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A Promise To Betray

Translate the manifestos into real numbers, and they read: mislead the people and get power

A Promise To Betray
outlookindia.com
-0001-11-30T00:00:00+0553

BJP manifesto: In the next 10 years, over 10 crore people will be provided jobs.
Congress manifesto: India must add 7,000-8,000 MW of generating capacity every year.
Janata Dal manifesto: Increase bank credit and investment in agriculture to 28 per cent of total investment.
United Front manifesto: Food in every home, every Indian healthy, every child in school.

WELL designed, deeply deliberated, achievable policies, or unadulterated rhetoric? Ask Atal Behari Vajpayee, Sonia Gandhi, or Inder Kumar Gujral, as they pose for pictures, and their faith in implementing these unimplementable programmes is as sound as their quest for power—get it at any cost.

Ask the ailing Chokhelal in Sagar, Madhya Pradesh, a bidi roller who earns Rs 15 a day, and the answer would, depending upon his hunger, range between passionate indifference and rustic hatred for the drafters of these manifestos. He, by sitting on his haunches for 12 hours a day, rolling 1,000 bidis, votes for the next square—or round or triangular or whatever—meal.

Ask Abusaleh Shariff, principal economist with the National Council of Applied Economic Research (NCAER), and the answer is similar: "It fills me with disgust." The anger is based on hard numbers. "Almost 40 per cent of all Indians sleep hungry, and it's not because of lack of resources. It's because of corruption."

Ask Sumiter Broca, an NCAER consultant in the agriculture and rural development division, and the answer, piping hot with cold analysis, is: "That's silly". Talking about the concessions granted to farmers, he asks: "Why? In any case, farmers are getting credit that's lower by three percentage points."

 In a follow-up of the claims being made by political parties, Outlook found a clear mandate manifesting itself through party manifestos: mislead the people, raise false hopes, capture power. We examined five major claims the parties are making, and followed them to their financial and logical closures. None passed the test.

AGRICULTURE: The UF says farmers will be given a rebate of 5 per cent on interest on loans provided by financial institutions. This is to get the farmers to repay past loans promptly. The government will bear the cost of the interest subsidy. The Janata Dal will give electricity to farmers at at 50 paise per unit, and agriculture will get 28 per cent of India's total investment and credit. Why 28 per cent? Because agriculture contributes 28 per cent to the GNP.

 "Wow," is what the rich farmer is thinking. As it is agriculture is heavily subsidised, and he already gets these loans at a lower interest rate. Says Broca: "This almost amounts to extortion." For decades, he says, farmers have been led to expect that loans to them will eventually be written off. Five per cent off on interest will just mean that much of a bigger drain on the exchequer.

More important, from the supply side, how can banks be made responsible for maintaining a low NPA (non-performing assets)—unrecovered loans—when loan users know that they need not repay? But which political party has the courage to say that the banks need not be profitable, that banks will continue to be infused with free capital, that they are not responsible for generating national wealth?

Of course, in case of national calamities—drought, flood, cyclones—and as a one-off step, such a loan waiver makes sense. But to implement it as a policy, across the board, is a sure-shot route to titanic disaster. Loans, Mr Gujral, are significantly different from doles.

As far as making the financial institutions lend 28 per cent of their investments and credit to agriculture goes, Mr Sharad Yadav would do well to remember that for more than a decade the state-owned financial institutions and banks have had a target of 18 per cent for agriculture. So far, they have been able to give only 12 per cent. Putting another unrealistic target of 28 per cent doesn't make any sense. If you impose targets, you compel lenders to give money in projects where they are not sure of a return.

Broca cites a Stanford University study on UP farmers. According to it, one-third of the farmers didn't need credit; they could generate their own funds. But if they get cheap loans, they're not going to refuse (would you?). If anything, they could recycle the same money, at higher interest rate, to other non-agricultural borrowers. "Farmers," he concludes, "are not stupid."

POWER : The Congress manifesto states that 7,000 to 8,000 MW of generating capacity is to be added every year in the Ninth Plan. The BJP promises all eight fast-track power projects will start construction in 1998.

Translate that into numbers and the Congress is talking about investing between Rs 28,000 crore and Rs 32,000 crore into power every year. Over five years, that's at least Rs 140,000 crore. Where's the cash?

Probably in private hands. But then, private power projects have been decaying in bureaucratic bins for seven years now—ever since the sector opened up in 1991. Only one new power plant has come from an independent power producer (IPP). Later, on the logic that till large projects come up, smaller ones would ease the looming Indian black-out, small-gestation plants were allowed. Not one has been commissioned.

A power project finally sees the light of day only after financial closure. Financial closure comes only when the lenders to the project—largely international bodies—can see a return on investment. With the state electricity boards—the sole buyers of power today—broke, and the Centre not giving any more counter-guarantees, it is unlikely that any businessman worth his dollar will put his money into the Indian power sector.

Those who do have their finances in place face other problems. Fuel linkage, for instance. Every plant needs fuel—naphtha, furnace oil, coal and the like—to run. Being a fuel deficient nation, none of these are assured to IPPs. No fuel, no power, so no plant.

