JOIN USRation and inflation: Greased bamboo pole politics
For generations, school-going students have learnt to solve in their math class the problem of the greased bamboo pole; when will the monkey reach the top if it slips some and gains some.
The government, run by Narendra Modi, is doing just that - figuring out how fast it can empty the pockets of India's workforce, regardless of whether they are currently employed or seeking employment or have given up the chase to find paid work. The rate at which pockets are being emptied is about the same as the rate at which prices of petrol, diesel, CNG and gas cylinders are being hiked to fill the government's coffers.
The ripple effect of the 24-hour cycle of hiking the prices of petrol, diesel, CNG and gas cylinders penetrates kitchens and the quality of life of every individual, compelled to cut back on nutrition and a sense of wellbeing. If the government's indefatigable effort to fill its coffers is limited to hiking the price of hydrocarbons, essential to keep the economy in motion, it would be bad enough. But the Modi regime has opted consistently to pursue an economic agenda that requires that citizens payout till it hurts.
In every political rally and every raucous speech on how his regime has ushered in "sabka saath-sabka vikas", Modi has emphasised that providing housing to the poor and ensuring that every Indian is a pukka homeowner with all basic amenities is a priority. His target date for ensuring that every Indian had a pukka home was 2022. In recent weeks, Modi has participated in virtual "griha pravesam" ceremonies, complete with flowers and conch shells, for 5.21 lakhs homes under the Pradhan Mantri Awas Yojana.
And then there is his government that has noiselessly withdrawn the additional tax exemption for first-time homeowners of Rs 1.5 lakhs starting April 1, this year. The scheme, under Section 80 EEA, was launched in 2019 and has been withdrawn now. Every new homeowner will have to pay out more and get less incentive to spend on better housing. In 2019, when the exemption was introduced, the average home loan ticket size jumped from Rs 23.82 lakhs to Rs 26.14 lakhs.
The surge was so obviously linked to the exemption that it is blinding. Men who borrowed to buy new homes for the first time upped the outlay to Rs 26.04 lakhs from the previous average outlay of Rs 23.64 lakhs, which is an increase that just about matches the size of the exemption.
Since the Modi regime decided that it will not create exceptions for home loan takers depending on the size of the borrowing, it is clear that the government prioritised keeping its coffers filled to fulfilling its promise of ensuring that every Indian would have a pukka home by 2022. Since there is no way in which every Indian will own a home by the end of this year, dumping the tax exemption seemed an easy way for the government to turn skinflint.
The consistency with which the Modi regime has followed the principle of impoverishing the economically distressed, maintaining that India cannot be profligate as a developing country. It has painted a halo around Modi's head by talking up a storm on how free rations, free gas cylinders, housing, toilets, and daily wage work have been put in place to help the distressed, those thrown out of work in the wake of the pandemic.
The six-month extension from April 1, 2022, of the Pradhan Mantri Garib Kalyan Yojana of free rations was a political gimmick designed to convey that the Modi regime is sympathetic to the plight of the poor. This is nonsense. The 24-hour cycle of increase in the prices of petrol, diesel, CNG and gas cylinders robs the economically distressed of whatever relief the extension of free rations may have provided.
Paying to sustain the consumption of the economically distressed is what responsible governments tend to do. As an aspirant for upping itself to the slot of the fifth-largest economy, India should look to see how a state in the United States has made itself responsible for offsetting the increases in petrol prices. California, which would be the fifth-largest economy globally, were it a country, has announced a yearlong refund on purchases of petrol for car owners. If the Modi regime were indeed conscious of how the surge in petrol prices post the Ukraine crisis affects Indians who use diesel or petrol or CNG as fuel, the claims to work for sabka saath-sabka vikas would not sound quite so hollow.
Narendra Modi's message of frugality and sacrifice for the greater good and his condemnation of the politics of profligacy (sic!) pursued by opposition ruled states has become obsessive. At a recent meeting chaired by him, the fiscal indiscipline of Tamil Nadu, West Bengal, Delhi, Punjab, Telengana and Andhra Pradesh were flagged as "populist" and "economically unsustainable" and carried the warning that these states could end up like Sri Lanka, where the Gotabaya-Mahinda Rajapaksa regime has become unstable, as public anger over shortages and rising prices has spilt out on to streets, and people have died in the violence.
The Modi regime's preference for squeezing the economically distressed and the announcements of the newly elected governments in Uttar Pradesh extending the distribution of free rations and gas cylinders, Goa's announcement that three gas cylinders would be free per household are apparently contradictory. What is fulfilling election promises for the Bharatiya Janata Party-ruled states is "populist" and "economically unsustainable" for opposition ruled states.
"Populism is not a distortion or pathology," writes Professor Partha Chatterjee in his reading of Ernesto Laclau, arguing that "it has a distinct political reason in the field of democracy." Narendra Modi knows this and uses it to turn himself into a benevolent sevak for the masses with his regularly repeated list of benefits under various schemes targeted at the "labharthi varg" (beneficiaries). He, however, is unwilling to concede that the opposition, as ruling parties in some states, has exactly the same reason for doing what they do.
Professor Chatterjee's "I am the People" explores State populism, Opposition populism, and governmental populism. He says, "What is underway is an electoral battle between Modi's populist leadership and a tactical combination of several regional populisms." The recent meeting of top bureaucrats and Modi to trash the populist and unsustainable spending of opposition-ruled states and warn that it could lead to a Sri Lanka like situation points to two things; first, Modi's extreme uneasiness about the emerging tactical combination of regional populisms, spearheaded by Mamata Banerjee and backed by Sharad Pawar and now the Shiv Sena, Arvind Kejriwal, K Chandrashekar Rao, M K Stalin and potentially others. It also indicates that Modi sees in some of these leaders a star political challenger in the 2024 Lok Sabha elections. Underlying his discomfort and anxiety is a basic instinct; spending must never exceed income.
The difference between home economics and the economy of India is incomprehensible for Modi, with his simplifications and generalisations and common touch. The greased bamboo pole is his totem; immiseration will allow him to appeal to voters as the saviour. It will be a cheap and easy tactic. It will also assist in branding the populist regional and smaller parties as irresponsible and short-sighted spendthrifts.
(The writer is a senior journalist based in Kolkata)
Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.
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