Social_Democracy Pranab Bardhan

8/3/2019 Social_Democracy Pranab Bardhan

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Inequality,Inefficiency,andtheChallengesforSocialDemocracyinIndiasEconomicTransitionByPranabBardhan

I TheVariousInequitiesandDeprivations

Differentpeoplemeandifferentthingsbysocialdemocracy.Withoutgoingintothatdiscussion

letme

start

by

briefly

describing

what

Id

mean

by

social

democracy

in

this

paper

and

then

go

ontoanalyzingthevariouschallengesthattheIndianeconomyfacesinbringingitabout.

Socialdemocracyforthispaperhasthreeessentialingredients:

(1)Democracyprimarilyintheformofmeaningfulpoliticalcompetition,effectiveaccountabilitymechanisms,andsomebasichumanrights;

(2)Acompetitiveandincentivecompatibleeconomicsystemwithindividualpropertyrightswithinreasonablebounds,andeconomiccoordinationmechanismsprovided

bymarkets,multitieredgovernment aswellascommunityorganizations, with

thesemechanismsoperatingindifferentfieldsinmainlycomplementaryways;

(3)Aneffectiveandcomprehensivesystemofsocialprotectionforthegreatmassesofpeoplefromdeprivation,destitutionandvulnerabilitiestoindividualandsocialrisks

ofdifferentkinds.

InthispaperIshallkeep(1)and(2)largelyinthebackground,withoutagreatdealof

discussion,andlookatproblemsofachieving(3)underthecircumstances.EventhoughIam

fullyawarethatwehavemilestogoon(1)and(2),Indiaisatpresentparticularlyand

atrociouslydeficientin(3).Indiaistheworldslargestcountryofilliteratesandschooldropouts,

ofchildandmaternalmortality,largestnumberofstuntedandunderweightchildren,andthe


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largestincidenceofanemiaandTB,andtheoverwhelmingmajorityofpeoplelackinganyofthe

socialbenefitsthatareconsideredaspartofaminimumsocialsafetynet.Morethan400

millionpeoplehavelessthanwhatbyIndianofficialstandardswillbeconsideredthebarest

minimumpovertyline.Ifonetakesincomeinequality,orwhatismoreimportant,inequalityof

economicopportunity,Indianinequalityisoneofthehighestintheworld,contraryto

conventionalwisdom.InacountrylikeIndiainequalityofopportunitylargelydependson

distributionofland,ofeducation,andsocialidentityachildborninarurallandlessadivasi(indigenous)familywithverylittlescopeforeducationwillbeseverelyhandicappedinherlife

chancesfornofaultofherown.

ItmaybewellknownthatlanddistributioninIndiaismuchmoreunequalthan,say,inChina

(thisis

partly

because

India

has

amuch

larger

landless

population).

But

most

people

seem

to

beunawarethatIndiaseducationalinequalityisoneoftheworstintheworld.Ifonemeasures

thisinequality,verycrudely,justbylookingattheyearsofschoolingintheadultpopulation,it

isworsethanthatinalmostallLatinAmericancountries,andsomeAfricancountries,notto

speakofChinaagain,thisispartlybecauseofIndiaslargeilliterateandnearilliterate

population.Takingalongview,whatismoreimportantthanstaticinequalityisinter

generationalmobility.Onthisquantitativeempiricalworkisratherscanty,butsocialmobility

maybe

particularly

low

in

India,

partly

no

doubt

because

of

the

deadening

legacy

of

the

system

ofcasteoppressionanddiscriminationinIndia(thoughthereissomeevidencethatsocial

mobilityisimprovingforsomeofthelowcastes).

Somepeoplethinkthatpreoccupationwithissuesofinequalitydeflectsattentionfrom

economicgrowthwhichiswhatmainlyalleviatespoverty,throughcreatingnewandbetterjobs

andgeneratingmorepublicrevenueforwelfareprogrammes.Buthowmuchofgrowthtrickles

downtothepooritselfdependsoninitialinequality(forexample,ithasbeenestimatedthat

thesameonepercentriseingrowthreducespovertybymuchlessinIndiathaninChinapartly

becauseofthehigherinequalityinIndia)andtheresultantdistributionofeconomicand

politicalpower.Besides,inequalityofopportunityitselfcanhaveseriousadverseeffectson

economicgrowth.Thisisparticularlyimportantwhentherearebarriersfacedbythepoorin


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landandcapitalmarketsandinskillacquisitionandincopingwithrisks,whichsharplyreducea

societyspotentialforproductiveinvestment,innovation,andhumanresourcedevelopment.

