Freebie: A Flawed National Obsession

Atul K Thakur, Senior Associate Editor, INCLUSION

Until a decade ago, the idea of 'inclusive growth' was not making high-octane buzz in the Capital.

Welfare measures are not freebie. Hence, the policy culture must keep an effective balance between passion and compassion, to make the impact of underlying much more robust than in the sloganeering confine of ‘greater common goods’. This is already in collective reckoning - India didn’t or doesn’t do well on human development. Any contrarian view leads to plethora of checks on those questioning arguments, which typically rely on the real facts - nothing else.

Until a decade ago, the idea of ‘inclusive growth’ or chant of ‘inclusion’ was not making high-octane buzz in the Capital. Then came the UPA-I, supported by the left front from outside, and henceforth policymaking shown an engaged temptations to involve with the issues, earlier not packaged and produced in such overt progressive fold.

Well-intended, the schemes like Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme, Mid Day Meal Scheme, food security entitlements would have done immense help - in case these were targeted the actual beneficiaries and through the planks of execution strategies, much needed to keep all go smooth. Through inability to handle the work-plan right after the policy level, these finest social welfare programmes have created lesser impact and ironically caused to increase the leakages more inexorably than even before.

Somewhere, it was left out that the welfare measures have to be delivered more efficiently and leakages have to be stopped.

In sadder revelations, the huge outlay, financing these schemes benefited fewer actual beneficiaries and more the officials and other stakeholders in charge. In food entitlement scheme, there are cases, where in many villages - the real numbers of Below Poverty Line (BPL) families trail behind the disguised poor who otherwise drove car to collect their ‘welfare ration’ from the Fair Price Shop or PDS Shop.

Not that the ‘freebie spread’ is limited with ideological political commitments - its proven, the traction comes con?ceptually less-structured and lacks the impetus to attain anything targeted. The Planning Commission is gone now, but its replacement, NITI Aayog will run through the same edifice where once planners sat their wings and kept the Hindu Growth Rate insisting throughout the allegedly wasted decades.

It appears simplistic to issue all wrath for a cadaver that once liven the Constitutional dreams of the nation eloquently - thus if new body will simply go in opposite direction, it will do great disservice to the causes of its establishment. Essentially, the tomorrow comes after a spent day - but the same predictability cannot be asserted and established while dwelling with the macro policy issues of a wonderland, India. So, NITI Aayog shall play a key advisory role in creating policy framework, and making welfare programmes working on ground.

Putting it precisely, going away with Nehruvian Model - all the ills of ‘Entitlement Raj’ wouldn’t be solved - as in the post-reforms eras, the recklessness of social programmes have rejuvenated at faster pace. Its not blurred, where to look the semblance of order is not radically shifted in the succeeding years since Victor Hugo was courted (for his oft repeated homily: ‘Nothing is more powerful than an idea whose time has come’) in Indian Parliament by the then the Finance Minister Manmohan Singh while to open the economy to usher it into a new trajectory.

The NPAs are the biggest freebies, which were never looked as due. These are much more lethal than the loopholes ridden grand government programmes, and their leakages. In an interview given to Business Standard on 12 December 2014, MIT Economist Abhijit Banerjee has remarkably pointed out that “NPA reporting in India is not watertight’. He touched the core, indeed. In spite of shady NPA reporting by the Indian banks, as per the RBI data - cases of loans of over Rs 2 lakh crore were pending at 33 tribunals till the FY 2014 end, up from Rs 1.43 lakh crore in FY 2013.

The grimness becomes more evident with the RBI Governor Raghuram Rajan’s admittance, ‘The amount recovered from cases decided in 2013-14 was Rs 30,590 crore, while the value of loans to be recovered was Rs 2.36 lakh crore. Thus, only 13 per cent of the outstanding NPAs in the tribunals were recovered in FY14’.

According to Rajan, even though the law says that cases before the Debt Recovery Tribunal (DRT) should be disposed off within 6 months, only about a fourth of the cases pending at the start of the year are disposed off during the year suggesting a four year wait even if the tribunals focus only on old cases. Quite explicitly, the large defaulters in the country rob the taxpayers and make funding of projects costlier.

Although known as market friendly in avatar of an economist, Raghuram Rajan recently shown his apprehension on this devastating trend pursued by the large corporates, ‘ The amount written off by banks as bad debts in the last five years would have been enough to fund the education of 15 lakh of the poorest children in the top private universities of the country, all expenses paid.’ He couldn’t read the situation more right on this.

It is not alone in the hand of the regulators to come hard on these unethical practices - the governments have to be kingpins finally, to keep the banks’ unrealistic obsession with ‘profit’ in right balance. This will lead to take comprehensive banking reforms, which were spelt out during the Gyan Sangam. The populism and corporate greed, which manifests them in bigger shamble of resources - essentially are the flagbearers of the ‘freebie culture’.

With keeping political populism asides, and bringing at place, some rational economic wisdom - the nation can have more productive hands than the forced or leveraged dependents. The aim should be to fix the interests of the economy and people at the same side - that would be the true inclusive stride, with potential to endure ahead.

(Atul K Thakur can be reached at atul@skoch.in)

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