Chanakya's New Manifesto: To Resolve the Crisis Within India (32 page)

A real increase in agricultural productivity will release millions into the workforce as efficiencies cut down the number of people required to keep up productivity in the agricultural sector. Already, disguised employment and under-employment is pervasive in Indian agriculture. So long as this underutilized work force is tied without options to agriculture, poverty levels will remain high. It is imperative therefore that in tandem with a second revolution in agriculture, our manufacturing sector also undergoes a revolution. In India, manufacturing contributes only 16 per cent to the GDP; the comparative figure for China is in the vicinity of 42 per cent. A dynamically expanding manufacturing sector is the sponge that can absorb employable Indians who, for lack of an option, remain mired in poverty. The services sector’s contribution to GDP is large, but its employment potential is low. The gap can only be filled when the manufacturing sector sees a quantum jump in productivity.

A basic constraint is that almost 40 per cent of our manufacturing output comes from the informal sector, which is characterized by low productivity, lower wages and no labour laws. By contrast, the corresponding figure in South Korea is 4 per cent and in Japan 5.8 per cent. It is only when the share of the organized manufacturing sector in our economy goes up rapidly on an employment-intensive basis can we create jobs, not only for the young but for the rural and urban poor. Amitabh Kant, CEO and MD of the Delhi-Mumbai Industrial Corridor Development Corporation, estimates that almost 70 per cent additional jobs will come from policy measures which enhance manufacturing growth with employment intensity.
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The new National Manufacturing Policy (NMP) aims to create 100 million new jobs by raising the share of manufacturing from the current 16 per cent to 25 per cent by 2021-22. This means that the manufacturing sector must grow at 16 per cent year on year in the decade from now to 2023. Not even China, with its undiluted focus on the expansion of its manufacturing sector, has achieved this. But the challenge has to be taken up, because a radically expanded labour-intensive manufacturing sector, along with a new agricultural revolution, is the best strategy for inclusive growth.

And yet, no strategy for inclusive growth will take off unless, along with it, the mindset of Indian society changes as well. Unless the relatively privileged are motivated to shed their traditional insensitivity to the plight of the deprived, there is every chance that the change that needs to take place will be subverted, or reduced to tokenism. The creation of an inclusive society needs an enabling environment, and this is a far more difficult project than devising the right economic policies.

To make India a more caring society must become an obsession with each one of us who belongs to the more privileged segment of the country. At the moment, perhaps the elite of the country would, if possible, secede to form their own republic! But since the poor are so numerous and won’t let them, the next best thing is to believe they don’t exist. This attitude is appalling and needs to change without any delay. Partly, this indifference to the plight of less fortunate countrymen has to do with our legacy. India has, since time immemorial, been an incorrigibly hierarchical society, where those at the bottom rung of the ladder are seen as part of a preordained structure of things, a consequence of individual karma, almost undeserving of help. Moreover, the moksha or salvation of the better-off has very little to do with ethical or compassionate behaviour in the real world; the hundis of rich temples like Tirupati are full of gold and precious gems donated by rich benefactors, who would not spend a paisa on the poor.

An important reason for this state of affairs is that, thus far, the government has almost monopolized what needs to be done for the underprivileged. The government genuinely believes that this is how it should be, that the ‘mai baap sarkar’ does not need support from elsewhere. Nor does it need to do anything to change the socially insensitive psyche of society. For verifiable historical reasons, the dominant bias in policy making has been that government has a monopoly in delivering inclusive goals, and all those who have the temerity to ‘meddle’ in this area must be treated with hostility. The government’s role is indeed pivotal, as initiator, catalyst and the principal funding agency. But that does not mean that there is no scope for outside participation and partnerships. The truth is that today, State altruism is monopolized because the establishment does not want outsiders to disturb the corrupt gravy train that follows in its wake. Unfortunately, every governmental project for inclusive growth that is subverted or mismanaged, devalues the goal itself. This venality and indifference must be rooted out.

