Dole to doldrums is India’s unequal growth story

India is a classic example where power players use bad economics for good politics for harvesting votes during the elections.

Published: 03rd February 2019 04:00 AM  |   Last Updated: 10th February 2019 11:47 AM   |  A+A-

Piyush Goyal

The Interim Budget was nothing more than a statement of NDA’s performance and a portmanteau of poll promises like freebies, tax concessions and other allurements.

Facts are stubborn things, but statistics are pliable.— Mark Twain

The abyss of perception divides reality and prefab reality. Between facts and statistics lie New Age politics and tech-savvy political leaders. In the fallacious field of competitive populism, leaders of all shades and symbols are competing to prove Mark Twain right. Numbers Day in Parliament last week saw a factually figurative fiasco when Finance Minister Piyush Goyal displayed a series of statistical tables to prove that India under Prime Minister Narendra Modi is on the move. The Congress and other BJP rivals responded by mocking this datafest.

The Interim Budget was nothing more than a statement of NDA’s performance and a portmanteau of poll promises like freebies, tax concessions and other allurements. The pliability of Goyal’s statistical narrative only led to a slanging match between rivals. The circus of credulity also got some serious wires crossed when the government questioned the data collected and selectively leaked by a subterranean section of the same government about the unemployment levels and GDP growth rate. Union budgets have always been very high on giving away alms and low on promising more jobs.

India is a classic example where power players use bad economics for good politics for harvesting votes during the elections. The tone was set by Congress President Rahul Gandhi last week in Raipur. Anticipating an election-oriented Budget 2019, he stymied the ruling party with the promise of a minimum income guarantee (MIG). His ecstatic audience cheered his announcement that “We have taken a decision that every poor person in India, after Congress forms government in 2019, will be guaranteed a minimum income. Every poor person in India will receive at least minimum income in their bank accounts from the government.

There will be no more hunger or poverty.” But he made no mention about how much money is needed to pull how many families out of poverty. Even after five decades, Indian economists haven’t arrived at a consensus to define poverty. Going by one definition that anyone earning less than Rs 30 per day lives below the subsistence level, over 20 crore families would be entitled to MIG. If the Congress manages to head the next government, it will have to find at least Rs 2.30 lakh crore to implement RaGa’s New Deal. 

But then, can Modi and his team be rhetorically far behind? Goyal responded by saying that the government would transfer Rs 500 per month with retrospective effect into the account of every farmer who owns up to five acres of land—a total expenditure of Rs 75 crore per year. In real terms, each farmer would get Rs 2,000 before he goes to vote in May. This was followed by tax concessions for the middle class, pensions for the unorganized sector, 8 crore additional cooking gas connections to housewives and more. If all the welfare schemes announced by both parties over the past four years are put together, the government would end up distributing around 25 per cent of its income on cash subsidies to over 80 per cent of India’s population. However, cash-for-votes is not a new practice.

It was devised by Indira Gandhi, who directed banks to organize Loan Melas for giving cash to persons that was never returned. Now every state government is offering gratis for gratitude from saris to TV sets in the name of raising the living standards of the marginalized. Recently, the chief ministers of Odisha and Telangana announced much more attractive cash distribution plans for their farmers. Since there is no clarity on the issue, it is more likely that both the states and the Centre would end up spending much more if the beneficiaries claim financial support announced by both the governments. In their urge to please all sections, the Centre and state governments are announcing similar schemes without even looking at the financial or political implications.  The inequality crisis eclipses the BJP vs. Congress numbers rivalry.

A long-term political or economic road map to address growing economic disparities and rising unemployment is absent. Six decades of Congress rule and over ten years of non-Congress dispensations were devoid of vision and mission to convert India into a Berozgar Mukt Bharat (unemployment-free Bharat). Illiteracy and joblessness perpetuate dole-to-doldrums vote banks. While all the governments bent over excessively to extend numerous benefits to encourage entrepreneurs to open myriad universities and colleges, no mechanism was conceived to provide employment to the millions of graduates.

The rich got richer and the poor got poorer, and nobody in power bothered to explore the reason. The real worth of the top one per cent rose 100-fold more than that of the bottom 90 per cents in 2018. At the recent World Economic Forum annual extravaganza – a conclave of the rich and mighty—the emphasis was on the concentration of wealth in the hands of a privileged few. Their networking skills with political leaders and government officials are rewarded in most countries with money-minting opportunities through incentives for short gestation capital intensive projects. Investments in the services sector also generate disproportionately desirable returns. Global wealth distribution trends reveal that it is pouring diamonds for the rich and dust for the poor and the lower middle classes.

Undeniably, welfare measures have brought down the number of BPL families. But the number of unemployed youth in the country hasn’t shrunk. Our leaders cynically ignore the truth that doles are turning a productive section of the population into unproductive assets. Instead of spending the money on labour-intensive projects, lawmakers are perpetuating vote banks that will permanently survive on government munificence. In spite of the biggest GDP growth rate in many years, over 19 crore Indians are waiting for gainful employment; according to the latest government report (disputed), the highest number since the 1970s. Ironically, ever since economic reforms were introduced in 1991, India has seen unprecedented growth in the services sector and a decline in agriculture and manufacturing.

The tertiary sector of technology that led with over 57 per cent of the GDP hasn’t contributed more than 10 per cent of the new jobs. If even half the amount spent on subsidies and corporate tax concessions is diverted to infrastructure development, at least 10 million youth can find work every year. Alternatively, add 50,000 kilometres of six-lane highways. Or create at least 50 new smart cities.

The money could also be deployed to create productive assets that would enhance the earning capacity of farmers—better seeds, completion of irrigation projects, setting up new fertiliser and nutrient plants, creation of local markets and access to e-commerce, setting up food processing plants, replacement of diesel pumps with solar pumps and investment in horticulture and floriculture markets. This would, however, put the brakes on the creation of Steve Jobs-type jobs—more money for fewer people. No wonder ‘Garibi Hatao’  remains the clarion cry of the ideologically bankrupt Indian polity.

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  • Faqruddin

    Very nice and unbiased analysis. My wish is to see all political parties work together to Convert India into a Berozgar Mukt Bharat. Many problems will be solved automatically. Thank you for writing a good article and enlightening us Faqruddin
    14 days ago reply
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