In the ADR survey that we had discussed in detail last year, healthcare was the second biggest priority for people across India, across demographic groups. Voters indeed know their priorities right. Yet, this is the word cloud of issues that Republic TV, India’s most patriotic news channel discussed about during the election. Pakistan, Robert Vadra were some of the urgent topics. After that we heard a lot about Kashmir, Mandir and then CAA/NRC. I am sure Arnab Goswami must have owned the liberals many times during this period.
While we were distracted by all the hot button topics, Indian healthcare was not getting the attention it deserved. Today there are few hospital beds left in major Indian cities due to COVID-19, and our doctors, especially resident doctors and nurses are overworked and underpaid. Tax payers are running from hospital to hospital in Delhi to save the lives of their loved ones. Imagine if ours was a civil polity where the people‘s concerns were actually heard. Where a primary priority of our government was also health capacity. And where people were not dosed with talking points that politicians and their surrogates wanted you to talk about.
People love conspiracy theories, and so here is a real conspiracy theory for you: you are being mind controlled by those in power through the black mirrors (TV, smartphones) every single day.
They shape your agenda, when their agenda should be shaped by you.
The Indian stimulus package offers around 0.55% of the GDP (around Rs 1.1 lack crore) as immediate measures for the poor, in which 0.31% of the GDP is in-kind transfers, most of which were offered on 26th March 2020. May month measures did not offer substantial relief for the immediate needs of the poor.
The economic stimulus packages being offered in response to the COVID-19 crisis, are like a fruit basket with a motley of measures. Each measure is different, based on the intended beneficiary, the level of immediacy and the instrument of relief. This article identifies stimulus measures announced by the Indian government where the poor or their employers are direct beneficiaries, and which are intended to immediately provide them relief.
The largest stimulus measure by the Indian government was announced on 26 March 2020, a day after the beginning of the lockdown. It provided 800 million poor individuals with 5 kg of wheat/rice per month, and 1 kg of pulses per household per month, for three months. The total fiscal cost of this measure was estimated to be Rs 45000 crore (USD 6 billion). A follow up to this scheme was announced on 14th May 2020 when 80 million migrant workers - including those who did not have proper identification - were included in the scheme (for 2 months) at a stated fiscal cost of Rs 3500 crore (USD 467 million). In a related measure the government also announced on 26th March 2020 a provision of LPG cylinders for 3 months to 80 million households, at a fiscal cost of Rs 13000 crore (USD 1.73 billion).
These in-kind transfers worth Rs 61500 crore (USD 8.2 billion) are welcome measures that are providing necessary relief to hundreds of millions Indians. Based on the 26 March announcements, per capita, a poor person was promised grain transfers worth (cost to government) Rs 560 (USD 7.5), and a poor household was promised an LPG transfer worth Rs 1625 (USD 22). Of course, for a program of such a scale, there have also been leakages in the implementation of this relief, due to lack of accessibility or endemic corruption, an example of which has been reported in Jharkhand.
Along with the in-kind transfers, specific vulnerable groups have been provided direct cash and income transfers. These beneficiaries include 204 million women who receive Rs 1500 (USD 20 in three monthly instalments) through their Jan Dhan Bank accounts at a fiscal cost of Rs 30600 crore (USD 4.08 billion). 30 million poor widows, senior citizens and disabled receive a one-time payment of Rs 1000 (USD 13) at a fiscal cost of Rs 3000 crore (USD 400 million). 7.2 million workers with a monthly income of less than Rs 15000 (USD 200) in firms with fewer than 100 employees, get 24% of their monthly salary paid by the government for 3 months, at an expected fiscal cost of Rs 2800 crore (USD 373 million)1. This scheme was further extended for 3 more months at a stated fiscal cost of Rs 2800 crore (USD 373 million). The government has also made a wage increase of Rs 20 (USD 0.27) per day for MNREGA workers helping 136 million individuals at a fiscal cost of Rs 5600 crore (USD 747 million).
Although these transfers are worth Rs 39200 crore (USD 5.2 billion), the size of relief per capita is very small. For example the three Rs 500 per month instalments to 204 million women is inadequate to provide a sizeable relief. A paucity of cash has important negative ramifications on local demand, and as a consequence on the local economies. Hence, helping the poor through cash may be an important step in reviving local economies.
