The Attack on ‘Subsidies’

It is hard to recall a seminar as high-powered ashe recent Delhi Economics Conclave. Held behind closed doors, it was graced by the Prime Minister, the Reserve Bank Governor, the vice-chairman of the Niti Aayog, the Finance Minister, the Minister of State for Finance, the Petroleum Minister, the Chief Economic Adviser, three Chief Ministers, the former Chairman of the Unique Identification Authority of India (UIDAI), four US-based academics, a representative of the Bill and Melinda Gates Foundation, and several Secretary-level officials. Something big is afoot.

The theme of the conclave was "Realizing India's JAM (Jan-Dhan Aadhar Mobile) Vision". That refers to the combined effect of three things: vast numbers of no-frills Jan Dhan bank accounts recently created under the Prime Minister's programme; an identification number for (eventually) nearly all Indians; and near-universal mobile tele-phony. In combination, they will enable the Government to send cash directly to individual accounts, in place of providing goods and services to the people.

Huge claims are made for JAM and Direct Benefits Transfer (DBT). The world's richest man, Bill Gates, has congratulated India for having "put in place the foundation for a strong financial inclusion programme, which will lower costs and result in widespread innovation". The Chief Economic Adviser, Arvind Subramanian, claims that DBT had enabled Rs 12,700 crore of savings on Liquefied Petroleum Gas (LPG) subsidy alone (the actual figure for 2014-15, researchers later discovered, was at best Rs 96 crore, and at worst, negative). The Petroleum Minister announced that "We are confident that soon we will be able to bring kerosene under DBT. There could be a reduction in the subsidy bill by Rs 4,000-5,000 crore", he added. The Expenditure Commission has called for bringing almost all Government welfare schemes and subsidies under the DBT.

The impression conveyed by the official discussion of the DBT is that it uses innovation to reach people more effectively. In the words of acronym-smitten Prime Minister, "JAM for me is Just Achieving Maximum - maximum value, maximum empowerment to people and maximum technological penetration among the masses".

These hymns to technology should not obscure the real object of the exercise: the systematic reduction of the meagre existing claims of the people on the social product. The Finance Minister vaguely indicated this real purpose when explaining the philosophy behind the JAM initiative: "the question was whether to continue subsidies indefinitely with an unquantified amount going to an unidentified number of people, or target specific categories of people needing them." That is, it is not merely a question of removing bogus ration cards and plugging leakages, but an exercise in removing existing beneficiaries from the target. At the same time, by replacing actual goods and services with cash payments, it creates opportunities for the rulers to reduce assistance in real terms.

It has become even more urgently necessary to expose this attack on 'subsidies', and its true character.

Certain social claims of the working people historically have been conceded by the rulers for fear of popular unrest. The rulers choose to term some of these claims 'subsidies'. These 'subsidies' too are under severe attack, in the name of reducing the fiscal deficit.

However, the rulers are alive to the mass opposition they may face when they try to snatch away these historically established entitlements. And so a necessary component of their attack has been to manufacture a theoretical justification for it, and to indoctrinate the media and the public with this justification. They foster the impression that these subsidies are a form of charity, perhaps permissible in the past, but unproductive, prone to misuse and ultimately unsustainable. In recent years US-based academics, who command a special authority in this semi-colonial intellectual milieu, have been airdropped into leading position here to do the job.
[Source : Aspects of Indian Economy, No 62]

Frontier
Vol. 48, No. 42, Apr 24 - 30, 2016