A Confused Reality

The maxim ‘truth is stranger than fiction’ plays out daily in our lives. On the one hand, tax collections, Sensex and sales of high-end vehicles are at record levels and people were seen queuing up to buy gold on Dhanteras but on the other, the subsidised ration scheme had to be extended for five years and the extraordinarily large number of people applying for work under MNREGA, resulted in budgeted funds getting exhausted by mid-year.

A Confused Reality

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The maxim ‘truth is stranger than fiction’ plays out daily in our lives. On the one hand, tax collections, Sensex and sales of high-end vehicles are at record levels and people were seen queuing up to buy gold on Dhanteras but on the other, the subsidised ration scheme had to be extended for five years and the extraordinarily large number of people applying for work under MNREGA, resulted in budgeted funds getting exhausted by mid-year. Then, there were alarming visuals of poor people scooping out oil from the 23 lakh diyas lit by the Government to celebrate Deepotsav in Ayodhya.

Government spokesmen pick up the first set of facts to showcase a rising India while detractors quote the second set to prick the Government’s balloon. A strident debate between opponents and proponents leaves the public totally confused. The paradox runs deeper; according to the 360 ONE Wealth Hurun India Rich List 2023, India added two billionaires every three weeks in 2022, and now has 259 billionaires, the third largest in the world.

At the same time, according to per capita GDP, India is at the 129th position and at rank 132 in the Human Development Index. The only possible conclusion is that our development model has spawned a small number of super-rich people while the vast majority of Indians can barely make both ends meet. Reading the electorate’s needs correctly, outrageously generous freebies are on offer by all political parties in the ongoing mini-General Election.


Another sad reality is that unemployment is growing in all sectors of our economy ~ except the gig economy that comprises of Amazon delivery boys, Uber drivers and the like. According to classical economics, as an economy progresses the number of persons employed in the primary sector i.e., agriculture, goes down while employment in the secondary sector i.e., manufacturing, goes up.

More economic progress sees employment in primary and secondary sectors going down, with a concomitant increase in people employed in the tertiary sector i.e., services sector. Our economic progress has probably redefined economic principles; as of now almost 46 per cent of our labour force is employed in agriculture ~ an increase of 3.3 per cent in the last four years. With agriculture accounting for barely 15 per cent of our GDP, the poverty of our farmers can well be imagined.

Quite clearly, the increase in agricultural labour is made up of persons who came back to their villages in their long homeward march during the Covid-19 pandemic ~ the only possible controversy could be that some of the returning labourers did not walk back home, but travelled in dumper trucks and oil tankers. Despite public statements to the contrary, manufacturing sector, and not agriculture, is the top priority for the Government.

However, despite Make in India, Atmanirbhar Bharat, and Production Linked Initiative (PLI) schemes, manufacturing contributes around 17 per cent to our GDP and employs only 12 per cent of our workforce. Significantly, employment in the manufacturing sector has decreased from 5.1 crore people in 2016-17 to 3.56 crore people in 2022-23.

On the other hand, during Corona times, when production of all commodities nosedived and exports touched their nadir, production and export of agricultural commodities actually increased. Moreover, agriculture absorbed the exodus of industrial workers retrenched during the lockdown. Yet, despite being the bedrock of the country’s wellbeing, agriculture is the proverbial step-child of the Indian polity; while lakhs of crores are given away to the manufacturing sector as Production Linked Incentive and other hand-outs, nothing substantial is earmarked for the agricultural sector. In fact, no worthwhile initiative has emerged for agriculture for quite some time.

Neglect of agriculture and the entire agricultural ecosystem has kept yields low, and farmers in penury. Additionally, consumers, that is the entire population, are affected by madly fluctuating prices of agricultural commodities ~ sometimes farmers throw their produce on the road because of low prices, and at other times consumers throw up their hands in despair, at the high prices of agricultural produce.

Despite the Government’s ambitious Operation Greens scheme, aimed at ensuring availability of TOP (tomatoes, onions and potatoes) vegetables at stable prices, the prices of these vegetables often touch the sky. As an ameliorative measure, the Government opens some distribution centres, that sell these vegetables at reasonable prices, benefitting 0.001 per cent consumers.

However, a long-term solution has not been thought of, much less implemented. Another, more serious anomaly, is that despite having adequate stock of food grains in FCI godowns, and with the National Food Security Act mandating distribution of food grains to the poor, a significant percentage of the Indian population is nutritionally challenged. A Report titled “Asia and the Pacific ~ Regional Overview of Food Security and Nutrition 2022” prepared by FAO, UNICEF, WFP and WHO makes depressing reading; around onesixth of our population is undernourished, probably because a healthy diet requires much more than cereals ~ vegetables, milk, eggs to name a few.

Evaluating our progress, at the halfway point, since the Sustainable Development Goals (SDG) were announced in 2015, the Report notes that progress towards ending malnutrition has stalled, and we do not seem to be on track to achieve Targets 2.1 and 2.2 of the SDGs. Significantly, the Union Government did not furnish statistics for preparation of the Report, but with no similar survey being conducted by the government, one has to place reliance on the FAO report.

The Report blames the 5Fs ~ lack of food, feed, fuel, fertilizer and finance ~ for the present crisis, the last four factors being squarely applicable to the Indian milieu. Also, in what could be an indication of inequality in our society, child obesity is increasing sharply. Ominously, the food price index has been rising steadily since March 2020 i.e., since the onset of Covid-19, with an increase of 12.5 per cent in the last financial year alone; it would appear that the era of cheap food is now definitely over, though farmers are nowhere near getting a remunerative price for their produce.

The challenge facing the Government is to ensure that enough food items are available in the market at reasonable prices, yet farmers are not short changed. A slew of reforms is required, from ensuring that agricultural holdings are not fragmented further, to making agricultural inputs available to farmers at reasonable prices.

Then, a fair and transparent market for agricultural commodities has to be developed, farmers have to be made aware of the latest agricultural techniques, and village economies have to be developed, so that the burden on agriculture is reduced. The Union Budget doubles every three years, lakhs of crores of rupees are spent on public welfare every year but a corresponding increase in public wellbeing is not noticeable.

Corruption is cited as the principal villain holding back development, but periodically, mostly after some legislative change or a significant catch by CBI/ED, the Government declares victory over corruption. However, when things do not go according to plan, corruption is reincarnated as the principal villain. Almost deliberately, the role of good policies in development is underplayed.

Sadly, vote-bank politics has overtaken sound economic sense; welfare expenditure is now synonymous with subsidies. Only a very small part of the welfare budget is proposed to be spent on education and healthcare, the rest being given away in subsidies, though it is obvious that social sector spending i.e., spending on good education, healthcare and creation of civic amenities will ameliorate the lot of the poor substantially, and will help them to escape the poverty trap.

The futility of competitive subsidy politics, in vogue today, was well understood by statesmen like Benjamin Franklin two and a half centuries ago: “I am for doing good to the poor, but… I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. I observed… the less was done for them, the more they did for themselves, and became richer.”

(The writer is a retired Principal Chief Commissioner of Income-Tax)