Postponing the Bitter Pill and Perpetuating Poverty

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A resource which is limited in India – that is land. At least when compared to the per capita burden on it. Broadly speaking, the performance of an economy depends on how judiciously are the limited resources utilized for maximum wealth creation.

Yes, farming is the livelihood of a large portion of India’s population. But what is the lifestyle of these farmers? Are they even comparable to the urban lower middle class? No. Not even close. The words poor and farmer are synonyms in India.

This isn’t just about the income – but also the kinds of services which are available in rural areas. Majority rural India doesn’t even have basic healthcare and education facilities.

So when we talk about protecting the livelihood of Indian farmers – what livelihood are we talking about? The one that is defined by poverty? If the status quo needs to be changed – a systemic overhaul is needed.

How can such change be made possible? By providing handouts? Or, quasi-handout scheme like MNREGA?

What is the big picture?

How much net wealth is one economy able to generate utilizing its resources most efficiently. This is where GDP numbers become important.

When socialist argue about proper-distribution of wealth, they completely skip the harder steps. Wealth generation – that is the first important step. And it needs to be done right.

The problem is, we’re so used to crony capitalism that this is the only version that remained in our memory. And don’t forget all this happened while tracing socialist values. Had India practiced capitalism the right way (and not the crony way) – we would have tasted development much earlier.

Coming back to farming – one fact needs to be clearly stated. It is not working out for us. 10,000 farmers produce what could be produced well by a thousand through efficient farming. So, this is not just about livelihoods – it is also about wastage of resources.

Efficient farming can’t be done on such a large scale because there’s no money to facilitate it. And there’s no money because of inefficient rural economy. It’s a vicious circle.

Even if efficient farming is somehow facilitated – farming alone will still not be enough to hold the increasing burden on our economy. Firstly, somebody will have to bear the burden of the expense, which we can’t. Secondly, the return on investment won’t be as quick.

India needs wealth generation, which is only possible through industry. And this needs to be achieved keeping one eye on the environment and the other on the social welfare. It’s a hard balance to achieve.

No government has been able to bell this cat so far – because no regime could dare to take the difficult decision which may not present an immediate pretty picture on social welfare. So, they kept postponing it. Constantly, showing the carrot of “garibi hatao” – while handing-out limited wealth and resources in the name of social welfare and different varieties of appeasement. All this, without creating enough wealth to keep our heads above water.

In reality, social welfare had been a mirage. And the perfect example of that was MNREGA. Dole-out money for uneconomic activity in the name of social-employment. But it, like all such schemes, leaked our economy – solely, to satisfy the large poor population for an extremely short-term. Such policies over the years were so myopic that they couldn’t see beyond 5 years. This is why we have remained poor.

Any political party truly committed to development will have to take the decisions which will benefit the economy in the long-term. And not just string the masses along with dreams of good-days.

Crony capitalism has been a culprit – though it was not the problem, but a symptom. Businesses work on profit incentive. And when the governments are dysfunctional, business also becomes dysfunctional to achieve their bottom-line.

The job of a smart government is to align the bottom-line of business to social-good. That is in fact the most key role of a government in a capitalist economy. To keep the business in-line – but not through regressive methods. This is why socialism fails. Efficient wealth building always needs to be the priority. The second step is to see the maximum advantage to trickle to the bottom for an all-round development.

Improving the land acquisition bill to remove bottle-necks is the first bold step in this direction. However, opposition today in India, is more inclined towards improving their dipping political stock – and is trying to give an emotional tangent to this issue, which quite frankly is very easy to sell as well.

Corporate is not the enemy – enemy is the political establishment which has so-far only chosen short-cut to power. And in a vastly poor and ill-informed country like India – taking the short-cut of handouts is quite lucrative. Modi administration should be commended for daring to take the steps to change the course of our economy.

All our destinies – poor and middle-class – are tied to the economy. As a common man – one needs to overcome the tendency to be extremely myopic and be ready to swallow the bitter pill. Achhe din won’t come through a magic trick.

Written by Ishaan Mohan Bagga

Political Analyst. Social Visionary. Editorial Journalist. Founder of open-magazine Indian Exponent.

Follow him on twitter @IshaanMohan
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Indian Exponent: Postponing the Bitter Pill and Perpetuating Poverty
Postponing the Bitter Pill and Perpetuating Poverty
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