Populist budget minus economic prudence

By Ramesh Kanitkar

Just as there is no such thing as pure politics, pure economics belongs to the realm of Utopia. In real life, we live in the framework of a political economy. Hence, there can be no politics without economics and no economics without politics. Politics takes precedence over economics when you present a budget just before an election year. Finance Minister Mr. P. Chidambaram could not have avoided that. He has, therefore, done a balancing act.

The economic well-being of a state and its people is based on continued growth, price stability and equitable distribution. When all are under threat, corrective steps are needed. The most radical step in the 2008 Budget is the proposed loan write-off for marginal and small farmers. The amount, almost 30 per cent of the total agricultural loans outstanding in the banking system, ultimately will be paid for by the exchequer-which is all the people who pay taxes, whether income tax, excise or customs duties. It is a moot point to debate whether this is achieved through write-offs or through tax concessions, since directed write-offs run the risk of moral hazard.

Budgets are an expression of political choices, and this one represents Congress leadership's desire to win assembly polls in major states and retain power at the Centre by reclaiming the "aam aadmi" plank and preserving the broad coalition that helped it come to office in 2004.

The debt waiver may be the chief populist device, but the government has dutifully carried out Congress President, Mrs. Sonia Gandhi's brief to reach out to politically crucial constituencies by other means as well. Increased subsidy for houses under the immensely popular Indira Awas Yojana, welfare schemes for workers in unorganised sector, special measures for SCs/STs and minorities, a new deal for senior citizens and women-Finance Minister P. Chidambaram's panoply is really broad. Add to this I-T relief for the middle class, clear indication that government would implement the recommendations of the Sixth Pay Commission, and the Budget fits the "please-all" tag.

Politically, it can help coalition managers claim that they have redeemed the aam aadmi ke saath pledge, obscuring the gap between UPA's performance and soaring pro-poor rhetoric that helped them best the BJP-led NDA. Congress was already busy milking the debt waiver with Mrs. Sonia Gandhi appearing at a thanks-giving show choreographed by party managers who had bussed in crowds from Haryana even before Chidambaram had revealed the "Budget secret".

Importantly, the first celebration took place even before the Budget had been presented when a Congress delegation noisily celebrated an "indication" from Prime Minister Manmohan Singh that Congress chief's "advice" for relief by way of a farm sector package would be duly heeded. On February 29, the Prime Minister, said to be usually wary of the moral hazard that loan waivers represent, proactively tried to grab some bragging rights with his office helpfully informing that it was he who had "done it".

The volume will be turned high in the coming days as more delegations are likely to turn up to thank the Congress leadership. It will not be a surprise if those from poll-bound states of Madhya Pradesh, Rajasthan, Karnataka, Chhattisgarh and Delhi get a few more photo-ops with Mrs. Sonia Gandhi.

The Finance Minister's assertion that he was mindful of the need to keep inflation under check wasn't the only sign of Mr. Chidambaram being in tune with party's electoral priorities. The choice of Rajasthan and Delhi among the launch pads for Rashtriya Swasthya Bima Yojana can't be a coincidence when the electoral calculus seems to govern every decision.

The schemes targeted for specific demographics-those for SCs/STs and minorities-may mark a continuity. But for Mr. Chidambaram to swear by the recommendations of Sachar Committee for the welfare of minorities getting enshrined in the Budget represent boldness, at least, so far as Congress is concerned-in the face of BJP's campaign against "appeasement of Muslims". The indication last year that Sachar Committee may have been enshrined as a principle of governance has proved correct. Chidambaram's allocations for SCs also may have been in keeping with the trend of past years. But by tom-tomming them, he seemed to articulate fears of his party men over BSP supremo Mayawati's ambitious plan to raid Congress's bases outside UP.

