Indian Budget 2024: A Hindutva Gift To Corporates – OpEd
On July 23, Indian Finance Minister Nirmala Sitharaman presented the Union Budget (2024-25) which highlights the priorities of Hindutva politics of economic growth sans human development. The Modi-led BJP government, along with its finance minister, continues to pursue failed and rejected neoliberal economic policies, including the reduction of corporate taxes, in an attempt to spur economic growth. However, the historical evidence suggests that corporate tax cuts have not effectively stimulated economic growth. Despite this, neoliberal capitalists and their corporate allies persist in advocating for these tax reductions, arguing that they lead to increased profits and economic expansion. In reality, these policies often result in greater income inequality and benefit large corporations at the expense of the working people.
The Congressional Research Service (CRS) studies have revealed that taxes have no significant effect on economic growth in the USA. They also found that higher tax rates contributed to economic growth in the USA after the Second World War. Most reliable studies on the relationship between tax cuts and economic growth show that there is no significant relationship between the two. Corporate tax cuts have been found to have an insignificant to zero effect on economic growth. Even the biased empirical studies of institutions like the World Bank and the Tax Foundation indicate that a 10 percentage point reduction in corporate tax rates contributes only 0.2 percentage points to annual GDP growth. This insignificant and imprecise contribution of tax cuts to GDP continues to be the opium of Hindutva politics, which competes in the global race to cut taxes to uphold corporate interests.
Despite all international experiences and evidence, Hindutva politics continue to support corporate interests while the people suffer from unemployment, hunger, homelessness, and poverty. The lowering of corporate taxes encourages corporations to save for their own investments, which circulates corporate capital for profit accumulation. Therefore, corporate tax cut is not a social good but a saving gift to corporates.
The Indian Budget 2024 is a Hindutva gift to corporates, while it designs systems that put students, farmers, and entrepreneurs into debt traps created by banks, furthering the interests of an unproductive, rent-seeking economy. Students need scholarships, fellowships and good academic infrastructure to study and gain skills that contribute to India's economic and social development. However, the budget's provision of loans to students is likely to create a debt trap for them, with banks emerging as the net beneficiaries.
Similarly, the credit line extended to Micro, Small, and Medium Enterprises (MSMEs) will likely only create debt traps for entrepreneurs. This approach fails to create conditions for innovative development and does not provide the necessary support for MSME leaders to thrive. Instead of fostering genuine growth and innovation, these measures merely increase the financial burden on small business owners, leaving them struggling under the weight of debt rather than contributing meaningfully to the economy.
The corporate tax reduction is not the final gift of Hindutva politics to corporate capitalism. Hindutva leadership have also promised to tax reform which is an obsession of every radical bourgeois represented by Mr Modi and his finance minister Nirmala Sitharaman. The reduction of corporate taxes is bourgeois socialism of Hindutva variety which robs the pockets of working people for corporate saving in the name of economic growth. Critics argue that a more balanced approach, including investments in social infrastructure and equitable taxation, would better serve the country's economic interests and lead to sustainable growth.
The tax policies can be a tool for redistribution. Such a proposal is not even radical redistribution but by ensuring that corporations and wealthy individuals pay their fair share, the government can generate revenue to fund social programs, infrastructure, education, and healthcare. Such redistributive tax policies can help reduce income inequality and provide more opportunities for marginalised and disadvantaged groups. Instead of relying on debt-inducing schemes, a focus on equitable taxation and investment in public services could lead to more sustainable and inclusive economic growth.
The praxis of Hindutva politics continues to neglect the broader goals of mass welfare and the long-term transformation of Indian society towards economic and social equality. Rather than addressing the pressing needs of the working people and striving for a more equitable distribution of wealth and opportunities, Hindutva politics is increasingly focused on supporting and promoting the interests of large corporations. Tax cut is just an example. This approach prioritises the establishment and maintenance of corporate dominance within the country, often at the expense of the common citizen's needs and rights. By doing so, it helps in widening the gap between the rich and the poor, undermining the principles of democracy and social justice. The emphasis on corporate hegemony suggests a shift away from policies that can promote inclusive growth and social harmony, raising concerns about the future direction of India's socio-economic development under the directionless leadership of Hindutva politics and economy.