Additionally the government has promised to create a fund for stressed MSMEs with a stated commitment of credit guarantee of Rs 4000 crore (USD 533 million), helping 200 thousand MSMEs. This is a welcome measure to help small businesses and their employees in distress.
Other measures: To help urban migrant workers the government, on 26th March 2020, directed state governments to utilise Rs 31000 crore (USD 4.1 billion) of the existing welfare fund for building and construction workers, to help 35 million workers enrolled in the fund. This fund helped state governments finance their relief measures. However a report by SWAN (Stranded Workers Action Network) showcased that even after 32 days of lockdown 97% of the migrants they surveyed had not received cash relief, 82% had not received food grains, and 68% did not have access to cooked meals. The government plans to provide an advance payment of Rs 2000 (USD 260 million) to 87 million farmers who are part of the PM-Kisan Yojana, which incurs no additional fiscal cost.
30 million small and marginal farmers are also expected to receive additional working capital through NABARD which will lead to cash infusion of RS 30000 crore (USD 4 billion). Similarly the government promises to provide working credit of up to Rs 10000 (USD 133) to 5 million street vendors leading to cash infusion of Rs 5000 crore (USD 666 million). A similar mega measure of credit infusion has been offered to 4.5 million MSMEs leading to cash infusion of Rs 200000 crore (USD 26.7 billion), helping them stay afloat saving jobs. Each of these measures, although incur no fiscal cost on the governments, are welcome steps to provide relief to small businesses, employees, micro entrepreneurs, and workers for survival.
The overall fiscal cost of the stimulus package for immediate relief to the poor is about Rs 110300 crore (USD 14.7 billion), that amounts to around 0.55% of the GDP in which 0.31% of the GDP is in-kind transfers. The overall stimulus is estimated by various agencies to have a fiscal cost of around 1% and it is encouraging to see that more than half of those fiscally costly measures are directed for the poor. Yet it is also worth noticing that most of these measures for the poor were already announced on 26th March 2020. In fact, in the much awaited wave of “self-reliant India” announcements in May, only three measures with a fiscal cost of Rs 10300 crore (USD 1.37 billion), were of direct relevance to the poor, although a variety of credit infusion measures were taken to help businesses that employ them. Hence, the second wave of announcements in the month of May have been a lost opportunity for providing more immediate relief to the poor. Given the scale of India’s poverty, severity of its lockdown, and the bullish growth prospects in the long term, there is space for more spending on the poor, which the government should focus on.
(This article appeared on IIMB’s faculty blog on 2nd June 2020.)
Resident doctors are fighting the war against the COVID-19 crisis from the front lines. There is no dearth of showering of wordy and flowery gratitude for all their hard work and efforts.
Young doctors in their early 30s, who chose the path of being a doctor over other lucrative careers, are earning between Rs 40000 to 50000 a month as residents, while doing frontline COVID-19 duty, exposing themselves to all the risks, with no hazard pay. If they wanted to leave after the crisis, to pursue a better career, they would be asked to pay a hefty bond in some states, such as West Bengal. On top of all this, there are reports from around India that resident doctors are being treated poorly (without basic equipment) with reports of their pay being cut or docked in some instances.
If such is the working conditions and pay incentives of top of the line resident doctors in their early 30s, what is the incentive left in this country for people to become a doctor? For a country that has abysmally low doctors per capita, such a poor incentive structure does not make the medical career any more lucrative, and the future of healthcare in India any more assuring.
Today if you want to pursue a well-paid career, a generic MBA seems to be a must. Opportunities for those who pursue expertise, in science and especially in medicine are meager. For someone in their 20s and 30s, being a YouTube “influencer” offers a more attractive career path than being a doctor. There is something broken about our economic system when being a highly educated scientist or a doctor is not a lucrative early career option, of the same kind as a bureaucrat, a consultant, or a Twitter troll!
Why are doctors, even those with decent medical experience in their 30s, treated as low paid “residents” when clearly they are qualified experts. Are they less capable, less intelligent, less hard-working, less rare, less essential professionals than the bureaucrats? The skills of Indian doctors are highly valued across the world. Then why can’t India value its own? Its true that bureaucrats in India are also paid only modest salaries, but they are afforded certain benefits which make their jobs lucrative to many including from the private sector. They are treated as babus, when resident doctors of their age are given little voice, neither within the profession nor outside. Why do young doctors not get comparable benefits?
