India Needs to Move Beyond Hubris
BRICS, 3 Apr 2017
Moin Qazi – TRANSCEND Media Service
“There comes a time when one must take a position that is neither safe, nor politic, nor popular, but he must take it because conscience tells him it is right.”
― Martin Luther King Jr., A Testament of Hope
3 Apr 2017 – India’s Prime Minister Narendra Modi now stands on the cusp of new political glory after the resounding mandate his Bharatiya Janata Party received in Uttar Pradesh, India’s most populous state, which is the country’s metaphorical heart and the gateway to its political soul.
While responding to the nation’s volcanic trust in him, Modi tweeted:”A new India is emerging, which is being powered by the strength and skills of 125 crore Indians. This India stands for development.” the trust is all the more great because it comes from people who have just suffered the enormous pain of the currency ban which Modi repeatedly and convincingly emphasized as a patriotic exercise to purge the nation’s body politics of toxins of illicit wealth.
Modi has literally emerged as India‘s rock-star .It is time now that he gets down to delivering on the long list of promises that is adding up with his every new campaign. He should not allow hubris to get better of his commitments. Indians are now sharply alive to the wisdom of the great American statesman, Thomas Jefferson: “I predict future happiness for Americans, if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.” we have seen earlier that enticements with extravagant populism can have disastrous consequences
Modi has already talked about many good games and certainly delivered on some significant ones: maternity benefits for village women, paid maternity leave for working women, increased spending on health, loan waivers for farmers and his powerfully alluring and vote garnering freebie -natural cooking gas for women who had to trudge miles to fetch firewood. All these have helped the Prime Minister cement his pro-poor credentials. But the results of several other major initiatives relating to agriculture and industry are yet not palpable on the ground. They haven’t been as far-reaching or as coordinated as they could be.
India has ranked a lowly 131 among the 188 countries surveyed for human development in 2016, according to a just released UN report. it has made no improvement in its ranking over the previous year The report puts it in the “medium human development” bracket, which also includes nations like Bangladesh, Bhutan, Pakistan, Kenya, Myanmar and Nepal.
Modi has demonstrated in recent weeks that he has seized control of the national agenda and sent a message that it’s time for all of India—not just its infotech services sector—to join the 21st century. Now that Modi’s party controls territories comprising more than 60 percent of India’s population, and is India’s political juggernaut, he has better space to shift the gears of policies to crack open India’s lands, factories and markets to investors. The new power alignment puts him in an enviable position and he can combine the reinforced strength into a more ambitious liberalizing agenda. The states can now flex their levers through central support to loosen the grip of the middlemen-dominated agriculture produce marketing committees .Introduced in the 1960s, these legally-enshrined committees have created several layers of intermediaries, lengthening the supply chain and increasing the opportunity for cartels to form, which in turn drive prices down for farmers and up for consumers.
India spends more on programmes for the poor than most developing countries, but it has failed to eradicate poverty because of widespread corruption and faulty government administration. The development landscape is still arid, with occasional green shoots, and is not seeing the sort of development that significant public expenditure would seem to warrant, and the needs of important population groups remain only partly addressed.
It is a tough test for the reformer in Modi. Modi’s popularity is also inseparable from the pledge that won him office in 2014: to deliver the jobs India’s burgeoning population desperately longs for — with nearly a million new job-seekers entering the market every month. The grandiose plans should not end up like the development projects of the past administrations he has been excoriating during his campaign: high-minded pronouncements on paper with zero delivery in practice. For this, it is equally important that the lessons of the failure of the long series of development progammes should not be lost on us.
India’s once ample resources have been frittered away on grandiose schemes which have failed to pay the expected dividends. India’s growth in GDP would constitute a resounding success only if it was labor intensive, involving sustained and large-scale job creation. If not, millions of young Indians entering the labor force will not be able to find decent jobs and growth boasts will be hollow.
Che Guevara, whose handsome face I had seen on posters and tee shirts, comes to mind. I did not know who he was till I read this passage attributed to him, “The merit of Marx is that he suddenly produces a qualitative change in the history of social thought. He interprets history, understanding its dynamics, predicts the future, but in addition to predicting it, he expresses a revolutionary concept: the world must not only be interpreted, it must be transformed.”
If Modi wants to deliver development that is both a GDP- booster and at the same time is egalitarian and equitable, he would have to recast the development paradigm radically.
