Entitled India: Why our policy passion for freebies enfeebles our country
The recent legislative shift that expands the idea of upliftment from social to economic criteria is yet another instance of a politics addicted to doling out tax-funded privileges, creating in its aftermath an entitled nation.
The Constitution (124th Amendment) Act, 2019, that was cleared by the Lok Sabha and the Rajya Sabha last week, provides for reservation for the economically weak in higher educational institutions and government jobs – and it is one step backwards.
Instead of ending all reservation and moving towards a more meritorious society as India steps into the super-skilled disruptive information age, our leaders, across parties and ideologies, are busy powering the politics of backwardness. That this economic reservation, like social ones, applies to all private institutions, whether aided or unaided, but leaves the minority educational institutions out of its ambit will accentuate societal cleavages, this time across economic inequality.
This law is a political cop-out.
It tells us how predictable and cynical Indian politics has become in the pre-election months. It also focuses on how the attention of our leaders is not towards building a nation on the shoulders of its enterprising young citizens, but towards distracting them via an idea that has failed.
Reservations based on social inequality over the past seven decades seem to have neither uplifted socially nor empowered economically and hence, goes the argument, are being continued. Instead of drafting a policy that first reduces, and then ends all reservations, we are moving towards strengthening them.
Instead of fixing – or simply even investigating – what’s gone wrong, we are continuing with these policies in the fear of a political backlash. Thrown out of the window are the empowering outcomes the reservations sought.
It is nobody’s case that those left behind should not be helped – if there is a policy failure that has prevented and continues to prevent the empowerment of backward classes, castes and minorities, it is the duty of the state to intervene.
But the time for reservations is over – we need new ideas.
As a policy, reservation directs the attention of the young towards getting a government job, the attractions of which are many. A very high salary. No outcomes-based assessment. No accountability. Unless you go out of your way to achieve these, no exit, no dismissal. Protection of privileges, guaranteed by law, that include best quality housing, transport, healthcare, vacations. Assured promotions and raises that are completely delinked from performance. Look at merit with contempt – hard work with sarcasm.
Looking at it through the lens of finance, a government job has become a one-way street to an extremely high annuity that goes on paying till death and even after death to the spouse and unmarried women children via pensions and medical facilities.
It is a route to extreme power that can and has delivered rent-seeking, corruption and extortion on the dark side, plain mediocrity in the grey, with the rare sparks of merit on the bright crescents of nation-building, nation-serving being the exception.
Who pays for all this paraphernalia? Taxpayers.
We want less government when it comes to macro numbers. But we want the same government jobs when it comes to micro households. The 20 million applicants for 1,00,000 railway jobs that opened last year is a case in point.
Nobody knows this better than our leaders, who prey on our latent desires and cobble up schemes that we pay for through our taxes to serve up a job rhetoric. The issue of jobs is not whether they are available or not; the issue is how many ‘government jobs’ are on offer. And if this is the measure of a government’s job creation delivery mechanism, if this is what we expect, if this is the political economy conversation we engage in, we are standing on the edge of a fiscal precipice.
In love with the petty and the paltry, we are quick to celebrate such interventions. We love guarantees. Enough has been said about the guarantees government jobs provide. But our demands for entitlements don’t end there. In our investments, we seek government-backed guaranteed returns, be it small savings schemes or quasi-government supported low returns from banks and insurance.
In December 2017, the Financial Resolution and Deposit Insurance Bill, a fine piece of legislation that would have cleared the path to shutting down sick banks, instead of funding them with taxpayers’ money, was thrown in the rubbish bin because of a badly-drafted bail-in clause.
As a result, a law that would have taken us away from the government guaranteeing failing banks to a robust system that would have alerted, prevented and carried a failing bank to closure has been smothered.
We seek entitlements on our spending and investments. The entire plethora of tax incentives we take so much for granted have huge costs – deductions on Section 80C alone added up to Rs 58,933 crore in revenues foregone in 2017-18, up 31 per cent over the previous year. Add other sundries such as exemptions for senior citizens or educational loans and the total revenues foregone stood at Rs 76,581 crore.
We shun loan waivers for farmers – as we must because they are bad policy at a time that has several alternatives – but enjoy these waivers on our personal taxation side.
Waiver for the other is a fiscal problem – waiver for us is an entitlement.
All depends on which side of the mirror you stand.
The only entitlements that can stand the test of policy intervention are those that arise due to market or social failures. On healthcare, for instance, the Pradhan Mantri Jan Aarogya Yojana, launched last year, under which the poorest 100 million households would get a health insurance cover of Rs five lakh, is one such move.
Another is the Mahatma Gandhi National Rural Employment Guarantee Act of 2005, a policy that has successfully captured the experiences over time – it has evolved out of the Community Development Programme of 1952, the National Rural Employment Programme of 1977, the Rural Landless Employment Guarantee Programme of 1983, the Million Wells Scheme in 1988.
The crux of the problem lies in poor execution, leakages and corruption. The inability of our politics to converse with our economics is leading us up a weed-laden path of entitlements. Instead of creating an enabling environment for entrepreneurs to come forth and invest their ideas, money and industry to create jobs, the economic system is shunning them – while living off them.
All those who are celebrating reservations based on economic backwardness that balances social backwardness are not thinking about the costs the Indian economy would pay over the next 25 years.
But if such is the currency to power, an entitled India will look up and watch other meritorious nations get ahead.
Our political entitlements will enfeeble our economy.