Why can’t all the Indian doctors above a certain qualification, serving public healthcare, be enlisted in a national medical service (similar to the UPSC) and be afforded a decent seventh pay commission package that matches the depth of their expertise? This is also a recent request that the Federation of Resident Doctors' Association India (FORDA) has made to the Prime minister. Being a doctor is a social service, and they understand that such a service does come with some sacrifices. They are doing their job out of a sense of duty, not for the greed of money. Hence, doctors do not expect hedge fund manager salaries. But a good salary, a good package with a decent quality of life - what stops the government from offering them so?
A major reason why paying generous salaries to the doctors, especially those who are young, doesn't cross the mind of Indian policymakers is because human capital - health and education - seems to have been a historical low priority of the nation. India’s government spends around 1% of the GDP on health (lowest among G20 countries), when China spends around 3%, the USA over 14%, the UK around 7.5%, and Brazil around 4%.
When there exists such a small kitty for health, is it a wonder that a pay raise for doctors never reaches the decision desk? At the same time, lack of private competition in the health industry further worsens the situation because doctors have no labor mobility. They work effectively within a government monopoly. While we can debate how much privatization should there be in Indian healthcare; yet the fact that competitive salaries must be paid to the doctors is a no brainer.
The condition of Indian resident doctors is also a reflection on the state of human development in India. Human capital in India has been ignored, first in favor of top-down industrialization during the pre liberalization era, and then of pro-business privatization in the liberalization era. Where are the much-needed investments in public goods? Even the much-anticipated stimulus package speaks the language of supply-side economics, ignoring the obvious fact that the coronavirus pandemic is primarily a health crisis, and a priority for the government must be to invest more in public goods such as healthcare. The machines, the factories, the bridges, and other “temples” have been given a priority in the country for far too long over the doctors, the teachers, the nurses, and the scientists, i.e. the actual skilled class of the country that holds it together. As human capital has been ignored, no wonder India has uncharacteristically low levels of human development: infant mortality is high, literacy rates are low, drop out rates continue to be up, and life expectancy still remains 10 years behind China.
We should hope that at least after the pandemic, our investment in public health will go up. For sustainable growth, a simple one-dimensional focus on businesses and capital won't be fruitful, and it will require a holistic approach. The pandemic is an opportunity for this understanding - of the importance of public health - to dawn. In the latest stimulus package the government has given an indication of increasing health expenditure, but the amount or percentage GDP terms were not specified. A significantly greater fraction of India’s GDP must go into healthcare. And with such an increase, the health workers, including doctors should get the respect, recognition, privileges, and the pay that they deserve.
(This article appeared on IIMB’s faculty blog on 19th May 2020.)
