Ideas

The Yet Underestimated Impact Of Modi Schemes

Prof. Vidhu Shekhar

May 24, 2024, 11:55 AM | Updated May 25, 2024, 10:10 AM IST


Prime Minister Narendra Modi.
Prime Minister Narendra Modi.
  • India is witnessing a massive revolution driven by the welfare schemes initiated under Prime Minister Narendra Modi.
  • Intense political polarisation can sometimes blind us to great revolutions happening around us. In such scenarios, media coverage, and even academia, can miss great successes that can fly under the radar.

    Modi Schemes, the welfare initiatives undertaken by Prime Minister Narendra Modi, serve as a prime example.

    Despite their sweeping reach and impact, these initiatives remain undervalued and underappreciated. This was especially true prior to 2019.

    However, their role in Prime Minister Modi's resounding victory in the 2019 elections led some media houses and political analysts to reluctantly acknowledge the effectiveness and reach of these schemes after the results were announced.

    Yet, the transformative potential of these schemes remains underestimated, including its impact on the 2024 elections.

    Critics may argue that benefit programmes have always been part of Indian governance, rooted in post-independence socialism. However, equating these with Modi Schemes is misguided.

    Historically, such programmes were poorly designed and poorly implemented. There was no holistic approach, and in delivery, only 15 per cent of benefits reached the intended recipients, as accepted by a former prime minister.

    Many houses and toilets were constructed on paper only, and lakhs of ghost beneficiaries, if not crores, existed, siphoning away massive government funds. This inefficiency led to widespread issues like 70 per cent open defecation and 90 per cent lack of tap water access even after 70 years of independence. But that has changed now.

    The Great Design, Lifecycle Targeting, Reach, And Scale Of Modi Schemes

    The most unique and underestimated values of the Modi Schemes are its extraordinary breadth and thought-through design of the schemes. India’s legacy has been treating benefits as 'doles' handed out to the 'poor'.

    The distinctiveness of Modi Schemes lies in their holistic development approach. Rather than mere handouts, these schemes target various life stages to empower citizens and enhance productivity. From food and housing to energy, financial inclusion, health, sanitation, and skill development, there is a scheme for almost every critical area of human development.

    Among the two most ambitious ones are PM Garib Kalyan Anna Yojana and PM Awas Yojana, which cover the two most basic needs of roti and makaan.

    The PM Garib Kalyan Anna Yojana has been a lifeline for 800 million people, providing free food grains, especially crucial during the Covid-19 pandemic to ensure no one goes hungry.

    The PM Awas Yojana has been instrumental in providing housing to the urban and rural poor; with over 40 million homes sanctioned, countless families have a roof over their heads. The PM Awas Yojana has been a game-changer for many who were living in slums or kachcha houses.

    But the schemes don't just stop at roti and makaan. The Swachh Bharat Abhiyan has constructed over 100 million toilets, reducing open defecation.

    The Jal Jeevan Mission has provided clean tap water to over 115 million rural households. PM Jan Arogya Yojana (PM-JAY), the world's largest government-funded health insurance scheme, has provided health coverage to over 107 million households, availing hospitalisation benefits worth Rs 82,000 crore.

    The Pradhan Mantri Ujjwala Yojana (PMUY) has issued more than 100 million LPG connections, significantly reducing indoor air pollution in rural households. The Pradhan Mantri Jan Dhan Yojana (PMJDY) has opened over 500 million bank accounts, integrating a substantial portion of the population into the formal banking system.

    This has led to other benefit schemes like Kisan Samman Nidhi Yojana and Atal/Virdha Pension Yojana directly reaching people 100 per cent without leakage.

    At the very top of this set of schemes lies the Pradhan Mantri Mudra Yojana (PMMY), which has sanctioned 43 crore (430 million) loans to small and micro enterprises, fostering grassroots entrepreneurship.

    Of these, 31 crore Mudra loans have been extended to women. It must be remembered that a poor is not poor because of a lack of returns. A goat-rearer earns around Rs 6,000-7,000 annually from a single goat with a cost of approx 2,000, giving a great return of 3-4x.

    However, he will remain poor if he has the money to buy and rear only one goat. There is no dearth of good financial return-based entrepreneurship in India. From dhabas to salons, they are there everywhere. But they lack capital and hence remain small.

    That is precisely where PM Mudra Yojana fits in, uplifting them via entrepreneurship and empowering them to uplift others, too. All these efforts are complemented by initiatives like Skill India and Make in India, which aim to enhance the workforce's skill set and boost domestic manufacturing.

    Just as a quick comparison of the astounding scale of Modi Schemes, Sweden’s population is 10 million, France and the UK around 65 million, and Germany 83 million. For almost all the schemes, the targeted beneficiaries are larger than several big countries worldwide. We are indeed witnessing a transformative revolution.

    Transformative Long-Term Impact

    With an extensive bouquet of life-targeting schemes, it's no wonder that PM Modi keeps returning every time with a bigger and better majority. In fact, one of the most important keys to pro-incumbency in India is the reach of such direct schemes — adjusted for inflation. It is also worth noting that PM Modi managed to keep inflation low despite heralding possibly the largest benefit schemes in India and the world.

    With further implementation of earlier schemes and the introduction of new schemes like Anna Yojana — the world’s first Universal Food Scheme, Modi Schemes are likely to play an important role in the ongoing 2024 elections as well.

    The Indian government structure, being the largest touchpoint for people, has been effectively utilised by PM Modi to deliver to the people at large. A delayed acknowledgment of the same by analysts may come after the elections, as it did in 2019.

    However, that's not where the impact of these schemes ends. Or are intended to end. The elaborate holistic design has a very long-term effect that can lead to a capable and empowered citizenry, making India truly aatmanirbhar.

    As children grow up in homes with electricity, clean cooking fuel, and sanitation, their health, mental, educational, and overall outcomes will improve drastically. As women are freed from the drudgery of collecting firewood and fetching water, they can invest more time in their education and income-generating activities, leading to their empowerment and gender equality.

    A healthier and more educated population will increase productivity and economic growth. The financial inclusion and entrepreneurship support provided by the Modi schemes will have far-reaching effects on the economy.

    As more people enter the formal banking system and access credit, a vibrant and thriving ecosystem is created, leading to job creation, economic growth, and much more. These long-term benefits will lead to a virtuous cycle of growth and development.

    As people's incomes rise, they will have more disposable income to invest in their health, education, and quality of life. This, in turn, will lead to a more skilled and productive workforce, attracting investments and driving further economic growth.

    The Modi Schemes can potentially transform India into a more prosperous, equitable, and resilient nation in the long run.

    Dr. Vidhu Shekhar holds a Ph.D. in Economics from IIM Calcutta, an MBA from IIM Calcutta, and a B.Tech from IIT Kharagpur. He is currently an Assistant Professor in Finance & Economics at Bhavan's SPJIMR, Mumbai. Previously, he has worked as an investment banker and hedge fund analyst. Views expressed are personal.


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