Nobel Laureate and India’s most accomplished economist, Amartya Sen has consistently struck with his stand that “growth rate is a very daft—and a deeply alienated—way of judging economic progress.” Sen and Jean Drèze, a Belgian born Indian economist ,and warned as early as 1995 that reforms that boost growth, though important, were not enough to improve the living conditions of the poorest, let alone dismantle caste and gender hierarchies and generate employment. They “have to be supplemented by a radical shift in public policy in education and health.” they wrote. Bangladesh, which is only half as rich as India measured by per capita income, now exceeds India in, among other social indicators, life expectancy, child mortality, and immunization.
For human development to reach everyone, growth has to be inclusive, with four mutually supporting pillars—formulating an employment-led growth strategy, enhancing financial inclusion, investing in human development priorities and undertaking high-impact multidimensional interventions (win-win strategies).
jobless growth, which has been more dramatic in the last two years, is probably the main issue of the Indian economy today. It is largely responsible for demonstrations by young Patels of Gujarat, Marathas I Maharashtra and Jats of Haryana in the name of reservations. Since they can’t get jobs in the private sector, they fall back on government jobs. But the public sector is shrinking. Not only are jobs fewer than before but those that are created are precarious and badly paid because of the informalisation of the economy.
The growing inequality in India is very stark. According to the Credit Suisse Global Wealth Databook 2014, the share of wealth of the richest 1% in the country has been rising, in contrast to the rest of the world, and it now owns nearly half the country’s wealth. The wealth share of the top 10% has increased by a tenth since 2000, the CEO of Oxfam India has pointed out that just a 1.5% wealth tax on 65 of India’s uber-rich could lift an astounding 90 million out of poverty. If the country could reduce inequality by just over a third, it could eliminate extreme poverty. According to the National Council for Applied Economic Research (NCAER), which incidentally doesn’t subscribe to socialist ideology, only 12% of the population can comprise the middle class
Impoverished populations desperately require lighting, fuel for cooking, affordable and accessible health care, clean water, elementary education, housing and sanitation, and financial services. Government programs to supply these needs are plagued with corruption (by some estimates 50-70 percent of all welfare spending in India is soaked by the administrators in the form of bribes). It is estimated that up to 85% of government water subsidies go to private taps, yet 60% of poor households collect water from public taps. Or electricity subsidies — 67.2 % of Indian households are connected to the electric grid, most likely representing some of the wealthiest households in the country. Out of the population with connectivity to the electric grid, the top income quintile consumes 121 kWh per month on average (37% of the subsidy) while the bottom quintile consumes only 45 kWh on average (10% of the electricity subsidy).
The government subsidizes a wide range of products and services with the expressed intention of making them affordable for the poor: rice, sugar, wheat, pulses, cooking gas, kerosene, naphtha, electricity, water, fertilizer, railways. The cost of these subsidies is about 4.2 percent of India’s gross domestic product, which is more than enough to raise the consumption level of every poor Indian household above the poverty line.
In traditionally administered government programmes poor often get less than their due because of local corruption in disbursement with amounts being sponged by middlemen. By digital modes, the government can pass on benefits directly to the poor, bypassing layers of bureaucracy. Prices can be left to market forces and subsidies paid to the deserving through their accounts.
Many of India’s antipoverty programs end up feeding the rich more than the needy. India has eliminated a raft of bureaucratic middlemen by depositing government pension and scholarship payments directly into the bank accounts of, in a bid to prevent corrupt state and local officials from diverting much of the money to their own pockets. A whopping Rs36,000 crore (rupees 360 bn-5.5bn $) have been saved by the government through cash transfers through the Direct Benefit Transfer (DBT) scheme .More than 1,200 government schemes were examined for coverage and about 550 of them could be immediately taken up . More than 320 million beneficiaries are being provided various aids by direct credits to their accounts. A full coverage has been achieved in 84 schemes, including Pradhan Mantri Jan Dhan Yojana and Mahatma Gandhi National Rural Employment Guarantee Act where wages are being paid into account without the intervention of the administration. Similarly subsidies for liquid petroleum gas (LPG) are also going directly into the account of beneficiaries.
Now these programs have the potential for making a serious dent in poverty in India. Under the acronym JAM — Jan Dhan, Aadhaar, Mobile — a quiet revolution of social welfare policy is unfolding. Jan Dhan is Modi’s flagship program to give poor people access to financial services, including bank accounts, credit and insurance. Aadhaar is the initiative to issue unique biometric identification cards to all Indians. Together with mobile money platforms, they will enable the state to transfer cash directly to those in need — without the money going through intermediaries that might take a cut.
