An increasing focus on welfare at the cost of development was triggered by the DMK. In 1967 the party offered three measures of rice (approximately 4.5 kg) a rupee. At that time the state was suffering a severe shortage of rice. This promise worked a miracle and proved a trigger for voting out the Congress government which had a good record in economic development. Of course, the government led by DMK leader C N Annadurai couldn’t fulfill the promise.
The idea was expanded by both the DMK and its arch-rival, AIADMK under MGR. Thus for 50 years the two Dravidian parties steadily expanded the content of welfare measures and freebies. These have resulted in ever-increasing allocations for welfare that touched a peak of Rs 82,673 crore or 40 per cent of the estimated total revenue expenditure of Tamil Nadu estimated for 2019-20. This technique served the parties the purpose, of winning elections. The sops also expanded over time to offering cash for votes. These techniques have been adopted by a few other states and even by the Centre. eg. the mid-day meal programme for school children and the recent Ayushman Bharat, both benevolent schemes.
The flavour for the 2019 elections seems to be the brainwave of former Chief Economic Advisor, Arvind Subramaniam’s concept of Universal Basic Income (UBI). Telangana Chief Minister Chandrasekhar Rao proved its effectiveness by sweeping the elections by offering a direct income support scheme of Rs 6000 per year to farmers having cultivable land up to five acres. This was quickly adopted by Tamil Nadu, Odisha and by the Centre.
In the competitive populism, the promises get expanded to bizarre proportions: the Congress election platform breezily offers Rs 6000 per month per family for 25 crore families below the poverty line. This would entail an expenditure of Rs 360,000 crore per annum and more than seven times the outgo on MGNREGA.
While the latter is related to the provision of employment, Nyuntam Aay Yojana (NYAY) will be an outright dole.
Public debt bulging
The need for addressing crass poverty can be understood. But in a country with a weak statistical base, it will be tough to check abuse of the system by under-reporting incomes. The Centre’s budget is already suffering from resource constraints. Public debt has been bulging. Allocation of large sums of taxpayers’ money for distribution under NYAY as free payments will severely impact the culture of working to earn a living.
The experience of Venezuela offers invaluable lessons. The country is rich in oil, has a sizeable fertile land mass with a small population of 3.2 crore, the size of Kerala. The country has roughly 30 per cent of India’s area but less than a fortieth (40th) of India’s population.
For over five decades the country has been fed on doles. When oil prices zoomed post-1971, the entire population lost on building any economic activity including agriculture and industry. The country was complacent over spending lavishly on imported goods including food.
In a matter of just one year from 2014 to 2015, the country’s per capita GDP dropped from $ 16,000 to $ 6000 and to $ 4498 in 2017 and the economic growth became negative. The country, which was once famous for its beauty pageants and threw up Miss Universes, is suffering extreme poverty leading to high crime rates and prostitution. Inflation is running in six digits. The sanctions imposed by the US are contributing to a steep decline in petroleum exports and on crude oil production to a third in less than a decade. Venezuela, which had the second largest oil reserve (next to Saudi Arabia), now has neither foreign capital nor tourism nor any worthwhile economic activity. The complacency bred by doles thrown by the state is at the base of this precipitous fall of a country with such abundant natural resources.
Political parties of India, sadly, do not seem to be concerned with the long term damage caused by freely resorting to offer doles unaccompanied by the quid pro quo of citizens’ contribution. Expansion of the MGNREGA would make for far greater sense than NYAY.
