India embraces the welfare state

by Shashi Tharoor

In recent weeks, India's parliament, often justifiably derided for the frequent disruptions that mar its work, has surprised its detractors by passing two crucial pieces of legislation that could transform the lives of hundreds of millions of people. The first, the Food Security Act, grants 67 percent of India's population a right to 35 kilograms of rice or wheat for three rupees (less than five US cents) per kilo. Together with related provisions that would provide meals to infants and expectant mothers, and subsidized pulses to supplement cheaply available food grains, the law will add $6 billion to India's annual fiscal deficit. But it would also abolish the risk of starvation and malnutrition in a land where too many have gone hungry for too long. The second law assures fair -- indeed generous -- compensation to people, often small-scale farmers, whose land is acquired by the state for development purposes. In a country where two-thirds of the population is still dependent on agriculture and small holdings are all that a majority of Indians live on, the new law helps those who have often felt exploited and deprived of their livelihoods by the state's power of eminent domain. The new law requires the consent of 80 percent of a major tract's landowners before the state can acquire it, and includes exacting provisions for the rehabilitation and resettlement of those affected. It will even compensate tenant farmers for their loss of livelihoods and require that those displaced by land acquisition be offered employment in the institutions that displace them. Taken together, the new food-security and land-acquisition laws underscore the Indian government's gradual but firm move toward making the world's largest democracy a society in which citizens' welfare is based on rights and entitlements rather than ephemeral charity. Detractors on the right insist that the new laws will break the budget and undermine economic growth, while opponents on the left argue that they do not go far enough in covering all of India's poor and vulnerable. The government believes that criticism from both sides suggests that the laws strike an appropriate balance. At a time when democracies are struggling with various models of welfarism, seeking to balance the imperative of fiscal retrenchment with alleviating the insecurity of vulnerable populations, India has moved in a direction that few thought possible for a developing country. From the Right to Information Act, which has empowered citizens and boosted government accountability and transparency, to the Right to Education Act, which has led to record-high school enrollment and pumped resources into moribund classrooms, the current government's reforms have changed the face of Indian society. One in five rural households benefit from the Mahatma Gandhi National Rural Employment Guarantee Act, which provides employment mostly to the Scheduled Castes, the Scheduled Tribes, and women in villages (in my own state, Kerala, 92 percent of the beneficiaries are women, whose lives have been transformed by their new income). By raising the bargaining power of agricultural labor, the act's passage has led to higher farm wages, greater purchasing power for the rural poor, and lower distress migration. And sustained government investment in public health is reflected in steady improvement in India's infant mortality rate, maternal mortality rate, and life expectancy. These measures cost money, but they also enable the poor to break free of poverty. When government policies keep India's telecom rates among the lowest in the world, it ensures that the poor can have access to a technology that increases their autonomy. When the government promotes food security, it is part of a bold effort to strengthen agriculture, which has led to record-high production of food grains. At the same time, economic reform has not been abandoned. Controversial budget provisions that had earlier deterred investors are being reviewed. The decision to permit foreign direct investment in multi-brand retail and civil aviation has been pursued, even at the cost of losing a recalcitrant coalition ally. Subsidies on diesel and cooking gas have been reduced in the face of vociferous opposition. Pension reforms have been passed, and insurance reforms are on the anvil. India has suffered, like most developing countries, from declining foreign investment, poor export performance, and a depreciating currency. But even pessimistic estimates project 5 percent growth in the coming fiscal year, and a good monsoon should ensure a bumper harvest. The measures that India should take to get its economic narrative back on track are the stuff of heated debate among economists and pundits. But for the aam aadmi -- the common man in whose name every party claims to speak -- these debates pale in significance beside the major steps taken to build a social safety net in a country where everyone had been expected to fend for himself. Cynics say the new measures are motivated by political considerations alone: the next general election is due by May next year. Before it was passed, one wit joked that the Food Security Bill meant “food for the poor, security for the ruling party and the bill for the taxpayer.” But it should be no surprise in a democracy that the government should pursue policies that are popular with a majority of voters. The fiscal costs of such measures are high, but the average Indian is better off now than he or she was nine years ago. Any government would feel vindicated by that record.