Opposition seemed to acknowledge the shrewdness of the manoeuvre. The criticism appeared proforma and dutiful. It also marked a setback to plans to use farm distress as main weapon in Opposition's electoral arsenal. UNPA, for one, had made plans for that and must feel cheated. BJP also has to rework its plans for the coming state polls where it will be handicapped with the "incumbent" status. It is also sure to take serious note of the attempt to lure the urban middle class with the help of income-tax relief in the post-delimitation scene where urban vote will count for more.

UPA has clearly taken fresh guard. But in the process, Finance Minister has also pulled off an image makeover. During one of the pre-Budget huddles, Railway Minister Lalu Prasad Yadav had complained that Mr. Chidambaram's budgets always end up erasing the "feel good" vibes of his railway budget. On the V-day, Lalu Prasad's rail bonanza paled before Chidambaram's populist inventory.

Opposition leaders found it difficult to find arguments and enthusiasm to criticize the Budget, while the smile on Congress MPs' faces grew bigger and wider. For, these two mega giveaways-aimed at urban and rural constituencies-were not the only sops for vote bases. There were major hikes in outlays on education, health and the social sector. The mid-day meal scheme-already the biggest in the world-will also be extended to upper primary classes of all government and aided schools.

Some of the giveaways-like the excise cut and more money for the middle class-may have positive economic effects insofar as they could spur demand. Some may not. But Mr. Chidambaram didn't seem as worried about fiscal prudence as about the electoral spin-offs.

There are some proposals that sting, but they steer clear of the "aam aadmi". For instance, the hike in short-term capital gains tax from 10 per cent to 15 per cent. Businessmen, corporates, brokers and investors may not be as happy with the Budget as the middle class, but that the Congress can live with. In an election year, if the choice is between those who count their money in crores and those who number in crores, you don't have to be a political pundit to get the choice right. INAV

Danger of de-population rather than over population

By Jyotsna Pandit

The 'population explosion' in developing countries was till recently considered a severe constraint on growth and development. China's mandatory one-child norm and India's 'sterilisation' drive were predicated on this view. Population control policies still exist, but hardly anybody talks about the population time bomb any more. Focus has quietly, but swiftly, shifted to addressing issues arising out of an ageing society: decline in the number of workers, pension and welfare reform, migration and decline in growth rates. The population time bomb has yielded to demographic bonus, with babies elevated to the status of future growth drivers. China's one-child norm now seems growth threatening while India's failed 'sterilisation' drive seems fortuitous!

The population scare in developing countries generated by the Club of Rome and scholars like Paul Ehrlich was preceded centuries ago by something similar in Europe. As Europe entered the first stage of demographic transition, characterised by a sharp fall in death rates consequent on rapid improvement in public health, Thomas Malthus argued that human population growth would soon outstrip food supply, leading to catastrophic adjustment through war, famine and pestilence.

This did not happen. Out-migration to white-settler colonies provided a partial 'safety valve', but Malthus was eventually proved wrong because productivity growth exceeded population growth. Scholars like Ester Boserup turned Malthus on his head, arguing that population pressure provided the creative impulse that boosted agricultural productivity.

Population density from the dawn of human evolution never exceeded more than 2-3 per square mile right up to the Neolithic Revolution about 10,000 years ago. Even as man began to grow his own food human densities beyond fertile river valleys remained very low as agricultural productivity was low. It is difficult to imagine today that average European grains yields were around 1:4 right up to the end of the Middle Ages. They were slightly higher in the Low Countries, in the rice growing regions of Italy, and in southern European which relied less on meat, devoting more land to cereal cultivation. The predominantly cereal consuming rice-growing riverine areas of China and India, and maize-growing ones of Meso-America, were more productive, and hence more densely populated. The west European marriage pattern of late marriage and high celibacy and resultant lower birth rates underscored these differences.

Population density thus adapted to available energy levels, which did not vary greatly over long periods since technological improvements were few and far in between. The demographic pattern was characterised by high birth and death rates. Demographic upswings occasioned by a succession of good seasons were periodically audited by famine, disease and war since man had limited control over his environment. Indeed, 'Malthusian crises' better described pre-industrial societies where the sharply fluctuating death rate was the critical equilibrating force keeping population in check.