Theyoftenblockthecreationofsociallymoreefficientpropertyrights(forexample,inland

tenure)andinvestmentinhighriskbuthighreturninnovativeprojectsonthepartofsmall

producers.Inequalitythatkeepstheworkforcelargelyuneducatedandunhealthycannotbe

beneficialforprivatebusinesseither,apartfromthelawandorderproblemsthatinequality

generatedconflictsmaybringabout.Moreover,institutionalstructuresandopportunitiesfor

cooperativeproblemsolvingareoftenforegonebysocietiesthatarehighlypolarized.

SociologistshavenotedhowextremelyhierarchicaltheworkorganizationwithinIndian

factoriesis(oftenreflectingthesocialstratificationoutside),andthisisnotunrelatedtothelow

productivityofIndianfirmseveninsimpleproductionprocessescomparedtoothercountries,

andthesocialdistanceanddistrustbetweenmanagers,supervisersandjobbersontheone

handandthegreatmajorityofworkersunderminethecooperationthatisneededfordayto

dayshopfloorinnovationsthatcharacterizemoreproductiveworkplaces. Equityandefficiency

thusoftengotogether,contrarytotheoppositepresumptionofmuchoforthodoxeconomics.

Apartfromseveredeprivationsandhighinequalityofopportunity,anotherfeatureofthe

economythatraisesspecialchallengesforsocialdemocracyinIndiaisthatofallthemajor

developingcountries

India

has

the

largest

informal

sector,

with

94

per

cent

of

the

labour

force

workingthere,mostofthemdailyfacingthebrutalinsecurityofnoretirement,disability,

unemploymentorhealthbenefits. Evenoutsidetheagriculturalsectormorethan80percent

ofthelabourforceisintheinformalsector.Thetinyminorityofformalsectorworkers(two

thirdsofthemgovernmentemployees)clingontotheirpaltryprivilegeswithnervousmilitancy,

astheyfacethesocialvertigooflookingonthevastmassesoftheunprotectedhuddleddown

below.Thisgreatvoid,theabsenceofevenarudimentaryframeworkofgeneralsocial

assistance,makes

the

implementation

of

social

protection

as

difficult

as

it

is

urgent.

Theprocessofeconomicgrowthinaworldofglobalcompetitionhasmadethisworkeranxiety

andinsecuritymoreacute.Evenwhenmarketcompetitiondoesnotleadtonetjobloss,it

usuallycausesagreatdealofjobchurninganddisplacement.Eveninrichcountrieswith


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relativelyweaksafetynets(liketheUS,incontrasttotheNordiccountries)thisleadstostiff

workingclassoppositiontoglobalcompetition.Thereissomeevidencethatincreasedglobal

competitioninthelasttwodecadeshaswipedoutsomeofthelowproductivitytinyinformal

firmsinIndianmanufacturing,whomayhavethencrowdedthenontradedsectors.Itisnot

surprisingthatinIndiawhereanysafetynet(outsidethediminishingsupportofextended

familiesandkinshipgroups)isabsentfortheoverwhelmingmajorityofpeople,mostsurvey

evidencesuggeststhatmarketreformsarevastlyunpopular.Yetthesereformsareimportant

foruncloggingthechannelsofentrepreneurship andinnovation.

Thematterismademuchworsebythefactthat,unlikeinChinaandVietnamwheretheinitial

growthspurthasbeeninlabourintensiveindustries,inIndiathesuccessstoriessofarhave

beenlargely

in

skill

intensive

(software,

business

processing,

pharmaceuticals)

or

capital

intensive(machinetools,vehiclesandcarparts)sectors,andasaresultthehigheconomic

growthhasnotresultedinalargeexpansionofjobprospectsforpoorunskilledworkers.The

publicpolicydeficienciesineducationandskillformationhavealsolimitedtheemployabilityof

thepoorworkersinmanyofthenewjobs.

