Let me begin by recounting a conversation I overheard on a smoggy, winter evening in Delhi last week. It was at one of those events where everyone believes they are political analysts and obliged to have informed discussions on the subject of the moment. That evening it happened to be the government’s announcement that it would soon be making direct cash transfers to the poor instead of supplying them with subsidised domestic gas and kerosene. This is what I overheard. ‘Well, that settles it. We could now be looking at the possibility of UPA-III. What a clever little scheme they’ve come up with. It should be called cash-for-votes or something like that.’
Not a profound piece of political analysis but definitely on the right track. My friends in the Congress Party (I have a few left) admit privately that they are delighted with the scheme because they believe that underprivileged voters will be totally seduced into voting Congress by money pouring into newly opened bank accounts. And those who believe, mistakenly in my view, that it was MNREGA that won the Sonia-Manmohan government a second term, are now convinced that direct cash transfers will achieve even more spectacular results for them in 2014. Politically, the Prime Minister and his lady boss cannot be faulted for going full steam ahead with this utterly populist scheme but will they be doing irreparable damage to our already damaged economy?
It is my conviction that they will. Let me admit first that I have always found Nandan Nilekani’s Aadhaar plans confused, expensive and purposeless. In another column long ago, I described the Unique Identity card as something that came straight out of Peepli Live. For those of you who may not have seen this excellent film, here is a short synopsis. The film is fundamentally about the futility and bizarre nature of government welfare schemes. So a destitute farmer who announces plans to commit suicide is provided a hand pump, a colour television set and other similar relief measures in a village hut that has neither water nor electricity. Could Indians living below the poverty