Modi’s Welfare Vs Everybody Else’s Freebies

Released earlier this year, the annual Economic Survey, citing the stimulus announcements during the pandemic months, stressed the need for an agile approach in policymaking.

Against the idea of dropping helicopter money into the bank accounts of the poor, as suggested by renowned politicians masquerading as economists, the government settled for an agile approach or improvising and improving as the pandemic intensified.

For instance, in March 2020, when the first national lockdown was announced, the government’s priority was ensuring food security for the poor. Thus, 88 per cent of the Rs 1,928,000 crore released as a stimulus package took care of livelihood and food.

During May-June, of the Rs 1,185,561 crore released, 30 per cent went to agriculture, and 37 per cent went to support for MSMEs and other firms, given the economic disruption due to the lockdown. The overall share of food and livelihood came down to 12 per cent.

In October 2020, as the economy began to recover, the focus was on boosting demand. Thus, of the Rs 73,000 crore announced as the next stimulus package, 49 per cent was dedicated to accelerating consumption while 51 per cent was directed towards boosting investments.

In the next stimulus package announced in November 2020, worth Rs 265,080 crore, almost two-thirds were directed towards investments, given the v-shaped recovery the government was targeting.

Between June and December 2021, after the gruesome second wave and just before the less lethal Omicron wave hit India, Rs 697,338 crore were pumped into the economy by the government of India.

Forty per cent of it was directed towards ensuring liquidity, for many businesses wanted to get back on their feet, recalibrate their operations, and most importantly, go back to creating employment. 17 per cent was also reserved for boosting exports, given the critical lessons learned around supply chain vulnerabilities during the pandemic.

Why should governments improvise and improve on the go when they can simply transfer funds to the bank accounts of the people, as suggested by Congress’ Rahul Gandhi ahead of the 2019 elections when he declared that under the NYAY programme, India’s 20 per cent population or around 250 million people, at the bottom of the economic pyramid, will get Rs 72,000 annually.

Why must the governments invest in a business-friendly atmosphere when they can simply promise an unemployment allowance as AAP’s Arvind Kejriwal does during every election?

The primary argument backing freebies is that India is a country of social and economic inequalities. Thus, free electricity and water are equivalent to the fundamental right of the poor, as per Kejriwal.

Inequality is indeed the crude reality of the country, where earning merely Rs 25,000 per month puts one in the top 10 per cent and where 800 million people have been supplied with foodgrains for more than two years now, apart from their routine monthly quota.

However, divorcing freebies from welfare becomes imperative. The debate around freebies versus welfare can be narrowed down to one question. Does the policy (freebie or welfare) enable the beneficiaries or merely write them juicy cheques between election cycles?

Put simply, is the policy teaching the 800 million-odd people in villages to catch a fish, or is it supplying them with a fish each day from a financial pond that is both finite and vulnerable?

As per the promoters of freebies, from Arvind Kejriwal to Rahul Gandhi to Nitish Kumar to Mamata Banerjee, their policies liberate the poor. They could not be more wrong.

How can Kejriwal justify free electricity and water bills for someone living in the posh localities of South Delhi or anyone earning enough to pay their bills? How can Rahul Gandhi justify, on fiscal grounds, the idea of giving 250 million people Rs 72,000 annually while cursing the wealth generators?

How can Nitish Kumar explain the concept of a progressive Bihar while backing the freebie model that enabled corruption and economic stagnation in the state? How can Mamata Banerjee promise endless freebies with her state reeling under debt?

This is where Prime Minister Narendra Modi’s ‘BMW Socialism’ or ‘Bare Minimum and Workable’ state support comes into play.

Freebies, unlike Modi’s welfare schemes, lack strategic targeting of beneficiaries, are not without monetary leakages, have little or almost no room for improvisation and improvement, are not financially viable or sustainable beyond a point, do absolutely nothing to enable the poor to get out of the poverty trap, and are meant to increase dependency rather than impart atmanirbharta.