Agrowthpatternthatisskill andcapitalintensiveobviouslyexacerbatestheproblemof

inequality.Inadditionthereisapeculiarbimodalityinthesizedistributionofmanufacturing

firmsinIndia;mostfirmsarebunchedatthelowerendwithverylowproductivity,paying

extremelylowwages,whereasatthehigherend(withamissingmiddle)ofthefirmsize

distributionwagespaidaremuchhigher.Thislargewageinequalityinthesameindustryadds

ontotheinequalitybetweencapitalandwageincomes.

Ontopofallthistherearetheusualprocessesofagglomerationeconomiesofscaleintheearly

stagesofgrowthwhichleadtoregionalandsectoralconcentrationresourcesandcapital

moveto

growth

poles,

the

poorer

areas

fall

behind.

The

large

urban

growthdriven

by

such

agglomerationforcesthatIndiaisexpectinginthenexttwodecades,withtheurban

populationexpectedtoreach600million,willenhancethisinequality,apartfromstrainingthe

urbaninfrastructuretonearbreakingpointandstokingthenativistforcesinbigcitiesin

resistancetolargescalemigrationfromtherestofthecountry.Yettheproductivitygap


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betweentheruralandurbansectorsorbetweenagricultureandmanufacturingandservicesis

solargethatsuchtransitionwillbeinexorableintheprocessofeconomicgrowth.Insituations

whereeconomicgrowthinvolvesextractionandprocessingofmineralsfromlandcurrently

belongingtotheindigenouspeopleofIndiawhoareuprootedintheprocess,oracquisitionof

landingeneralfromthepeasantsforcommercialandindustrialdevelopment,agreat

distributiveconflictisalreadyshapingup,oftenturningintoviolence,ultimatelyturningonthe

questionoftheappropriatedistributionofthelargerentalincomefromscarceappreciating

resources,nowaccruingdisproportionatelytothecorporateoligarchy,realestatetycoons,the

miningmafia,andtheirpoliticalpatronsandcollaborators.

Itisinthislargercontextofthemountingforcesofinequalityanddisplacement,theneedfor

organizingaviable

system

of

social

protection,

already

rather

enormous,

is

all

the

more

desperate.

II ApproachestoSocialProtection:ACriticalAppraisal

Inthe

Indian

discussion

there

have

been

different

approaches

to

the

question

of

how

to

tackle

socialprotection.Averypopularapproachthesedaysistocouchitintermsofrights(tofood,

education,information,jobs,etc.),andthereisagreatdealofcommendableactivismonthis

front,andalreadysomeachievementstoshow,particularlyinthelandmarklegislationsonthe

righttoinformationandtoworkonpublicworksprojects(thoughtheirimplementationin

manystatesareasyetratherslowandfeeble,andfacingagreatdealofresistancefrom

bureaucrats,contractors,etc.).Thisapproachcan,attheminimum,servetoraise

consciousnessamong

the

poor

and

vulnerable

about

their

entitlements,

asense

that

they

are

notmeresupplicantstothepoliticiansorbureaucrats,thatifthelatterfailthereisaccessto

courtstoenforcetheserights,andpublicinterestlitigationandcourtinjunctionsonthese

mattershaveattractedagreatdealofattention.


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Butatthesametimeoneshouldrecognizesomelimitstothisrightsbasedapproach.Ifthe

deliverystructureforimplementingsomeoftheserightsremainsasweakandcorruptasitis

now,merepromulgationofrightswillremainhollowandwill,afterapoint, generateagreat

dealofcynicism.Indianpublicarenaisalreadylitteredwithhundredsofunenforcedor

spasmodicallyenforcedcourtinjunctions,andthereissomedangeroftheproliferatingjudicial

activisminstretchingtheinterpretationoftheconstitutionalrighttolifeendingup,forallits

goodintentions,inunderminingthecredibilityandlegitimacyofthejudiciaryitself.

