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Mainstream, Vol. XLVII, No 27, June 20, 2009

After Congress‘ Rejuvenation in Election 2009: Need for an Indigenous New Deal

Monday 22 June 2009, by Praful Bidwai


The great story of Election-2009 is the Congress’ rejuvenation on an inclusive pluralist-secular platform and the electorate’s emphatic rejection of the BJP’s divisive, communal politics. The Congress has got its second wind and overtaken the BJP by 90 seats and a hefty 10 percentage points in votes. There is overwhelming evidence that the key to its performance lay in its projecting itself as an advocate of the caring state on a broadly Left-of-Centre or social democratic platform through the National Rural Employment Guarantee Act (NREGA), farm loan waiver and other progressive measures including the Right to Information (RTI) Act. Or else, people wouldn’t have queued up to vote for the party in some extremely backward districts of UP without even knowing who its candidate was. Nor would there be such a tight concurrence between the salience of livelihood issues for the poor and the voting patterns in Tamil Nadu, Punjab, Andhra Pradesh, Rajasthan, Maharashtra and Delhi.

Clearly, this was less a vote for stability than for change in favour of the underprivileged: call it what you will, an emancipatory agenda, emphasis on the “aam aadmi”, social democratic orientation or appeal to inclusive egalitarianism. The Congress’ success lay in acknowledging that redistributive justice is vitally, centrally, important. People have handsomely rewarded that acknowledgement and want that agenda carried forward.

The NREGA must not be trivialised despite its flaws. In 2008-09, it provided an average 48 days of productive work to each of 45 million households, one-fourth of India’s total, amidst the slowdown, growing unemployment and increasing distress. It remains the UPA’s single greatest achievement. Social auditing shows the scheme’s performance has significantly improved, especially where there’s transparency and the RTI is used. With better auditing and closer monitoring to eliminate record-fudging and corruption, it can be further improved.

There’s a larger lesson here. Measures like the NREGA, loan waiver and the almost-ready-but-yet-to-be-passed Right to Education Bill follow from the premise that normal market-driven growth processes are woefully inadequate to create social opportunity and establish access to health care and other public goods which hold the key to human development in this hierarchical and unequal society with widespread deprivation and obscene regional and income disparities. This premise stands vindicated by India’s recent experience of high GDP growth, which saw employment growth fall to 1.85 per cent during 1993-2004 from 2.03 per cent over the preceding decade and has left 77 per cent of people scraping a living on a subhuman Rs 20 a day.


We need public action based on a redistributive agenda. This means breaking with GDP-ism and inverting conventional wisdom that sees poverty alleviation, employment generation and social welfare as derivatives of growth, arbitrarily defined as eight or 10 per cent. Instead, we must derive the growth target from the objectives of maximising employment, welfare and human development, including food security and guaranteed access to safe drinking water, health care, shelter and education. What India sorely needs is an enriched version of Franklin D. Roosevelt’s New Deal launched in 1933 in the wake of the Great Depression. FDR not only regulated rogue capitalism, he brought about substantive economic restructuring and social change through large-scale public works projects, including constructing 40,000 public buildings, 72,000 schools, 80,000 bridges and 8000 parks. The Deal’s entire cost in today’s dollars was a modest $ 500 billion. With progressive taxation of the rich, anti-monopoly laws and promotion of small businesses, it wrought a radical transformation of American society, reducing poverty and unemployment, spreading education, paring income and regional disparities and creating a huge infrastructure for balanced development.

Nothing could be more appropriate for India than an indigenous New Deal. To design one, the new government should revive the National Advisory Council (NAC), which gave birth to the NREGA, RTI and other innovative policies, but was wound up with the office-of-profit controversy involving Sonia Gandhi. An NAC reinforced by more public-spirited scholars, administrators and civil society activists can pick up the old threads.

The government must address three broad areas. First, it must extend the NREG model to other fields like food security (through a universal public distribution system), education and skill development and a national health programme which revives the currently moribund primary health centres. This last will have an electrifying effect on the health of the poorest people who cannot afford private medical care. Second, there must be rapid implementation of the report of the Arjun Sengupta Commission on Unorganised Sector Enterprises, which include credit provision, social security for the poor and affirmative action in many other areas. Equally important is public investment in backward areas.

Third, the government must mobilise resources needed for these programmes through levies and progressive taxation. The rich in India are among the world’s most under-taxed. Since the 1930s to the Thatcher-Reagan era, the Western capitalist countries had a top tax rate of 60 to 80 per cent and a direct tax-GDP ratio of 35 to 55 per cent. India’s ratio, fewer than 10 per cent, cannot fund public services. These changes will be resisted tooth and nail. But if the Congress recognises the roots of its own success, and Rahul Gandhi takes his social sector commitments seriously, the government must forge ahead with the New Deal.

(Courtesy: The Times of India)

The author, a free-lance journalist, is a well-known political commentator.

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