Why not invite farmers for pre-budget consultations?

This is the budget season and time to look at how our money is spent by the government. About one-third of our people live ‘below the poverty line’ (BPL). They exist on less than one dollar a day. Politicians of every hue swear by reducing poverty.

Indira Gandhi won elections on the slogan of ‘garibi hatao.’ Over a quarter century later ‘garibi’ is still with us. Rajiv Gandhi said, “Only about 15 paise of every rupee spent on poverty programmes reach the poor.” Twenty-five years later the story remains the same.

The reason for continuing poverty is the poverty of thinking in the thinking on poverty! Indian economists and politicians continue to harp on GDP growth as the mantra for reducing poverty. This is an outdated ‘Reagan-era’ solution. Every finance minister calls business bigwigs for consultations on the budget. Agriculture scientist Dr Swaminathan posed the question, “Why doesn’t the finance minister call the poor farmers for consultations, since they form the majority of private enterprise?” We will soon have an answer when Pranab Mukherjee begins the process.

Prices are rising inexorably and inflation is spiralling out of control. The worst sufferers are the poor. The Centre and state governments blame each other. Hapless citizens are helpless, mute spectators. Wrong policies are responsible for this. Some of the reasons for the price rise in grains, pulses and vegetables are the policies of permitting large corporates into food retail business and lax administration. Is there any remedy? There certainly is, if only the thinking on poverty could be changed.

Firstly, it would be necessary to give up outdated western economic solutions. Discard the pursuit of GDP growth, as economic panacea. The GDP growth model is ‘trickle down’ economics. Experience belies expectations of a solution for unemployment through private investments and concessions for business. Yet, inexplicably government pursues policies slanted toward private investment.
Land acquisition and SEZs are two indicators of this policy orientation. The employment thus generated does not improve the lot of the displaced persons and increases poverty levels. When the farmers are dispossessed of their meagre holdings after giving them paltry compensation in the name of industrialisation, it only accentuates income disparities and not lessens them. In tribal areas, it has led to the spread of Naxalism. This policy has created an unjust ‘dual economy’ which only benefits a handful of people.

Catch phraseology used to drive economic direction include, ‘infrastructure.’ Several thousands of crores of rupees are spent on it to facilitate economic growth. Rural roads, it is claimed, would lead to development of villages. The British built railway infrastructure, not to enable Indians to travel, but to move their troops.
Rural roads, far from improving the lot of villagers, would merely make it easier for middlemen and corporates to extend their exploitative reach, unless preceded by rural entrepreneurial advancement. ‘Development’ has replaced ‘garibi hatao,’ in political sloganeering. Bihar has showcased it, albeit with allegedly fudged statistics, so have Gujarat, Madhya Pradesh and other states that went to the polls recently. But significantly, none has demonstrated any reduction in BPL families.

Co-operatives
‘Development’ and ‘infrastructure’ are the new mantras of the economic paradigm. Instead, if poverty is to be eliminated, a paradigm shift to enabling rural entrepreneurship, through the ‘Amul’ model of cooperative development, is needed. This could be done by setting up national vegetable and grain boards, on the lines of the NDDB. What the marginal farmers need is not loan waivers, but the facility to market their produce through organisations that they own — the cooperatives, like the ones that created the ‘Amul’ brand.

NREGA and loan write-offs are useful election strategies, but do not lead to poverty reduction. These are equivalent to providing the indigent with the proverbial fish, instead of teaching them how to fish! Money earmarked for these programmes usually end up in the hands of corrupt politicians and officials.

Rather than improving administration and enforcement of anti-corruption laws, the government has thoughtlessly embarked on the fanciful UID programme, at an astronomical cost hoping to ensure that NREGA money reaches the poor. NREGA is itself rather ill-conceived. It condemns the poor to life-long manual labour.
Poverty reduction and elimination could only come through provision of access to health, education and justice to the rural masses. Mass unemployment in rural areas leads to mass migration into cities. The answer is not ‘urban renewal,’ on the assumption that such migration is inevitable.

Instead of subsidising higher education, the government should provide for essential education and strengthening of entrepreneurial spirit in rural areas. Instead of JN-NURM have a ‘Rural Renewal Mission.’ Instead of UID to control corruption in NREGA, spend the monies set apart for both these on rural health care, education and access to justice.

Noted economist Joseph Stiglitz has called for an end to GDP fixation. He terms it, ‘GDP fetishism.’ He says, “It should have been obvious that everything could not be reduced to a single number.” There is a need, he says, “to assess better what contributes to citizens’ sense of well-being.”

Wrong policies, inadequate, efficient economic measures and incorrect funds allocation lead to private affluence and public squandering. Will the finance minister avoid these obvious pitfalls in the ensuing budget?