The annual ritualistic presentation of the Budget is an over-hyped event to say the least. It provides the finance minister with an opportunity to grandstand and wax eloquent on each and every issue. Voluminous documents are churned out commencing with the Economic Survey to something called an outcome Budget. This government did well by breaking with tradition and junking the antiquated practice of presenting a standalone Railway Budget. The government would do well if it limits the Union Budget to a barebones income and expenditure statement and allows every minister to present his plan of work to Parliament based upon a prior allocation of resources. The standing committees must then examine the budgetary allocations of every ministry in conjunction with the annual plan of work. It would make the whole exercise far more meaningful than the process currently in play. However, what the Union Budget does even in its current avatar is that it provides an opportunity to re-examine the fundamental macro-economic model.
However, the Economic Survey of 2017 waxes eloquent when it propounds: “The result of all these reforms over the past 25 years has been a remarkable transformation of India from a largely closed and listless economy to the open and thriving economy. The country’s progress is not only qualitative. It is also measurable”. Consider, for example, four standard measures: openness to trade, openness to foreign capital, the extent to which public sector enterprises dominate commercial activities and the share of government expenditure in overall spending. However, this is far from the truth. In a recent report Oxfam has stated that eight men own the same wealth as the 3.6 billion people who make up the poorest half of humanity. In a follow-up interview, Nisha Agrawal, India CEO of Oxfam, elaborated the India context: “In 2016, India is the second-most unequal economy after Russia. Inequality is fracturing our economy and the reality is that today 57 billionaires control 70 per cent of India’s wealth. Even the International Monetary Fund recently warned that India faces the social risk of growing inequality…”
Oxfam’s Ms Agrawal further stated, “Over the last 25 years, the top one per cent has gained more income than the bottom 50 per cent put together. Far from trickling down, income and wealth are being sucked upwards at an alarming rate. Like many other countries, in India, too, policies have not focused on raising the incomes of the poorest. India’s liberalisation in the early 1990s has seen an explosion in inequality since it created opportunities in a few high-end sectors such as banking, IT, telecom and airlines that only created a handful of jobs for the highly skilled and educated. Not many policy reforms have happened either in agriculture or labour-intensive manufacturing that could have created millions of jobs and raised incomes of the poor. Furthermore, not much effort has been made to raise more revenues and spend on basic education and health so that the poor could benefit from the opportunities being created”.
It does not require rocket science to know the truth of those assertions. Anyone who has travelled extensively around the country over the past two-and-a-half decades has seen the disparities grow at an exponential pace, notwithstanding attempts to bring about socio-economic equity by successive governments. Just as the command economy model locked India into the derided “Hindu rate of growth”, the current economic construct has failed to deliver sustainable livelihood to a substantive swathe of the people of India. Explaining what that model is, the Economic Survey of 2017 points out: “India has replaced its erstwhile socialistic vision with something resembling the ‘Washington Consensus’ open trade, open capital and reliance on the private sector — essentially the same development model that has been tried and proven successful in most countries of Eastern Asia. Reforms along these lines have been adopted by every successive Indian government over the past quarter of a century.”
What may have worked for the Asian tigers because of smaller populations or other locational and geographical factors, the dividends of this economic model for India have been few and far between; It is the oligarchs and crony capitalists who have thrived and flourished, much like the initial flush of Russian economic liberalisation. The question then is — where do we go from here? The answer lies in part in one of the chapters of the survey entitled Universal Basic Income: A conversation with and within the Mahatma. Explaining what the concept means, the Survey says: “Universal basic income is a radical and compelling paradigm shift in thinking about both social justice and a productive economy. It could be to the 21st century what civil and political rights were to the 20th. It is premised on the idea that a just society needs to guarantee to each individual a minimum income which they can count on, and which provides the necessary material foundation for a life with access to basic goods and a life of dignity. A universal basic income is, like many rights, unconditional and universal: it requires that every person should have a right to a basic income to cover their needs, just by virtue of being citizens.”
With the State unable to provide jobs or even opportunities for stable and sustained employment the time has come to build an economy for 99 per cent of the people, and not just a few at the very pinnacle of the pyramid. It would entail a fundamental restructuring of the economy that does not look at this construct as a dole to keep the unwashed masses from revolting against a skewed economic order but as a means of harnessing the creative energies of millions of our people by putting them to work. With the palliatives of socialism and the “trickle down effect” both having failed, universal basic income benchmarked by the index of gross national satisfaction must be the way forward.
