Chandrababu gets it totally wrong on dole vs jobs
Given Andhra Pradesh chief minister Chandrababu Naidu’s tech-savvy approach and industry-friendly policies could not help him regain power in 2004 and he remained out of power for 10 years, it is only natural that he should think only those reforms work that are socially acceptable. Of course, the voters will vote out politicians who come up with solutions they don’t like, but it is up to the political class to not just understand their mandate, but also to shape it, to package the reforms agenda in a politically acceptable manner. Indeed, it is surprising India’s original reformer should talk this language in the light of recent political events. Even former finance minister P Chidambaram is on record saying the Congress misread the mandate of 2009 since, while it won most of its seats in urban areas, it kept pandering to the voters in rural areas. Despite all the freebies showered on voters, the Congress got the drubbing of its life in 2014 as voters realised the freebies didn’t add up to much.The Food Security Act, to cite the biggest welfare scheme the Congress came up with, promised around R100 worth of subsidised grain per person per month, or R500 per month for a family of 5—that’s something the family could make in a day or two were the economy to grow fast enough to guarantee them jobs.Even inflation did not worry voters too much as long as there were jobs; it was the combination of no jobs and high inflation that did the Congress in. In the assembly elections also, the governments that were seen as performing were voted back.
Of course, drawing room theorising is quite different from reality, and this is where sequencing of reforms is very important.Cutting subsidies in a situation where there are no jobs is a recipe for disaster. Which is why, if things go to plan for prime minister Narendra Modi, he will be able to give people cash in their hands through the Jan Dhan Yojana and, while doing so, cut on the 60-70% wastage that physical deliveries entail—nor is this a novel strategy Modi came up with, the Congress’s Aapka Paisa Aapke Haath was much the same thing, but it just never got implemented. The plan to have gas grids might sound very high-tech, but the maths behind it is remarkably simple: since natural gas is much cheaper than LPG that is made out of refining the more expensive crude oil, it is more economical to give people piped natural gas than it is LPG. So, once the gas grids are in place, a smart politician can save on LPG subsidies while providing people a cooking gas medium that works just as well. Privatisation of electricity or even water supplies works only when potential voters can see a discernible difference in quality/reliability of supplies. Naidu’s right in saying, at the just-concluded World Economic Forum, that all reforms need to be socially acceptable, but it is up to the political class to sequence and market them as such, to make the trade-offs between jobs and dole clear to the electorate.