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NAMO’s Freakonomics

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Rural India has been off the policy radar since the NDA came to power. Will this change in the aftermath of the Bihar verdict? Or will inclusive growth remain just a politically convenient slogan?

By Ajith Pillai


Two days before the results of the Bihar assembly elections left the government shell-shocked, the prime minister spoke a truism that we all know—if growth is not inclusive, it is no growth at all. In fact, in what can best be described as a politically correct speech, Narendra Modi spoke of safety nets through social security schemes, he waxed eloquent about empowering the poor and stressed the need to take economic reforms to the villages. He concluded by saying that “the goal of reforms is not better headlines in the pink papers, but better lives for our people”.

Well said, you would say. But three days after the PM’s reassuring speech comes the news that the government has put a ceiling of 60 percent on central funding to 17 social welfare programs, including the Sarva Shiksha Abhiyan and the Mid-Day Meal Scheme. This move is likely to adversely hit and limit these schemes. It comes against the backdrop of 50 percent cuts announced in this year’s budget to 15 central agricultural schemes such as the Rashtriya Krishi Vikas Yojana and the National Mission for Sustainable Agriculture. Remember, funds were also slashed by `9,278 crore for programs under the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA).

DIFFERENT VOICES
Therein lies the rub. Modi promises several things from the public platform, while his government delivers differently on every count. It seems to be working on a different plane and on an agenda that is far removed from the one articulated by the PM. That is Freakonomics for you, Modi style.

While the PM says he is not chasing GDP highs or kudos from the pink papers, his finance ministry seems to be wallowing in praise from the press and gloats about the high (often suspect) rankings given to India by international rating agencies. While Modi speaks of taking “vikas” to the villages, his government sees the farmer as a subsidy guzzling creature who does not require any further policy indulgence. In fact, rural development is, for all practical purposes, a politically profitable promise during poll time.

Vikas or development is a much-abused term. It is a refrain that one hears whenever politicians speak. But who is this vikas for? Is it as inclusive as the PM claims it is? The state of the rural economy certainly does not reflect this. Five states—Madhya Pradesh, Maharashtra, Karnataka, Andhra Pradesh and Odisha—have been hit by drought. Sowing for the rabi season has also been affected. Food inflation—particularly the prices of pulses—has severely strained family budgets in urban and rural India. Spending power has thus been hit, which in turn, has impacted the overall economy.

NO GROWTH
Scan the reportage in economic papers in recent months and a rather grim picture emerges. Tractor sales have reportedly fallen by as much as 20 percent in the first six months of the year. The demand for motorcycles is down by four percent during April-October. In the quarter ending September, sales of consumer goods (read toothpaste, soaps, shampoo, creams, etc) fell despite manufacturers slashing prices to generate demand. Some economists partly attribute this depressed buying power to budgetary cuts in rural employment schemes in a drought year.

KILHOTRAN-DODA, JUNE 13 (UNI):-Mid-day meal being served to the School childern in  Jammu and Kashmir on Saturday. UNI PHOTO-96U

The truth is simply this—if rural India does not shine, the sheen wears away from the larger economy. That’s because a sizeable section of our population resides in “Bharat” and not in urban India. We must also remember that 52 percent of our population is directly or indirectly involved in farming which is its livelihood. So, unless reforms touch the hinterland, overall economy cannot grow.

farmer 8new

No one is advocating throwing mindless sops at farmers. But they must be given support and succour in a crisis. The second National Convention of Farmers’ Organizations was held in Bangalore on November 2-4. It was an event that found scant mention in the media. But agriculture trade analyst Devinder Sharma reported in his blog about the outrage expressed at the “continuous neglect of the farming community” and how it had become the “victim of growth economics”. Indeed, the budgetary allocation to the farm sector has seen a 20 percent cut since the NDA came to power in 2014.

Enough has been said about skyrocketing prices. There seems to be a mismatch between the government’s all-is-well projections and the realities on the ground. Price rise is not just an urban phenomenon but one which has had its reverberations in rural India, which in turn, has led to depressed spending on FMCG products and luxuries.

WHAT VIKAS?
Rural India seems to be the last thing on the minds of those framing policy. For example, this year’s budget saw allocation for the panchayati raj ministry being drastically cut. Last year `7,000 crore was earmarked. This year it was reduced to `95 crore! Similarly, women and child development which has a large rural focus was given 51 percent reduced funding. Health was given 15.7 percent less. Such cuts could only be interpreted as less priority for programs that are meant to touch the lives of the larger populace. So where is the “sabka vikas” that the PM and the BJP keep harping upon?

Bodh-Gaya, 11 November, 2013
Patients at a rural clinic

If truth be told, rural India has been ignored. This is perhaps one among several reasons for the voters of Bihar rejecting Narendra Modi and the NDA. As Devinder Sharma puts it: “The trickle-down theory of development has failed all over the globe; propping up the rich class, including the corporate, and then thinking the benefits will trickle down to the poor has failed. The answer lies in what Narendra Modi rightly said the other day—to make an effort to benefit directly the bottom of the pyramid. This will require a substantial change in economic thinking to turn it pro-people, pro-environment and pro-women. The Bihar election results will hopefully help make the requisite corrections in economic reforms. The sooner it is done the better it would be.”

It certainly is the prime minister’s call. It remains to be seen if he takes inspiration from his own speeches, has a second look at reforms and tweaks its meaning, particularly when it comes to governance.

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