But along with technology technical literacy it is s necessary to empower the recipients to access their funds more conveniently at little cost. There is concern about the lack of operable infrastructure and the resulting delays in receiving subsidies or cash transfers. In a series of experiments with cash transfers in places such as Rajasthan, Jharkhand, and Delhi, recipients have to navigate a complex and wobbly ecosystem hobbled by unclear fingerprints to receipt systems that relied on internet access in places where no internet access exists. In parts of Rajasthan, a program gave cash transfers (deposited in recipients’ bank accounts) in lieu of kerosene subsidies. During this time, the consumption of kerosene dropped dramatically along with user satisfaction. Many poor families were simply unable to navigate the many loops required to open a bank account, where they would receive their transfer, let alone afford the initial fee to start an account in the first place. While the JAM Trinity and cash transfers have a role to play, so does continued outreach to marginalized families through simple technology (like cell phones), , and education.
One of the most important governance ingredient that has increasingly relevance on account of the incessant buzz of choruses like “sabka sath sabka vikas “ is the need for tolerance and transparency in the ruling class. Tulsidas tells us that dispirited on seeing Ravana in an armed chariot while Rama was without arms or a chariot, Vibhishana expressed his deep anxiety, “Ravan rathi, virath Raghubeera!” However, Rama explained to him that a hero who has self-control, benevolence, forgiveness, discretion, evenness of mind and compassion as his weapons or horses is unconquerable. there is a great lesson for us in this timeless wisdom.
The government will also to take a radical relook at grassroots development apparatuses. The current approach of India seems to miss the holistic nature of sustainable development, allowing the goals and targets to be divided up between different ministries and departments without identifying the inter-linkages that exist between the different goals, and this risks working in silos – which is unlikely to deliver.
The best approach to local development is to tap into the knowledge already available and think of ways it can be leveraged to achieve a more appropriate, locally useful and sustainable development. Approaches to rural development that respect the inherent capabilities and native of rural people and that systematically build on experience have a reasonable chance of making significant advances in improving those people’s lives. A critical success factor is creating organizational capabilities at local levels that can mobilize and manage resources effectively for the benefit of the many rather than just the few.
It is important to reaffirm that significant advances are attainable for the hundreds of millions of households whose constitute “the rural poor.” They are a potential source of great knowledge, wisdom and creativity that have to seek first and foremost their own survival. Their poverty deprives not only them but also the rest of us of the greater value they could generate under more supportive and enabling circumstances.
Sometimes we filter when we listen, having a preconceived notion of the ground realties. In a country as large and diverse as India, it makes sense to connect those who live in similar climates and by tracking the effectiveness of the projects they manage and making appropriate, informed changes to those that aren’t working. People who pioneered successful social programmes recognized this potential and sought to evoke. It is possible if we imbibe the true spirit of Modi’s oft repeated mantra: “sabka saath, sabka vikas” (partnership of all, development for all).
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Moin Qazi, PhD Economics, PhD English, is the author of the bestselling book, Village Diary of a Heretic Banker. He has worked in the development finance sector for almost four decades in India and can be reached at moinqazi123@gmail.com.
This article originally appeared on Transcend Media Service (TMS) on 3 Apr 2017.
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This is a very sound piece of professional advice to PM Modi in terms of what his priorities should be in national development. But all indications are that he either knows this already or has the means at his disposal to know them. For instance, the chief economic dvisor to Government of India Arvind Subramanian had earlier, while working as a senior fellow at the Peterson Institute for International Economics, among others, had written in 2013 that India followed an “unusual model of economic development, which relied on a limited pool of skilled labor rather than an abundant supply of cheap, unskilled, semiliterate labor”. That says it all. Mr. Modi’s promise of Achchhe Din in 2014 seemed to promise a highly inclusive development approach that ropes in just this enormous mass of such unskilled and semiliterate people. But nothing has been heard of it again. Similarly, India’s NITI Ayog too has for some time recommended that in order lift India’s current $2 trillion economy to $10 trillion–close to China’s current $11 trillion–by 2030, India needs to work with China to that end. But Mr. Modi instead has been hobnobbing with the West, particularly the US instead and participating in the latter’s designs against China. The latest paradox in India has been that Mr. Modi brings enormous misfortune to the people through his ill-conceived demonetization drive but it just seemed to bring him more votes in the recent UP election. So, Dr Qazi’s recipe may be too rations for the conditions in India.