This equilibrator became ineffectual with increasing food security and improvements in public health that marked the first stage of demographic transition. While death rates respond to technological progress, birth rates adjust to death rates with a variable 'cultural' time lag. With rising living standards, life expectancy and literacy, especially female literacy and empowerment, birth rates have adjusted so drastically that most parts of the developed world face sub-fertility rates and declining populations in what is described as the second stage of demographic transition. The third stage, where population is expected to stabilise after adjustment, remains elusive.

Sharp declines in poverty, rising living standards and female literacy have also sent several developing countries hurtling towards the second stage of demographic transition. It is estimated that over the 20th century population quadrupled, while per capita GDP quintupled. Global growth has been unequal, but most parts of the globe have nevertheless seen a rise in living standards. However, most developing countries would grey at far lower per capita incomes compared to OECD countries, constraining their capacity to transfer incomes to cope with ageing-related crises in welfare.

Poverty and population growth share more in common than simply positive correlation. Neither seems capable of direct targeting, except in non-democratic environments like China. Democratic India's sterilisation drive was quickly transformed into 'Family Welfare' following political catastrophe. Both poverty and population are however sensitive to 'indirect' targeting through policies that promote growth, human productivity and social welfare.

As food supply continues to outstrip population growth, the Malthusian case now rests on the environmental impact of population growth. But unsustainable growth has less to do with population per se than with consumption benchmarks set by rich countries. They also contribute more to global environmental change despite their declining population. Others argue environmental pressure would stimulate technological solutions for its own abatement.

As the ageing and welfare crises in the developed world unravel, migration can be expected to increase sharply, equalising the global demographic structure over the long-term. Human demographic structure has come full circle, beginning and ending with high dependency ratios with one crucial difference: while pre-industrial societies had more infants on account of high birth and low life expectancy, the dependants in post-industrial societies consist primarily of the elderly on account of low birth rates and high life expectancy. The long-term threat to the human species may well be de-population rather than overpopulation.

Migration, crisis in welfare, declining growth and rise in age of retirement are well known consequences of ageing and depopulation. The more intriguing impact however could be through correctives to globalisation which is exacerbating inequality and leaving some countries, especially those in Africa, behind. On account of the strong positive correlation between affluence and ageing, poorer countries will age later, and could become nodes of growth as more affluent ageing societies slow down. Secondly, it is widely believed that globalisation has increased inequality by increasing the rewards to capital relative to labour. Ageing could reverse this equation, with asset prices falling as a growing number of retirees sell assets to a shrinking base of workers. INAV

Legal captives

By Ramesh Pandita & Meenakshi Koul

This reminds me the words of Rosseau that 'Man is born free, but he is everywhere in chains'. How true this stands, that despite having everything at our hand, whether in the form of being learned and educated, with all good senses to assess all good and bad and various others, up to the judiciary, which is there to maintain law and order for the simple reason to protect human interests. As all of us have assessed, that there prevails a threat to human beings from one of the Gods deadliest creature, which unfortunately also happens to be a human being and whom we more often yell as our own brethren, the fellow human beings, who have become so inhuman, that they do not hesitate at times in decapitating the head of fellow humans, where brothers keep a constant eye on each other with all ill intentions that when they will find the opportunity to make other one to be at the receiving end so that even his part of loaf of bread be grabbed. And strange it may sound when I will make mention here that the law also holds the neck of poor, where the mightier seeks every protection from law and leaves no leaf of law book unturned to hold the miser with the clutches of law.

