The political and economic aspects of revdism were discussed in part I and part II of this series. Now let us look at the possible solutions to the issue. There are three arrows in the quiver, viz., administrative, legal and political. Let us look at each of these one by one.
We need a Revdi Index for states, immediately. NITI Aayog, think tanks or even financial magazines can develop the index. It can begin with a loose definition of revdis and map the expenditure to the state revenues, fiscal deficit, debt etc. They can split hairs in the welfarism vs revdi discussion, on whether providing free bicycles to girls or free electricity is a revdi or not, as long as they come up with a workable definition. The recent RBI reports on "State Finances" have already done a lot of the legwork.
Once that is constructed, we should probably look at legislative options for "revdi control"- something self-governing like the FRBM Act. In the debates, let the issues of federalism, people's will etc. be discussed satisfactorily.
But we have to remember that the thief will always be smarter than the police. Even if a "Revdi Control Act" of some sort is passed, babus and politicians could come up with clever ways to circumvent rules. Say, they could devise a public works scheme where attendance is not mandatory. But the idea is to make a beginning, to keep improving the law and to maintain the cat-mouse game at an acceptable level.
These two - the Index and the Act - will provide structure for discussions in Finance Commission meetings, PRAGATI meetings and other center-state coordination forums. Right now, all the battle is rhetorical and there is no quick baseline reference for both the officials and the general public.
Let me just broach another tricky issue - Direct Benefit Transfers. Like the question in the beginning of part-1 of this article series, one can ask, "what stops a future government to promise transfers of say, Rs.30,000, to each adult citizen every month?" So far, the central government has been extremely responsible and has used Direct Benefit Transfer as an ameliorative and short-term "pain relief" mechanism.
Aadhaar, UPI and other technological advancements have made DBTs easy and smooth. This feature itself might tempt politicians to lean towards cash-transfers instead of tackling hard public administration problems. Like revdis, cash transfers can also become morally corrupting, if carried to the extreme. While we debate revdis, it will be prudent to add cash-transfers to the debate as well.
The legal challenge to revdis started more than a decade ago chronicled in newspapers as the "Subramaniam Balaji vs. State of Tamil Nadu" case. It began as a heroic attempt to challenge the freebie culture in Tamil Nadu. The line of attack was that the pre-poll promises of doles were not just disguised bribery, but also were violative of certain provisions of Article 14 (Protection of Life and Liberty and Equality under law).
In 2013, Supreme Court had dismissed the "corrupt practices" argument as under the Representation of People Act of 1951. It had then asked the Election Commission to issue guidelines on manifestos as a part of the Model Code of Conduct. No further progress seems to have been made on that directive.
Last August, the Supreme Court had agreed to set up a three-judge bench to relook into the same case. A series of related petitions that were not confined to pre-poll promises were also thrown into the mix. The expanded ambit included issues such as, burden to exchequer, free speech, transparency of debate etc. Hope the legal position on the issue will be known sooner than later.
Also, revdis come under the ambit of multiple quasi-judicial bodies. There are multiple jurisdictions involved such as, the Election Commission, the Comptroller and Auditor General of India and the Reserve Bank of India. They have made no explicit pronouncements on revdis.
In the public square, it is difficult to craft arguments clearly distinguishing genuine welfare measures and freebies. Not only the lack of nuance, the positions will be very hard to oppose in the political arena, lest one come across as "anti-poor". The economic argument of increase in productivity at a population level, expressed rhetorically as "samruddhi", is hard to estimate and harder to explain. When revdis are presented as a moral case for human welfare, the only counter could be to subsume it under a larger short-term vs. long-term debate
Revdis have long-term electoral failings as well. The recent election in Telangana offers a case study. The Bharatiya Rashtra Samiti was generous with doles. But the resultant underdevelopment of rural infrastructure and corruption made voters choose an alternative. Unfortunately, the electorate shifted to a competing party that was also offering doles! (In Telangana, the promises made by Congress government would cost the government 1.4 lakh crores. The total government revenues is 1.9 lakh crores. How they will manage to fulfil the promises without wrecking the balance sheet has to be seen.)
The failure of the "NYAY" scheme of Congress in the 2019 general elections and the defeat of incumbent governments recently in Chhattisgarh and Telangana offer teachable lessons. Ambitious politicians that would be aspiring for being more than just "single-term leaders" would have paid heed. Lack of development is the karma that catches-up. But, "long-term" is such a dicey proposition in politics. A strong narrative of empowerment, backed by programs that create enabling conditions for improving the "ease of living" and "ease of doing business", seem to be the way to go. It has been proved successful by PM Narendra Modi, when he was Chief Minister of Gujarat.
Recently, former Finance Commission chief, NK Singh, mooted the idea of "subnational bankruptcies". While the economic ramifications of the idea is not analysed yet, it will definitely make an impact on political narratives.
Also, the politicization of bureaucracy has resulted in the weakening of checks and balances. But it must be acknowledged that if revdis have not become a pandemic yet, it is because of sensible bureaucrats cleverly doing their thing against the pirate instincts of political leaders.
In summary, revdis have their roots in political psychology. They threaten the long-term economic prospects of states just when India is being looked at favourably as the next superstar of the world economy. Doles threaten to overrun the Keynesian (vs. Hayekian) paradigm of state led economic development. They could unsettle not just the economic prospects, but also the moral contract between citizens and the state.
The administrative and legal solutions can only help set up the stage for political debates. Ultimately, it will be people that will choose the way they want to be served.
Banuchandar is a political and public policy advisor. He posts at @Banu4India.
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