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LATEST NEWS UPDATES | Mr. Modi’s war on welfare -G Sampath

Mr. Modi’s war on welfare -G Sampath

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published Published on May 29, 2015   modified Modified on Oct 2, 2020
-The Hindu

The Modi government is determined to dismantle the two-pronged welfare paradigm.

It is now an established fact that one area where the Narendra Modi administration has acted with a sense of purpose, urgency and resolve is in slashing social expenditure. Be it education, health, agriculture, livelihood security, food security, panchayati raj institutions, drinking water or the Scheduled Castes/Scheduled Tribes sub-plan, central government funds earmarked for social protection have been cut.

The cutbacks have been so drastic that one of NDA’s own Cabinet members, Maneka Gandhi, the Minister for Women and Child Development, felt compelled to write a dissenting note to the Finance Minister. According to the estimates doing the rounds, the overall reductions in social sector spending add up to about Rs. 1.75 lakh crore.

No Indian Prime Minister has ever launched such a full frontal attack on the welfare state that India, for a brief period, has tried to be, or some might say, pretended to be. Considering that the biggest beneficiaries of these schemes were the poor and the marginalised — typically dismissed as vote banks responsible for the political nuisance of populism — Mr. Modi deserves full credit for this achievement, the most noteworthy of his first year in office.

But these cuts in social spending tell only half the story. We need to look at the other half — what he wants to replace the Mahatma Gandhi National Rural Employment Guarantee Act, the Public Distribution System, and all the other existing social provisions with — to get the rest.

Social security that isn’t

The ruling party’s spokespersons, in response to the charges levelled by the Opposition that their government is anti-poor, have been pointing to the social security initiatives launched by the NDA including the Pradhan Mantri Jan Dhan Yojana, the Pradhan Mantri Jeevan Jyoti Bima Yojana, the Pradhan Mantri Suraksha Bima Yojana and the Atal Pension Yojana.

If anyone wants to find out how pro-poor the NDA administration really is, all they need to do is to compare the provisions of the social expenditures it wants out, such as the MGNREGA, with the ones it is pushing. The larger design becomes immediately apparent.

The MGNREGA and the Food Security Act (which governs the Integrated Child Development Services, PDS and the Midday Meal programmes) are both rights-based social provisions. The MGNREGA legally recognises the citizen’s right to demand work as a right, and if the state cannot deliver 100 days of work in a financial year, it has to provide unemployment allowance.

Similarly, while it may come as a shock to economists imported from Washington DC, many people in this country hold the bizarre belief that it would be difficult to stay alive without food — which is why the FSA makes food a citizen’s right.

The NDA’s various Pradhan Mantri Yojanas, in contrast, put the onus of social security on those who lack it the most — the poor themselves.

Launched by Mr. Modi on August 15 last year, the Jan Dhan Yojana has been touted as an initiative for financial inclusion, a slippery term that can be spun to say one thing and mean another. It could mean real financial empowerment, which is what it is being projected as. What it entails in reality is having your income, however meagre, made accessible (via the banking system) to global financial capital, which has run out of options in the economies that have finished emerging and don’t know what to do.

Sections of the media have already begun writing glibly about the “success” of the Jan Dhan Yojana. What do they mean? Simply that a great number of bank accounts have been opened — 14.99 crore of them as of April 15, 2015. But as per the government’s own figures, the majority of these accounts (58 per cent as of March 31, 2015) have no money in them. Thankfully, India has enough public sector banks that can be arm-twisted to take on the potentially ruinous burden of these lakhs of ‘no-frills’ accounts that are also, at the moment, ‘no money’ accounts.

But the Jan Dhan Yojana is at the heart of the NDA’s whole social security framework, such as it is, or will be. It is the basis for the life insurance, accident insurance, and pension schemes scheduled to commence from June this year.

While a detailed scrutiny of each of these schemes is beyond the scope of this essay, the broad contours can be summarised.

First of all, unlike the schemes on the NDA’s chopping block, none of these are rights-based, which means they can be wound up at any time, or the benefits denied on technical grounds (no Aadhar card, for instance).

