Modi government's Budget 2018 was adequate but not visionary
As another Budget rolls out, the question that bothers many ordinary citizens is whether they stand to benefit or lose from it. But the more thoughtful and compassionate among us worry whether we are really winning the war against poverty in India.
Such a question has a topical edge to it, not just because the 2018 Budget is supposed to be pro-poor and pro-farmer. Actually, from Davos to Beijing to Rio to Washington, one of the problems that afflicts our world is rising economic inequality. This, by no means, is an Indian tribulation alone, though we have the largest number of absolute poor in the world. When the richest eight individuals in the world, most of whom are Americans, are worth as much as the bottom 50 per cent — or nearly four billion — of the world’s population, surely this spells global trouble!
Poverty and growth
So what are we doing about it? I was not yet eight when Gunnar Myrdal’s neo-Malthusian Asian Drama: An Inquiry into the Poverty of Nations was published. The Swedish social economist was a name to reckon with in the 1960s and 1970s, sharing the Nobel Prize for Economics in 1974 with Friedrich August von Hayek.
As I was growing up, I heard people from the Left, Right, and Centre referring to this book either to explain the poverty of India or the failure of the development project. Myrdal’s tome of over 2,000 pages is forgotten today, partly because how well not just Asia has done, but how India’s own impressive catch-up in the last quarter century seems to have belied Myrdal’s predictions. We have at last left behind our so-called endemic Hindu rate of growth and accelerated to keep pace with the leading economies of the region, not excluding China. But are some of Myrdal’s lessons worth recalling?
A catch-phrase attributed to Myrdal and going back to his American Dilemma: The Negro Problem and Modern Democracy (1944) is that of “cumulative causation”, the idea of poverty creating poverty. The agro-orientation of our 2018 Budget is directed at alleviating this vicious cycle. The poor, including our small farmers and sharecroppers, shouldn’t be locked into producing less profitable primary goods and services, while the rich are more than amply rewarded through value addition and economies of scale. If that, in a nutshell, is the basis of the tremendous inequality in our society, what is the way out?
Will increasing the minimum support price of agricultural produce, as mooted by the finance minister, end farmers’ distress? I am not sure. To empower our farmers, we must ensure that they have direct access to the market, to small, even retail, as well as large and wholesale buyers. Tying farm income to government largesse may lead to greater dependency, in addition to expenditure and commitments which are difficult to keep. Moreover, large populations of unemployed and underemployed youth may not quite yield the much-touted demographic dividend but instead lead to demographic damages of the kind that Myrdal warned us about and which we see in the vandalism of "senas" today.
Opposing ideologies
One of Myrdal’s distinguishing traits, which also annoyed both his admirers and detractors, was his unique skill in steering between the opposing ideologies of capitalism and communism. During the height of the Cold War, this was a difficult balancing act. But noteworthy in his economic theory was his emphasis on social values.
Unless the poor feel that they can change their lives through the dint of their own efforts, they remain unmotivated and apathetic. But the dignity of labour is observed more in its breach in countries such as India as evidenced in tasteless jibes against chai and pakora-wallahs.
The great and game-changing feature of "Modinomics" is the notion “Yes we can”, a slogan used by the Barack Obama campaign in 2008. Narendra Modi’s version of it was "Sab ka Saath, Sab ka Vikas".
It was Modi who ended the apathy and complacency of our sarkar when it came to the most excluded and deprived sections of our population. He was not content with blaming the stagnancy inherited from the colonial past or the decades of Congress compromise and corruption for our slow pace of poverty alleviation. Modi also emphasised wellness, a holistic combination of cultural, social and economic factors, not just betterment in purely financial terms.
Social discipline
This is where we need to recall Myrdal again. Years ago, he warned of the dangers of a "soft state" when it came to economic progress: “There is an unwillingness among the rulers to impose obligations on the governed and a corresponding unwillingness on their part to obey rules laid down by democratic procedures.” With a very low level of "social discipline", it will be hard for us to progress rapidly. That is why I believe that NaMoCare, touted as the biggest health programme in the world, has major problems. Rather than focussing on improving health infrastructure and preventive care, it proposes the insurance route to guarantee treatment, that too without the beneficiaries having to pay even a minimum premium.
What we need is neither a suit-boot nor a mai-baap sarkar, but a participatory government, both responsive to the needs of the people and facilitative of their individual and collective enterprise. Unlocking lokshakti is what effective economic planning should do. By this yardstick, the Budget is adequate, not visionary.
(Courtesy of Mail Today)