Friday, February 8, 2019

Modi's Last Minute Welfare

Image Credit: geographyandyou.com
People are mostly economic beings. In the words of one of India’s greatest sages, Swamy Vivekananda, “He walks, and the stomach goes first and the head afterwards… It will take ages for the head to go first.” People, however, get swayed by emotional issues, think about bread and butter things at the end of the day. Maybe that is the reason Modi dispensation, which appears to be going all out to rake up divisive issues to secure a second term, changed tack for a while to give an impression that it has, at last, started paying attention to people’s bread and butter things through the interim budget.
Perhaps for the first time during Modi’s tenure, the finance minister made a pro-poor statement during the budget speech saying, “The poor have the first right over the nation’s resources.” It has many concessions and freebies to offer to salaried class, farmers and informal sector workers. These concessions and cash transfers, which are aimed at reducing the rural distress, sound good at the outset.
So, it has once again proved that on the eve of an election, governments in India shed their plutocrat-centric policies and temporarily adopt pitchfork-centric policies. They, for a while, reluctantly set aside their plutocrat cronies to give an impression that they are pro-poor, pro-farmer and pro-rural.
For full four years our politic­­­­­os move hand in hand with business oligarchs and hand over nation’s resources to them in the name of development. A­­­nd as if it is not enough, they even give them tax cuts and bailouts in the name of ease of doing business. When the poor and the ordinary take to streets demanding ease of living, their pleas are simply ignored.
The entire thing makes me recollect the article titled “of the 1%, by the 1% for the 1%” authored by the Nobel winning economist, Joseph Stiglitz. Governments in India, irrespective of who is in power, appear to have only one strategy. They safeguard the interests of the 1% plutocrats for full four years to enable them to accumulate more wealth, which leads to the concentration of economic power, and play a ‘sop opera’ in the election year to grab the attention of the rest of the 99%.
Now the question is why do they do this? The plutocrats who they nurture, constitute only 1% of the population and democracy, unlike corporate governance, allows only “one person one vote”. Therefore, politicians, as elections near, reluctantly do something which caters to the needs of the poor and the ordinary, who patiently queue up in front of the polling booths elections after elections with unending optimism. So, the politicos, irrespective of who is in power, think about the poor and the ordinary only on election eve and this budget is a clear manifestation of this trend.
Most of the news media, while writing about the budget, prominently mentioned how the government missed the fiscal deficit target. Now the economists who don’t lose any time in showering praises on Modi government for bringing the fiscal deficit under control through its judicious spending, start predicting that with the introduction of these welfare schemes, the fiscal slippage will happen more rapidly.
In this neo-liberal era, the fiscal deficit is a big thing and becomes extremely important for the governments during the first four years. “Fiscal prudence” is important for them to get higher ratings from international credit rating agencies and accolades from the World Bank as these entities brand welfare as ‘populist’ and blame it for being responsible for widening fiscal deficits.
But neither international credit rating agencies nor the World Bank ever said that big business defaults followed by bailouts and corporate tax cuts, which have insidious costs, are not good for maintaining fiscal prudence.
So, the governments practice fiscal prudence during the first four years of their tenure by cutting welfare expenditure and handing out all the sops to the tycoons in the name of ease of doing business and only during the election year they get reminded of people’s welfare and let “fiscal slippage” happen. Once they win the elections, they – politicos, plutocrats and egg headed economists – once again emphasize on stalling the fiscal slippage and things will be back to square one.
Hailing the budget, Prime Minister Modi stated, “It is essential to ensure that the benefits of development reach all sections of society. This Budget will empower the poor, give a boost to the farmers and an impetus to economic growth.” But he might have forgotten the fact that he ignored the same poor during the first four years of his tenure.

As far as the targeted cash transfers the FM has introduced now are concerned, they are paltry when compared to the corporate debt that the government had written off. Some trade unions even accused this government to be more caring towards cows than workers. Because it allocated 500 crores for worker’s pension and 750 crores for the welfare of the cows.

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