The ideas expressed in the budget could be powerful instruments of transformation. However the ideas will not fly on their own unless the government finds champions to steer them.
By Shankkar Aiyar | Published: 05th February 2017 04:00 AM |
John Maynard Keynes once said that the difficultly lies not so much in developing new ideas as in escaping old ones. In the saga of governance, the challenge is not so much in creating new ideas, but in dismantling old ways of governing the political economy.
Budget 2017 makes a start, an attempt to dismantle some old shibboleths, even if on a limited scale. Embedded in the long-winded 12,482-word speech, stretched across 184 paragraphs, are ideas that could deliver transformation and enable Bharat into the 21st century.
Take the section on agriculture. The budget speaks of higher credit, micro-irrigation, enabling of marketing and about dairy development. This column has persistently highlighted (Links: http://bit.ly/24uW8bm http://bit.ly/2jDijKQ) the need for quantum change — induction of technology and connectivity of producers and consumers.
Farming is a business but politics has systemically rendered it into a vote bank, a noble cause with vulnerable viability. The critical element, missing for years, has been the need to connect demand with supply — that is the buyers with the producers. Hidden in the budget verbiage is a most powerful idea: “A model law on contract farming would, therefore, be prepared and circulated among the states for adoption.”
The re-arrangement of the equation of supply in alignment with demand — along with other initiatives listed in the budget — can create the ecosystem that farmers have been denied for decades.
This could bring into play advisory services and technological inputs on choice of irrigation, soil diagnosis and better nutrients — all of which could be delivered by start-ups.
The computerisation of primary agricultural credit societies could connect them with big banking. The liberation of perishables from the clutches of the APMCs can bring e-commerce entrepreneurs and deliver better price discovery. The creation of the micro-irrigation funds could be the seed capital for enabling migration to drip and sprinkler irrigation — now covering a fraction of total cropped area.
The creation of the Mission Antyodaya to time with the 150th birth anniversary of Mahatma Gandhi is another force multiplier. The articulation of the idea lacks details, but essentially the idea it would seem is to converge all social schemes at 50,000 gram panchayats and ensure accountability and outcomes to make them poverty-free. The demonstration effect of this one initiative — with a timeline and deadline — should create a template for governance in rural development.
The fundamental problem that daunts India in translating allocations into outcomes is the lack of capacity on the ground. The budget, in paragraph 44, mentions a programme to initiate “human resource reforms for results” for Panchayati Raj institutions, to be launched this year. The budget lists the idea but has been less than ambitious.
A country with over 5.9 lakh inhabited villages needs trained personnel for local governance. Why not create a cadre — on the lines of the all India services — for the panchayats. Or at least a state cadre, in all the states, with a template designed perhaps by the Niti Aayog. The inductees could be trained to harness the allocations available — for the many programmes — and deliver outcomes.
The same could be replicated for urbanisation for over 3,700 Census towns languishing on the frontiers of urbanisation to deliver much-needed capacity and create employment (http://bit.ly/2jhBygh).
Micro, small and medium enterprises (MSMEs), which account for the bulk of employment in the private domain, are among the worst-hit by demonetisation — thanks to the fact that many deal in cash for inputs and output and stay informal. This has been recognised both in the Economic Survey and in the Budget.
The MSMEs are not “informal” by choice — the fundamental reason is the plethora of compliance and attendant costs.
There are 54 different laws governing workers as illustrated in earlier columns (http://bit.ly/Lnn8oL; http://bit.ly/1JjROUC). The laws ostensibly intended to preserve jobs work to preclude job creation. Small entrepreneurs neither have the capacity nor the capital to migrate to formal systems.
Budget 2017 promises to dismantle the wall of regulations that the Inspector Raj prospers on. The budget promises legislative reforms to simplify labour laws into four codes — wages, industrial relations, welfare, and safety and working conditions. Ideally, it should have been just one code — the various facets of labour welfare encompassing the multitude of issues.
Be that as it may, the move — along with the promised model shops and establishments law — should enable small entrepreneurs migrate to the formal sector and be able to access credit, insurance, technology and markets.
The ideas expressed in the budget could be powerful instruments of transformation. The operative phrase here is “could”. The ideas will not fly on their own unless the government finds champions to steer them.
To appreciate this, one must consult history. C Subramaniam (backed by Lal Bahadur Shastri) championed the Green Revolution, Verghese Kurien propelled the milk revolution. The space programme was steered by Vikram Sarabhai, the nuclear programme by Homi Bhabha.
Success stories of recent years validate this. The software revolution was enabled by Nagraj Vittal, backed by P V Narasimha Rao in the wake of the 1991 crisis. The rural roads programme, now a major success story with over 4.92 lakh km, was an idea championed by Nitin Gadkari in Maharashtra. The Aadhaar platform — now critical both for financial and social inclusion — was championed by Nandan Nilekani, backed by Pranab Mukherjee. More recently, Piyush Goyal has been championing the cause of rural electrification, languishing amidst changing definitions.
Lest we forget, history is littered with ideas that flailed without champions. The struggle to deliver drinking water, the many programmes to reduce malnutrition and under five mortality, the broken state of education (http://bit.ly/2bIEH52), the Gotham-isation of urbanisation (http://bit.ly/2jJZMjn), the miserable progress of skills development initiative, are visible illustrations.
Yes, a big reason for the failures is systemic — the multi-layering of decision-making between Centre and states. And this is precisely why ideas must be championed across political and geographical boundaries.
The politics of transformation, like laws of economics, is governed by the rule of necessary and sufficient conditions. It is not enough to plant ideas. Success demands navigation and nurture by champions of the cause.