Millennium Post

Populism or welfare?

Will the Congress Party’s strategy to woo the electorate with populist welfare schemes work in the 2014 elections? Will there be a UPA-III? It is indeed an uphill task to overcome the present scams and policy paralysis for the UPA-II to come back to power. Sonia Gandhi and her advisers think that new welfare measures like the Food Security bill and the Land Acquisition bill, which have been passed by Parliament this week, might work just as well as the MGNREGA and the loan waiver schemes did in the 2009 polls.

The Congress President has made it clear that she has no faith in the trickle down effect to reach the poor, and instead prefers that they be rewarded immediately through these welfare measures. This is contrary to the neoliberal economic theory, which believes in doing away with subsidy regime and allow the market forces to take over. While pursuing these schemes, Sonia has simply brushed aside the objections including those from Singh and has insisted that the resources have to be found. This is the paradox facing the economist Prime Minister Manmohan Singh – which is where to find resources. Sonia believes, just as her mother-in-law Indira Gandhi did, that populist schemes are the route to power. Many of the regional satraps may agree with her on this.

Before the last Lok Sabha election, Gandhi pulled out of the closet the MGNREGA scheme, which provided for guaranteed rural jobs to the unemployed youth. Now comes this Food Bill, with its promises of cheap food grains to the poor. The Land Acquisition bill is to provide fair compensation to those whose land has been taken away for public buildings and factories. These together constitute a welfare regimen that is not only huge in terms of outlay, but also by the sheer size of the beneficiaries.

Although MGNREGA has been touted as a relief to many poor people, the critics find fault in many ways including leakages in its delivery. Studies reveal that the money meant for rural employment did not reach the intended false beneficiaries claimed the benefits. As for the Food Security bill, doubts are expressed about the lack of storage facilities, the actual number of beneficiaries, linkages and leakages. But the Congress hopes that the mechanism for transfer will be in place in the next six months and the benefits will be for all to see. The Congress ruled states – there are fourteen of them – would go all out to implement the scheme even if the non – congress states do not cooperate. Three of them had already launched it on August 20, on the birth anniversary of late Rajiv Gandhi. The strategists are sure that this will create a huge rural vote bank, which would favour the Congress Party.

But 2013 is not 2004 or 2009. The Congress itself was surprised by the 2009 victory, as it did not expect to perform so well. It may be a big gamble this time in view of various factors. After two terms and a series of scams tumbling out of its cupboard, the Congress and the UPA 2 government are in a vulnerable position facing a strong anti- incumbency.

Secondly, the emergence of a strong leader like the BJP’s main campaigner Narendra Modi has become an unknown factor for the Congress when the Gandhi scion Rahul Gandhi is still reluctant to be on the forefront to counter him.

Thirdly, the Congress strategists hope these welfare measures may cover up the series of scams and governance deficit. However, it is not going to be that easy. Take the FSB. Even though it is a centrally sponsored scheme, the delivery system is the responsibility of the states.  While the Congress ruled states might be enthusiastic, the non -congress ruled states like Chhattisgarh and Tamil Nadu have grievances that their existing welfare scheme was much better than the FSB. In any case, the benefit to the Congress depends on the delivery system by the states.

Fourthly, the growing middle class is slowly turning against the Congress. It was this huge vote bank, which helped the Congress in 2009 elections. The urban middle class that was charmed by him from 2004-2009, with the high growth rate and his clean image, is now simply depressed with him, vexed with the spiraling prices and high inflation.

Fifthly, the captains of industry who were waiting in vain for the reforms from the economist prime minister are quite disappointed and are looking to the BJP campaign chief Modi to rescue them. Modi has projected himself as a friend of rich industrialists and there are at least eight big industrial houses, which are supporting his claim for the top job. They are upset with the Congress for bringing the land acquisition bill, which they claim is anti-industry.

Sixthly, there are serious doubts in some sections whether Sonia’s welfare policies are on the right track. They feel it may be good politics but bad economics. This section believes that the victory of Congress in 2009 had nothing to do with rural employment, healthcare or increase in agriculture prices. They argue this is not the right time for brining any new welfare schemes when the economy is on the downslide .The global rating agencies are predicting a down grade for India in view of is economic performance.

The Congress led by Sonia Gandhi is taking a big gamble in the next elections and solely depending on the freebees it is offering to the poor. It is a million dollar question whether the Congress pull off the hat trick.
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