It is bare minimum, enough to get them going, and it is workable, and unlike the India of the past, doesn't have a five-paise reaching the benefiaciary against the intended rupee that left the centre.

Take the example of Jal Jeevan Mission. More than 6.75 crore households have been provided with tap water connections. Assuming each family to have five members, that is almost 35 crore or one-fourth of the population of the country, aided with a permanent solution.

While the Jal Jeevan Mission ensures access to tap water which has a direct bearing on the micro economy, poverty alleviation, quality of life, and so forth, the policy of free water only adds to the burden of the average tax-payer and gives the rich a service they do not need or deserve.

Post-2014, one of Modi’s biggest reforms was to give the poor bank accounts; thus, the Jan Dhan Yojana programme happened. Many questioned the need for bank accounts, given that the intended beneficiaries were without money to deposit in these accounts.

Many would have instead preferred the idea of dropping helicopter money from time to time, especially around the election cycles. Jan Dhan, coupled with Aadhar and mobile, eventually became the foundation for the economy's digitisation.

The buck did not stop there, for once these beneficiaries were inculcated into the formal financial ecosystem, they were looking for credit, and thus programmes like MUDRA happened. For first-time borrowers, account aggregators are helpful, given they ease the access to credit for millions of firms and individuals.

Once e-commerce had grown big in India, the government embarked on the idea of an Open Network for Digital Commerce to help the digital economy flourish without dependency on aggregators or platforms that take away hefty commissions.

Can Delhi’s Mohalla Clinics, built under the AAP government, which were touted as the next big thing in governance, be compared to Ayushman Bharat, that not only enables medicare and insurance for 500 million people but, in the long run, moves healthcare policymaking from reacting to preventive?

The failure of the mohalla clinics was evident during the first and the second wave, and that of Kejriwal when he questioned the need for ‘outsiders’ to come and get treated in the national capital. Substandard local clinics made for good optics but did nothing for the beneficiaries’ healthcare.

Nowhere is the distinction between freebies and welfare more obvious than in Punjab, a state with a debt of more than Rs 270,000 crore. What the Congress and AAP want for the state is endless freebies in the form of free electricity and water, and an inflated and continued MSP for wheat and paddy.

The Modi government, via the farm laws, wanted policy support and an economic cushion for the farmers wanting to move away from the MSP framework and deal with the private sector while cultivating fruits, vegetables, and other ecologically viable crops.

The freebie promoters had the last laugh. Today, the state’s entire agricultural economy depends on two crops. However, what these promoters do not realise is that even if the government supplies them with twice the MSP annually, it does nothing to reverse the falling groundwater levels, the depleting soil quality, or the state's rising debt.

The very freebie AAP and Congress want for the Punjab farmers would be futile for them five years from now. That is the consequence of zero improvisation and improvement on the go. Zero agility.

As the Agnipath protests proved, the freebie model is also a mindset problem. Nitish Kumar, Bihar’s Chief Minister with a new alliance partner, may feel heroic quitting the NDA over Agnipath, but it does nothing to arrest the dependency of the state’s young minds on government jobs.

Protesters were demanding a monthly pension amount credited to their accounts, on average, for 40-50 years, starting at the age of 21-25, for a service they were a part of for four years. Another way of asking for freebies.

A country where two-thirds of the population is in villages warrants state support, but a separation must be made between welfare and freebies.

The government’s moral duty is to liberate the poor from the tyranny of poverty, to aid them with public infrastructure, both digital and otherwise, that enables them to create or look for opportunities without worrying about roti, kapda, makaan, and this is what the Modi regime has done with toilets, houses, bank accounts, healthcare, tap water connections, gas subsidies, and many other policies. Enable them with bare minimum to equip them to achieve the maximum.

To build a $5 trillion economy, a lesson in catching the fish is necessary, and that is where Modi’s welfare schemes are light years ahead in ideas and implementation of his political contemporaries elsewhere.

Modi is right. Agile, he’s playing the long game. Everybody else is merely fooling around between election cycles. There lies the difference.

Also Read: Making Sense Of The Subsidy-Freebie Debate