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The wrong end of the right debate

‘Neo-liberals’ emphasise sewers, sanitation and toilets, not ‘neo-communists’.

It is Amartya Sen, the nemesis of neo-liberals, who would emphasise toilets as much as growth. (Photo: PTI) It is Amartya Sen, the nemesis of neo-liberals, who would emphasise toilets as much as growth. (Photo: PTI)

In an article in The Indian Express (‘The pragmatic PM?’, August 22), Ashutosh Varshney of Brown University asserts: “It is Amartya Sen, the nemesis of neo-liberals, who would emphasise toilets as much as growth.” This is perhaps true in the exalted world of Western academia and among many academic followers of Sen in India, but not in the trenches of Yojana Bhavan, North and South Block, where many of these and related issues were decided.

It is the followers of Sen (neo-communists?) who emphasised increased “private health spending” over “public health” spending on sewers and sanitation. It is the “neo-communists” who emphasised “right to food” as a means of eliminating malnutrition, as against sewers, sanitation and toilets.“Market liberals” like me have  showed that the absence of these is the main cause of child malnutrition.

It is these neo-communists who emphasised doubling and tripling the money allocated (inputs) to standard, inefficient, corrupt and leaky food, education and health programmes, ignoring arguments on the vital need to first improve their effectiveness to achieve better outcomes.

A Planning Commission paper by this writer, “Poverty and Hunger in India: What is Needed to Eliminate Them”, (2006), analysed poverty, hunger, education and health indicators (in a comparative framework) and their linkage to government policy and programmes, arguing that the “broad theme that emerges is that the failures on this front, apart from the indirect effects of growth, are linked directly to the failure of governance. This failure has many dimensions; the mis-allocation of government resources, the failure to follow norms of social benefit-cost analysis that were the raison d’etre for the introduction of national planning, the neglect of public and quasi-public goods that are the most fundamental justification for the existence of government and a gradual (over decades) but progressive deterioration in the quality of governance. This conclusion differs radically from the conventional wisdom (national and international) about India’s poverty, social indicators and income distribution. Even if treated as a hypothesis it merits debate and further analysis.”

The paper concluded that “It can be argued that the ideal (most efficient) social welfare policy is a direct transfer of income to the poor through a negative income tax. In a developed country this would be very easy. How can we transfer these amounts directly to the poor, the needy and the disadvantaged in a poor country? The answer, by setting up an Indian version using a modern smart card system that delivers cash and/ or subsidies to the poor based on their entitlements as per specified parameters and norms. Such a smart card could be programmed with identity (photo and biometric fingerprint), and have information on social (SC/ ST) and personal/ household characteristics. Each person/ household’s entitlements could be in the form of specified subsidies for the purchase of a set of items, C. The set of items, C, could include food/ cereals, kerosene, midday meals, nutrition supplements, drinking water, toilet/ sanitation services, basic drugs, schooling (primary/ secondary), internet access, electricity and a host of other items reflecting the dozens of subsidies and programmes currently in existence. The entitlement could be varied with and dependent on various economic and social handicaps such as SC-ST [status], age (infant or aged), mental handicap, physical disability, female head of household, lactating mother, chronic illness. In this way all the current stakeholders, special interest groups and social policies could be accommodated within a single integrated system.”

“Where we have failed as a nation is in improving our basic social indicators like literacy and mortality rates. Much of the failure is a legacy of the three decades of Indian socialism (till 1979-80). The rate of improvement of most indicators has accelerated during the market period (starting 1980-81). The gap between our level and that of global benchmarks is still wide and our global ranking on most of these social parameters remains very poor. This is the result of government failure. Government overstretch, misplaced priorities and deteriorating quality (corruption) has resulted in a failure to fulfil the traditional, accepted functions of government like public safety and security, universal literacy and primary education, public health education (superstition and quackery), provision of drinkable water, sanitation drains and sewage facilities, public health (infectious and epidemic diseases), building roads and creating and disseminating agricultural technology. Consequently the improvement in social indicators has not kept pace with economic growth and poverty decline and has led to increasing interstate disparities in growth and poverty.”

A presentation of this paper to members and advisors in the Planning Commission was scheduled and cancelled several times because of the unavailability of “certain” Planning Commission members and never took place because of their active discouragement. Apparently the “neo-communists” thought it was too dangerous to even present the comparative data on hunger, health and education, or discuss it.

The writer is a former IMF executive director and former chief economic advisor, ministry of finance. He was involved in many of the economic reforms from 1991 to 2009

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