Forexample,iftherighttofoodisexertedwithnoconsiderationoftheefficiencyandcost

effectivenessofthewaysofimplementingit(likethecurrentPublicDistributionSystemPDS

whichinmanystatesisanenormousprojectoftheftandwastagearoughestimateisthat

lessthan

aquarter

of

the

subsidized

foodgrains

reaches

the

poor),

it

is

an

unwarranted

and

unfairburdenontaxpayerswhofundthegallopingcosts.Inanycasetheprogrammeas

currentlyadministeredisweakestinthepoorestregionsthatneeditmost.Foodstampsthat

havebeenadvocatedfromtimetotimewillreducesomeofthewastageandtheftinthe

storageanddistributionbypublicagencies,butwillnoteliminatetheproblemsof(a)fraud

rampantinnonuniversalmeanstestedtargetinglikethattobelowpovertyline(BPL)people

and(b)thedevelopmentofsecondarymarketswheremerchantsbuyupthestampsin

exchangeof

some

(smaller)

cashin

which

case

you

might

as

well

directly

give

people

cash

ratherthanstamps. TherecentRighttoEducationActdoesverylittleforthepoorqualityand

quantity ofeducationservicesactuallyprovidedingovernmentschools(thatdrivechildrento

privateschoolseventhoughteacherstherearebyandlargelessqualifiedandlesswellpaid)or

aboutthenegligencewithwhichthenewpoorstudentsfoistedontheprivateschoolsarelikely

tobetreatedwithoutaproperqualityevaluationofschoolsinplace,ortheremedialeducation

thatthepoorperformingchildren(atprivateorgovernmentschools)andtheschooldropouts

desperatelyneed.

ThecurrentEmploymentGuaranteescheme,thelargestofitskindanywhereintheworld,for

allitsflaws(whichwouldhavebeenfarlessifaregularandinstitutionalizedsystemof

independentsocialauditswereinplace),providesapossiblefallbackoptionformanyable


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bodiedruraladultsforworkingonmostlyconstructionprojectsforaperiodof100daysevery

year(thoughthislimitof100daysandtimelypaymentofwageshavesofarbeenreachedonly

inveryfewareas),andthismayhavealreadyexertedsomepositiveindirecteffectsontherural

wageearnedbythepoorestpeople.Thisis,ofcourse,quitedifferentfromtherighttojoboften

demandedbyorganizedworkersintheformalsector. Therighttojob,ifnarrowlyinterpreted

asthesecurityonagivenjob,canconsiderablydistortthelabourmarket,ifitfreezestheability

oftheemployer(publicorprivate)toadjusttochangingconditionsintechnologyormarket,

thushurtingthewholeeconomy,andthejobprospectsoflessprivilegedworkers.Itisvery

importanttodistinguishbetweeneconomicsecurityandjobsecurity. Aworkershouldhavetherighttoexpectfromsocietygeneraleconomicsecurity,butnotsecurityonagivenjob.Myown

empiricaljudgment,however,isthatstringentlabourlawsthatareaimedatensuringjob

securityinlargeindustrialfirmsmaynotbethemostimportantconstraintonIndianindustrial

growth;otherconstraintslikeinfrastructure,creditandmarketingmaybemoreimportantin

manycases,butthattheyconstituteaconstraintcannotbedenied.Thereisultimatelyno

alternativetoapackagedealbetweenemployersandorganizedworkers:allowingmore

flexibilityinhiringandfiringhastobecombinedwithareasonableschemeofunemployment

compensationoradjustmentassistance,fromanearmarkedfundtowhichemployersand

employees

should

both

contribute.

No

Indian

politician

has

yet

gathered

the

courage

or

imaginationtocomeupwithsuchapackagedeal.

Thedistinctionbetweeneconomicsecurityandsecurityofaparticularjob(usuallyintheformal

sector)alsobringstotheforegroundaparticularconflictamongworkerswhichorganizedtrade

unionswouldratherslurover.ItiswellknownthatsocialdemocracyinWesternEuropecame

outofahistoriccompromisebetweencapitalandlabour(thelattergetssociallyprotectedand

areasonableshareoftheeconomicpie,andinreturngivesupitsdemocraticpowerof

expropriatingthe

former,

so

that

it

can

carry

on

its

innovations

that

expand

the

pie).

In

India

wheretheinformalsectorismassive,socialdemocracymayrequireanadditionalimplicit

compromiseinthelabourmarket,betweenformalandinformalworkerssinceinmanyways

theirinterestsmaybeinconflict(oneexampleisstringentjobprotectionofformalworkers

maybeattheexpenseofthepotentialexpansionofjobpossibilitiesforinformalworkers;


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anotherexampleisthatthegeneralstrikesandbandhsfrequentlycalledbyformalsector

unionsaspartoftheirorganizationalmuscleflexingparalysecitylifeandrobthedailyinformal

workersandstreetvendorsoftheirsubsistence).Besides,thestrongestorganizedworkersare

thoseinthepublicsectorservices,anditistheircorruptandcallousservicenondeliverywhich

thepoorinformalworkersaspotentialrecipientshavetofaceeveryday.

