Recently, I’ve been to Srikakulam. I went to Vizag on flight and then took a cab from the airport to our home. The driver was a talkative guy, We chatted quite a bit. In the course of the discussion, he said something thought provoking. He said, “Government is giving free money to every one to get votes. That’s making people lazy and people like him have to work throughout the day to earn their bread” At that time, I agreed with him and moved on to other topics but the topic haunted me ever since.
It seemed to me that the answer isn’t straight forward. On one hand, utilising the money to invest in capital expenditure seems like the right thing to do. It creates assets which generate future revenue. It also creates employment during and post the investment phase. Despite its obvious advantages, why does the government dole out the money to people instead? To understand the answer, we need to rewind a little bit. In may 2020, Government imposed lockdown to contain the pandemic. This move destroyed the livelihood of millions of people. A lockdown implied people couldn’t go out to do business affecting the economic activity. This violates the fundamental right which allows people to earn their honest livelihood in any part of India. Due to the lack of income, these families struggled to make their ends meet. This in turn violates the right to life, guaranteed by the constitution. This right encompasses the right to food, right to shelter, right to education for children and right to the basic health care. It’s imperative on the Government of the day to make sure that these basic needs of life are met. So, when Government is doling out cash to the poor during the pandemic, it’s not doing them a favour. It’s discharging its constitutional duty
Now that the economic activity is resumed, should the government stop giving free money? The answer is again no. The economy has not resumed to the pre-pandemic levels. Unemployment is at a record high. If government stops supporting the poor, it leads to lot of social problems in the long run. It might mean, a lot of children might drop out of school. This risk is particularly high because a lot of children lost an year worth of studies due to pandemic. Once they lag behind in the curriculum, in most cases they don’t catch up. This problem is more intense in children from low economic background who could not afford a quality education through online classes. This in turn, deepens the economic inequality. Secondly, the pandemic has impacted everyone in one way or the other. The health care costs have risen across the board, from the very poor to the very rich. Some families have lost the main bread winner pushing them from above poverty line to below poverty line. There is a necessity to support them too.
Governments started giving sops long before the onset of pandemic. Was that justified too? I think, it’s a much harder question to answer. For example, the successive governments in AP have run a scheme to waive the farm loans. This had the unintended side effect of farmer not paying loans in the year of election. That in turn led to banks refusing to lend loans to farmers for the fear of increased bad loans. However, in principle, lending economic support to farmers makes sense. In India, majority of farmers depend upon rains for agriculture. Even when the monsoon is good, most farmers don’t make a lot of money due to raised costs of fertilisers, seeds, irrigation(power), supply-demand mismatches. There’s a lot of risk involved with farming. For the risk taken, the amount earned isn’t commensurate. For people working in private sector, there’s an appraisal every year. As the experience of employee increases, his/her wages and his/her standard of living increases. Being a part of formal sector, he/she can avail loans for financial necessities. In case of farming, there’s no such benefit. Every year, the return depends on a huge number of factors and the money they receive is not stable. They aren’t part of formal sector and hence, don’t have similar economic benefits. Considering all this, I think it becomes the duty of government to support farmers in short run and make farming sustainable in long run
Let’s all hope things return to normalcy soon, that Government isn’t forced to give out huge amount of freebies.
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