भारतीय वित्त मंत्रालय ने गत दिन कई सुधार प्रस्तावित किए, जैसे कि श्रमकानूनों को सरल बनाना, न्यूनतम वेतन निर्धारित करना, गिग और असंगठित मजदूरों को आर्थिक सुरक्षा प्रदान करना, और एक-राष्ट्र-एक-राशन। यह सभी सुधार अर्थव्यवस्था प्रोत्साहित करने के लिए बहुत अच्छे वादे हैं। लेकिन यह वादे हैं। हमें पिछले साल इन सुधारों की उम्मीद थी जब सरकार को भारी बहुमत मिला, लेकिन पिछले साल सरकार ने ग़ैर आर्थिक मुद्दों को प्राथमिकता दिया।
राजनीतिक वर्ग अभी भी प्रवासियों और गरीबों की तत्काल स्थिति को समझने में असमर्थ है। CMIE सर्वेक्षण कहता है कि एक तिहाई से अधिक भारतीय घरों में एक और सप्ताह के लिए संसाधन नहीं हैं। लोग अस्तित्व की लड़ाई लड़ रहे हैं। करोड़ों प्रवासी मज़दूर, बिन पैसे और भोजन, दूसरे प्रांतों में फँसे, घर वापस जाने की गुहार कर रहे हैं। स्थिति अत्यंत ही दुष्कर है।
दीर्घकालिक उपायों के रूप में, आर्थिक सुधार के साथ-साथ ऋण प्रावधान अच्छे उपाय हैं, लेकिन गरीब और प्रवासी परिवारों की मदद के लिए अल्पकालिक उपाय बहुत कम किए जा रहे हैं। जब अन्य देश स्टिम्युलुस पैकेज के बारे में बात करते हैं, तो इसमें आम तौर पर नकद ट्रान्सफर और पेचेक सुरक्षा कार्यक्रम शामिल होते हैं। उदाहरण के लिए यूके में एक फर्लो स्कीम है जहां सरकार श्रमिकों के वेतन का 80 प्रतिशत तक भुगतान करती है यदि कंपनियां उन्हें अपने पेरोल पर रखती हैं। यूएसए ने अपने नागरिकों को $ 1200 दिए हैं। यह समझ से परे है कि केंद्र सरकार को 3200 करोड़ रुपये खर्च करने वाली मुफ्त अनाज योजना की घोषणा करने में लॉकडाउन के बाद से 50 दिन क्यों लगे। इस तरह की योजना पहले दिन से दी जानी चाहिए थी। 3200 करोड़, 20 लाख करोड़ के सामने कुछ भी नहीं।
सरकार का कहना है कि रोज़गार के अच्छे अवसर अब इस पैकेज के बाद ग़रीबों को मिलेंगे। पर यह तब होगा जब अर्थव्यवस्था की बुनियाद सशक्त होगी। भारत की अर्थव्यवस्था इन ही मज़दूरों के कंधों पर निर्भर है। यदि मज़दूरों के कंधे टूट गए तो अर्थव्यवस्था भी नहीं संभलेगी। सरकार को यह समझ में शायद नहीं आ रहा है कि अर्थव्यवस्था के दो पक्ष हैं - आपूर्ति और मांग। घरेलू खपत की मांग के बिना अर्थव्यवस्था कैसे चलेगी? कारोबार किस को बेचेंगे? नौकरियाँ भी किसी माँग की आपूर्ति के लिए ही होती हैं, और व्यवसाय मात्र को क़र्ज़ देकर यह माँग नहीं बढ़ेगी। देश का स्टॉक बाज़ार भी इस सिद्धांत को समझ रहा है, जिस कारण आज स्टॉक मार्केट स्टिम्युलुस पैकेज के बाद भी गिर रहा है। सिर्फ चना और खाद्यान्न प्रदान करना स्टिम्युलुस पैकेज नहीं है, यह एक सर्वाइवल पैकेज है जो 50 दिन देर से आया है। देश का गरीब सिर्फ़ मज़दूर नहीं, कोई मशीन नहीं, वो इंसान भी है, उसकी भी गृहस्थी है, उसके परिवार की भी कुछ आवश्यकताएँ है, जो मात्र कुछ किलो गेहूं से नहीं पूर्ण हो सकते। उनके द्वारा अर्जित माँग अर्थ्यवस्था और व्यापार की वृद्धि करता है।
जब जन धन योजना, आधार कार्ड, और मोबाइल बैंकिंग के त्रिकोण से देशमें एक क्रांति हुई है, तो इस क्रांति का प्रयोग कर ग़रीबों को नक़द ट्रांसफ़र के रूप में लाभ पहुँचने में देरी क्यूँ। ये समय है इस त्रिकोण को और अधिक सुदृढ़ बनाने का, ताकि देश का हर व्यक्ति आपातकाल में इस त्रिकोण द्वारा राहत प्राप्त कर सके। इसी कारण हमारी यह प्रस्तावना रही है कि भारत कीजीडीपी का 1% नकद ट्रान्सफर भारत की 25% ग़रीब आबादी को बेशर्त मिले।क्या भारत की अर्थव्यवस्था का 1% भी भारत के 25% सबसे ग़रीब भारतियों को नहीं मिल सकता? इस प्रकार का नकद ट्रान्सफर एक चिंगारी के समान है, जो आर्थिक एंजिन को पुनः शुरू करेगा, और देश के सबसे गरीब को आर्थिक स्वतंत्रता भी देगा।
स्थिति निर्लज्ज सी लगती है। मीडिया एक संदिग्ध दावे का जश्न मना रहा है कि भारत का स्टिम्युलुस पैकेज विश्व के सबसे बड़े और सबसे उदार स्टिम्युलुस पैकेजों में से एक है। जबकि पृष्ठभूमि में प्रवासी और उनके बच्चे अपने अस्तित्व के लिए दर्दनाक यात्रा कर रहे हैं और पुलिस उन्हें डंडे बरसा रही है। प्रचार और वास्तविकता के बीच का द्वंद्व और अधिक स्पष्ट नहीं हो सकता।
Do we need to work to live well? If you look at the tiny sliver of the top 0.001 % - their families often do not do market-labor. They live off the rents they raise from their accumulated capital. A few of them may be self-made, but the larger mass of the wealthy are the inherited folks. They are the landlords. If we do not question the inherited entitlement of the rich - the Trumps for example, why do we question such a desire of the poor?
