| Politics needs shorthand for effective communication. The Congress battle-cry of 1971, "Garibi hatao" (Remove poverty), is perhaps an all-time winner as a political slogan. But the policies that came with that slogan are what held India back for many long years, and some of the legislative legacy still lingers. In other words, good slogans are not a substitute for careful thought, or for properly crafted policy. That cautionary word is necessary when the successor slogan to "Garibi hatao" says "Congress ke haath, aam aadmi ke sath" (The Congress' hand is with the common man), and is being used once again as a substitute for careful thought. |
| Consider, for instance, Congress President Sonia Gandhi's warning shot against allowing foreign investment in retailing. Now, Wal-Mart may not be the world's most admired company, but the fact is that organised retailing has come onto the Indian map""with or without foreign investment. Shopper's Stop, Westside and Food World are as homegrown as they come. If the neighbourhood stores are going to be threatened, they will be by Mukesh Ambani and Kishore Biyani just as much as by Wal-Mart or Carrefour. This is not an issue of whether to allow retail chains or big box stores; both will sprout because there is opportunity in abundance to reduce middleman margins in what is today a multi-layered supply system, and to close the gap between producer and consumer prices. That is an efficiency gain for the system as a whole, with or without foreign investment in retailing. The advantage that foreign investment brings with it is that a foreign retailer will set up supply chains that will feed export markets as well. If Wal-Mart increases its buying from India five-fold or ten-fold, opening up to foreign investment will have paid handsome dividends for a whole bunch of producers, whether farmers or businessmen. Indeed, creating efficient retail networks also helps control inflation""which would be a boon for the "common man". For sure, some neighbourhood stores and existing wholesalers might find the going getting difficult, but where's the larger interest? |
| Thought must also be applied to the big spending programmes that have come along with the "aam aadmi" slogan. These programmes have had their independent votaries, and they have had their critics. As time passes, it should be possible to check who was right and who was wrong, and whether course correction is required. Else, sloganeering has replaced rational analysis yet again. Certainly, after a year of the rural employment guarantee programme, all the questions about targeted delivery and effective administration of the scheme loom larger than ever. This is not to argue against social welfare schemes per se, but to ask that the options be considered. |
| One that was suggested right at the start was a straight hand-out to the poor, without all the bother about poorly administered programmes. For instance, if the longstanding fertiliser subsidy has ballooned to Rs 22,000 crore, can it be better targeted at small farmers by giving all of them a straight fiscal transfer? For 92 million small farmers (those owning 5 acres or less), this would mean getting Rs 2,400 per year""which is enough for them to buy the 200 kg of urea that they apply on average. In other words, all small farmers would get their urea free. Surely, this would be more efficient as well as bring about a welfare gain. So why is the money being given to inefficient fertiliser companies and not to farmers? |
| Is it for the same reason that state governments do not want to take part in a programme that would give a pension to indigent old people, paid through the post office""because a straight fiscal transfer would mean that there is no money to be made by those who administer the inefficient programmes? If the state were to move from being a generally inefficient service provider to an agent for fiscal transfers (and modern e-systems make it possible to manage large databases), it would be helping the "aam aadmi" much more with much less. But this too would mean moving from slogans to working out rational solutions that work. |
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