End of Entitlement

WHEN PRIME MINISTER Narendra Modi launched the Pradhan Mantri Kisan Samman Nidhi or PM-Kisan on February 24th, 2019 in Gorakhpur, there was plenty of cynical commentary. The General Election was at hand and the scheme was supposed to be a measure to bolster the Government’s allegedly poor standing among the electorate. The scheme was announced by then Finance Minister Piyush Goyal on February 1st and he had made a provision of ₹ 75,000 crore in the Union Budget for the scheme.

The cynicism came in two varieties: some held it to be an electoral ploy while others thought it was a case of too little, too late. More than two years later, data shows the Government was on the right track, after all. Earlier this month, the Central Statistical Office (CSO) released the Situation Assessment Survey of Agricultural Households, a report that presents a snapshot of the status of farmers for the July 2018 to June 2019 period, a period roughly eight months prior to the launch of PM-Kisan. The survey shows that an average farmer earns a paltry ₹ 27 per day from the cultivation of crops. This translates to ₹ 9,855 per year, assuming the farmer works every day of the year. With every farming family getting ₹ 6,000 per year under PM-Kisan, the support provided by the scheme amounts to 60 per cent of what a farmer earns from cultivation.

The comparison is not wholly accurate as PM-Kisan delivers support to a farming family and not an individual farmer, but however one may look at the data, it is clear that the scheme goes a long way in helping small and marginal farmers who are buffeted by adverse economic circumstances. There is little doubt that while our farmers deserve more, the question is about getting the resources for the task.

A year later after the scheme was launched India experienced its worst economic downturn due to an external shock, a pandemic. The emergency measures put in place badly hit Government revenues. But that did not affect PM-Kisan: enrolment in the scheme as well as payouts continued apace. Envisaged as a scheme to help 12 crore small and marginal farmers, the scheme witnessed 3.16 crore payouts from December 2018 to March 2019. Two years later, this number jumped to 10.23 crore during the same period and has remained stable around 10.5 to 11 crore payments every quarter, largely fulfilling its objectives.

The enthusiastic participation of farmers in the scheme clearly points to the massive demand for financial help among farmers, something that cannot be met completely by the Government’s redistributive efforts. The prime minister clearly recognised this and began working towards doubling farmers’ income in five years. Unfortunately, that goal was dented by a class of large famers who launched an agitation against farm reform laws that would have allowed greater market access to the sons of the soil. This unfortunate aspect of India’s politics has, however, not deterred the Government from furthering the welfare of the backbone of India’s population, its farmers.

The political roadblocks on the path of reforms that directly help people are best exemplified by the Direct Benefit Transfer (DBT) programme that lies at the heart of the welfare delivery plumbing of the Government. At any given point, the Union and state governments run hundreds of welfare schemes. The sum of government money involved in these schemes is, to put it mildly, gigantic. The Mahatma Gandhi National Rural Employment Guarantee (MGNREG) scheme alone is upwards of ₹ 65,000 crore every year. These schemes, until seven or eight years ago, were also the largest sources of corruption in India. Every year in the Budget, the Union finance minister would announce a slew of schemes meant for poor citizens. Only a fraction of these resources ever reached those for whom the money was meant. From 2014, one of the priorities of the Government was to devise a system in which this loot could be limited to as great an extent as possible.

The architecture of the system depended on the use of Aadhaar numbers to link individuals. From ration shops dispensing foodgrain to subsidies for LPG cylinders to more, the linking of Aadhaar with individual accounts was essential if corruption was to be halted. This met with a wall of political and intellectual resistance. It was argued that Aadhaar did not have legal backing in the form of a law. When that was done on March 11th, 2016, when the Bill enabling this was passed in Lok Sabha, a legal challenge was mounted in the Supreme Court on various grounds, such as a violation of privacy, procedural infirmities in passing the law, etcetera.

Finally, after the Supreme Court cleared the decks, the DBT programme took off. At the end of May 2016, 74 schemes of 17 ministries and/or departments were covered by DBT. This later rose to 311 schemes from 54 ministries. Today, it is inconceivable that any Government benefit can be transferred bypassing the DBT mode.

The architecture’s finest moment came during the pandemic. In one the most painful events of modern Indian history, lakhs of workers began trekking back to their villages as urban India locked down and economic activities ground to a halt. A key concern, in the Government as well as among citizens, was to ensure that hardship was minimised. In April alone, just a month after the nationwide lockdown was announced, more than ₹ 36,659 crore from Central and state government schemes was transferred by DBT to the accounts of 16.01 crore people. Cash benefits amounting to ₹ 9,930 crore were transferred to 19.86 crore women account holders. This was part of the PM Garib Kalyan Yojana.