The coronavirus pandemic has taught us that some occupations are more essential than others. We need the farmers, the sanitation workers, the doctors and nurses, more that the landlords at this moment. Yet, the landlords and the rent seekers hold significantly more wealth that the essential workers who live vulnerable lives - pay check to pay check. There is something sick about such a system, where the classes that do not work preach the gospel of work to those who actually work. "The poor are lazy", they say, while they themselves live off rents.
Every now and then people have identified and stated this irony, and the response to this irony has varied. Marx advocated for communism - a proletariat revolution against the capitalist rent seekers with the goal to socialise the means of production. But he implicated the bourgeois with the rent seeking capitalists. That was a mistake, as this ultimately led to the failure his entire movement. The bourgeois i.e. the city dwelling educated middle class, are the lifeblood of the knowledge economy and the source of economic, technological and often social progress. It were the bourgeois around the world who were the initial groups most receptive to liberal economic ideas of freedom and equality. They were not the enemies of progress as Marx imagined them to be. He held the bourgeois, the city folks, the industrious, the entrepreneurs in low regard, which made him and his movement an anti-knowledge-worker, anti-entrepreneur, anti-individual exercise.
We have learnt from the past that the best response to the above irony is not communism. So then what is it? Over the last decade new ideas have emerged to tackle this problem of unfair inequality. The first idea is the idea that community-orientation is an essential pillar of social support. For example, Rajan suggests in his new book (The Third Pillar) that when market, state and community are in balance then society is on a path to progress. When the balance fails there is chaos like the one we see today. Today in his view, communities have weakened considerably especially in post-industrial societies. However, in countries like India community matters, and it matters probably too much. While a majority of Indians are unable to raise emergency funds during a crisis, among those who can raise such funds almost half of them get it from their family and friends. The problem is, poor people have poor communities too, and rich people have rich communities. Hence, while communities matter and their importance can not be undermined, yet they can help the vulnerable only in limited ways.
The second idea is the idea of universal basic income, which posits that everybody should get a monthly check from the government that is large enough for them to live just fine, whether or not they work. This idea seems to be a closer response to the question - does a person have a right to live well even if they refuse to labour? Basic income proponents says yes. Yet there remains a problem. This system creates dependency on the government. Basic income is not a right, it is only a handout. As long as the government is charitable the public will get that income. If the government and its ideas changes, the public will once again be deprived of such basic income. Basic income still does not address a fundamental problem. It is wealth, not income that leaves millions vulnerable and exposed to uncertainty. The rent seekers get a good deal, not because of their high incomes, but rather because they have wealth (inherited or not) that they can seek rent off.
Hence, a way forward - distinct from communism, community-orientation or basic income - is the path of universal basic wealth. We need to create the conditions such that nobody is compelled to work just because they have rent to pay. Such a work-so-you-can-pay-the-bills, is a form of wage slavery that we need to address today. We need to take cues from the early European settlers, who occupied unsettled lands and called it their personal property, becoming their own little sovereigns. They no longer bowed to a monarch, but as owners of substantial lands they became their own rulers. We need to universalise this idea of sovereignty, where all citizens of a country have sovereignty and ownership over some substantial property/wealth on which they can build their lives as they please.
The idea of basic wealth can rest on three social endowments that every adult can be gifted unconditionally with:
The coronavirus pandemic offers us a chance to relook how we support each other. Basic wealth in the form of three endowments - a house, some savings, and emergency funding - can help in reducing vulnerability in the lives of people, and turn them into their own little sovereigns.
It is possible that some say these ideas are costly or difficult, but when implemented on a war footing building housing to shelter all is not a radical idea. Singapore has reached close to such a case of universal housing. This can be done. Similarly, unconditional basic income to children which can be accessed when they grow up, may be more effective, better targeted and affordable than universal basic income, cash transfers or subsidies. In the same way, unconditionally insured emergency healthcare funding is a low hanging fruit that can help bring millions of lives out of fear and insecurity. None of these ideas are radical, but together these solutions can provide a new deal - a package of basic wealth that can protect people, especially the poorest, and help us all lead better, fuller lives.
(This article appeared on IIMB’s faculty blog on 19th May 2020.)
