It is not yet clear what the mandate and priorities of the newly constituted NAC will be. Historically,the NAC has been associated largely with inputs into social sector schemes,and important governance legislation like the Right to Information Act. The authority of the NAC in relation to government will always be a matter of concern; it will have to energise the functioning of government and line ministries without pretending it is one itself. But in so far as it exists,its priority should be to bring intellectual coherence to a vast developmental agenda.
Although for political reasons it makes sense for the Congress president to take ownership of the NAC and particularly social sector schemes,it is important not to let the end become the means. The social sector agenda and the reform agenda are still often politically presented as two distinct areas of concern: one the province of the Congress president,the other the province of the prime minister; one concerned with the poor,the other with capital in a broad sense. But both agendas are actually causally related,and the causation runs in both directions. The expansive social sector agenda of the UPA would not have been possible without growth and the rise of opportunities and revenue that it entailed. On the other hand,that growth and reduction in poverty are not going to be sustainable without investment in health and education: creating citizens who can participate in this growth. The NAC should not be seen as undercutting the need for or political legitimacy of reform; it should be seen as requiring it.
Second,expanding opportunities for the poor requires very supple governance. Just take a few examples. NREGA has been an important scheme in many respects,and in particular its effect on raising wages seems to have been pronounced. But,even apart from how it is administered,there are issues associated with it: how to get wage rates right,so that there are tangible gains in welfare,without distorting labour markets too much? Are gains from rising wages wiped out by food price inflation? In short,are the gains of a well thought-out social sector scheme neutralised by a non-performing ministry of agriculture? If the objective is poverty alleviation,then agriculture reform and investment are possibly more consequential. Sometimes it is worrying when some Congress politicians seem to confuse poverty alleviation with schemes,more proud of the fact that NREGA is helping more people rather than asking how we can expand opportunities so that NREGA becomes less necessary.
Third,the determinants of poverty alleviation are also becoming more complex. It will be a mistake to think that infrastructure,for example,has little to do with poverty alleviation. By some estimates now circulatory migration in India is close to 150 million. Transport costs are central to the lives of the poor. Or take the power sector. While the well-to-do can arrange for captive power,it is the smallest of small businesses that needs reliable power supply. We underestimate the degree to which a lack of energy policy is hurting the poor. What do you think will happen to poverty in a state where even the smallest flour mill cannot run because of lack of power? On new data available,the range of services which the poorest of the poor are buying using private means is astonishing. What does this portend for how we look at the cost of services?
Or the really big elephant in Indias poverty story: urbanisation. Urbanisation impinges on poverty in two ways. Not only do the urban poor have a special set of challenges,but there is little doubt that the form and pattern of urbanisation is going to be critical to create a long-term growth path out of poverty. Or subsidy reform can,if intelligently done,free more resources for the state. Again,while the focus on schemes is vital,the gains will be neutralised,if other,less politically visible reforms are not produced.
Fourth,India is at an interesting moment in state-building. It is poised to now inscribe rights-based welfare architecture across the board: from education to information,from food to possibly health. In a way,the paradox is that a rights-based approach is necessitated by a backdrop of serious state failure. But,given the massive ramp-up in both entitlements and scale,there is a greater need to think of a long-term integrated architecture for welfare. In some ways,the big disjunction is that delivery architectures still seem trapped in old models.
These have three downsides. First,we know that poverty varies considerably by region. In fact geographical location seems to determine the prospects of the poor considerably. The paradox is that the better governed and better placed states are also better placed to take advantage of Centrally sponsored schemes. Second,while many states are moribund,it is wishful thinking to suppose that in the long run welfare architecture can be sustained only by Central largesse and monitoring. In the long run,too much centralisation that comes with the scheme mentality will be self-defeating. Third,can these schemes be leveraged to break old intellectual mindsets? What was,in principle,innovative about NREGA was that it relied on self-identification. Can we think of alternative methods of identification that cuts through so much of the controversy associated with drawing BPL lines? To put it somewhat provocatively,given the character of poverty,is a BPL list,even revised with all the convincing sophistication of the Tendulkar Committee,an intellectual help or hindrance in addressing poverty? A BPL list is increasingly irrelevant to most emerging schemes: they are relying either on universal entitlements or self-identification. Perhaps this logic needs to be followed through,leaving controversies over BPL more for researchers than making them the basis on which schemes sink or swim.
In a way,the promise of the NAC will not be redeemed if it concentrates on monitoring schemes,or merely is a vehicle to project Congress ownership of schemes. If its promise is to be redeemed it must be able to balance and articulate the tradeoffs between different elements of a new social contract. At this juncture,India needs a liberal defence of freedom,enterprise and a critique of oligarchy. It also needs a social democratic critique of both populism and inequality. One without the other will be self-defeating.
The writer is president,Centre for Policy Research,Delhi