Thursday, September 20, 2012

Sops and projects only trick up UPA sleeve

It is difficult not to be cynical over the UPA's efforts to press the constitutional amendment for promotions for SC&ST personnel in government.
Especially since the ongoing political developments are bringing on talk of the next general election which is scheduled to be held by May 2014, but could well take place sooner.
The zeal with which the UPA pushed for the SC&ST promotion Bill was not merely to deflect the heat from the Coalgate affair, but also to prepare the ground for the next general election.
Having no other 'big bang' idea, the UPA government has, in bits and pieces, begun putting in place a slew of social welfare schemes, sops and projects which are designed to maximise its appeal to the electorate.
The centre pieces here are the food security bill, health-care reform and rural sanitation schemes.
In addition, the government has put in new funding for older schemes like Bharat Nirman, for developing rural infrastructure and the MNREGA for providing rural employment.
The food security bill seeks to cover a staggering 67.5 per cent of India's 1.2 billion people, expanding the existing subsidised food entitlement scheme that covers about 180 million of India's poorest people who receive about 4 million tonnes of grain every month through 'fair price shops'.
The scheme would virtually double annual food subsidies and play havoc with the fiscal deficit, but that would happen after the elections.
Of course, with the future functioning of parliament in doubt, it remains to be seen whether the proposed Bill will ever go through both the houses.
The second pillar of the social welfare regime to be promised in the coming elections is the new healthcare programme for the urban poor.
Here, the Union Health ministry is already moving to unveil its National Urban Health Mission to benefit the urban poor which will provide healthcare infrastructure worth Rs 22,500 crore in seven metros and nearly 800 towns with a population of more than 50,000.

Coal-laden trucks at Rajrappa, an open-cast coal mine project, under Central Coalfields Limited in Ramgarh, Jharkhand, India
Coal-laden trucks at Rajrappa, an open-cast coal mine project, under Central Coalfields Limited in Ramgarh, Jharkhand, India

This is a counterpart of the National Rural Health Mission which has been under way since 2005, but which, as the example of Uttar Pradesh shows, has been mired in corruption and maladministration.
A third scheme that the UPA is banking on is the rural sanitation scheme for which Rs 3,500 crore has been allocated for the coming year and an estimated Rs 35,000 crore will be spent in the coming 12th plan period (2012-17).
The legislative leg of this scheme is a bill to prohibit manual scavenging and rehabilitate the scavengers.
A pre-election budget could see a host of more sops. A preview of sorts is visible in the promises being made by the Gujarat Congress party which has promised affordable houses, free plots, cheap medical treatment, and free laptops to students after they clear standard XII examination.
The Delhi government, for its part, has come up with a massive scheme to regularise over 700 illegal colonies.
And this is just the beginning. In an atmosphere where free TVs, laptops, mixer grinders and mangalsutras are raining down on the electorate, it is not surprising that a rumour last month claimed that the PM was all set to announce the distribution of free cell phones for below poverty line people.
All these come on top of a massive subsidy regime involving fuel, fertiliser and food.
The budgeted (for 2012-13) subsidy for fuel is Rs 43,580 crore, that for fertiliser Rs 61,000 crore and Rs 75,000 crore for food. But we know that if the controlled prices of petroleum products are not increased substantially, the subsidy could be several times the budgeted amount.
In the present economic situation, the government's subsidy efforts require it to run faster to stay in the same place.
That is because the economic downturn has led to a considerable slowdown in the rate of growth of jobs, particularly in the urban and semi-urban areas.

That these subsidies have a distorting effect on the economy is understood well by the economists. But the ordinary folk do not understand that the fiscal deficit that they lead to can actually negate the value of the subsidies.
That is because the fiscal deficit leads to inflation, which has rightly been called a tax on the poor. This year the government had budgeted for a possible deficit of 5.1 per cent of the GDP, but it now looks like that the figure could be over 6 per cent. But will that stay the government's hand?
Unlikely. The ruling UPA does not seem to have anything else by way of election strategy.
The last two years have seen the government embroiled in multiple scandals which have served to show that the licence-quota raj is alive and kicking.
Indeed, in almost every area, the government seems to have retained discretionary power and has misused it to aid and enrich friends and their families.
Experience shows that no elections are ever won by promises of sops and subsidies. Otherwise incumbents would never lose since they are often in a position to promise more goodies.
Almost every general election that has taken place has shifted the political paradigm in one direction or the other.
So will the next general election. And you can be sure that sops and subsidies will be of little avail.
Mail Today September 14, 2012

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