Probably, some people find my optimism for Indian government’s pandemic response to be irrational. After all, I have consistently said in the past that the economic mismanagement and a systematic effort to harm the social solidarity of this country will be an unforgivable legacy of this government unless we course correct. I do not trust leaders and governments. But, I trust India.
I guess I see this country differently from most people. For “scholars”, a country is a group of individuals bounded together by a social contract. In that view, India is just another country, yet another mass of people - and a poor, low human development index one. But that’s not how I see India. I see it as a Kumbh, the biggest and the most exceptional Kumbh that exists on the planet. It has a spiritual core that binds the most diverse, heretic and opposing people, in one single strand. No other country has such tremendous capacity for diversity. You won’t find communists winning elections in the USA or UK. The population of religious minorities has not reached even double digits and Europeans are already voting for far right groups. India is different. People have tried to plunder this land for centuries and yet it remains. The Vedas remain. The Buddha remains. The Sufis remain. They need no protection, and hence whatever comes to this country is transformed by their insight, in very subtle ways. Even the plunderer becomes a part of the giant stream. The river moves on, cleansing, assimilating through her grace unconditionally. It is a strange country in that way, because few other cultures can understand how Rama can pray to Ravana after the end of the war. How could Rama request Lakshma to learn the great wisdom of the Lanka King, as Ravana dies. It is strange when you think about it. Ravana is reverred in India not only by heretics, but by Rama himself. That’s why India is a Kumbh. Heresy isn‘t just tolerated, it is welcomed, and it is being welcomed for thousands of years.
The fact that India is more like a Kumbh than a country - as scholars define it - is critical for understanding India’s epidemic response. The Kumbh has no leader. It is a motley, a fair, a circus. It has both fairness and unfairness, it is raw, like an anarchy. Same is true for India. India does not rely on leaders, it never has and probably that is why India is the only true and living example of an anarchic society. It is an interesting fact that Mahatma Gandhi was an anarchist himself, he believed in Swaraj - rule of the self - and was skeptical of government. He thought “Kingdom of God is within you” inspired by Tolstoy. That is also the stance of Indian tradition. It is anarchic in nature. No final authority. It is also diametrically opposite to the modern communist Chinese way of top-down control. Yet India being an anarchy, also has a sense of the crowd. The crowd comes together when it needs to. The government is helpless if the crowd doesn’t want it. Indians rebel not once in a century but everyday. They can not be preached. Heresy is the way of this country, and we need more of it.
India is a mission based, not a system based society. When Indians have a mission, they get things done. When we had the mission of independence, we came together and boycotted the British in one call of Gandhi in 1942. That day, the British rulers had known already that the Empire was gone, because Indians, while fighting valorously for the British in the WW2, had already gained their freedom in their mind and in their actions. Indians had gratitude for the British too, we learnt a lot of things from them, and the river assimilated our plunderers and moved on. When India emerged as a democracy, many wondered if this was temporary. Indira Gandhi’s emergency should have been the death knell on it. Yet Indians got a mission, turned into street marching heretics the next day, and she was kicked out. Democracy was restored. Today, as we fight the coronavirus epidemic, once againt Indians have a mission. Other countries, (except China which locked down draconially), are having a tough time imposing the lockdown. Yet, India with one of the weakest systems of policing and crowd control, is doing it better, because once again Indians have a common mission. Probably the lack of system helps, because Indians know that if we fail in our mission, what we face is doomsday. It keeps us alert, mission oriented. And what is beautiful about this sense of mission of Indians is that it takes everyone along. It is not discriminatory. This land is for all who live here, and who are born here. There is no authority that can provide a precedence on who can call India her home. On that note, those who believe that a piece of citizenship law written in 1986 or 2003 has the power take the jus soli birthright of Indian citizenship, may you wake up soon. This country does not heed to pieces of paper, or proclaimations of leaders and priests. India is a Kumbh, an anarchy, bounded by a collective sense of responsibility, a natural respect for nature. The law that holds this land is deeper than any law proclaimed by man, or group of men.
During a period of emergency, such as the coronavirus pandemic, the public needs immediate assistance. Governments need the necessary infrastructure of last mile and last person connectivity to provide such an assistance, and the universal access to bank accounts and digital payments can go a long way in making such immediate assistance possible. How is India placed on these parameters? The World Bank Global Findex Database can provide with some answers.
