Economics & Politics / Political

How a decade of Entitlement based policies destroyed India’s Growth Story

How a decade of Entitlement based policies destroyed India‘s Growth story

We have completely lost a decade that had the potential to turn around the fortune of 1.2 billion people of India. The first decade of 21st century seemed so full of opportunity when it started, the period from 2000 to 2004 was so good that NDA Government actually believed  that they will cruise towards victory in 2004 general election with the slogan of India Shining. 50 years of misrule were forgotten in the 5 years of good governance. A large section of urban India/ middle-class population/ youth believed in it, they actually started taking it for granted, so much so that they didn’t even bother to vote decisively in that election.  NDA lost, maybe because of its overconfidence that initial right steps towards economic growth of India are enough to attract majority of population.

But it was not just NDA which lost 2004 election, a lot got buried in the UPA’s hubris once they came to power, India’s economic growth story is also one of the losers of that election.  As the Government changed, things started sliding so badly. Like a person getting stuck in a quagmire, the process  was smooth yet terrifying. India and its economy is getting into deeper and deeper trouble with every passing day.

If you look at the way the government is functioning lately, its seems democracy has given way to monarchy in India, there is a Queen who decides what is to be done, and her minions follow it up, a prince is being pampered, as if its his birth right to be the King. No one dare say anything which may displease the Queen or the Prince. Institutions are being destroyed, constitutional positions trivialized, Security (internal, external, financial) compromised. People are treated as mere subjects to whom they are doing a favor by giving them, Right to InformationRight to Employment (NREGA), Right to Education, Food Security, etc. All these things are not perks that the government needs to give to  selected number of people. They are available to all the citizens of India under the constitution. What we need the government for  is to ensure governance as per the constitution of India. Unable to fulfill their primary duty, the government is engaging in gimmickry  to fool the voters one more time.

Analysis e.g. (http://www.business-standard.com/article/opinion/the-economic-consequences-of-professor-amartya-sen-113070901024_1.html) and (http://www.niticentral.com/2013/07/10/upas-nrega-is-all-politics-no-economic-growth-101792.html) appearing on a daily basis  explaining what is going wrong under the watch of the government, but it just seems to be getting lost and not reaching the people living in their high Palaces, maybe they are so high on power that they are totally oblivious to the realities of India and its mango (common) people.

The following is a summary of Arvind Subramanian‘s article linked above, explained by R Jagannathan in a very precisely manner here (http://www.firstpost.com/economy/food-bill-amartya-sens-charlatan-economics-debunked-again-944451.html).

Why this ‘Right’ based approach of UPA Government is seriously flawed?

  • It causes economic instability and vulnerability.
    • The domestic slowdown and the antics of the rupee are clear evidence of this. No further proof is required of the damage caused by UPA-nomics.
  • The rights-based approach “legitimises atrocious policies”.
    • Leave alone food, Subramanian explains  how energy subsidies have ballooned over the last 10 years of UPA rule, distorting the choices people make in multiple spheres – from bad crop patterns to wrong fertiliser use to under-investment in power.
  • The rights-based approach also “undervalues opportunity costs”.
    • Subramanian gives the example of the right to education (RTE). An enormously expensive exercise with doubtful payoffs.
    • It would have been far cheaper and more effective to focus on ensuring teachers turned up for work – thus improving student learning.
    • The RTE is an extravagance the country could have done without, when cheaper and more focused solutions were possible.
    • The UPA never weighed the costs of what could have been done with the money spent – hence incurring a huge opportunity cost.
  • The rights-based approach overburdens the state’s capabilities.
    • The state’s first duty is to protect its people, deliver law and order, and ensure basic rights, and public facilities.
    • When the focus shifts to private welfare benefits such as providing food and homesteads, the state fails to deliver on public goods
  • Ultimately, overburdening the state leads to its weakness.
    • Subramanian says that when the state does not provide the basics of protection, health and education services, and focuses instead on redistribution, it loses the allegiance of the middle class.
    • They will evade taxes, educate their children abroad, live in gated colonies, and generally turn away from the state.

One thought on “How a decade of Entitlement based policies destroyed India’s Growth Story

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s