(27 January 2011, Special to ‘Financial Chronicle’)

by Praful Bidwai

The key to the United Progressive Alliance’s return to power in 2009 lay in its promise of “inclusive growth” centred on the aam aadmi. On top of the launching of the Mahatma Gandhi National Rural Employment Guarantee Act (NREGA), this gave the UPA immeasurably greater appeal and legitimacy than its rivals. But it also entailed obligations to implement other rights-based programmes, on food security, education, healthcare, etc.

The National Advisory Council, consisting of concerned social scientists, social activists and progressive civil servants, was re-established under Sonia Gandhi as the UPA’s conscience-keeper and social mentor, which would help fulfil these expectations while remaining autonomous of the government.

The Manmohan Singh government is now in the process of betraying the expectations. The Right to Education has been diluted by excluding children under six. It won’t be realised, as it should be, through guaranteed access to government-run, affordable neighbourhood schools. Healthcare won’t be revamped through a universal programme, but through health insurance schemes that expand the role of the private sector.

The process has reached its most advanced expression in respect of food security and statutory minimum wages under the NREGA. The NAC began with the idea of a universal public distribution system (PDS) for affordable food. This was based on the unassailable premise that the Indian state, which presides over widespread hunger and under-nutrition, is morally and socially obliged to provide food to all.

Only then can it banish the scourge of malnutrition prevalent among half of India’s children, besides hunger among at least one-quarter of the population. Food security is indispensable for enabling children to exercise their fundamental right to develop their elementary human potential.

Food security provision becomes especially urgent because the last two decades, the highest-growth period in India’s recent history, have not significantly decreased poverty and under-nutrition. “Normal” market- or investor-led growth won’t achieve this; only resolute action through a food security law can.

Experience establishes the vast superiority of a universal PDS over a targeted one. A targeted PDS encourages the exclusion of the poor who most need food support, and inclusion of the non-poor. A universal PDS works better through self-exclusion by the non-poor.

The NAC came under pressure to lower its ambition and recommend subsidised food entitlements for about 90 percent of the rural population and just half the urban population—despite destitution and growing malnutrition (owing to fast-food consumption) in our cities.

The pressure came from Manmohan Singh, transmitted through Sonia Gandhi. Last September, Singh made his unfortunate statement about the impossibility of giving free foodgrains to the poor—even when food rotted in government godowns amidst the Supreme Court’s exhortation to feed the poor. Whatever the moral soundness of Singh’s views, he was wrong to have interfered with the established arrangement based on an autonomous NAC.

The NAC further diluted its proposal, again under pressure, to create two categories, broadly along the below-poverty-line (BPL) and APL groups of the Tendulkar committee, with different grain entitlements. The difference between the total quantity of grain (including rice, wheat and millets) needed for this minimalist programme, and for universal food entitlement, is about 15-20 million tonnes (present procurement being 60-65 million ones, excluding millets).

However, even this dilution wasn’t acceptable to Singh, who set up a committee under arch-conservative Economic Advisory Council chairman C Rangarajan. Rangarajan duly overruled the NAC by speciously arguing that higher procurement is practically impossible. But India produces 280-290 million tonnes of foodgrains. It’s not difficult to procure, say, 90 million tonnes without disrupting the food economy and price-wage-cost balances.

In effect, Singh has thrown down the gauntlet to the NAC—all to save some Rs 30,000-40,000 crores. But this is only a fraction of the government’s revenues, which have more than tripled over six years to about Rs 8 lakh crores. It can easily afford to double the NREGA budget (Rs 40,000 crores) and also support universal food security. This additional expenditure is puny in relation to the tax write-offs, subsidies and other concessions given to investors and exporters in last year’s budget, amounting to Rs 5 lakh crores.

By showing such extraordinary callousness towards the poor, the UPA risks undermining the NAC, which has decided to stand firm against further diluting its recommendations. This would cause a serious loss of direction in a government which has few ideas about inclusive growth. Worse, it will further severely damage the UPA’s popular credibility.

Ultimately, what will count for the UPA is its credibility, not investor confidence. History will judge it harshly if it fails to do well by the poor. But the government seems to be forgetting this even on the minimum wage issue.

The minimum wage is not a dole or favour. It is the right of a worker to earn in ways which, as Nehru put it, “do not break his strength or spirit”. The minimum wage, says the Supreme Court, “sets the lowest limits below which wages cannot be allowed to sink in all humanity”. It is far lower than a “living wage”, which should “provide a standard family with food, shelter, clothing, medical care and education of children”, and also “frugal comfort to provide for old age and evil days”.

It takes the imagination of nasty usurers and sweatshop-owners to insist that NREGA workers should not get the minimum wage. “Inclusive growth”?!