Memorandum by All Central TUs 
for the Pre-Budget Consultation with Finance Minister

Leaders of central trade unions - CITU, AITUC, BMS, INTUC, HMS, AIUTUC, AICCTU, UTUC, TUCC, LPF - met the union finance minister Pranab Mukherjee on 16 January and placed before him their demands in the form of the following memorandum

• Take effective measures to arrest the spiraling price rise and contain inflation; Ban speculative forward trading in commodities; Universalise and strengthen the Public Distribution system; Rationalise, the tax/duty/cess on petroleum products as a part of anti inflationary measure.

• In view of huge job losses and mounting unemployment problem, the ban on recruitment in Govt deptts., PSUs and autonomous institutions should be lifted as recommended by 43rd Session of Indian Labour Conference (ILC).

• All stimulus packages to the corporates must be made conditional to ban retrenchment, VRS, lay-off, closures, wage-cut etc. and to create employment.

• The massive workforce engaged in ICDS, Mid-day meal scheme, Vidya volunteers, Guest Teachers, Siksha Mitra etc. should be regularised and the workers engaged in the Accredited Social Health Activities (ASHA) brought under the coverage of statutory minimum wage and social security. Universalisation of ICDS should be done as per Supreme Court directions by making adequate budgetary allocations.

• The scope of MGNREGA should be extended to urban areas as well, and employment for minimum period of 200 days with guaranteed statutory wage should be provided, as unanimously recommended by 43rd Session of ILC.

• Steps should be taken for removal of all restrictive provisions based on poverty line in respect of eligibility for coverage of the schemes under the Unorganised Workers Social Security Act 2008. Adequate resources should be allocated for the National Fund for Unorganised Workers (as fixed percentage of GDP) to provide for Social Security to 43.5 crore unorganized sector workers including the contract/casual and migrant workers in line with the recommendations of Parliamentary Standing Committee on Labour and also the 43rd Session of ILC.

• Public investment must be increased for creation of assets and decent employment. For the purpose, the public sector units should be strengthened and expanded. Disinvestment of shares of public sector units should be stopped forthwith and their huge reserves and surplus of more than Rs. 6 lakh crore be used for rehabilitation of sick CPSUs and modernization and expansion of other CPSUs. CPSUs are having average debt equity ratio of 0.75:1 as compared to 2.3:1 in private sector, PSUs should be allowed to have more access to debt market of banks and FIs instead of resource mobilization in equity market through disinvestment.

• The financial sector, including Banks & Insurance which stood the test of time even during the recent global melt down should be encouraged, enlarged and improved instead of imposing the so called reforms which will adversely affect them and weaken their public sector character. The proposed move of Banking and Insurance and Pension Reforms should be stopped forthwith. Industrial houses should not be permitted to start banking operations.

• Requisite budgetary support should be provided for addressing crisis in traditional sectors like Jute, Textiles, Plantation, Handloom and Coir etc.

• Budgetary provision for elementary education should be increased, particularly in the context of the implementation of the right to education as this is the most effective tool to combat child labour.

• Ongoing export of raw materials/mineral resources should be restricted and strictly monitored either directly or through appropriate fiscal instrument to promote value addition and consequent employment generation domestically. In particular, iron-ore export should be banned and domestic steel makers should be allotted captive blocks on a preferential basis.

• The system of computation of Consumer Price Index should be reviewed as the present index is causing heavy financial losses to the workers. The revision of DA should of done every three months instead of six months.

• EPF rate on interest should be enhanced in view of high inflation and as a part of social security. Threshold limit of 20 employees in EPF Scheme should be brought down to 10 as recommended by CBT-EPF. Pension benefits under EPS unilaterally curtailed by the Govt. should be restored. Govt. and Employers’ contribution should be increased to allow sustainability of Employees Pension Scheme and for provision of reasonable minimum pension as recommended by Parliamentary Standing Committee on Labour.

• Income Tax exemption ceiling for the salaried persons should be raised Rs. 3 lakh per annum and fringe benefits like housing, medical and educational facilities should be exempted from the income tax net in totality.

• Entry of MNCs and big corporate in retail trade should be prohibited.

On Resource Mobilisation and Taxation, we propose the following

• Increase duty on imported power plant equipments

• Impose windfall tax on petroleum products exported from standalone refineries to curb their windfall profits.

• A progressive taxation system should be put in place to ensure taxing the rich and the affluent sections who have the capacity to pay at a higher degree. The corporate service sector, traders, wholesale business, private hospitals and institutions etc. should be brought under broader & higher tax net. Increase taxes on luxury goods and reduce indirect taxes on essential commodities as at present the overwhelming majority of the populations are subjected to indirect taxes that constitute 86% of the revenue.

• Increase export duty on ongoing iron ore export

• Concrete steps must be taken to recover huge accumulated unpaid tax arrears which has already crossed around Rs 3 lakh crore on direct and corporate tax account alone, and has been increasing at a geometric proportion. Such huge tax-evasion, over and above the liberal tax concessions of around Rs 2 lakh crore on direct and corporate tax account as on 2009-10, should not be allowed to continue.

• Effective measures should be taken to unearth huge accumulation of black money in the economy including the huge unaccounted money in tax heavens abroad. This money should be directed towards providing social security.

• Concrete measures should be expedited for recovering the NPAs of the banking system from the willfully defaulting corporate and business houses. Defaulters should not be allowed fresh loans.

• Tax on long term capital gains should be introduced; so also higher taxes should be levied on the security transactions.

• ITES, outsourcing sector, Educational Institutions and Health Services etc. run on commercial basis should be brought under Service Tax net.