Focus on the aspiring, not just the ‘neo’, middle class

For ‘ache din’ pain of policy shifts for the poor must be made part of defined future benefits for them

mukul

Mukul Sanwal | July 11, 2014




The PM’s blog on his first month, the foundation course for members of Parliament and now the budget have begun to shift the balance between subsidies for the rural poor and growth that will provide employment in industry and move the agrarian population to cities and into the middle class. Whose ‘ache din’ is a question that has remained unanswered?

The issue is that in giving the needed stress to manufacturing and to the middle class and making the pie bigger by rationalising subsidies, the PM has not capitalised on the mandate for change to move beyond budget allocations signalling intentions.

He has not used the opportunity provided by national coverage of an anticipated event to begin a national debate on the longer term future. There is no paradigm shift to reach out fully to the aspiring middle class who have rejected the approach of entitlements and subsidies that kept them afloat in villages. He has to build public opinion for the short term sacrifices with the assurance of near term future gains that would enable longer term investments as well as implementation, in both the areas where we have failed in the past. Policy shifts respond to the scope and scale of the challenge.

Decisions have so far focused on known problems of decision-making, states are acknowledged as equal partners, the balance between welfare and commercialism is changing, there is a promise of expenditure management, fairer tax administration  and overhaul of subsides and we have a ‘hands on’ PM. This shift removes the anomalies of the past and does not amount to the ‘ache din’ the nation has been waiting for.

The partial withdrawal of the rail fare hike has an important lesson for governance. It is not enough to warn the nation that reform will involve ‘pain’, because while most will acknowledge the former, few will support the later assertion. What if the railway minister had explained why we need high speed trains for exponentially increased future passenger and freight movement and that improved signalling alone enables trains to run fast and on run on time?

The underlying issue is the difference between a CM and the PM. Peter Druker, the management guru, perceptively pointed out that there is no difference between one organization and another, the real difference is between big and small organizations. Should the PMO focus on urgent matters of management, such as public grievances, or on important issues of leadership where trade-offs are required, like coal plants generating less than half their installed capacity and the complexity of distribution of electricity?

The meeting of the PM with secretaries also focused on processes of interaction and decision-making, that is, the structures and behaviour of governance, with very good results. The need for strategic direction came up later in the interaction between secretaries and the cabinet secretary.

Clearing pending matters of the states is important for confidence building; they must also be given leadership, with full support from the central government in pushing education, skill development, employment creation and land acquisition. Without the participation of the states, the business climate will not improve enough to attract long-term investment, and the pay back in high speed rail is thirty years.

It is easy for ministers to talk to one another to remove bottlenecks, but the centre and the states also need to work together to integrate initiatives like establishing 100 new cities, linking of rivers and high speed rail and expressways, all of which will need land use change, which is a state subject, through a composite vision that will resonate with the poor, the middle class and the rich. 

For example, environment and sustainable development resonate with large sections of the society- rich and poor, and have inexplicably been ignored as an integrating theme in the disparate budget allocations, for example, for a climate adaptation fund, an Institute for Himalayan Studies, cleaning the Ganga and MGNREGA productive asset creation linked to agriculture. According to the most recent science, the intensity and duration of the monsoon is going to increase because of climate change and conservation of the run-off is essential for future growth of cities, which the linking of rivers will ensure, but has not been explained in these terms. Similarly, the new cities must not only be smart but also climate friendly, as that will be our contribution to dealing with the global problem and by ensuring energy efficiency we will reduce the demand for fossil fuels. ‘Smart’ cities must also be ‘green’ cities because three-quarter of carbon emissions will soon come from urban areas. In a climate constrained world, increase in agricultural productivity will come from biotechnology and not asset creation related to soil conservation and minor irrigation, which gets washed away during  monsoon. It’s not just about communication and packaging a message as synergies across schemes have not been analysed.

The challenge for the PM is to craft a compelling vision that includes local visions of the states to make it a collective vision as that alone will provide the basis for an agreed road-map for directional change in a federal, diverse and continental size country. Decision making on approvals, public-private partnerships, market development and regulation and involvement of the states will then conform to this national vision. A strategic direction is essential for ensuring investment, coherence, time-bound implementation and defined results to secure public support for change.

We have reached a stage of development where “inclusive growth” should be defined in terms of the “Indian dream” of moving into the middle class. It can then be argued that the vast funds spent on subsidies keep the poor in villages and slums, whereas shifting allocations to research, infrastructure, urban design and employment generation will benefit them much more over the next five years. It must be put to farmers that land use change is an essential element of economic growth to enable the movement of rural population to urban areas and non-agricultural employment, as three-quarters of future growth will come from cities.
 
The existing push for more electricity, high speed rail, expressways and e-governance would also need to be projected as sources of growth and precondition for giving every citizen a greater chance of prosperity. 

An agreed vision is also necessary for reviewing labour and other laws and rules regulating transactions of government to conform to new objectives of time-bound implementation, good governance and attracting foreign direct investment, which are essential elements of continuing growth. Good governance, for example, needs early enactment of the civil services performance standard and accountability bill, code of ethics for ministers and a code of conduct for public servants, being drafted by the department of personnel and training for some time now.

‘Ache din’ has to be a joint commitment of both the centre and the states, that is, a national commitment. The national development council must come out with a bold vision for the nation and most importantly — how it would be achieved. This is what happened in China and earlier in the west.

Few will disagree with the assertion that no country has moved into the middle class while remaining agrarian, and three – quarter of the population should move into cities, and the middle class, by 2050; the west achieved this in the 1970s and China will do so around 2030. The debate will then be on the strategies, priorities and instruments, and that is where the PM must focus his energy.

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