T C A Srinivasa-Raghavan: Can the State really help the poor?

LINE & LENGTH

Would you allow a busload of convicted rapists to become the guards and wardens of a women's hostel? Or a bunch of jackals to guard a hen coop?

If not, why the silent acquiescence about the rural employment guarantee scheme, which is to be administered by the State? Is it guilt or just plain pusillanimity?

Let's get to the point straightaway. In India, the State is the biggest oppressor of the poor and even the not-so-poor.

Oppression here is an accepted and legal form of governance. And thanks to the British, Indian taxpayers even pay the salaries of their oppressors, which is the worst form of oppression ever possible.

But let us not blame the British alone. The Indian State has always been oppressive. It is likely to remain so for the foreseeable future.

Yet, amazingly, the advocates of the employment guarantee scheme are asking the very same State to initiate and implement it. Paradoxically, these people also think that the State hides far too much and have succeeded in getting the Cabinet to approve the Right to Information Bill.

Some of these people are well-meaning; some are confused; and some are both. Many are activists suffering from tunnel vision. A few are economists with an eye on the main chance.

But the rest, and here lies the problem, are either functionaries of the State or aspirants to State power. The soft hiss you hear is them rubbing their hands in anticipation.

This group sees the employment guarantee scheme as a golden opportunity, not just to enrich itself but also to acquire huge political influence in rural India for the ruling party (see Okonomos, Business Standard, December 16). Sonia Gandhi is leading them. She knows how to buy influence.

But those who think that the money will reach the intended beneficiaries are living in a fool's paradise. Unfortunately, they include some very decent people like Aruna Roy and Jean Dreze, who don't seem to realise that Sonia Gandhi is only using them. Once their pet hobby horses become law, she will discard them. You have to be blind, deaf and dumb not to see this.

Instead, the debate is getting bogged down in numbers. Some say it will cost so much, others say, no, it will cost that much. Some say it will only take 1 per cent of GDP, others dispute this and trot some other number.

Yet others say that subsidies that benefit the middle class can be cut to pay for the cost. They forget to mention, if they know that is, that the bulk of the so-called Indian "middle class" earns only about Rs 8,000 per month. It is all very well to talk in class terms, but you have to see its composition as well.

And so the futile debating goes on, watched by Sonia Gandhi, who knows that the Opposition will not take her on. But when the ruling party and the Opposition agree, surely it can only mean one thing, namely, that only the politicians will gain.

At the simplest level, poverty is because people don't have jobs. If you want to create jobs, you must have policies that encourage investment. This much even a first-year student of economics knows.

But this is where the Indian paradox comes in. The very lot that wants to create jobs via the guarantee scheme also opposes policies that would increase investment.

Thus, whether it is the Left opposing public sector disinvestment (which will release thousands of crores for productive investment) or the NGOs opposing MNCs and globalisation via trade liberalisation, the end result is the same: opposition to investment even when you know that only investment can create jobs.

But there is another level at which the issue needs to be understood. To those who hold forth on poverty, I would recommend a book called The Idea of Poverty by Gertrude Himmelfarb, a professor at CCNY. It was published in 1984.

Ms Himmelfarb, now in her eighties, is generally seen as a rightwing intellectual. But then it is typical of the Left to use labels to discredit people so that their ideas can also be discredited.

Ms Himmelfarb's point is simple: poverty alleviation has far more to do with ordinary morality than with State action. State action inevitably degenerates and mutates into oppression of one sort or another.

Traditionally, Indians have been good at simple morality, which made them give to charities and quietly support a few poor. But for the last 35 years, starting with the garibi hatao programmes, the State has been systematically attacking that morality because, by taking over what must remain a private function, the politicians can get votes.

Ms Himmelfarb believes that much of the problems lies with the objective definitions of income and subsistence that have become fashionable as result of the political scoring of points. As soon as these began to determine notions of poverty, the very way people thought of poverty also changed.

Social responsibility (leading to the Dreze-Roy version of activism) has become a substitute for individual moral responsibility. So individual action has been slowly vanishing. The wolves and jackals of the State have been allowed take over the welfare of the poor.

In 1991, she wrote another book called Poverty and Compassion, where she argued that Virtue, rather than Reason, was a better instrument to fight poverty. Rationality was fine but morality was more effective.

Moral action has to be a product of moral sense, not reason. Her latest book, in which she distinguishes between good and bad Enlightenment, which was the flag-bearer of Reason, takes these notions further.

It seems worth noting in this context that religious institutions do more to help the poor than the State does, yet they get hardly any credit. In "secular" India they are treated like lepers.

Actually, indirect intervention of the sort we see happening through religious institutions can be initiated by the State also. For example, in the US they have law that requires all charitable trusts to spend 5 per cent of their annual incomes on "good works".

We too have Section 80G of the Income Tax Act, which allows donations to charity to be deducted from tax. But unlike in the US, it does not impose any significant liability on the charitable trust if it fails to do its part. Therefore, with the connivance of the State, the Section is used to launder money.

So here is a simple solution for the finance ministry, which is valiantly fighting off the onslaught of the NGOs: re-examine 80G, tighten it, and direct it for rural employment creation. The alternative is disaster, fiscal and social, especially as these funds will not be allowed to be audited.