T N Ninan: The old mindset

Pranab Mukherjee, in his acceptance speech after being sworn in as president, mouthed the usual platitudes. Some of the nice-sounding claims were more myth than fact — like the claim that India is non-violent, indeed that “violence is external to our nature”; if in doubt, ask the Dalits. But one can let that pass, as uplifting sentiments were appropriate to the occasion. More importantly, what about his references to economic issues? Mr Mukherjee set the stage by saying that economic equity was the most important form of equality, and elaborated by adding: “For our development to be real, the poorest of our land must feel that they are part of the narrative of rising India.” In the same vein, he added later that the national mission was to eliminate the curse of poverty, and that “there is no humiliation more abusive than hunger”. This emphasis on the last man was entirely unexceptionable, indeed necessary, since some 300 million citizens of the republic still live below a minimalistic poverty line, and a good number out of them do not get two square meals a day.

The door was opened to debate and disagreement, however, as soon as Mr Mukherjee declared that “trickle-down theories do not address the legitimate aspirations of the poor,” because he thereby stepped into questions of method, and choice of technique. First, no one is seriously advocating trickle-down, because that is a no-brainer: if 300 million people are still below the poverty line, even after the per-capita income has trebled since serious economic reforms were launched 21 years ago, then it is obvious that enough is not trickling down. Indeed, as someone who was finance minister till the other day should have known, the debate these last few years has been, not about trickle-down but about how best to help the poor — through programmes executed and managed by the government (parallel distribution of grain, make-work programmes, etc) or through cash transfers (which Mr Mukherjee has himself endorsed in his Budget speeches). Both options address the need to pay special attention to the basic needs of the poor; one in kind, the other in cash. No one is advocating “trickle-down”.

What Mr Mukherjee did not say is also revealing. Poverty has declined fastest in the years of most rapid growth, so why did he not advocate policies that accelerate growth? Indeed, rapid growth provides the fiscal cushion that helps pay for programmes meant for the poor. The silence on the vital importance of growth speaks more of mindset than absentmindedness. The decision-makers in the Indian political class are still stuck in the mental framework of the 1970s, which is when they were blooded in politics. In a depressing milieu when per-capita income grew less in five years than it does now in a single year, our politicians became comfortable with left-of-centre stances. Unfortunately, they have chosen to stay in that comfort zone by mouthing old shibboleths, while India and the world have changed. Nor did Mr Mukherjee draw the obvious and vital linkage between poverty and jobs. Half the workers in the country even now are engaged in agriculture, but they produce barely one-sixth of the national income; so an essential requirement for removing rural poverty is to create non-agricultural jobs, which should to a large degree be in manufacturing. No one expects the president to go into detail on such issues, but it would have been easy to say that poverty reduction depends on job creation, which has to be in manufacturing, which must be encouraged. So why did he not say it, instead of taking aim at “trickle-down”? The answer will explain why India’s politics has such little space for the advocacy of economic reform.