Second, they are contributory, and earnings-linked. If the poor don’t have jobs, they won’t have an income, and if they don’t have an income, they won’t have money to put in the Jan Dhan accounts, (which is why 58 per cent of them are lying empty). And if they don’t have money to put into their accounts, they will default on their insurance premiums and pension payments — and if they default, well, there ends their social security from the Pradhan Manthri Yojanas.

All the three schemes — the Pradhan Mantri Jeevan Jyoti Bima Yojana, the Pradhan Mantri Suraksha Bima Yojana, and the Atal Pension Yojana — operate on an auto-debit basis from the Jan Dhan bank account. All three state categorically in their rules that if there is insufficient balance to keep the insurance/pension plan going, the benefits will cease.

Of course, on paper, the Jan Dhan account is where the subsidies, such as the cash equivalent of the food grain subsidy, are supposed to be transferred. But cash transfers alone, without jobs, will never be adequate to live on, let alone pay insurance premiums.

Put simply, the government’s intent behind these Yojanas seems to be to disavow any responsibility for the socio-economically vulnerable.

Welfare to paternalism

The very idea of social welfare in a modern, capitalist, market economy has been informed by two essential principles. One, because capitalism doesn’t work equally well for everyone, it requires some cushioning, achieved through income redistribution from the comparatively wealthy to the poor. This is accomplished via progressive taxation, and by setting up a public infrastructure of certain universal social benefits such as a free health service, or subsidised schooling, or housing.

Two, a recognition that social entitlements are a political right, not a charity. The post-World War II golden era of capitalism — which lasted till the ascendancy of neo-liberal economics — was able to deliver a good life to so many only because of a strong welfare state premised on these two principles. The social democracies of the Scandinavian countries, which always top any global ranking for quality of life, still largely operate on this model.

It is precisely this two-pronged welfare paradigm — rights-based social provisions and redistribution of gross national income — that the Modi government is determined to dismantle.

Under so-called Modinomics, citizens shall have no right to work, no right to food, and no right to ask for what is their due by right (which might explain why the government hasn’t filled the post of the Central Information Commissioner for the past eight months).

Of course, insurance-based schemes driven by contributions from the citizenry are also a widely employed social protection tool. But these are more suited to the developed economies with less acute poverty. Its role there has been to offer protection against economic risks such as unemployment or sickness. Social insurance is not a poverty alleviation measure — which is what India needs at present.

So, what does a social protection scheme that is also an effective poverty alleviation measure look like? This is what the radical communist organisation, the OECD, says in a report released this week, “India has one of the largest public works programme in the world in terms of coverage, the NREGS, which plays an important role in reducing short-term poverty and smooth employment and income throughout the year for rural labourers.” And it adds, for good measure, “The programme, however, remains little used, mainly in poorer States, because of lack of funding”.

Unfortunately, for India’s rural labourers, Mr. Modi doesn’t think as highly of the MGNREGA. There is, however, a practical reason for this dislike of any rights-based welfare measures: by definition, and by law, a rights-based entitlement cannot be subjected to fiscal tyranny.

This is precisely why all of India’s rights-based legislations — the right to work, the right to food, the right to education, and the right to information represent a huge achievement for Indian democracy. They symbolize the triumph of politics over blind monetarism. And today, they form the legislative edifice on which the social and economic aspirations of a vast majority of Indians rest.

But the Modi dispensation — like the one that preceded it — is also under pressure to kowtow to the dogma of fiscal rectitude. Yet fiscal discipline is not the only agenda behind the savage spending cuts in its very first year. The aim is also to prepare the ground for fundamentally altering the default settings of social welfare in India — from a rights-based one that honours the dignity of the poor, to a paternalistic one that will push thousands more of the landless poor into a debt trap, depress rural wages, and make them ever more dependant on government charity, and at the brutal mercy of the unorganised labour market.

At the end of the day, all that the average Indian asks of the state are basic amenities for a life of dignity, not life insurance. It is doubtful, however, if this expectation will much impress our ‘tough love’ Prime Minister.

The Hindu, 26 May, 2015, http://www.thehindu.com/opinion/op-ed/modi-government-is-determined-to-dismantle-the-twopronged-welfare-paradigm/article7244983.ece


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