Poor Sunday- Worst Political Economy

Poor Sunday- Worst Political Economy.

It is unfortunate that on this Sunday (19/04/15), India’s economic debate has again centred on Poor. It is the force of democracy that Modi, who came to power on development agenda is forced to repeat word POOR every alternate sentence in a speech given to BJP parliamentarian (in a work shop which itself was titled something like “Schemes for Poor”).

It means all theories about victory of BJP with regard to aspirational poor and a vote against entitlement politics (free- bees) of UPA was wrong. Similarly theory of AAP winning election based on alternative politics was also wrong. The fact is in Lok Sabha election people voted single party against coalition and preferred Modi against none (Now Rahul is trying successfully to make it Modi v/s Rahul). Victory of AAP can also be seen where peoples were attracted by Kejriwal and his promise of free water, subsidised electricity and regularisation of illegal colonies (reaffirmation of entitlement politics).

I am not against poor, I am against policies which makes no economic sense or unviable but are announced and people vote for it. It is also unfortunate that those who is not pro- poor (freebees) is pro crony –capitalism.  The fight is between two vested groups to corner natural resources at the cost of national development.

It is not a political but social problem. A divided society where no group has empathy for other group.   For example, as long as UPA policies were benefitting rich and upper middleclass, everything was good. The moment it became pro poor by way of MNERAGA, RTE (Right to education), Rights of Tribe, Food Security Bill etc. all started crying about policy paralysis and scam etc. The crime was not a policy paralysis, the crime was spending more than the earning.

NDA came to power and everything changed, there was sensible, central and railway budget. There are sever cuts on education, health and welfare schemes due to fund crunch and so on. (But I am not endorsing cuts).Now if it shifts gear to pro poor, label of policy paralyse by rich is not far away, and many of good program like efforts to take railway on track or properly responding to China policy ( encircling India)  will be derailed.

Coming back to problem of policy of entitlement and crony capitalisms- why we cannot have middle path. Presently, when everyone says crops are failed and farmers are committing suicide (must be true), but then why there is no corresponding dip in crop output. Or why we do not admit damage is to the extent of crop damage and say only really affected farmers be supported. Further, no body ask, why farmers are not saving for a bad crop in a cycle of 3-4 years. For industrialist also, financing pattern in India is such that, in case of profit shareholder/owner corner benefit but in case of loss lender (bank) suffers. Owner boast of being entrepreneur but does not take risk of loss.

Reverting to land bill which is in the storm of controversy, every rational parson (not only economist) agrees that there is need for reduction of population dependent on agriculture. (Presently for 13 % of GDP contributed by Agriculture, but almost 67 % population depend on it) and land is urgently required for non-agriculture purposes. Then why schemes are not prepared, where by owner farmer continues to own land and/or enjoy benefit out of it when land is proposed to be utilised for non-agriculture purpose.    

Thus focus of debate on the bill should shift from, consent clause etc. to retaining ownership /perpetual benefit like an owner. Farmer should accept the need of land for non-agriculture purpose and entrepreneur / industrialist should be ready to give proper rate of return on a factor of production –Land.

In general every Debate or Policy should not be pro-poor or pro rich, they should be pro-anti-development. Somewhere, policies advocated by Amirtya Sen and Jagdish Bhagwati/ Panagariya should merge together.   For this to evolve first society should develop empathy.

Else, the way we have lived with Garibi Hatao as slogan and Crony Capitalism as policy for last 45 years, we shall continue to live for another hundred year. The dream of taking over China will be a dream for ever.

We need to change content and discourse of Political Economy.