And how far we are able to protect the human interests is perhaps not concealed from any body; as a matter of fact every minute all over the world, there is Human Rights Violation in one or the other form. And how far we are able to defend our Rights and protect our interests is really perhaps un-assessed, and how shocking it appears, when we make a mention of Human Rights Violation by Law, rather Legally Violating Human Rights. Actually we have got people all around us, who always keep on conceiving ideas as how to harass others or how to make others succumb before us with all legal clearance rather under the nose of law with all evidences that the person deserves things that way. We know very well how law is handy in protecting the 'Human Rights' and their violation but what will happen if law violates the Human Rights and fails to protect ones rights, this is what all of us may come across one or the other day in one or the other form but most of the time same gets un noticed and this I believe should get into the notice of every body that in one or the other way we either are or we may become legally captives, and if we are legally captives who will come to our rescue, really a thought provoking one.

A bond in writing or an affidavit with regard to any activity of a person ensures that a net of legal confinement has been woven around one to not to let one do things of ones choice, doesn't matter if the bond or writing has been given during the course of utter helplessness or the moment the bond was signed there was no second alternative to protect ones interest, but doesn't it reflect the nature of being total un-lawful. Here one is legally unable to protect ones interest because the captivity has been made under the legal course by the custodian. To be more exact I have a tale of my good friend to tell you, This is with regard to his job in an autonomous organization, where he was offered the job on conditional basis that he has to serve the organization for minimum five years period and needed to give a surety in writing in the form of a bond. Now the question arises how legal or lawful it is, isn't it Human Rights Violation, where my friend is supposed to sell off important five years of his life to an organization and in case the same is violated then he need to reimburse the whole salary drawn form the organization with in the specified period. To this effect, it is wide apparent that the organization wants only to serve its own purpose in every respect, whether it is in terms of its growth or development and for this they can cull the growth and development of an individual as this is the only reason which provokes them to make a person legally captive. A five years bond means an opportunity to better job will be lost, it means confinement of expression of thought, and it means the attained knowledge will also get confined as there may not be the better means to exploit ones attained knowledge in the best way for the betterment of humanity. This means all the good which may come in ones way has to be fortified. As the person has given in writing that he will serve hence loses all claims and that too legally. And, during the case of failure, the reimbursement of whole salary to the employer means the time spend and the services rendered to that particular institution or organization doesn't hold any importance and the employer has got nothing to do with the personal growth and development of the employee, and it clearly signifies that the employees services is worthless and time spent in that particular institution is totally valueless.

Usually we seek legal assistance to protect our interest so that no body may misuse or exploit our interest but the scenario in present date is totally different and people today seek legal help to cull the interest of others. This is not just the case with one or two, all of us know better that every activity in present date is carried out with all legal corroborations primarily inclined towards the party, which seeks the legal assistance, just to ensure that the recipient party should no way be left powerful to cry for his/her interest and should be always at the receiving end to obey the dictates of the former and it is the fear of unseen which keeps one at the bay to take all sought of legal help no matter if it is at the cost of life of others because primarily it is going to protect the ill interest of legal assistance seeker.

Now the question arises, how far we are correct in our assertion that people can be kept legally captives and how far it is illegal to keep a person legally captive, because at both the fronts it is law which can protect our interests, as it is with the help of legal assistance one can confine one and it is the law which is the only hope for every legal captive to break this jinx. Besides the question arises also, as how far it is legally correct rather approved to exploit ones bad days, during which every body remains always prepared to get exploited, as, at that time it hardly matters who is exploiting and what it costs, because nothing costs more than life and if ones life is at stake, every body will embarrass any thing for the sake of life of ones parents and all other dependent members of the family and for this I can say every thing is fair at the cost of life, so is the singing of legal documents intentionally, where even consent for life long slavery may be asked for, where one is always ready to sell-off ones every thing for the sack of many. This is where we can make the difference between the two faces of same coin in which one works for the sack and betterment of humanity and the other one for the bringing down of same. In the end surely and being optimistic we can say let good sense prevail on all of us so that we can really assess our own role and responsibility towards our fellow brethren, where we may only say that human is the best creation of God.