Meanwhile, one government after another is busy making empty promises to the people. Farmers in Punjab get free electricity. Forget the drain on the government, it's not even good for the farmers. Free electricity, points out Broca, is fraught with problems: farmers will not get steady power. He cites a study, which shows that farmers are willing to pay extra for regular power. Which is what they need. What is the point in giving cheap power, where none exists? Think about that Mrs Gandhi, when you light up 10, Janpath.

UNEMPLOYMENT : The BJP will provide full employment, and 10 crore jobs over the next 10 years. But, asks Shariff: "Please tell me where are the unemployed?" The government's latest National Sample Survey finds only 4 per cent of all Indians unemployed. "The poor can't afford to be unemployed. They have to eat." The crucial question: what is employment? It's not getting a group of people to dig wells, as the much-hyped Jawahar Rojgar Yojna has done. Jobs mean stability and identity. An employed person has to have durable income, and should be able to define what he does.

The next question: where's the money? One 'job' means that a person is employed for at least 250 days a year. One crore jobs mean 250 crore mandays. At an average minimum wage of Rs 31, one crore people, working for 250 days, adds up to an annual additional expense of Rs 7,750 crore. As the target is 10 crore jobs over 10 years, the wage bill for 2008—at today's prices—will be Rs 77,500 crore. And cumulatively, over the period, the number would stand at Rs 426,250 crore. "Nobody has that kind of money," says Shariff. Another statistic: the Social Security Association of India—an NGO watchdog on formal and informal wages—is pushing for a minimum wage of Rs 120.

Then again, there is issue of quality of jobs. "Daily wages are not needed," says Shariff. "With them, you only mislead the poor." What's really needed is stability of job, and creation of skills—at a mass level.

And don't forget the Damo-cles' sword: the Fifth Pay Commission report. That's Rs 46,000 crore to be shelled out at the Centre. Add another Rs 69,000 crore from the states, and the total annual figure gallops to an astounding Rs 115,000 crore. Which means that out of every Rs 100 of GDP, Rs 10 will go towards salaries. And the social sector—which should be getting Rs 20—gets only Rs 8.

FOOD : The BJP's commitment:food for all; the UF will make sure there is foodgrain in every home.

What's the big deal? Basically, there are three sectors of people in India: the farmers, who are largely self-sufficient in food; the urban people, who don't cultivate, but can buy food; and the poor—rural and urban. According to Shariff, while almost 40 per cent of India sleeps hungry, there has been no attempt by the government to even define the poor. Says he: "They don't even know how to identify. They don't know how to think." In a recent paper, he has shown that 80 per cent of Indians do not use 2,400 kilocalories of food—the internationally accepted norm for survival. That they are alive is a miracle. In fact, the lowest 5 per cent of the economic strata, who eke out a life on less than Rs 4 a day, get a little more than half their true energy requirements. The next 5 per cent, spending between Rs 4 and Rs 4.66 daily, are undernourished by 33 per cent. Those who spend between Rs 4.66 and Rs 5.50 a day, manage to eat only three-fourths of their requirements.

It is only those who spend Rs 10 to Rs 11.83, who manage to consume 2,400 kilocalories. At the other end of the spectrum, the richest 5 per cent, those spending more than Rs 18.66 a day, are overnourished by 44 per cent. Only the top 10 to 15 per cent of India has access to the minimum standards of nutrition.

To try and make attempts at providing food, says Shariff, "is as foolish or as childish as providing 10 crore jobs". How does the government provide food? Through the public distribution system (PDS). But the PDS network comprises just 8 per cent of the total food market in the country. In some states, it doesn't even exist. In parts of UP and Bihar, less than 5 per cent of rural areas had a PDS during 1990-94. Think about that, Mr Vajpayee, when you eat your next meal.

EDUCATION: The Janata Dal manifesto assures universal literacy by 2010; the United Front promises every Indian literacy and every child the opportunity to go to school.

The reality: 60 million children are not enrolled in schools. The mathematics: there should be 30 students to a class with one teacher.The average annual salary of a teacher is Rs 50,000. If these 60 million children have to be enrolled, they would need the services of 20 lakh teachers. The total annual cost of these teachers would add up to Rs 10,000 crore. Or Rs 1,667 per student.

And that is only the direct teaching cost. According to Shariff, another 40 per cent has to be factored into the cost in the accompanying bureaucracy and maintaining infrastructure. So the figure swells to Rs 14,000 crore, or Rs 2,333 per student. All this only to enrol the children. And only at the current population level.

After enrollment comes the dropout rate. Children leave schools for farms after two to three years. Two reasons: more hands are needed in the farms or to supplement the family income; and two, the insecurity of the parents (an educated young man is less likely to stay on the farm and look after the parents in their old age). To really improve the lot of children, argues Shariff, policy makers have to address the old.

Besides, the money for the literacy mission is yet lying unused. The 'villains', according to him, are the states, who redirect the money for education into sectors like road construction, where corruption is easy. An educated India is more important than ever today, where an educated work-force can propel the nation into economic prosperity. Tomorrow, India may not have another chance.

Says Shariff: "All these manifestos are like a cheap Hindi film. I just can't sit through them, but am forced to." As is the 60-crore mass of voters that has been and is being systematically misled by the hollow tom-toms of political parties.

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