Chanakya's New Manifesto: To Resolve the Crisis Within India (30 page)

In spite of such underperforming welfare instrumentalities, the Manmohan Singh government was committed to bringing in a Food Subsidy Bill (FSB) whose aim is to provide subsidized foodgrains to at least 75 per cent of the rural population and 50 per cent of the urban population, or 67 per cent of the entire population of India. To achieve this stupendous goal, it proposed to use the same rotten PDS and the same genocidal FCI. Moreover, undaunted by the proven futility of precise targeting beneficiaries, it planned to further categorize beneficiaries into general and priority sectors! The cost to the exchequer of this monumental piece of misguided benevolence has been estimated, for the first three years of its operation, at anywhere between a whopping five to six lakh crore!
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Given our rising fiscal deficit (3.6 per cent in UPA-I, 5.8 per cent in UPA-II), even a layman can conclude how effectively expenditure of this magnitude could wreck the economy.

Another mega scheme deserves mention—the National Rural Employment Guarantee Act (NREGA). Introduced by the UPA-I government, it seeks to provide the rural poor guaranteed employment at a minimum wage for a hundred days in a year. At an initial cost of over
40,000 crore, it has been projected as the world’s largest public works project for the generation of jobs. The scheme was well-intentioned and it has provided employment to some. Moreover, given its populist content, it was an important factor in the UPA coming back to power in 2009. But a closer audit has revealed that, although over
1.66 lakh crore has been spent on the scheme since its launch, only a meagre 6.5 million households have actually completed 100 days of work. The government itself has accepted that 60 per cent of the scheme’s beneficiaries are not the poor; in fact, the non-poor—for whom the scheme is not intended—have benefitted by 17 per cent more workdays. The former governor of a state, who was enthused by the scheme to begin with, and was personally involved in its implementation, has admitted that the scheme fell far below expectations because of ‘the sluggish pace of work, shoddy implementation, corruption of the executing agencies, deficient institutional management, siphoning of funds, defalcation by intermediaries and middlemen, procedural wrangles, non-utilization and diversion of funds, ritualistic monitoring of programmes, indifference towards community mobilization, delayed payment of wages, fake or ghost jobs and ration cards and muster rolls. . . The targeted beneficiaries were in many cases not even aware of the programmes.’
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The scheme also gave rise to absurdities. Ditches were randomly dug, roads that led nowhere were constructed, drains through which no water or sewage would ever flow made their appearance—all just to meet expenditure quotas. No skills were imparted to the beneficiaries. To make matters worse, the easy pickings the scheme offered meant that people who had gainful employment actually gave up jobs to exploit the scheme. The government’s own department of industrial policy and promotion admitted in 2012 that NREGA’s assurance of work to unskilled workers has slowed the availability of skilled and semi-skilled labour to prospective employers. The scheme, the internal research study says, is likely to ‘dampen the initiatives of rural workers to acquire skills and consequently reduce their skill levels and their likelihood to move into skilled jobs’.
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It is also clear that there is no co-relation between the scheme and reduction of poverty on the ground. Maharashtra and Orissa had the best records for poverty reduction in the period from 2004 to 2009; incidentally both also had the worst record for implementation of the NREGA scheme. Only 2.7 per cent of households in Orissa allegedly benefitted from the scheme; in Maharashtra that statistic was even lower at 1.1 per cent. In spite of these glaring facts, Prime Minister Manmohan Singh announced that NREGA is the ‘only way’ to help the landless rural poor, the only ‘silver bullet’ that will be effective.

The efficacy of such schemes is only one part of the question; the other part is whether the government can afford to squander public resources in this manner. ‘In 2011-12, government revenue stood at
7.7 trillion while expenses were
13.2 trillion. This amounted to a shortfall of
5.5 trillion which again had to be funded by borrowings (
4.4 trillion). As a percentage of GDP, the fiscal deficit was 5.9 per cent but as a percentage of revenue it was 68 per cent. Effectively therefore, the government now borrows almost two-thirds of what it earns and one-third of what it spends.’
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The government’s revenues are falling but its non-plan expenditure on subsidies has risen by 30 per cent, its interest payments have grown by 13 per cent and its market borrowings have increased by 32 per cent in the last five years. India is staring at its largest fiscal deficit of close to 6 per cent of the GDP, fuelling a vicious cycle of inflation and trade deficit.

But to be fair, no government can or should ignore the interest of the people even if funds are in short supply. So we come back to the most important question—the efficacy of the schemes that exist or are being proposed for the poor. Let’s take a look at health services. The National Rural Health Mission (NRHM), grandiosely announced by the government in May 2005, is yet another example of a good plan being wrecked by corrupt and shoddy government execution. An independent appraisal
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revealed that the ‘novel scheme did not translate into action on the ground; there was a huge backlog of community and primary health centres, a huge shortage of specialists, a crippling lack of laboratory services and repeated cases of fudged statistics by government agencies. Worse, in many cases, panchayats which were to play a pivotal role in the implementation of the scheme were not even aware of its existence. And, lack of ownership was a ‘grave hazard’: neither the community nor the state government stepped forward to lay their claim. The former thought it was another measure imposed from the top, and the states felt that it was essentially a Centre-centric programme.’ The Annual Health Survey (2010-11), while noting some gains, broadly endorsed these findings.

Moreover, the level of corruption was scandalous. In UP, when the scam relating to the misappropriation of funds from the scheme began to be investigated at the end of 2011, two chief medical officers (CMOs) were murdered, a deputy CMO was found dead and a project manager committed suicide. The CAG in its report held the state, middlemen and contractors responsible for siphoning off as much as
5,700 crore of the
8,657 crore released between the years 2005-11. And this in just one state.