The Aadhaar Bill is possibly one of the most transformative economic reform legislations introduced in India
Aadhaar Bill: Budget 2017 contained the announcement that use of the biometric identity card, Aadhaar will be provided statutory backing. On Thursday, the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Bill (hereafter, the Aadhaar Bill), was introduced as a Money Bill in the Lok Sabha. I believe the tabling of this Bill in Parliament is possibly one of the most transformative economic reform legislations introduced in India. But the editors of the white newspapers thought it more fit to give Kanhaiya Kumar 15 more minutes of fame. He pontificated the following “Modiji was talking about Stalin and Khruschev…I felt like jumping into the TV screen, grabbing his suit and saying, ‘Modiji, please speak about Hitler’”. (Page 1, The Indian Express, March 4, 2016). The Aadhaar news, instead, was buried deep in the white papers (The Indian Express, The Hindu, Times of India): Are they, too, going the way of TV news?
Coming back to the Aadhaar Bill, why is this one of the most transformative economic legislations? Because it is the single-most important method of decreasing massive political and bureaucratic corruption in India. And of delivering a much higher level of income transfers to the poor. Econ 101 teaches you that it is important that the government does not interfere in the pricing of goods and services. But before Kanhaiya Kumar-led scholars from JNU (and elsewhere) protest that the free-market does not guarantee a just distribution of income (it absolutely does not and not only because it is difficult to define just), let me remind the Left that Econ 101 also teaches you that income transfers are a necessary part of a capitalist society. None other than the arch-capitalist Milton Friedman introduced the idea of a negative income tax.
More importantly, what Aadhaar will do, as it has already done for LPG connections, is to provide bank transfers in the name of the woman head of household. In his Budget Speech, finance minister Arun Jaitley stated that the government has embarked upon “a massive mission to provide LPG connection in the name of women members of poor households”. This can now be used for other welfare payments (food subsidies, MGNREGA, etc) Presently, 50% of food subsidies (approximately R50,000 crore), registered as payments to individuals by the Food Corporation of India, accrue to no known man, woman, or child in India. But that money is withdrawn from the exchequer—it is not Monopoly money.
The opposition to the Aadhaar Bill is on several grounds (as is well known, in India, we also debate the existence of gravity, failing which we debate whether the acceleration due to gravity is really exactly 32 ft/s2! For you youngsters, that is 9.8 m/s2). But the prime concern is that the government is mistaken in introducing the Bill as a Money Bill and that it is doing so to circumvent the Rajya Sabha. This argument has merit, but only if it is valid.
Article 110 of the Constitution, Definition of the Money Bill, states that in addition to taxation matters, “the custody of the Consolidated Fund or the Contingency Fund of India, the payment of moneys into or the withdrawal of moneys from any such Fund” is also part of a Money Bill. The opening para of the Aadhaar Bill, not surprisingly states, that the purpose of the Bill is to “provide for….efficient, transparent, and targeted delivery of subsidies, benefits and services, the expenditure for which is incurred from the Consolidated Fund of India” (emphasis added). And remember, if any question arises whether this Bill can qualify as a Money Bill or not, the decision lies with the Speaker of the Lok Sabha, and is final. Therefore, the argument that the Aadhaar cannot be a Money Bill is invalid.
Moving on, the BJP is being attacked for having opposed the introduction of Aadhaar during the UPA regime, and rightly so. The BJP in Opposition has the disappointing record of helping the UPA pass every bad Bill that should not have been passed, and obstructing the passage of all the Bills that should have been passed. A not so publicised fact is that major elements within the UPA were opposed to Aadhaar as well.
The Standing Committee on Finance in 2011-12 found that ministries within the UPA government had raised several concerns with respect to Aadhaar—the ministry of finance on the lack of coordination between agencies leading to duplication of expenditure; the home ministry on the involvement of private agencies in the scheme resulting in a potential threat to national security, to name a few. While these are concerns to which solutions need to be found (or maybe already in the pipeline), this is far from undermining the fact that Aadhaar is the need of the hour.
Other objectors belong to the narcissistic holier than thou ideologues, i.e, impersonal, government-administered cash transfers are bad, but government administered in-kind subsidies (e.g. food subsidies) are good as long as you ask me how it should be done. In this camp are leftist academics who believe that we should not tinker with the PDS system because recently the corruption leakage has been reduced by 10 percentage points from the prior leakage level of 50 percentage points!
I started this article with reference to Kanhaiya Kumar and I will be remiss and amiss if I did not comment on Judge J Pratibha Rani’s judgement in providing him bail. “The thoughts reflected in the slogans raised by some of the students of JNU … cannot be claimed to be protected as a fundamental right of speech and expression. I consider this as a kind of infection… if the infection results in infecting the limb to the extent that it becomes gangrene, amputation is the only treatment.”
This, in a judgement on whether Kanhaiya should be granted bail after he was arrested on false charges of sedition and on the basis of doctored evidence. If this is a sound judgment, then pigs must have learnt to fly. It used to be said that the Supreme Court and RBI are the only two respectable institutions left in India. I guess India is left with only RBI.
The author is contributing editor, The Financial Express, and senior India analyst, The Observatory Group, a New-York-based macro policy advisory group. Twitter: @surjitbhalla