The first thing that is needed is a change of mindset in government. The time has come to shed the old suspicion, if not downright hostility, to private participation in the promotion of equity. Given long-established behavioural patterns of lack of social involvement, and the nature of the Indian psyche which reacts best to self-interest, the government should create a policy framework to benefit those who participate in projects that further inclusive goals. Such a policy should include judiciously devised tax-breaks and reward corporate social responsibility (CSR). It must also reach out to NGOs who have a proven track record of exemplary service, and encourage new NGOs to work as partners. To achieve the larger goal of transforming the texture of our society, we need to pro-actively incentivize and motivate the private sector and individuals outside government to become, on a scale never attempted before, stakeholders in inclusive growth. Indians need to feel a sense of pride for participating with responsibility in projects to help the deprived. India needs competitive philanthropy backed by the government through enlightened policies. Only then can we revive, as an inextricable part of our social fabric, exceptionally relevant but now forgotten concepts like paropkar (or the public good) that once inspired us. There was a time when people believed as a matter of conviction that the successful must give back to society what society has given to them. We need to encourage citizens to believe in this concept again.

Change will not come easily. But the creation of the enabling environment of an inclusive society is perhaps modern India’s most ignored project. A new effort, with the right policy measures, must be attempted to save India from the insensitivity of its own citizens. The project may appear to be idealistic, but it cannot be postponed any longer. It is time for us to understand this in our own self-interest, because the truth is that uncaring societies are unstable, lack societal consensus, remain institutionally fragile, foster social unrest and are far more prone to self-destruct. If we wish to become a great nation, we have to show an improvement, at the level of the individual and of society, in our concern for the weakest. That alone will make the difference between an inclusionary agenda that works and one that fails.

Thus,
Chanakya’s New Manifesto
states states:

5.1    The time has come to accept that the policy of State altruism, where money in the form of subsidies is inefficiently shovelled from the top down, is not achieving the desired results. There are several reasons for this. First, this does not attack the root of the problem and thus deflects attention from foundational solutions; secondly, it locks up enormous resources for grossly below-par outcomes, and thereby diverts scarce resources which could be used more productively to achieve the same goal; thirdly, it nurtures an infrastructure of corruption which, apart from encouraging criminality and loss to the government exchequer, also legitimizes cynicism and callousness about the needs of the poor; fourthly, it has serious consequences for the pivotal issue of fiscal prudence—especially valid for an economy where the official fiscal deficit is touching 6 per cent of the GDP; fifthly, it perpetuates the mythology that the government is doing a great deal for the deprived, and, for this reason must be the only agency that should be doing so, thereby eroding the motivation and the space for the creation of non-governmental stakeholders in the pursuit of inclusive goals.

5.2    The magnitude of the problem is such that we need to move beyond quick-fix, non-empowering, short-term, populist solutions, and adopt those which may not appear politically seductive in immediate electoral terms but are foundational, enduring and empowering.

5.3    Good governance, leading to a competent management of the economy, is the first prerequisite for greater inclusion because it has been proven that when overall economic growth rates are high the poorest also benefit. Besides, a stable and dynamic leadership is better able to implement specific schemes to empower the poor.

5.4    The role of the State must come under critical scrutiny. The idea is not necessarily to limit the state participation but to focus it so that the desired deliverables actually reach the people in a manner that is transformational in nature.

5.5    Schemes like the NREGA and the Food Security Bill, seeking to guarantee food handouts or emergency employment, should be restricted to vulnerable drought prone or famine- afflicted regions as immediate alleviating measures. For this purpose, all the government’s UID schemes, including Aadhar, must first focus on the biometric identification of the poorest in these areas so that necessary succour can reach them through accurately targeted government subsidies. Further, they should try and ensure that most relief should be transferred to its beneficiaries by way of cash transfer which has been shown to reduce corruption.

