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Mainstream, Vol XLVIII, No 11, March 6, 2010

Letter to the Prime Minister

Saturday 6 March 2010, by M.N. Buch

My dear Dr Manmohan Singhji,

I studied economics for seven years in Delhi, Cambridge and Princeton, but I suppose very little rubbed off on me and I am not really an economist. You, of course, are and I presume Kaushik Basu, Montek Singh Ahluwalia and Shri Pranab Mukherji’s team are all economists. My reaction to the 2010-11 Budget, therefore, is that of a common man and a former administrator. Therefore, if I make bloomers in this letter I am sure you will forgive me.

The Budget is described as being growth-oriented, not least because it makes an attempt at reducing the fiscal deficit by increasing petrol and diesel prices. It is considered growth-oriented because the income tax rates have been adjusted so that there is more money available for consu-mption which, in turn, will encourage production of goods and services, thus providing employment. It is considered growth-oriented because there is marginally some additional funding available for rural development, especially the National Rural Employment Guarantee Scheme. According to industry, as reported in the newspapers, the Budget is encouraging because, if we read it in a long term perspective, it indicates the desire of government to encourage economic growth.

Let us begin with the question of more money in the taxpayers’ pocket. The total number of income taxpayers in India is approximately four crores. Assuming a family of five people, that figure covers about twenty crore people. That still leaves eighty crore people who pay no income tax, who have no tax concession, who have no extra money in their pockets, but have to bear the burden of higher prices. The persons outside the tax net, that is, the not-so-well-off people, have to go to work and whether they travel by some form of personal transport or use public transport, their daily cost of travel to and from work will increase. Despite the statements of the decimal point economists with which the Finance Ministry seems to abound, increase in the fuel cost of prime movers will have an effect on commodity prices, in particular foodstuffs. This burden will be passed on to a huge number of consumers who already spend about sixty per cent of their Budget on food alone. How is this a growth-oriented Budget for these eighty crore people?

The American pattern of a consumption-driven economy does not automatically translate itself into an Indian context. The market for consumer durables, especially those which are priced fairly high, is restricted to a relatively small percentage of Indians. The affluent certainly buy more motorcars, including the odd Rolls Royce, Mercedes, Toyota Lexus and Jaguar, but though the number is large enough to encourage a substantial automobile industry, it is not large enough to affect the economy as a whole. Moreover, jobs in a complex industrial process are limited to skilled workers and our education system is so skewed that vocational education is still minuscule and skill development is very limited indeed. Undoubtedly industry located in large cities will attract unskilled migrants into the unorganised service sector, but this is only transference of poverty from a rural to an urban setting. This does not represent growth. It represents the increase in misery as our towns fall apart.

I am happy that India is one country that has not bought the World Bank argument that development requires massive migration from village-based agriculture into urban-based jobs. That is why I welcome an initiative to provide employment in rural areas. However, I have been arguing ad nauseam that we cannot run a muster-based employment programme, whose objective is employment rather than asset-creation, with even a modicum of honesty. Dishonesty and misappropriation of funds is built into the genetic make-up of such a programme. I can write you a whole volume on how the present NREGS has brought corruption to the nth degree of perfection, but I shall leave the details to another occasion. However, if you so desire I can prove to you in the field how the programme, whilst putting some money into the pockets of villagers, has not created worthwhile assets and has, instead, enriched those who administer the scheme.

Why is this happening? We have gradually run our delivery system into the ground. As a young D.C. I had only Rs 1 lakh per year per Block available to me for development. The programme was truly participative, works were taken up according to priorities fixed village-wise, people had to contribute half the cost of the project by way of labour, materials or money and the works undertaken then are still largely standing because the people kept a sharp eye on the officials because their own money was involved. There was really accountability. Now we have brought in a Panchayat system which should have increased people’s participation but which in fact has transferred corruption from officials governed by rules to Sarpanchs who feel they are accountable to no one. There is no people’s participation because the Gram Sabha is, by and large, either ineffective or indifferent. In any case we have achieved the miracle of totally eliminating from our psyche any fear of consequences because we never punish any wrongdoing. The police is no longer a servant of the law, which it was under the much-criticised Police Act of 1861, when this country was still a society of laws. The executive magistracy has been totally emasculated and the district administration is in absolute shambles. We just do not punish wrongdoing, whether it be violation of traffic laws, arousing of communal passion, mass murder through rioting and terrorism or corruption on a scale which is beginning to make Kuomintang China look like a Sunday school picnic. I am absolutely shocked that officers of our elite All India Services are caught with mattresses and quilts stuffed with rupee notes. Politicians who take bribes in thousands of crores, businessmen who loot this country, landlords who keep bonded labour with impunity, evil men who rape women, persons who attack Parliament, are treated with leniency and traitors who rebel against the State given seats of honour.

