Freebies: A zero-sum game

The link between the current discourse over poll-influenced handouts and subsidies and the burning fields of Punjab, Haryana and Uttar Pradesh may not be immediately evident. But it is New Delhi and state governments’ inability to reverse the bounties that are handed out to farmers in the form of free water and electricity, subsidised fertilisers and assured buyback prices that are indirectly responsible for the pollution and public health crisis that engulfs north India for most of the winter.

Farmers burning off the stubble from the kharif season to prepare their fields for the winter crop is a relatively recent trend. Earlier, this stubble was manually removed, then ploughed back into the soil as a sort of compost fertiliser. Why did that practice stop in favour of burnouts that destroy the top soil and cause farmers and their families at ground zero and urban populations far away all sorts of respiratory problems? That transition has its roots in catastrophically depleting water tables, the result of indiscriminate use of cheap or free groundwater resources drawn out by cheap or free electricity to grow a water-guzzling crop traditionally alien to these parts — paddy — that is grown here only because of generous incentives that began with the Green Revolution.

Falling water tables have prompted state governments concerned to decree that paddy sowing has to be aligned with the onset of the monsoons instead of earlier when irrigation water from canals or bore-wells would flood the fields in preparation. Later sowing means later harvesting, leaving farmers an extremely narrow window to prepare the field for the next crop. Burning the stubble, thus, was discovered as a faster way of clearing the field rather than the manual root-pulling exercise. Journalists visiting the area report that farmers are aware of the deleterious impact of stubble burning on soil and human health but confess their inability to do anything else. State incentives for farm equipment to clear fields have so far proved limited. Perhaps the latest short-duration hybrid variety being developed by Pusa Institute could do the trick, who knows.

The obvious suggestion that rice growing be banned from these areas is likely to cause an uproar and bring farmers out on the roads in protest. The year-long farmers’ protest against New Delhi’s ham-fisted attempts to impose farm reform laws, which were subsequently withdrawn, offered a potent demonstration of the power of the agriculture lobby when it comes to defending the settled privileges it obtains from the government.

The Green Revolution-related subsidies, extended with the brightest of intentions at the time but without the precaution of sunset clauses linked to productivity gains or, say, landholding size, have hardened into permanent rights for both poor and rich.  Aam Aadmi Party (AAP)-ruled Punjab is a good example of the inability to comprehend the permanent and deleterious nature of subsidies. Following the template that has kept it in power in resource-rich Delhi, AAP introduced with gay abandon more freebies — free electricity for households up to a limit and financial assistance for women. The result is that Punjab now has outstanding debt that is 50 per cent of state domestic product.

The plight of power distribution is another potent example of how the political inability to address the gift of free or subsidised electricity to large cohorts of perceived vote-banks (again, mostly farmers) has created a vicious circle of the poor quality of electricity supply and growing indebtedness of state distribution companies (discoms). Multiple grand programmes by the Centre over the past 10 year to address this discom debt crisis have failed at the altar of populism. Many state discoms have chosen to partially bridge their revenue gaps through cross-subsidising their freebies by charging industrial and high tension consumers at higher rates, a trend that, ironically, adds to India’s reputation as a high-cost manufacturing destination.   

It is nobody’s case that vulnerable or needy sections of the population should be excluded from subsidies and support. But the structure of subsidies in India tend to congeal into static rights that gain political traction, though they may have little connection with facts on the ground. They have increasingly become a knee-jerk response to welfarism from politicians who lack the nous or imagination to tread the tougher and less populist route up the development value chain. Subsidised cooking gas for poor households, for instance, proved an election game-changer earlier; but the costs of maintaining the momentum of this scheme is straining the exchequer. A better alternative could have been distributing solar cookers that rely on a free, non-fossil, healthy fuel source that could have saved the state from recurring payouts.

The urge to retain hand-outs that perpetuate power equations has left governments with less to spend on the things that really matter to people —education, healthcare, access to employment and welfare for the truly needy — as lower-than-potential economic growth constrains their revenues and keeps large swathes of Indians in a permanent state of expectancy. Freebies may be the lazy politician’s go-to technique. In the long run, they do a disservice to India.