By Raghunath Nageswaran

Just over a month from now, a fresh ruling dispensation would have taken over the reins of the country. I’m restraining myself from hazarding a guess as to who will be at the helm of affairs, in an exercise of neutrality. A gamut of complex policy questions is staring the next government in its face and this challenge cannot be circumvented. The canniness and calibration with which these issues are dealt with will remain crucial to the robustness of India’s long-term policy edifice. In this article, I will delineate five policy priorities that merit immediate attention.

Aadhaar and Financial Inclusion:

Aadhaar (Unique Identification Number), one of the most ambitious pet projects of the UPA II, was launched with the overarching goal of promoting social and financial inclusion by re-engineering the system of service-delivery across the board. Touted as a panacea for plugging the loopholes in the supply-chain, the scheme has run into rough weather, with the Supreme Court giving a fiat to the Centre to withdraw orders that make Aadhaar mandatory for availing the entitlements. This was a logical upshot of making it “compulsorily voluntary”. What makes the picture look murkier is that, the ‘The Committee on Comprehensive Financial Services for Small Businesses and Low Income Households’ headed by Nachiket Mor predicates the goal of achieving ‘bank accounts for all’ on the Aadhaar platform. Though the recommendations of the panel are theoretically robust in substance making the framework efficacious, the kind of legal tangle Aadhaar is embroiled in and the ideological worldview of the next government leave the project in a state of limbo. On top of this, the main opposition party has been censorious of this project and what makes things worse is that the scheme doesn’t have a constitutional mandate. All these inadequacies loom large over the legitimacy of the project. The project in its present form might not deliver the promised benefits and it needs serious overhauling; if it is scuttled, then the colossal spending (Rs. 3494 crore) which pampered the initiative will go down in the saga of ‘welfarist approach’ as an irretrievable sunk cost. The next government calling the shots in this regard must chart an alternative plan to bring the massive unbanked population into the bandwagon of finance. In such a case, the approach towards public entitlements supply-chain management and cash-transfers will have to undergo thorough overhauling.

Reorientation of MGNREGS:

In a country like India, a programme of this nature cannot be dismantled in one stroke because of its relevance and significance. The programme has run the gauntlet of policy makers, economists and bureaucrats for the kind of unproductive jobs that it generates. The project can be phased out only after productive non-farm jobs are generated in adequate numbers. Discordant voices must understand that the underlying potential of this programme can be leveraged to create sustainable community assets, structures like the solar energy infrastructure, cold storage systems, durable water networks and modern sanitation architecture. Now that the wages of the income-starved rural poor have seen desirable incremental changes in terms of real income and marginal fall in distress migration, it is high time the available man/women-power is taken advantage of, to create a long-lasting healthy rural employment climate.

Land-Use Policy:

Land has become an intractable problem with the proliferation of industrial and commercial activities. Acquisition of land is a multi-dimensional problem since it encompasses questions of agriculture, employment, livelihood, displacement, environment and compensation. Since India’s track-record on these respects has been abysmal, a calibrated approach is necessary to frame a re-oriented land-use policy that will have inherent provisions to reconcile competing interests and ensure that land is put to the best possible use after an objective Social and Environmental Impact Assessment. For example, a shift from the cultivation of food crops to cash crops such as cotton and vanilla entails multiplication of risks, escalation in cultivation costs and excessive use of steroids (fertilizers and pesticides). The quality of land deteriorates over-time making it unviable for agriculture. Taking problems of this kind into consideration, region-specific land-use policies must be designed, so that the problem of supply-inelasticity could be negotiated effectively.

Thrust on Federalism:

The question of land is largely a matter of state’s prerogative. Imposing a one-coat fits all policy solution upon the states would create more fissures in the already fractured Centre-State relations. A meaningful engagement with the states is crucial for policy implementation. A recently completed state-level ease of doing business study by the planning commission points to the fact that the rigmaroles at the state level stultify the business environment. In the wake of an industrial dispute, the state government will throw its weight behind the labour unions to win political brownie points. This kind of parochialism must be done away with by fostering policy convergence at different levels. Whether it is the FDI in retail question or it is the Communal Violence Bill (that is hanging fire in the Parliament), the expected outcomes remain unfructified due to the underlying misgivings in the existing relationship. Going deeper, the idea of federalism should also encompass fiscal and functional devolution to the states and local bodies. Barring few showcase states like Kerala and Sikkim, which have enjoyed substantive gains from grassroots-level federalism, other states haven’t enjoyed the original taste of federalism. Shedding ideological differences, making the constituent states, the contributing partners in decision-making alone can be a long-term fix to the strained subject of federalism.

Rational Management of Strategic Resources:

In recent times, the scope for corruption has multiplied manifold in areas of land, energy, minerals, natural resources and infrastructure. The much bandied about bogies of “crony capitalism” and “rent-seeking” have become very much implicit in deals and contracts that pertain to the aforesaid areas. If this nefarious practice continues, then there will be sub-optimization of resources as pinpointed by the Comptroller and Auditor General (CAG) in the 2G spectrum and Coal-block allocation cases. The government must also understand that corruption in these areas could snowball into strategic security threats as apprehended in the 2G spectrum scam. The KG-D6 remains an unresolved multidimensional problem, characterized by allegations of underproduction, gold-plating of investments, wilful breach of contract and hoarding of natural resources among others. If this is the state of affairs in the strategically important areas of energy and telecom, can we even envisage a scenario of smooth exploration of the discovered shale gas reserves that brings with it more complex issues of commercial viability and environmental sustainability? A beauty-parade could be the practically applicable solution in terms of allocation and a climate of mutual trust is necessary for diligent execution of contracts. For all this to happen, transparency and accountability should become the watchwords of the government.

There are many other policy questions that need to be addressed on a war-footing. For instance, speculative trading in agricultural commodities through derivatives must be clamped down to rein in sharp spike in prices; balancing ecology and livelihood rights, stringent treatment of participatory notes, prioritizing disinvestment choices feature at the top of the agenda. It is important that the deep-rooted ideological disposition and political expediency should be kept out of the way, so that we can make desirable progress in policy-making and constructive implementation.

Raghunath Nageswaran is a B.A. Economics graduate from Loyola College, Chennai. He is a civil services aspirant, having a natural inclination towards understanding the nature of public discourse and policy framework in India. He has served Loyola Economics Association for Development (LEAD) in the capacity of Editor and Associate Secretary. His multitudinous interests gravitate towards the ideals of Daridranarayan and Antyodaya. He writes on socio-economic and political issues.  Can be reached at raghind@gmail.com .

Posted by The Indian Economist | For the Curious Mind