The responses to my last column reminded me of a suspicion that I have nurtured for a long time -- that readers are fundamentally divided into two camps, each believing certain 'facts' about India, and that this understanding largely shapes their views.
Like you, I too have my idea of what the good society should be, and if our visions are in conflict greatly -- I recognise that a number of you also have agreed with me often -- it is understandable that our take on events will be divergent as well. Any resolution of differences, therefore, must begin with what we believe to be true. Here's my list of founding facts. I'm limiting this list to the economic arena and within this to a few broad themes; if you believe this helps we can try this exercise in other areas too.
Brick and mortar families aren't middle class
This is a theme I have explored repeatedly, especially in my studies of auto-rickshaw drivers and their livelihoods. Before we can say that someone is middle class or not, we must first make a separate determination of what we mean by the term. I use the median income for a family (depending on sources, anywhere between Rs 3,600 and Rs 5,000 a month) as a guide, and contend that those whose incomes are within some range (say 20%) of this median are middle class.
This spread of incomes that can be justifiably regarded as middle class means that you and I don't belong in that category. A lot of urban families, when they refer to themselves as middle class, are plainly mis-stating the truth. There are good reasons for this. The tendency to compare one's economic standing to that of those who are better off than oneself is common. If we're not as rich as identifiable magnates (Tatas, Ambanis, Khaitans, etc.) or even rich enough to build large houses in fancy neighbourhoods, then we must not be affluent, right? Wrong. In comparison with the great majority of Indians, anyone who can read this column is probably in the 85th percentile of income or higher.
The dissonant sense of what middle class is can also be attributed to another reason. Today's conventional idea of what a middle class lifestyle is was not first developed in India, but in the West. A middle class family in the prosperous countries is identified as being able to afford many of the modern amenities within its regular income, and also able to secure a post-retirement reserve in some way. This is what we usually mean in India too -- that 'middle class' families are ones with washing machines, scooters, maybe even a second-hand automobile; things like that. This is the middle class of a different country, not India.
Investments to benefit the poor cost money, which we do not have
This is a common defense, especially considering that the combined deficits of the state and Union governments is now running at higher than 10 percent annually. Nonetheless, this argument is an unfair one, above everything else. To say that there is no money for investments to benefit the poor directly (schools, hospitals, etc.) gives two impressions. One, that the things that money is now being spent on are necessary and cannot be cut, and two, that direct investments for the poor would cost huge sums. But both these are plainly false.
What is really enormous is the defence expenditure (up to 44% of discretionary spending by the Centre, by some calculations) which is never subjected to this kind of scrutiny. If it were, one would find right away that much of the money that is being spent has no hope of achieving the security objective that is sought, and could easily be diverted to development objectives that are less expensive as well as more likely to be reached.
Unjustifiable expenditure can be found outside the realm of defence too. Water is piped into our homes at 10 percent of the cost of gathering and delivering it. Those same homes can avail of tax waivers on interest payments in their mortgage bills to the tune of Rs 150,000 each year. Yes, each year. Contrary to the conventional view about the poor, it is the upper classes who receive the largest subsidies from the government. It is a safe bet that families like yours and mine receive at least a hundred times higher subsidies from government than those living below the poverty line do. But largesse towards the literate beautiful people is considered investment in growing the economy, whereas even meagre generosity to the poor is attacked as undeserved dole.
Second, the amounts needed for direct benefits to the poor are enormously high, in part because governments have been so lax in enforcing the terms of its generosity towards the wealthy. Nearly every government-aided school in India has received assistance in the form of land grants and other subsidies, which often require those institutions to offer 10 percent to 25 percent of their seats free of charge to poor students. But these rules are flouted almost without exception. The same is true with hospitals, our name-brand hospitals receive subsidies from state and Central governments that require them to keep a portion of their services (usually 10 per cent) free for the indigent, but like in education, here too the rich recipients of state welfare ignore their obligations with impunity.
An immediate consequence of that violation is that the cost of providing education and health to many poor families, instead of being borne by the government-aided schools and hospitals as required in their contracts, has to be double-budgeted for by the government. The Supreme Court may be finally taking a hand; in Delhi it demanded that the education department look into compliance by government-aided schools. The court's Modern School verdict was a telling reminder that we have been conveniently lax in honouring commitments made to the poor; so much so that many schools now claim that it would affect their style of education to teach poor kids along with everyone else.
Three, the use of government funds is often hidden behind layers of secrecy that conceals its misuse, and in doing so drives up the cost of serving the poor. The saga over Delhi's Public Distribution System is a case in point. Parivartan, the pioneering right-to-information organisation in the capital, began rallying citizens to demand records of their rations from dealers. Shopkeepers responded by arguing that these records are their private business documents, not subject to public scrutiny. This is a lie; the reason shopkeepers resist opening their books to the public is that their crookedness would be exposed if they did. In the few instances where Parivartan was able to force disclosure of these records, countless cases of fraud were noted. It has taken more than two years of litigation, public rallies, and lobbying for Parivartan to now establish that citizens have the right to scrutinise what rations have been distributed under their names.
The prevailing economic ideas are proven to work
When the first defences of the status quo are shown to be either immoral or deeply biased against the poor, we encounter the fallback option -- namely, the argument that there is sound economics behind the choices that are made. By this argument, subsidies for the wealthy are given so that they will in turn lift consumption and create employment, thereby indirectly benefiting the poor. This advocacy of trickle-down economics is accompanied by a frontal assault on government institutions and mindless celebration of the 'free market'. Everything must be privatised for efficiency, it argues, and India must reorient herself to become an export-driven economy like many of the Asian tigers. This is the best way, we are told, to bring meaningful opportunities for employment to millions of poor.
This is not a theory that our leaders actually have any faith in; this is just an optimistic expectation they offer with a combination of naivete and gullibility that would be laughable if not for the tragedy it brings to millions of lives. It is disgraceful to present our relative poverty as a competitive advantage in trade, and vainly hopeful to expect any fruition of this expectation.
Optimism isn't economics. Even a theory of trickle-down rewards must preserve at least the minimal standards that the poor already experience. If, in the short
run, they are further impoverished or neglected to the point of death, their eventual upliftment must be seen as a promissory note that cannot be cashed. Along Gujarat's industrial corridor or Kerala's farmlands, for instance, improper management of chemicals used in various economic activities is poisoning the people. The continuing emphasis on large infrastructure projects has already displaced millions into the urban slums, and more such displacement is planned, nearly always without adequate scrutiny. How can the victims of such policies hope for eventual succour or prosperity? This question remains off the table._arti_inline_advt">
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