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LATEST NEWS UPDATES | Modi Government Gives Shock Treatment To Social Policy -Jean Dreze

Modi Government Gives Shock Treatment To Social Policy -Jean Dreze

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published Published on Sep 12, 2017   modified Modified on Sep 12, 2017
-NDTV

The Modi government is finally getting some flak, as it should, for its confused economic policies, epitomised by the demonetisation blunder last year. Despite relatively favourable circumstances (including good monsoons and a decline in international fuel prices), the rate of economic growth is declining quarter after quarter. For manufacturing, it is even close to zero, according to the latest estimates. Statistics related to employment and wages are even more worrying. To illustrate, one of the most telling - and least noticed - macroeconomic indicators today is the stagnation of real wages: according to the Labour Bureau's Wage Rates in Rural India (WRRI) series, ably analysed by Yoshifumi Usami among others, the wages of agricultural labourers in rural areas have remained more or less constant in real terms during the last three years. So much for inclusive growth.

Having said this, it is in the field of social policy that the failures of the central government are most glaring. For instance, there have been no initiatives of any significance in the fields of education and health during the last three years. Health policy, in particular, has been a subject of deep confusion. Three years ago, the government was making grand promises about universal health care and even health becoming a fundamental right. Nothing has come of them.

When it comes to social security, there have been some initiatives, but mostly of a misguided sort. As things stand, social security for the informal sector in India builds on five critical programmes: the National Rural Employment Guarantee Act (NREGA); the public distribution system (PDS); the Integrated Child Development Services (ICDS); midday meals for school children; and pensions for widows, the elderly and disabled persons. All these programmes have suffered important setbacks during the last few years.

The NREGA came under attack as soon as the Modi government came to power. Initially, the government tried to restrict the programme to the country's poorest districts. When that turned out to be difficult to get away with, caps were imposed on NREGA expenditure, leading to an unprecedented crash (30 per cent or so) in NREGA employment in 2015-16, along with mounting arrears in wage payments. More recently, the central government seems to have accepted that NREGA is there to stay, and financial allocations have even picked up a little bit. Yet, attacks on the programme continue. The recent committee report on NREGA wages, for instance, argues not only against the payment of minimum wages, but also in favour of NREGA wages being held constant over time in real terms. If accepted, this recommendation is likely to lead to the entire programme being gradually phased out, as labourers themselves lose interest.

Turning to the PDS, the system did improve in many states (especially the poorest states) during the last few years as the National Food Security Act was rolled out. These gains, however, are in danger of being undone by the imposition of Aadhaar-based Biometric Authentication (ABBA) on the PDS. There is growing evidence that ABBA has already done much damage in Rajasthan and Jharkhand. Official data for Ranchi district, where ABBA has been compulsory for more than a year, shows that about 20 per cent of cardholders have been excluded from the PDS month after month since January. The situation is likely to be worse in other districts, where there are serious connectivity problems. In spite of these and other indications that ABBA is inappropriate technology for much of rural India, the central government continues to promote it blindly.

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NDTV, 11 September, 2017, http://www.ndtv.com/opinion/modi-government-gives-shock-treatment-to-social-policy-1747767?site=full


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