Ingeneraloneshouldnotlookatthesocialprotectionrightsinabstractionfromcosts(direct

andindirect),deliverymechanismsoreventheirpoliticalconstituency.Welldesigned,well

administered,costeffectiveprogrammesofimplementingsomebasicrightsgeneratemore

politicalsupportevenamongthosewhoarepayingforthem.Oneshould,ofcourse,mention

herethatonepositiveimplicationoftherightsapproachisthatofuniversalprinciplesand

standards,which

in

some

cases

may

help

better

administration.

For

example,

it

has

been

pointedoutthatthePDSforfoodgenerateslessmalfeasancewhenitisuniversal(asinTamil

Nadu);aswehaveindicatedbefore,whensomepeopleareexcludedunderatargetedsystem

ofdelivery,itleadstodualmarketsandmoreincentivesandopportunitiesforfraud,apartfrom

erodingitslargerpoliticalsupportbase.

Onuniversalisticprincipleofsocialprotectiononeofthecleanestandleastincentivedisruptive

ideas,both

ethically

and

economically

compelling,

is

that

of

Universal

Basic

Income

(UBI),

under

whicheverybody,richorpoor,getsanunconditionalannual(orperiodic)incomesupplement.

Thisisanoldidea,originallyinspiredbysomeEuropeanutopiansocialistsinthe19th

century,

triedunsuccessfullyinMcGovernsPresidentialcampaignintheUSAintheformofaproposed

demogrant,currentlysupportedbysomeGreenPartiesinEurope,andactuallyimplemented

innonsocialistresourcerichAlaskasince1999(intheformofanannualPermanentFund

Dividend).IntheWestthediscussioninoppositiontotheideausuallycentresaroundthe

encouragementthis

may

give

to

idleness

and

dependency

and

the

unfairness

of

ahandout

to

therichaswell.Ithinkweneedtoworrylessaboutidlenessinacountrywherethe

overwhelmingmajorityofthepeopleareextremelypoorandoverworked.Givingtotherichas

wellmaybefoundadministrativelytolerablebymanywhoknowtheformidableproblemsof

monitoringandcorruptioninIndiaintryingtotargetitonlytothepoor.Themainquestionis:if


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wewantittobeuniversal,canweaffordit?Ofcoursetheanswerdependsontheamountto

begivenout,ifthiswillbeareplacementfortheexistingtransferprogrammeswhichhavealot

ofwastageandmisappropriation,howtheproblemofmisappropriationofthebasicincome

supplementwillbehandled,etc.Letsmakesomebackoftheenvelopecalculations.

Supposeinacountryof1.2billionpeoplewewanttogiveouteveryyearRs.5,000toeach

family(assumedtohave5members).ThisamountstoRs.120thousandcrores(notcounting

administrativecosts,whichneednotbelarge,withelectronichelp).Letsassume,forthetime

being,thatwiththeforthcominginstallationoftheelectronicUniqueIdentificationSystem(UIS)

theadministrativecostsofthisunconditionaltransferprogramwillbeminimal.Letsnow

comparethissumofRs.120thousandcroreswithsomebenchmarkfigures.Thetotalestimates

ofhowmuchiscurrentlyspentbythegovernmentonalltheantipovertyprogramscombined

easilyexceedthisamount.Whatismoreimportantisthatthisamountismuchlessthanthe

totalsubsidiesthegovernmentgivesouttotherelativelyricheveryyear.Wedonothaveiron

cladestimatesofthelatter.TheNationalInstituteofPublicFinanceandPolicyhasfromtimeto

timeestimatedthetotalamountofsubsidies(implicitaswellasexplicit)givenoutbythe

centralandthestategovernments.Thiscomestoabout14percentofGDPeveryyear.These

subsidies

are

classified

into

merit

and

non

merit

subsidies.

