Some of this like the Jan Dhan Accounts or providing insurance to the poor is desirable, but Modi has to trust the markets.
Given the energy he has expended in various missions such as Swachh Bharat Abhiyan and Jan Dhan Yojana or the two Bima Yojanas, it is likely they will find pride of place in prime minister Narendra Modi’s address at the Red Fort tomorrow. And so they should, given how each strives to address very fundamental problems, largely unaddressed in the last 68 years. Swachh Bharat may be far from taking off as yet, but it is probably the most meaningful way to address India’s health and malnutrition problems – contrary to what most think, stunting and other such problems are more related to water-borne diseases like dysentery, not lack of food with the poor. As India enters its 69th year, there is a lot to be proud of, just as there is a lot to be ashamed about, more so in comparison with our peer group countries like China.
The key message from the experience of the last 68 years, however, is that India’s salvation lies in growth, and there are no caveats to that – this applies to social indicators as well, not just the incomes of the rich and the middle classes. During the 1990s, when growth was just about middling, India’s poverty fell at 0.74% per annum. In the 2000s, when growth jumped, poverty fell at a much higher 2.18% per year. As GDP growth propelled the demand for jobs, so did the demand for education as there was now a definite value that could be realized for the investment made – literacy levels grew faster than before. All the years of caste-reservations didn’t do as much as education did – in 2014, the PRICE all-India survey shows, an upper-caste household headed by an illiterate earned less than an SC/ST household where the head had studied till just the 5th grade; in the last decade, inequality in incomes between caste groups has also fallen significantly with the growth in jobs.
In the case of education, the quality of private schools that mushroomed in response to demand seemed suspect, but the fact that around half of children today are getting educated in private schools in preference to free government schools tells you its own story – the birth of well-funded private universities like Ashoka University or Shiv Nadar University with global tie-ups, and often faculty as well, suggests the market is maturing, in keeping with the paying capacity of the populace. In the case of mobile phones, the private sector has delivered fantastically and at prices comparable to the heavily-subsidised public sector.
Which is why, as Modi enters the rest of his current term, he has to recalibrate his strategy and focus on just strategies that will deliver growth, get factories to be set-up – Make-in-India, done well, encompasses so many reforms from reducing red-tape and tax-terror to providing world-class infrastructure. The last one year has seen Modi focus more on direct intervention to solve the problems of the poor or to revive state-owned companies. Some of this like the Jan Dhan Accounts or providing insurance to the poor is desirable, but Modi has to trust the markets. Private firms have done more for telephony or ports than the public sector ones have, and the list can be multiplied across sectors including agriculture, education and healthcare – and they haven’t gouged the public in the process. Making it possible for firms to grow by addressing their concerns is what true independence is all about – that is how Indians will get more jobs and higher salaries, and that is how the state will get the money to intervene in areas of market failure such as in provision of sanitation facilities or insurance for the poor.