21th February 2020 : The Hindu Editorials Mains Notes : Mains Sure Shot
Note – There was only one important article on 21st February. It was an interview on freebies and welfare policies. These are some very important highlights.
- Providing healthcare and education are basically the functions of the government. That’s part of the reason why governments exist in the first place. It is the same with water and electricity or public services. So, calling them ‘doles’ or ‘freebies’ isn’t exactly the right terminology.
- If the state spending on welfare is not legitimate, then what is a legitimate thing for it to spend on? A part of the function of the government is that for things that we cannot individually organise, we entrust elected representatives to do for us. Public goods/services — sewage, drinking water, water, electricity, public transport — are one set of things; education and health are what we call ‘merit goods’. And they are the kinds of things where the market mechanism is not a satisfactory mechanism to deliver these things. And this is not just an Indian thing, world over, this is a well-understood principle.
- But it depends primarily on the fiscal space (i.e. the money/ revenue it earns and the money it has to spend on welfare) the government has. And within this fiscal space how the government design public benefits is entirely up to that party or government. So the distinction between welfare and non-welfare is kind of blurred. What is important is basically the public finance or the fiscal space question.
- There are some states like Jharkhand for example who have very limited fiscal space compared to Delhi or Gujarat and so they have to design their spendings accordingly.
- What’s important is stability of revenue in how the government designs their public benefits. The Delhi government has that stability of revenue, whether it’s the present government or the previous government, there is the comfort of having stability in revenue that other States do not have, so that’s a position of strength. Second, providing these things for free is giving income in hand, a kind of disposable income to the people.
- Whether it’s giving them free transport rides or free electricity, it is giving them disposable income to spend on something else which becomes important at a time of economic slowdown.
- Good welfare spending, whether it’s on health, education or public transport, at the Central level is very low.
- Various state governments also have welfare schemes like Amma canteens in Tamil Nadu that provide cheap food to the poor. But there are also policies like giving free mixer grinders/ cycles/ pressure cookers etc. In this context a distinction needs to be drawn.
- Each of these has to be evaluated on a case-by-case basis. The first thing to start with, of is the state’s ability to finance these things i.e. the fiscal space of that particular state. And the focus should be both on the expenditure side as well as its ability to generate revenues.
- As far as free grinders are concerned, it’s a huge labour-saving device, especially in a State like Tamil Nadu where rice is always being ground to make idli or dosai. Ultimately, one would have to evaluate them on a case-by-case basis depending not only on the benefits in some cases but also on the cost side.
- Good welfare and bad welfare is context-specific. If there is a girl going to school, then mobility is very precious to her. So, if a politician is providing cycles to girls, that is very valuable. And in the case of grinders, it is giving people more time to pursue other things and that can ultimately have a positive effect on income poverty as well. Similarly, with rural employment guarantee scheme, when all else fails, the government acting as ‘the employer of last resort’ is very precious.
- So, as long as there is no implicit crony contractual relationship (i.e. a biased money making relationship) between the government in power and the specific interest groups they are focusing on, it’s okay. All governments focus on winning over a group called swing voters and they look at how to make things attractive to those voters, but as long as there is no implicit crony contractual relationship or something like that, it’s okay. That is it should be for all and not a specific group. When the policies are for a specific group for money making or other things like gaining votes in exchange are in mind and not all the people who need it, then it becomes bad welfare or sham welfare.
- One argument against welfare policies is that it takes away money that could have been spent on infrastructure and roads. But infrastructure is one thing, but as an economy develops, a group of people are kept vulnerable. So, to remove their un-freedoms, and for them to participate in the economy and to access schools and colleges, we need to have public policies which tackle these logical entry barriers. So, ‘leave nobody behind’ should be the crux of a public policy or a welfare policy, rather than just thinking that roads and the public infrastructure.
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