Without

going

into

the

intricacies

ofthedefinitions,letussay,veryroughly,thatthenonmeritsubsidiesmostlygotothe

relativelyrich.Ofthe14percentofGDPintotalsubsidies,roughlytwothirdshavebeen

estimatedtobenonmeritsubsidies:thatcomestoabout9percentofGDP.Letusmakea

conservativeestimateandbringthisfiguredownto6percentofGDPasgoingtotherelatively

rich.In200910theannualGDPofIndiawasaboutRs.4500thousandcrores(at20045prices);

6percentofthiscomestoRs.270thousandcrores.Sowhatthegovernmentpaysoutas

subsidies

every

year

to

the

relatively

rich

is

more

than

twice

the

amount

itll

need

to

pay

out

a

basicincomesupplementofRs.5,000toeachfamily,richorpoor.Andifthisreplacessomeof

theexistingdysfunctionalprogrammes(likePDS)ornotveryeffectivecashtransfer

programmes(likeSGSYSwarnajayanti GramSwarojgarYojanaorIAYIndiraAwasYojana),

theincomesupplementscanbeevenlarger.Allthisisbasedonaveryroughandready


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calculationandoneshouldnottaketheestimatestooseriously,butitgivesussomesenseof

proportion.

Butarethepossibilitiesofmisappropriationthatafflictmostsocialprotectionprogrammesin

IndiaseriouslylowerwiththebasicincomesupplementideafortifiedwithUIS?Ifthemoneyis

depositedinanaccount(atanearbypostofficeorbank)fromwhichwithdrawalsrequirebio

metricidentification,andnomeanstestingorrichpoorclassificationisnecessary,manyofthe

currentproblemsoffraudandcorruptionandmanipulationofBPLcategoryarelikelyto

diminishconsiderably.Yetonecannotruleoutpossibilitiesofclerkswhodissuethewithdrawn

moneydemandingbribes,orlocalmusclemenregularlyextortingsomeofthecashfromthe

defenselessrecipient(likerobbersinmanycountriestakingtheirvictimstotheATMmachines

andforcingwithdrawals).Ofcourse,whenPDSgivesapoormansubsidizedfoodthatcanalso

berobbedandsoldinthemarket,butIsupposethelureofdirectcashmaybestrongerforthe

criminals. Similarly,chancesofalcoholicsanddrugaddictrecipientsblowingthecasharea

problemthatworriesmanycriticsofsuchprogrammes.Ofcoursetherearetwokindsof

reactiontothis.Onekindisthelibertarianone,sayingthatweshouldletpeopledecidehow

theywanttospendthemoney,bearingtheconsequencesoftheirdecisionispartofthe

responsibility

that

every

individual

has

to

take,

etc.

The

other

is

the

soft

paternalistic

kind,

tryingtominimizetheproblembyhandingoverthemoneytotheusuallymoreresponsible

femaleadultinthehousehold,devisingallkindsofgoodspecificvouchers,etc.Inacountry

wherewomenandchildrenareamongthemostdeprivedintheusualwayahouseholdisrun,

andchildandmaternalmortalityandmalnutritionareamongtheworstintheworld,concerns

abouthowunequallytheunconditionalcashtransferisspentbythefamilyaretobeexpected

andthemattermaynotbeleftsimplytothemercyofindividualresponsibility.

Moreimportantly,justhandingovermoremoneytothepoorresolvesonlypart(thefinancial

part)ofthesocialprotectiontheyneed.Aspettyproducerstheyalsoneedotherkindsof

assistance(knowledge,skills,marketingconnections,etc.)oraspatientstheyneedinformation

aboutdoctorquality,healthpractices,nutritionandsanitation,andsoon.Intheurbanslums


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wheretheruralkingroupsupportstructuresareweaker,socialprotectionhasalsotoinvolve

activesocialsupportstructuresagainstviolence,drugs,familybreakdowns,juvenile

delinquency,etc.