5.6    The unique identity-based service Aadhar is a needed initiative. At the time of writing, an estimated twenty-one crore people will have been given such unique identity numbers, but that is still only one-sixth of the population. Aadhar-linked payments will commence in fifty-one districts, largely in the first instance to facilitate old-age pensions and NREGA wages, but that still leaves 550 districts to be covered. Given the mammoth nature of its job, Aadhar would serve a better purpose if it is used to provide focused and assured relief to carefully targeted groups in pre-identified districts, which are especially vulnerable to repeated drought and famine and, as a consequence, suffer food insecurity on an endemic basis. Moreover, while using Aadhar to directly transfer cash from the State to a beneficiary’s bank account may be a better alternative than the physical delivery sought to be achieved under the PDS, it is still fraught with dangers. On an operation of this scale, venality and human ingenuity to subvert the scheme cannot be ruled out; there is also the danger that the cash transferred could be used for purposes other than that it was intended for, or that vested interests could use beneficiaries to extort the money; finally, in a competitive democratic system, there is always the fear that cash transfers could be used to influence voters prior to elections. The essential point is that while Aadhar and cash transfers should be used for targeted relief where needed, its nationwide usage for public welfare is, at this stage, far too ambitious, and should not be an excuse to bypass longer term but far more enduring solutions like a quantum jump in agricultural productivity.

5.7    As we have seen, if the economy grows rapidly, it helps the underprivileged. However, governments should focus on increasing growth in those sectors of the economy that impact the poorest the most.

5.8    With this in view, the government must adopt a new National Mission on Agriculture with the aim of tripling national agricultural growth rates in the next five years. The vast sums of money that are being mismanaged in populist schemes should be redeployed for attacking the root of the problem, viz, low productivity, except in drought-affected areas where special state interventions are required. A quantum jump in agricultural productivity will make an unprecedented dent in the numbers of those below the poverty line, apart from providing spin-off benefits to all other sectors of the economy.

5.9    What needs to be done to deliver this second green revolution is known and has been discussed in various parts of this book. However, the specifics of how policy must be made, and how this policy is to be executed should be left to experts like the great M.S. Swaminathan, the father of our Green Revolution. However, some of the areas that necessarily need to be focused upon are irrigation (including the water-conserving technology of drip irrigation), better agricultural extension services, new and better seeds, the use of appropriate fertilizers, mechanization, improved credit services, increased warehouse and cold storage facilities, better road connectivity, far more effective R&D inputs, the introduction of cash-yielding crops and so on.

5.10  With a dynamic agriculture minister at the Centre, the government must come out with a White Paper by the middle of 2013 which details the principal elements of the National Mission on Agriculture. The paper must spell out priority tasks, timelines, funding sources, PPP models, implementation strategies, requisite legislation and productivity targets. Within this umbrella policy document, symbolic of a new national resolve, states and panchayats should be given the flexibility to devise area-specific strategies of implementation.

5.11  In tandem with the enhancement of agricultural productivity, the present infrastructure of centrally-controlled food procurement and distribution should be phased out. The first step in this process must be a substantially reformed APMC Act. The next step must be to decentralize the process, giving states and panchayats, with the direct support of the district administration, the responsibility to run subsidized food outlets as necessary.

5.12  At the same time, the current restriction on the free movement of food products across state boundaries should be phased out. The apparatus of state control is a nursery for corruption; it inhibits market forces, and leads to an economically unviable dependency syndrome which primarily benefits richer farmers.

5.13  One of the principal aims of the new mission must be to empower the poorest with better skills and higher incomes, so that they become active participants in a growing economy and not the inert recipients of badly executed handouts. The mindset of our planners needs to change. Currently, they believe that the poor cannot help themselves. Nothing could be further from the truth. Even the poorest farmer can be a robust player in an economy and a polity which provides them with the right opportunities to stand on their own. A majority of people remain trapped in poverty because of the absence of choice. Unemployed and underemployed farmers must have the opportunity for alternative employment. Enhanced agricultural productivity would also release labour from the farming sector.