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Now for India to walk on two legs

Without the much noted acceleration in India’s economic growth, India cannot find the necessary means to attack poverty and marginalisation, writes Ashutosh varshney.

india Updated: Jul 06, 2009 23:38 IST

An integral part of the European and North American political economy, the term ‘social policy’ is not much discussed in India. Yet, slowly but surely, India is heading towards a social policy. The latest Budget is a clear illustration.

Roughly a hundred years ago, both promises and pitfalls of market-based economic systems became obvious to European political leaders and intellectuals. Politicians began to argue that while markets were necessary for the enhancement of human welfare, public intervention was also required to ensure that undue misery was not inflicted on a whole class of citizens whom markets did not — or could not — benefit. Was it not necessary to be cared for when sick, old, disabled or out of work? Rich families might not need State assistance on such matters. But what about those who simply did not have the means?

As Amartya Sen has put it, markets and economic growth are good at means enhancement, not at means use. Without markets, no society is known to have ensured a sustained expansion of wealth. Equally, with markets and growth alone, no society has been able to attend to the poor and marginalised. The set of public policies that reflected the latter thrust came to be called social policies. In India, the rise of the National Rural Employment Guarantee Act (NREGA), rural health missions, rural infrastructure plans and urban renewal schemes — to which the current Budget gives further push — all point towards the birth of social policies.

On why we should have social policies — a powerful second argument, based in the Nordic countries — has also emerged in recent years. Social policy is necessary not simply because markets are unable to protect the vulnerable; it is required because members of a modern political community are citizens, not subjects. There is a minimum bundle of rights that comes with the idea of citizenship. That bundle at the very least includes freedom from hunger as well as freedom from downright discrimination.

Such a bundle of rights can not be linked to a person’s asset endowments, gender, and cultural or ethnic background. It is owed to all citizens of a polity. Social policy and citizenship are thus intimately connected.

Typically, normative arguments alone do not cause policy departures. Such arguments acquire teeth when tangible carrots and sticks get associated with them. The fundamental reason for the emerging government priorities in India is inherently political.

Over the last two decades, India’s subaltern groups — defined as a combination of those who are poor by income, lower on the caste scale, and mostly rural in origins — have been voting more than the nation’s upper and middle income groups and those in the cities. India, therefore, has to walk on two legs. It must further unleash that part of the economy that post-1991 reforms have unchained. But it must simultaneously attend to the minimum needs of the poor.

Without the much noted acceleration in India’s economic growth, India cannot find the necessary means to attack poverty and marginalisation. But one cannot rely on the trickle-down effects of a market-based growth to help the poor. Mass poverty is being reduced much too slowly.

In a historical and comparative perspective, India’s social policies have to emerge sooner than they did in the West. A hundred years ago, when the Welfare State was born in the West, an industrial revolution had already taken place and societies had become primarily urban. As a consequence, the affluence of the West made the birth of social policies comparatively less difficult.

In Britain, in the first half of the Victorian era (1837-1901), poverty was viewed as a fact of life: the poor, thought the Victorians, “are always with us, always have been and always will be”. The Welfare State that finally emerged in the Britain was not simply a child of the rise of the Labour Party to power in 1906. Rather, all three major parties — Labour, Liberal and Conservative — contributed to the evolution of social policy. The State became responsible for the welfare of the deprived and less fortunate. The US followed in the 1930s.

Because of its democracy, India does not have the luxury of waiting for an industrial revolution before instituting a welfare State. The West adopted universal franchise in the 20th century, much after its industrial revolution had already taken place in the 19th century. India chose universal franchise amid mass poverty.

In a historically novel experiment — whose gravity was obvious to India’s founding fathers, especially Jawaharlal Nehru — the poor and the marginalised got the right to vote in 1952. Initially, the poor voted in a clientelistic way. The upper rural classes were the patrons, the poor simply their clients. Over time, patron-client relations started unraveling. In the last two decades, the poor have voted more independently. The polity is now feeling the so-called subaltern pressure.

More resolutely than before, India started building capitalism after 1991. It must now do two things simultaneously: unleash the markets where they provide the greatest private as well as social benefit, and run public programmes for the poor to improve their life chances and capabilities. India’s new Budget must be judged in light of these two simultaneous needs.

Ashutosh Varshney is Professor of Political Science at Brown University. He is co-editor of the forthcoming book, Social Policy, Citizenship and Governance, to be published by the World Bank.