Last June, as farmer suicides hit an average of three a day in eastern Maharashtra’s cotton belt of Vidarbha, over three crore letters signed ‘Manmohan Singh’ went out to farmers across India’s villages.
Each letter read, “My Farmer Friend…Farmers are our economy’s lifeline…the government is aware of your contribution…amidst hardship…” The page-long letter by the prime minister went on to welcome the farmer back into the formal credit system, by saying that the government was wiping off his outstanding debt.
The 65,000 crore move, the biggest loan waiver in India’s history was read by cynics as a populist bid to woo the rural Indian voter in the year before the United Progressive Alliance government faced elections. But it might just have worked.
On Saturday, analyzing the Congress’s electoral surge, Sharad Pawar said the loan waiver helped the UPA’s return to power.
More reasoning for the Congress party’s victory came from the opposition. Newspaper editor and BJP member Chandan Mitra said, “The NREGA was a major factor in the UPA’s win.”
The rural jobs program — the world’s largest social security program in terms of the people it covered and the money it spent — was necessitated by the urban-rural divide, perceived to have widened in the opening years of the decade. The National Statistical Sample Organisation’s 55th Round showed that employment had grown at an abysmal 0.67 per cent in the countryside, a third of the rate of population growth.
The National Democratic Alliance’s defeat in 2004 was interpreted as a vote against its ‘India Shining’ campaign. This created the political impetus for the UPA government to pay more attention to social sector spending and direct benefits to the marginalised, its stated focus being the ‘Aam Aadmi’ (Common Man).
But what made this economically possible was the 8 per cent growth rate of the economy through 2005 to 2008.
The government redistributed the resultant wealth through greater outlays for rural development (up from Rs 29,894 crore in the NDA regime to Rs 84,598 crore in the UPA regime), agriculture (up from Rs 16,439 crore in the NDA regime to Rs 36,716 crore under the UPA), education (up from Rs 28,024 crore to Rs 96,541 crore) and health (doubled from Rs 24,162 crore to Rs 51,124 crore).
Sustained growth and increased tax revenues ensured that social sector spending could increase from about Rs 36,000 crore in the last year of the NDA government to over Rs 1,20,000 crore in the UPA’s last year.