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India still remains a welfare laggard

india Updated: Mar 10, 2013 00:40 IST
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The suffering of millions of India's poor-endemic hunger, children in work, old age without rest, low-end casualised uncertain work, the squalor of slums and death because health care is too expensive -causes too little outrage. The indifference of people of privileges the main reason why India remains a welfare laggard, despite galloping rates of economic growth.

We are told that there is not enough money to ensure food for all, free and universal health care, pensions for the aged, social housing, clean water and sanitation, and high quality schooling for every child. Let us look at the facts. India taxes its people far less than many other countries. Both central and state tax as a percentage of GDP in India was 16 per cent in 2009-10, far below most industrialised countries (average 38.4%), and even industrialising countries like Brazil (34.2), South Africa (31.2), Kenya (18.3) and Thailand (19.5).

Moreover, we tax the poor much more than the rich: indirect taxes account for around two-thirds of our tax effort, in contrast to most industrialised countries where direct taxes which target people of greater means are two-thirds of the taxes.

India spends around 8% of GDP on social services, including food subsidy. Industrialised countries spend an average of 14%, whereas both South Africa and Brazil double India's spending, at 16%.

On the contrary, we are comfortable giving away subsidies (tax revenues forgone) of more than R5 lakh crore every year to industry and trade, resources which desperately need to be raised and invested in social spending.

We are told that tax breaks for industry are critical for growth, and that growth fosters jobs. But we are witness to years of jobless growth, and over look that expenditures on nutrition, education, health care and decent housing of the people are also critical investments in growth.Low public spending in social services, agriculture and infrastructure have contributed to economic slowdown and stagflation.

Those who lead both India's Finance Ministry and Planning Commission are on record that India will be able to wipe out poverty by the year 2040! It is considered morally acceptable to sacrifice an entire generation of poor people to preventable suffering and death, even as India's growth story soars.

In a compelling study of the Indian state 'Red Tape', anthropologist Akhil Gupta calculates that about 2 million people have died of malnutrition and preventable diseases annually in post-colonial India. What should be considered a humanitarian emergency and tragedy, but is not, is because poverty is seen as normal.Therefore not providing food, clothing, shelter, and healthcare to persons in dire need is not seen as killing. This violence is made invisible, so that poverty does not constitute a scandal, and the preventable deaths of the poor does not provoke soul-searching.

This explains why India's social development failures denying millions of people the means for dignified survival persists. It also explains why there is instead vocal public outrage among people of relative wealth against efforts to commit much more significant resources to ensuring food, social protection and health-care for the poor.

Harsh Mander is an expert on development economics and a noted policy analyst