Column : Things you must not do, ministers

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: The Congress manifesto promises a large number of welfare programmes and schemes to help the poor. There are promises to expand the number of schemes, the scope of schemes and the expenditure on them. One way of doing what the party has promised would be to spend more money with business as usual. The approach towards implementation would be unchanged; the budgets and staffing would grow by 50%. This would protect vested interests, and it would not upset the bureaucracy. But it is a bad idea for India, and it will hurt the Congress in the next general election.

Schemes that fail to deliver money to poor people are not new. The Congress leadership knows full well that most money that goes into education, health or subsidies is wasted. Yet, in the last five years, the government did little to improve governance and attempt to ensure better delivery of either subsidies or public goods. The strategy taken up, instead, was to harness the windfall of tax revenues coming in owing to high economic growth, and to spend money under conventional schemes. If the same strategy is followed today it could result in a much bigger disaster than one might think.

The last five years of unprecedented GDP growth have had two effects. First, GDP growth led to growth in jobs and incomes. And second, welfare programmes of the government helped people who were not part of the growth process. The latter were feasible because tax revenue growth was high, which gave the government the capacity to spend.

Circumstances are going to be different in the next five years. First, GDP growth is expected to be lower. It might be a long time before India witnesses another five years of above 8% growth. The probability that this will happen in the next five years is low. This means that a lot more people may need help under the welfare schemes like the NREG than they did in the previous five years, which will increase the number of claimants of welfare spending. Second, tax revenue growth will be slower because GDP growth is lower. This would mean the government would have less money to spend. Given the already large fiscal deficit and the high debt-to-GDP ratio, the government has much less scope to spend.