In eight years, Modi govt’s successful pro-poor agenda
As inflationary pressures permeate from the United States (US) to other parts of the world, governments are grappling with the challenge of keeping their people and economies afloat. Food and energy prices have increased sharply for the second time since Covid-19 hit. The rise in prices of essentials hits the poor badly, putting a big dent in individual spending. This, in turn, impacts a country’s output. Despite the pandemic and the challenging geopolitical climate, India has taken several steps to keep both the stoves of the poor and the engines of the economy running, a leaf out of this government’s eightyear-old playbook. The playbook is mounted on a pro-poor, progressive and proactive growth agenda. This article will delve into the first pillar.
In his first address at the Bharatiya Janata Party parliamentary meeting in 2014, Prime Minister Narendra Modi set the tone for the new government. He said, “Sarkar vo ho jo gareebon ke liye soche, jo gareebon ko sune, jo gareebon ke liye jiye (A government should be that which thinks for the poor, listens to the poor, lives for the poor)”. Six years later, this government walked the talk by saving millions from a fatal pandemic by introducing free ration, gas, and clean water schemes amid a harsh lockdown and dwindling revenues. And today, when inflation has hit every quarter, the government has resolved to provide a Rs 200 subsidy on gas to 90 million beneficiaries of the Pradhan Mantri Ujjwala Yojana. The beneficiaries of the free ration scheme are more than two-and-a-half times the population of the US, 12 times that of the United Kingdom, and double the population of the European Union.
What has changed?
First, welfare spending has seen an incremental rise in the last eight years despite harsh global headwinds. Reserve Bank of India data shows that the total development expenditure of the National Democratic Alliance government between 2014 and 2022 has been ₹90.9 lakh crore. This figure was only ₹49.2 lakh crore during 10 years of the United Progressive Alliance government’s rule (2004-14).
Second, the socialistic straitjacket has eroded. The past regime’s pattern of selective social spending for appeasement, as against equitable value addition for economic growth, has been dismantled. It has now been replaced with a balanced national safety net, alongside measures that enable upward social mobility. Even on the former, this government has shown the way for effective “direct welfare’’, backed by a realtime, transparent digital welfare system, which has allowed the government to redistribute more to the needy than ever. In the last year, payments for over 300 schemes reached 3% of the Gross Domestic Product ($86 per person per year), up from 1% four years earlier.
Third, be it air connectivity or the rollout of 5G, “last mile” outreach remains the common thread in all policy decisions. For instance, to make mobile phones cheaper and affordable for the poor, the government pitched for increased manufacturing of phones in India. The result was that mobile manufacturing units have risen from two to more than 200. Before 2014, not even 100 gram panchayats in India had optical fibre connectivity, which today is at 175,000 gram panchayats. Even in civil aviation, the way forward is for democratisation of travel to include those who have never even set foot in an airport.
Much of this is underway. By 2047, we will easily achieve cent percent saturation of coverage of our schemes for the poorest of the poor, including the urban poor such as street vendors, drivers, and rickshaw pullers.
Another key differentiator from India’s past that merits recognition is the greater thrust on the formalisation of the economy, which has enabled more people to enroll in the national social security scheme for formal blue-collar workers. Globally, ours is the first government to extend social security benefits to gig and platform workers. As a result, the informal economy has shrunk to 20% of the GDP from 50% three years ago, thanks to an increase in low-value digital transactions.
When pro-poor policies are married with political will, the result is a scenario wherein human resources are employed as a human force. Although a slow process, this antidote to poverty is a sure shot and will become the biggest boon for India’s giant leap towards becoming the world’s greatest nation.