Wednesday, July 2, 2014

Godfathers, Fathers and Mothers: A Viewpoint

    In my view, Nobel laureate and World renowned Philosopher-economist, Prof Amartya Sen was the intellectual godfather (in the sense of “godfather to a parents children”) of the UPAs statist welfare-socialism. PM Manmohan Singh and his friends and Associates had profound respect for Prof Sen’s intellectual capabilities. One could even go to the extent of saying that the former were intellectual Chela’s of the latter. Therefore, Prof. Sen’s admonitions relating to Social Welfare, Health, Education & Poverty, were treated virtually as “Gospel” or as “Ten Commandments” by the good doctor, his friends and associates.  Based on global comparative WDI data on Human Development Indicators and government expenditures, the commandments were simple and unambiguous: “Raise expenditures” on Health, Education, Child Development, Women’s development and other welfare programs.

    My observation & analysis suggests the following process thereafter: These recommendations were gladly and unquestioningly accepted by the Left wing of the Congress party whose inspiration was the Congress President, the Mother who gave birth to the UPA's Statist Welfare-Socialism (populism?).  Once accepted by the PM these issues therefore moved immediately to the Congress President led National Advisory Council (NAC) (as all politically remunerative welfare activities had to be attributed to 'the leader'). There, such programs, projects & policies were invariably sought to be loaded with numerous related and unrelated socialist objectives, statist-interventionist approaches and expenditure increases. Not infrequently the original intention of the PM, became a small part of an elaborate scheme of social engineering and business bashing.  These NAC modified (dare I say mangled) schemes, programs and laws returned to the government for execution (which then had to work out how much it would cost, where the money would come from and how they could actually be executed). The Mrs. Sonia Gandhi led NAC can therefore rightly be called the Father/Mother of this approach and can claim full credit for the programs, projects, laws, rules and regulations ordained by it.
       Experience of administering, monitoring and analyzing the numerous existing schemes was ignored or given short shrift. Experience and analysis suggested that without an improvement in the governance of multiplicity of such programs, more money would not have the effect that welfare economists sitting in the Developed countries expected.  One was convinced that without improvement in administration and reduction in absenteeism and corruption, there would be little impact of increased expenditure on health outcomes, educational achievements, pace of poverty reduction, malnutrition etc.[i]  It was suggested that governance improvement should be given equal, if not greater weight initially. The response to such doubts and suggestions was that governance issues could perhaps be addressed at a later stage.    Underlying this hint of future action on governance issues was a conviction that these socialist, welfare schemes, programs and laws would translate into a big electoral victory for the ruling party led, in the next election, by Shri Rahul Gandhi. 

    My earlier work on economic growth and the connection between economy and votes suggested otherwise:[ii] Unless growth was maintained through further policy reforms, a slowing growth rate would nullify any marginal political gains from inefficient, corruption ridden and unproductive welfare expenditures. Thus ineffective programs and slower growth would lose votes, not win them.
Only the potential extent of the loss was unclear till the BJP chose Shri Modi as its PM candidate for the 2014 general election. Sadly, the lessons have still not been learned by many politicians and their advisors.[iii]

[i]  A Virmani, “Planning for Results: Public Accountability  Information System,” Working Paper No. 1/2007-PC, Planning Commission, March 2007.
Arvind Virmani, “The Sudoku of Growth, Poverty and Malnutrition: Lessons For Lagging States,” Working Paper No. 2/2007-PC, Planning Commission, July  2007. .
[ii] Series of papers on growth at, & Arvind Virmani, “ Economic Growth, Governance And Voting Behaviour: An Application to Indian Elections,” Working Paper No. 138, ICRIER, July 2004. .

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