Crossing the thresholds of tolerance, whether economic or social, can garner votes in the short term. But in the long term, this can destroy a nation.
As I write comes the news that the political and economic crisis in Sri Lanka is worsening, sometimes by the hour. The Sri Lankan rupee has plunged to a record low to become the world’s worst-performing currency as the island nation grapples with looming debt payments, nationwide protests and an economic emergency affecting everyday life.
What lessons do these developments hold for India?
Sri Lanka’s crisis came up in a recent four-hour meeting that Prime Minister Narendra Modi had with some senior bureaucrats. The media reports note that a few officials flagged fears of India going the Sri Lanka way if some states continue with “populist schemes” which in their view were not economically sustainable. The officials reportedly said that the announcements made by some state governments, such as Punjab, Delhi, Telangana, Andhra Pradesh and West Bengal, are unsustainable and that solutions need to be found. They went on to warn that competition among political parties to outdo each other in offering “freebies” before every election will have serious repercussions on the finances of the Central and state governments over the long run.
The debate over the politics of freebies is not new. Clearly, no individual or state or country can live beyond its means for too long. However, the lack of consensus on what distinguishes a “freebie” from a scheme in the public interest, especially in times of economic distress, makes the discourse a lot more nuanced than some might like.
That this list has only Opposition-ruled states has not gone unnoticed. The reality is that neither populism nor indebtedness is unique to Opposition-ruled states.
Many states, including those where the BJP is now in power, have run up steep debts. In a report titled “State Finances: A Study of Budgets of 2021-22”, the Reserve Bank of India has flagged the worrying level of debt and the debt-to-GDP ratio of states. States with high debts include several Opposition-ruled states such as Punjab, Rajasthan, West Bengal. They also include Uttar Pradesh, where the BJP has bounced back to power in the recent Assembly elections. Some argue that if a state is experiencing economic growth, it is very likely that there are social priorities which need resources and that leads to the debt levels going up. This argument should be applied even-handedly, to all the states.
What complicates matters further is the absence of a consensus among political parties on what constitutes a “freebie”. Is free water or free electricity a freebie or a measure in the public interest?
In Punjab, the Aam Aadmi Party has promised 300 units of free power to every household and a Rs 1,000 monthly allowance for every woman. In Uttar Pradesh, the BJP has promised free electricity for irrigation and grants to set up borewells, tubewells, ponds and tanks. In Tamil Nadu, laudable results were achieved in the field of education through the free mid-day meal scheme, free bus passes, free cycles, etc, along with other affirmative action.
The fact is that in the election season, each political party promises such schemes. Should we be more circumspect in the language we use?
Dr Arvind Mayaram, a former finance secretary, said on Twitter that a Group of Secretaries must “list wasteful expenditure”, which in his view, was a much more robust categorisation, and this should include wasteful expenditure not just by the state governments but also by the Central government. Quantifying it will be truly reflective of what is “busting the Indian economy”.
Unsurprisingly, defining wasteful expenditure is as tricky as defining freebies. As Dr Mayaram points out: “There is no definition of either in the administration. Each given benefit is justified as public purpose.” For example, statues, he points out, are justified in the government files as tourism earners.
Lest we forget, the Government of India contributed Rs 3,000 crores for the Statue of Unity in Gujarat.
While the normalisation of the politics of freebies and running up huge debts and fiscal deficits by some states is being discussed threadbare at high-level meetings, there is also the normalisation of the politics of hate and exclusion that needs urgent attention.
The normalisation of hate often goes hand-in-hand with normalisation of the “otherisation” of the minorities.
A hate rally in New Delhi has been in the news in recent days. The Delhi police booked Yati Narsinghanand along with several other speakers for their incendiary speeches at a “Hindu Mahapanchayat” in the nation’s capital last weekend. The police claim it had not given permission for the event, but bafflingly, or perhaps not so bafflingly, the organisers went ahead with the “Mahapanchayat Sabha” anyway.
This is not the first time Narsinghanand has been in the dock for making inflammatory speeches about the minorities. The recent hate speech was made while he was on bail over another hate speech in Haridwar. Significantly, soon after booking the organisers and speakers of last weekend’s rally for alleged inflammatory speeches, the police also registered a separate FIR, citing the Twitter handles of a journalist and a media organisation, for allegedly “spreading rumours and inciting hatred”. The crowd at the rally had manhandled journalists. The tweets had identified the religion of those doing the manhandling and those who were being beaten up.
The normalisation of the politics of unsustainable economic measures and the normalisation of the politics of exclusion and deepening of social fissures are intertwined. An old essay by economist Arvind Subramanian, former chief economic adviser to the Government of India, makes this point forcefully in the context of Sri Lanka. “Sri Lanka suffers from cleavages along many different lines, notably ideology, ethnicity, language, and religion. Michael Ondaatje’s gorgeously sensitive novel, Anil’s Ghost, captures the human, personal consequences of these conflicts,” Mr Subramaniam notes.
“Societies with stable social and economic compacts between citizens and the state tend to have healthy rates of tax collection, reflecting a broad willingness to share the burden of paying for the services the state provides,” he points out. This is a grim warning to all countries playing majoritarian politics and ignoring the cost of deepening fissures.
Good governance means knowing the difference between profligacy and spending money in a way that provides long-term benefits to the public. It also means knowing the difference between statements that can yield short-term political benefits but will corrode social harmony in the long term....