Early in 1996, your columnist met the then finance minister, Manmohan Singh, in his North Block office. On being told that the Congress party would not be talking of economic reforms in its forthcoming Lok Sabha election campaign, Dr Singh retorted: “What else is there to talk about?”
The answer has come in all the elections since then: Loan writeoffs, higher-than-market procurement prices for grain, free foodgrain for the majority of consumers, job reservations for new caste categories, unsustainable pension programmes, an ever-growing list of freebies and subsidies, and (increasingly) cash handouts.
There is also credit taken for developmental work: Building the physical infrastructure, and the progressive provision of basics (toilets, electricity, and internet connectivity). What economists call reforms — essentially fiscal discipline and market orientation — never find mention.
Perhaps this is to be expected. Voters have learnt to look for what they can get today, not jam tomorrow, and seem to choose parties that offer the most generous packages — which encourages a rush to raid the treasury. Distrust of governments is such that promises relating to neglected longer-term development issues, like improving school education or public health care, have little resonance.
The response from political parties, without exception, is to offer non-solutions to the very real problems in agriculture, and of unemployment and low incomes. Consider the findings of the caste survey in Bihar, and what the promise of increased job reservations might mean. The total number of government jobs, in a state with 131 million people, is 2 million. These go disproportionately to the general caste category and somewhat less so to the backward castes.
What if this skew were to be corrected, and government jobs were to be distributed proportionately to the major caste categories? The Scheduled Castes, who have about 0.29 million people in government jobs, would get another 0.11 million; the extreme backwards would see the number of government jobs go up from 0.46 million by a further 0.28 million. The general category and backward castes would be displaced to that extent; even more so for the general category if the reservation percentage is raised. None of it adds to the total jobs on offer. The caste-wise changes and higher reservation would affect a million jobs.
Does anyone believe that this is a meaningful solution to either the caste/social justice issue, or the jobs problem — in a state with 131 million people?
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Consider next the promises of higher procurement prices for farmers, most importantly for wheat and rice, to levels well above the ruling market prices. On the one hand, this increases the incentive for farmers to focus still more on wheat and rice and to offload all marketable surpluses to the government, which would become de facto the sole buyer.
So, bid goodbye to private trade and also to crop diversification — badly needed for, among other things, better use of increasingly scarce water.
On the other hand, an inefficient public procurement system (where prices paid to farmers account for barely half the total carrying cost) will be persisted with — leading to grain mountains that can only be given away mostly.
Finally, since grain disbursement prices will stay unchanged (when there is a price), government subsidies will increase. Nowhere is there a mention of raising agricultural productivity to international levels, the only sustainable way to raise farmer incomes. The old BJP promise of doubling farmer incomes is long forgotten; also, of “more crop per drop”.
We come finally to cash payouts. It is generally agreed that absolute poverty has come down to minimal levels, though Covid has raised the numbers.
Yet the Bihar survey shows that a third of the people live on less than Rs 6,000 per month. By any reasonable yardstick, that is penury. Perhaps incomes have been under-reported, as often happens in such surveys. And people in most other states would be better off.
Still, 76 years after Independence, there is every case for providing an income supplement to the most deprived. Like the employment-guarantee scheme, this would reflect the failure of the Indian state to do well by all its citizens. Politicians hide that failure under growing largesse — which are palliatives, not solutions.
By special arrangement with Business Standard.
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