The number of individuals with a bank account in a financial institution has significantly gone up in India in the 2010s (from 35% in 2011 to 80% in 2017) as per the World Bank Global Findex survey, with a larger fraction having debit cards (33%), and making/receiving digital payments (29%). Among those who still don’t have a bank account, the key reasons cited are a lack of sufficient funds (54%) and a family member already having a bank account (52%). Other factors leaving many unbanked are issues related to accessibility - financial services being too expensive (27%), too far away (23%), lack of necessary documentation (22%) and a lack of trust in financial institutions (20%). This creates a complication - the poorest and the most vulnerable are likely to not have sufficient funds and documents, and can find financial services to be too expensive. But at the same time they are also the ones who are in imminent need for bank accounts so that necessary public assistance and welfare support can reach them on time, especially during the period of emergency.
During the times of emergency, more than half of the respondents in India said that they were not able to raise emergency funds within a month (52%). For those who were able to raise emergency funds (45%), the chief source of such funds was family or friends (48%), followed by money from working (25%) and savings (23%). Compared to developed countries like Norway, Japan, UK and the USA, an alarmingly larger number of respondents are unable to raise emergency funds in India, and are dependent on family or friends for support. Government payments can become a salient form of funding for Indians in times of emergency, and can be an important policy goal especially given that the majority of Indians are unable to unable to raise any such funds.
Government payments of social benefits has not significantly increased (14%) over time in India, but the mode of these payments has become more cashless (cash payments are down from 49% in 2014 to 20% in 2017), with a large fraction of such payments reaching the beneficiaries directly in their accounts (59%). Among those accounts that receive government payments, a large fraction were opened for the first time to receive government payments (57%). Compared to other developed countries government payments still reach a small fraction of Indians (14%). While there is a thrust on digital penetration and cashless payments in India, very few Indians do digital payments (29%). In developed countries, digital payments are ubiquitous (>90%) and government payments in hard-cash are minimal (<5%).
In conclusion, based on the data it appears that India has significantly improved its capabilities in banking and digital penetration. Yet the most vulnerable are still to be reached. Especially, the most important fact that policy makers should address is this: a majority of Indian respondents in the survey say that it is not possible for them to raise emergency funds within a month's time, and if they can then they rely primarily on their social networks - family and friends. In times of a crisis like the coronavirus pandemic, such a precarious support system leaves the most vulnerable at risk. With government payments reaching a meagre 14% of the population in India, there is a lot of scope for improvement so that every Indian can be reached out and helped in times of crisis.
(update) As the Economist points out in its latest edition (4th April 2020), India's outlay to the coronavirus pandemic is a paltry 0.8% of the GDP ($23 billion), when other countries are spending much higher. The social welfare infrastructure is today ready in India; now is the time for making the last mile and last person connections, so that most vulnerable Indians can be reached. Indians await a new deal, and we should come together as policy makers to provide it now.
During the national lockdown, lacks of vulnerable migrant workers are leaving for their hometowns, often in large crowds. For example, thousands of migrants crowding at the Delhi bus station are most certainly going to accelerate the pandemic. However, the situation without a lockdown would be worse. The fear that migrant workers have today is decades in the making. Consider New Delhi. The whole city rests on the low paid labor of the migrants, but many Delhiites look down upon them with derision - as unwanted outsiders. Those who work from paycheck to paycheck have no safety net or savings, no local government support (they do not vote) and their employers have little responsibility towards their health and safety. They are the expendables of society.
Many do not appreciate the significance of bank accounts (Jan Dhan Yojana) and promoting cashless transactions (Digital India) in providing safety net to migrant workers. Such schemes have opened a channel of assistance between the central government and migrant workers that did not exist before. Migrant workers have been brought out from the shadows, although the assault of demonetization, mismanaged GST implementation and now COVID-19 has also made their situation more precarious. A major reason why the BJP government is back in power is because it achieved social welfare penetration greater than any government in the past - it pursued "programmatic politics" at least on the economic front. It would be prudent for the government to seriously consider some form of basic income at this time, and to communicate with the vulnerable groups in a targeted manner through their mobile devices. This is also an opportunity to build the social safety net India did not have in the past.
India is better prepared to manage this lockdown, and protect the vulnerable, than anytime before in the past. So, lets not panic. In an exercise of this scale, there will be setbacks, and these setbacks will get coverage (thanks to a free media), and such coverage will make the government learn and act better. This is how government is supposed to work in such times of the uncertainty and crisis. We act, we learn, and we improve.
