ensure huge revenues, which could be put to good use for the public.

By and large, people believe that the central government or the state governments are basically acting for extraneous considerations either by way of getting bribes from corporations and acting in their interests, or for any other extraneous consideration but not in public interest. In fact, people have come to feel that the whole democratic system has become farcical where they are forced to choose between three or four crooked political parties. None of the parties in contention for power inspire any confidence. What we need is a strong Lokpal institution and stronger measures for transparency in government functioning & judicial reforms, without which all other reforms become worthless.
          

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