A year later, Finance Minister Nirmala Sitharaman said the system allowed the Government to reach people during a critical time. During an event in Aurangabad on September 16th, she said: “The JAM (Jan Dhan, Aadhaar, Mobile) trinity concept of the Narendra Modi Government helped to reach the farthest person in the country. There were questions in the minds of people when the Jan Dhan scheme was launched…The inclusion of people in Jan Dhan stood by us in the Covid-19 pandemic, and we could help the people directly so that they can live their lives.”

What is interesting about the “new welfarism” under the Modi Government is its changed emphasis from previous approaches. Some of the earlier schemes, such as MGNREGA, continue as before. The problem with those efforts was that they could neither deliver a sufficient level of income that rural households could get the goods and services they needed nor could they provide the “basic goods” themselves as at relatively low levels of income, it is very difficult, if not impossible, to get hold of these goods and services. Consider potable water through piped connections. In an urban setting where infrastructure, such as water purification plants, treatment units, pipelines and water quality systems are in place, the “last tap” delivery is not difficult. But in India’s far-flung rural areas, where such infrastructure existed only on paper, it is impossible to provide this service.

In August 2019, Modi had promised that every rural household in India would have access to tapped water supply. At that time, fulfilling the gargantuan task appeared difficult in the span of five years. Financial resources were one matter, the sheer physical spread of the country across vastly different terrains posed another problem. Two years later, the Jal Jeevan Mission—the umbrella programme tasked with providing Functional Household Tap Connections (FHTC) to every home—has gathered pace. The Covid-19 pandemic did slow the progress a bit, but even with that hiccup, 78 districts now have 100 per cent FHTC coverage. More than 1.14 lakh villages have tap connections with states like Bihar, Odisha, Telangana and Himachal Pradesh taking great strides in providing tapped water connections. This year, Sitharaman provided a whopping ₹ 50,000 crore in the 2021-22 Budget for the Jal Jeevan Mission. This is likely to speed up the programme considerably.

ANOTHER EXAMPLE OF these “basic goods” is an LPG connection. Once again, in urban India with its better connectivity and transport, getting a gas cylinder is just a matter of a phone call to the distributor or a centralised service. But clean cooking fuel has remained a pipedream in rural India. In its absence, respiratory tract diseases had become a constant in villages where unclean fuels were the only option for virtually all households.

The PM Ujjwala Yojana aimed to change this and push LPG connections to rural India. Launched by Modi on May 1st, 2016 in Ballia, Uttar Pradesh, the scheme originally had a target of five crore households. Later, it was extended to eight crore households with the last household being given a connection by the prime minister in Aurangabad on September 7th, 2019, well ahead of its target date. The scheme was extended to another one crore households in the Budget for 2021-22 as there were many deprived households that did not have this benefit. It was launched earlier this year. With the first phase of the scheme, LPG connections to poor families in India have gone up considerably since the scheme was launched in 2016. All 715 districts of the country are covered under the scheme.

At a conceptual and political level, the “new welfarism” under Modi provides an interesting contrast to the previous avatars of social welfare. Either by design or by intent programmes were allowed to coexist with corrupt practices, especially in rural India. The lack of information, the passing of benefits through the local power structure where elected officials often had a say in distributing benefits and poor citizens having to interface with officials often meant that benefits never really reached where they were meant to go. There were two issues. One, the number of intermediaries needed to be reduced; and two, citizens themselves needed to be empowered and take charge of their resources.

The way out was envisioned a long time ago when Aadhaar was devised as a universal identity number and was meant especially for those who lacked documentation to prove their identity. There was a clear link between the availability of a unique identification and the elimination of ‘ghosts’ from the welfare system across schemes and programmes. But this was not done. At the intellectual level, the justification for opposing the marriage of Aadhaar and welfare was violation of privacy. This was a far-fetched concern if not downright cruel: viewed dispassionately, the intellectual opponents of the new system seemed to want the poor to choose privacy over welfare.

This, however, was just the surface. The real—political—reason why the JAM architecture that empowered the poor was never put in place was its very nature: if the poor were empowered, then a very powerful set of people, a thick parasitical layer of intermediaries vital to the political system then, would be disempowered. This was one of the key reforms of the first Modi Government.

When one looks back at what was done, it seems to be simple enough but its welfare and political implications are still unfolding. This has certainly been for the better of India’s poor citizens.

The second major change is in the way welfare has been visualised. The so-called ‘entitlements’ approach earlier came close to fiscal recklessness and tried to turn everything into a ‘right’. In a vast country like India with a relatively low tax-to-GDP ratio, this was a recipe for constant fiscal pressure. Instead, a much better option was to visualise a bouquet of ‘basic goods’ that could improve the quality of life at the bottom of the economic pyramid.

This combination has proved its worth. Millions of households have accessed goods and services that they never imagined could come their way. The manner of frictionless and faceless delivery—also seamless in the case of benefits transferred via the DBT mechanism—is empowering in itself for the poor.

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