Letter to BS: Why welfare policies in developed nations are not populist

This refers to “Populism in less developed countries” by Pranab Bardhan (August 13). He has begun with the definition of populism adopted by economists as “macro economic profligacy leading to galloping budget deficits in pandering to all kinds of pressure groups etc”. While this definition is reasonable and acceptable for further analysis of economies of countries in the world, the author has chosen examples of welfare measures. In the last column of his long article, he has often used the following terms — welfare programmes in India, welfare state in Medina, minimum wages, general welfare policies, government subsidies and hand outs. So, it appears quite clearly that these welfare policies in developing countries are his examples of populist policies defined as profligacy. 

This is a complete misunderstanding. Welfare policies in developing and even developed countries are not at all populist policies. They are, in fact, fiscal policy not only to bridge the inequality gap in the economy but even to promote production. In poor countries, they are more relevant but are also relevant in developed countries where the inequality of income is not inconsiderable. A major part of the discussion on bringing about equality in the famous book by Professor Pickety and even articles published in this newspaper by Professor Martin also are on how to target subsidy to reduce inequality and at the same time, achieve higher production.

Examples of populist measures are sometimes controversial such as exemptions from indirect tax given to ladies’ hand bags and bindis and to imports of professional equipment by journalists.

This article by Pranab Bardhan is based on misunderstanding of welfare economic measures with populist expenditure.

Sukumar Mukhopadhyay  New Delhi

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