I am delighted to read in India Today about you and your group of officers in the PMO. Do you not think it is time now to ruthlessly enforce laws? Ultimately good governance is a function of whether laws are respected or not. Please mercilessly weed out from IAS, IPS and Indian Forest Service all those who are slackers, derelict in their duty, partisan and corrupt. Please make extensive use of Article 311 (2) (b) of the Constitution to dismiss these officials without an enquiry because their continuation in Service is hazardous to the security of the nation. In particular make it clear that officers in charge of districts and the administration of development projects will be held personally responsible for the faithful and honest implementation of the project. Empower them fully to take action against their subordinates and tell the politicians that any interference in this behalf will not be tolerated. Convert the National Rural Employment Guarantee Scheme into a Village Assets Creation Scheme because thereby there will be a permanent benefit to the villagers and employment will naturally be generated locally. Tell the police that it has no discretion in the matter of law enforcement and also send a message that if the police misuses its powers the District Magistrate will be expected to act as the Ombudsman who will apply correctives. Tell the politicians that the police will be immunised from political pressure and that only two things will be held against the police: (1) dereliction of duty, (2) misuse of power. Short of that the police should be told that in the enforcement of law they must be proactive and diligent.

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In the wider context of the national economy inclusive growth does not mean that some pockets of the economy make large profits and from this some money is doled out to the poor. The Budget must aim at taking genuine education and skill development right down to the poorest of the poor and lowliest of the lowly so that through education there is genuine equality of opportunity and a flowering of individual initiative. Inclusive growth means the simultaneous creation of rural infrastructure and not just hundreds of flyovers in Delhi because the Commonwealth Games are to be held there. In this behalf the Gujarat initiative is worth imitating. In any case the Planning Commission and the Finance Ministry must realise that the per capita or per unit cost of construction of infrastructure is much higher in rural areas than in urban areas because of the relatively sparse population and long distances in the former. This extra cost will have to be borne if we talk of inclusive growth. Inclusive growth means that there is threshold level of funding right upto the individual farms so that there is massive increase in productivity. Simultaneously we need to develop a marketing system in which the farm to consumer chain is simplified and though the per unit price of the product falls, the total value which reaches the farmer is much higher. Today the fact that rice sells expensive in the retail shop does not mean that the farmer has any gain. Let us stop this nonsense about trying to control prices through coercive measures against the retail trade. Instead, let us concentrate on greater productivity and a well-organised market with a drastic reduction in middle men so that extra money actually reaches the farmers. Let us increase the viability of small farmers because productivity levels have grown exponentially. In a country where sixty per cent of its land area is arable and where over seventy per cent of the people are directly associated with agriculture and allied activities, inclusive growth must make as much of an effort for their welfare as it does for the Ambanis and Adanis of this country.

Prime Minister, I am very sceptical about Yojana Bhavan and the so-called experts whose major haunt is the India International Centre (whenever I am in Delhi that is where I stay and I am very fond of the place). These people are clueless about the real India. Delhi is a pimple on the face of India. Why is it that in any process of policy formulation there is only proforma consultation with the rest of India? Whatever his other faults, Narayan Dutt Tiwari was a very good Chief Minister of UP, as are Narendra Modi of Gujarat and Nitish Kumar of Bihar. Hare Krishna Konar was the Revenue Minister of West Bengal who brought about the land reforms which have kept the CPM in power in West Bengal for over thirty years. There are many grassroot level leaders and officers who have so much to offer in practical terms. But does Delhi care? I know there are meetings held from time to time in which a few people are invited and given all of fortyfive seconds to articulate their views. In terms of real debate the answer is a big fat NO.

I must end by stating that I left the Service twentysix years ago. My only regret was that at the age of fifty, when I had the energy and the experience to do things in the field, I felt that I was not needed and that I was marching to my own drum whereas the world I lived in had changed. However, life has been kind and at least I am able to express myself freely because I do not have expectations and ambitions and, therefore, I have no personal fear or inhibitions. I am, however, xenophobically Indian and want my country to progress. You are in a position to be able to dictate the direction in which the country will go. Please use this authority to force some commonsense on those placed in a position to govern us so that every Indian feels himself to be a part of the same exciting journey.

Yours sincerely,

M.N. Buch

Dr M.N. Buch belonged to the IAS batch of 1957 and resigned in 1984. He was the Vice-Chairman of the National Urbanisation Commission. Presently he is the Chairman, National Centre for Human Settlement and Environment, Bhopal.

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