'If There Is No Money In The Hands Of People...'

'...how do they consume and contribute to GDP?'

It is the time of the year when major discussions are centred around the Budget to be presented by Finance Minister Nirmala Sitharaman on Saturday, February 1.

Before presenting the Budget, the finance minister meets representatives from different sections of society to listen to their suggestions on what could be included in the Finance Bill. Whether the ministry listens to the suggestions is another matter.

On January 6, 2025, representatives from trade unions met the finance minister. Among them was Swadesh Dev Roye, all-India secretary of the Centre of Indian Trade Unions, an affiliate of the Communist Party of India-Marxist.

"Even the business community is demanding that the government should go for intensive investment because people are not buying anything," Dev Roye tells Rediff.com's Shobha Warrier.

The memorandum of the trade unions starts with, 'We are compelled to state this, as not a single suggestion by the trade unions was considered while preparing the Budget or any policy of your previous governments.'
It is the same government and same finance minister again. Do you have any expectation from the Budget?

From time immemorial, all governments exercise pre-Budget discussions and consultations with all sections of society, particularly the business houses.

They also discuss with us, the trade unions. But it is just a formality.

We have always been expressing our concern and reservation that they call us for meetings but they don't take anything from our suggestions.

It is not confined to this government alone. All previous governments, irrespective of their political affiliation, did the same thing.

So, they call us, we go there for the meeting and submit our memorandum, but they don't listen to anything we say.

Why do the governments call you if they do not want to listen to your suggestions?

It is a mechanical process that has been going on for years.

We submit a memorandum first and then an oral representation.

They listen and say, we are not accepting it or rejecting it. They don't make any commitment. They say, we are listening to you. Sometimes, there will be a discussion on one or two points. That's it.

What were the major suggestions made by the trade unions and ignored by the government?

(laughs) It is a long memorandum!

The main problem is, all trade unions have been expressing their reservation, concern and protest but the government just listens. It does not accommodate any of our suggestions.

Even the post-Budget discussions, the finance minister will address every business community, the Chambers of Commerce, etc. But she doesn't call us.

One of our demands was to call us and tell us after the Budget presentation, what they have accommodated and what they have not from our memorandum.

They meticulously and religiously avoid meeting the trade unions. That's also one of our protests.

What is your major concern about the economy? Is it unemployment or inequality or..?

Everything about the economy is a concern.

In the oral representation, I have said that economy has entered into a vicious circle.

Even the business community also is demanding that the government should go for intensive investment because people are not buying anything. They are not consuming.

GDP growth is driven by 4 engines.

The number one is, public consumption.

When you say public consumption, it means the buying capacity of the general public. In the 1980s, public consumption used to contribute 80% of the GDP. And today, it has come down to almost below 50%.

When there is no public consumption, there will be market stagnation.

The second engine of the GDP is private investment. But private investors are asking, when there is a stagnation in the market and when there is no public consumption, why should we invest?

So, the first two engines are down; private consumption and private investment.

The third and fourth engines are government expenditure and import-export.

The balance between whatever we export and whatever we import directly contributes to the GDP growth.

Today, the country is facing an export-import deficit. We are importing more and exporting less.

Since everything in the economy circles around these four engines, and since all the four engines are down, it affects the GDP growth.

The chief economic advisor said that profit earned by the private sector is at a 15-year high now. Despite that, why is the private sector not investing?

But the salaries are stagnant...

Exactly. Their profit is a 15-year high but there is no wage rise. There is a stagnation in money wage and real wage.

If there is no money in the hands of people, how do they consume and contribute to GDP?

That's why I said, it is a vicious cycle.

The government is transferring money to the private sector to produce more employment. They are accepting the money but not investing. So, the taxpayers' money is being handed over to the private sector in the name of incentive.

This bizarre transfer of capital in the name of PLI (performance linked incentive) and Capex Incentive should be discontinued as they are unproductive capital transfer schemes.

This is the problem with the Indian economy.

Feature Presentation: Aslam Hunani/Rediff.com