I was quoted in the Economic Times, in an article (.png) by Dinesh Narayanan on "Data blackhole in Q1 2020 would challenge govt policymaking and corporate decisions". Here is the quote:
Unavailability of data would have implications for firm and individual level decision making. "This is a Black Swan event. Firms can plan for risk. But what we are facing is uncertainty not risk. Current forecasting techniques and methods would be useless,’’ according to Prateek Raj... Raj says true uncertainty leaves firms clueless. Government-supplied data, while important, would not be enough anymore. Firms would have to constantly search for signals in other data such as Uber orders and Amazon deliveries. ``What they would need is an ensemble of data from various sources.’’...Raj says experience from the 2008 economic meltdown showed that firms that were more decentralised and whose local managers were empowered coped better after the crisis. A similar experience may be in store now as well for both firms and governments although the trend in India seems to be towards centralisation.
Now some context. Information is the chief driver of how business gets done, something that is one of the main learning points in my PhD course on Evolution of Business and Markets. Just as the printing press revolutionised business, triggered the decline of guilds in Northwestern Europe, and gave rise to modern corporations, the same way too much uncertainty and data can force firms to change the very structure of their business. In a 2016 article for LSE Business Review, I wrote that "in uncertainty, strategic advantage comes from organisational form not plan". Firms in times like this coronavirus pandemic need to recognise that uncertainty is different from risk. While risk can be mitigated by careful planning, uncertainty requires firms to recognise that blueprints become less useful, and hence firms need to start opening all their eyes and ears for any new information, responding quickly to changing situation. The idea seems obvious, but it is not so obvious, because such a change in form of doing business requires giving more autonomy to local managers, and moving away from a centralized top-down approach. A useful research that also supports this idea is by US-based economists Aghion, Bloom, Lucking, Sadun and Reenen, which found that "firms that delegated more power from the Central Headquarters to local plant managers prior to the Great Recession out-performed their centralized counterparts in sectors that were hardest hit by the subsequent crisis." as they were better at gathering local information.
The New York Times just wrote an editorial today, requesting Donald Trump to order a national lockdown in the United States, citing India's national shutdown which affects 1.4 billion people.
Mr. Modi's actions during the coronavirus pandemic are exemplary. He has taken timely and balanced actions. The 21 day national lockdown is yet another important and timely step at a time when India's coronavirus cases were at the cliff of explosion. This is exemplary because Mr. Modi has placed the national public health interests above economic interests, something which western governments like the USA and UK have still not been able to come to terms with. The Lt. Governor of Texas went so far to say that he was willing to risk his own life to save the economy, and had urged other Texans to "get back to work".
If Mr. Modi focuses on politics of substance - the everyday common-man issues like healthcare and economy through out his tenure, India would be better prepared for such pandemics. If the pandemic spreads despite this lockdown, we will once again be in a dangerous territory, as India has just not invested in its healthcare, and instead prioritised the divisive cultural issues a lot more than it can afford to. The last few years, and NOW, is a golden opportunity for a healthcare transformation (the Ayushman Bharat is a welcome scheme), but Mr. Modi and his party/government needs to empower the doctors and nurses on the ground - whom we badly need, and not the xenophobic beasts on social media. While the last few years were a lost opportunity, but now the coronavirus pandemic is at India's doorsteps, and Mr. Modi has begun to listen to the experts, and is doing a good job. This shows that Mr. Modi is indeed a good executive, but only if he is willing to listen to the advice of experts, and does not act as a maverick or heeds to the xenophobes that infest India's entire social media ecosystem.
I hope the pandemic ends, and Indians - esp. middle class Indians (who enjoy an amplified voice) change their understanding about the role of a government. Indians must recognize the global goodwill Mr. Modi generated for India and himself, when he followed the Raj Dharma of putting the public interest first, over a divisive cultural agenda. I hope Indians do the same, and when the pandemic ends, I no longer get to see those awful Whatsapp forwards that belittle and demonize other groups, and obsess over their narrow religious identities rather than their collective nationhood. That we do not get distracted by divisive, emotive, angering and hateful propaganda and instead we talk about, and force the government to focus on healthcare, jobs, water, infrastructure, agriculture, law and order, defense, and all such things that really matter for strenthening the nation.
We need solidarity and common sense in India, not just during these times, but for all the times to come in the future.
Personal blog. Views expressed are my own, expressed in personal capacity.