Addressing the India Today Conclave on March 3, 2019, prime minister, N Modi lambasted the erstwhile UPA – dispensation as a regime that believed in ‘doles’ and ‘deals’ whereas his government believes in ‘empowerment’ and ‘fair deal’.
Elaborating on the charge, he opined that under Congress – led/supported governments in the past, even as little was done to empower the poor and augment their incomes, there was proliferation of doles – an acronym for subsidy or any other form of state support – financial or non-financial. A major slice of these doles never reached the intended beneficiaries [as the then, prime minister, Rajiv Gandhi opined ‘of the Rupee 1 that leaves Delhi, 85 paise disappears on the way’]. Moreover, the intent behind these doles was to garner votes.
As regards the ‘deal’, Modi used the term to connote that regime’s obsession with commissions in transactions of the government [especially in defense procurement wherein the secrecy/confidential clauses leave enough scope for such dubious practice] and grant of project approvals/clearances adding to the self-aggrandizement of corrupt politicians and bureaucrats.
By siphoning off scarce resources from the system, the deal-dole syndrome has seriously undermined development and forced a vast majority of citizens into perennial state of poverty. Yet, at the election time, those very politicians came up with doles [e.g. the loan waiver in 2008] to entice the gullible citizens.
Is Modi – government different? Has it done things which corroborate his claim of ‘empowerment’ and ‘fair deal’?
It has fast-tracked 99 irrigation projects pending for several years [some for decades]; mandated neem coating of urea which helps prevent diversion to chemical factories and ensure use in agriculture only; distributed soil health cards [SHCs] to ensure use of fertilizers and other inputs as per soil needs; a potent crop insurance scheme to compensate farmers for loss of output including post-harvest due to natural disaster; building rural-roads to seamlessly connect fields with markets and setting up of over 20,000 rural haats, connecting over 600 mandis with e-NAM [electronic – national agriculture market] and ensuring minimum support price [MSP] at 1.5 times the cost of production – as per Dr Swaminathan Committee report.
All these measures are aimed at reducing farmers’ vulnerabilities to swings in weather/rainfall, increasing crop yield and help them realize remunerative price. Besides, the government is helping them augment their income by incentivizing other activities – on field and off-field – such as poultry, dairy farming, bee keeping etc. In short, Modi is doing all that is necessary to empower the farmers.
To help millions of non-farm workers and even farm workers who don’t have work for most part of the year, it has restructured and streamlined the Mahatma Gandhi National Rural Employment Guarantee Act [MGNREGA] to increase jobs along with building rural assets such as rural roads, irrigation, ponds, rural houses etc.
The government is also creating job opportunities in the infrastructure sector viz. highways/expressways, rails, ports, airports, waterways etc; in manufacturing via ‘Make in India’, ‘Skill India’, ‘Start-up India’, ‘Stand-up India’ and boosting self-employment via providing loans under MUDRA [Micro Units Development Refinance Agency] without the banks insisting on any guarantee.
Modi has also reined in the cult of middle-men [and associated cuts], promoted transparency in deals, delivered policy driven governance, reduced bureaucratic red tape and encouraged use of technology viz. Jan Dhan–Aadhaar–Mobile for reaching financial help to the beneficiaries. The last bit has substantially cut down on leakages resulting in savings of over Rs 100,000 crore annually.
Without doubt, the present regime is working hard to empower the poor. Most of these are work-in-progress and it would be naive to expect immediate outcomes. What about the doles?
The subsidies given under previous dispensations are being continued even under Modi – regime. There are subsidies on agricultural inputs viz. fertilizers, seeds, credit, power, irrigation etc; minimum support price [MSP] for agricultural produce; food subsidy under the National Food Security Act [NFSA]; subsidy on petroleum products [LPG and kerosene] and even farm loan waivers by BJP-led governments in states viz. Uttar Pradesh, Maharashtra etc.
A major slice of the subsidies on agricultural inputs and MSP is cornered by large farmers [those with land holding >4 hectares] who have marketable surplus to offer. They also get most of the subsidized credit from institutional agencies and are the beneficiaries of loan waivers. Under NFSA, nearly 2/3rd of the population or 800 million get food at heavily subsidized price Rs 1/2/3 per kg for coarse cereals/wheat/rice. Surely, these include non-poor too.
Likewise, LPG subsidy continues to be appropriated mostly by non-poor despite voluntary surrender by over 10 million under Modi’s ‘Give-up’ campaign, denial of subsidy to those earning over Rs 1 million annually and bringing about 70 million poor under its ambit during the last two-and-a-half years since launch. Out of over 240 million covered under direct benefit transfer [DBT] of LPG subsidy, the non-poor households still constitute nearly 2/3rd.
The continued doles is a big negative all the more because a good chunk of these goes to the non-poor. Considering that most of these subsidies viz. fertilizers, food, power etc are routed through manufacturers and agencies such as Food Corporation of India, there is good chance of being pocketed by ‘unscrupulous’ persons.
These need to go which will save about Rs 310,000 crore. Together with additional budgetary support of Rs 50,000 crore, the amount can be used to give direct income support [DIS] @Rs 18,000/- per annum to 120 million small and marginal farmers [land holding up to 2 hectare] and @Rs 12,000/- per annum to equal number of landless workers. This is much more than Rs 6000/- per annum being given only to small/marginal farmers under PM KISAN.
If, these subsidies continue, it is most unlikely that the poor will get the much needed support. True, tax revenue is increasing [courtesy, reforms such as demonetization, GST etc] but this is far from absorbing the impact of high subsidies and DIS to the poor in adequate measure. So, there is no escape from ending subsidies.
Will the new government crack the whip?