InanycaseitisprobablyhighlyunrealistictoexpectthattherelativelyrichinIndiawilleasily

giveuponmuchofthesubsidiestheyenjoyorthatthevestedintereststhathaveaccumulated

aroundlongstandingwastefulprogrammeslikePDSwillallowanythingmorethanmoderate

tinkering.Soproposalslikeunconditionalcashtransfersoruniversalbasicincomesupplements

areunlikelytoflyinthepoliticsoftheforeseeablefuture,asthequestionofcanweafford

suchprogrammes?willremainunderthosepoliticalconstraints,eventhough,aswehaveseen,

inprincipleitisresolvable. Newprogrammesofsocialprotectionwithagreatdealoftargeting

(withlowercostsbutalsomoreleakages)andsomeadditionalgarneringofresourcesaremore

likelytobeimplemented.Oneclassofsuchprogrammesisthatofconditionalcashtransfers,

withtheaddedweaponofUIS.InsomesensetheRuralEmploymentGuaranteeisonesuch

programme,ofcashconditionalonwork,withselftargetingsavingsomeadministrativecosts

andleakageasthenonpoorwillnotusuallywanttoworkonsuchmanual,oftenback

breaking,constructionworks.UISmayreduceagreatdealofcurrentleakageintheformof

false

muster

rolls

of

workers.

In

the

delivery

of

social

services,

nothing

on

the

scale

of

OportunidadesinMexicoorBolsaFamiliainBrazilhasyetbeenattemptedinIndia.Mostofthe

conditionalcashtransferprogrammesfortheseservicesinIndiahavebeenrelativelysmalland

aimedatensuringthesurvivalofgirlchildren(andtheirmothersatthetimeofbirth),andtheir

continuededucationinschoolsandinraisingtheirageatmarriage.Wedonotyethaveenough

rigorousevaluationoftheseprogrammes.

In

general,

the

main

presumption

of

conditional

transfer

programmes

is

somewhat

paternalistic:lefttothemselvesthepoordonotexertenougheffortinsendingtheirchildrento

school,healthclinics,immunizationcenters,etc.Sotransferprogrammestrytoinducethem

withcontingenttransfers.Thereisalargeadministrativecostinmonitoringandenforcingthe

stipulatedconditions.Inanycase,suchdemandsidedinterventions(inducingthepoorto


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demandtheservices)donotsolvethesupplysideproblemswhicharesevereinIndia:not

enoughschoolsorhealthclinics,facilities,qualityteachersordoctors,teacheranddoctor

absenteeism,etc. Ofcourse,onthesupplyside,ourbureaucracyisoftennotmindfulof(or

interestedin)thefactthatthegovernmentmaybethefinancierbutneednotbetheactual

supplierandcanworkoutallkindsofinnovativesolutions.Forexample,itcanfinancethe

educationservicesbutoutsourcesomeofthem(asinthecaseofcharterschoolsintheUS);just

asinthecaseofPDS,theFoodCorporationofIndiacanoutsourceitswarehousingtoprivate

companies,insteadoflettingitsprocuredgrainsrotoutside(aboutonequarterofthetotalin

recentmonths)forlackofpublicwarehousingspace.

III GovernanceIssuesinSocialProtection

Intheprevioussectionwediscussedtheprosandconsofdifferentapproachestosocial

protectionintheIndiancontext.Inthissectionwediscusssomegenericgovernanceissuesthat

ariseinanyschemeofsocialprotectionandareparticularlyacuteinIndia.First,letustakeup

thedeliverymechanismitself.Iftheservicesaretobeprovidedbythegovernment,arethere

enough

incentives

on

the

part

of

the

bureaucracy?

In

the

Indian

civil

service

(which

has

often

beendescribedasneithermuchserviceorientednorverycivil)rewardsarenotingeneral

performancebased,promotionsareoftenmainlysenioritybased.Frequenttransfers,

sometimesarbitrarilydeterminedbythepoliticalbosses,discouragethedevelopmentofany

stakeinanyparticularlocalityofservice.Badperformanceisveryseldompunished;inanycase

themeasurementofperformanceisnoisyparticularlywhenthequalityofserviceis

necessarilymultidimensional.Thispromotesarampantcultureofimpunity.Theschool

teachers

and

doctors

and

nurses

are

not

punished

for

the

dereliction

of

their

duties,

their

salariesandpromotionsaredecidedfromabove,notbythelocalpeoplewhobearthebrunt.

Thisobviouslysuggeststheneedfordecentralizationandaccountabilitydownwards.Infact

thereissomeevidencethatinsomecases(e.g.inNagaland)whereevenaverysmallfractionof


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theteacherssalarywaspaidbythelocalpanchayatorvillagecouncil,itimmediatelyledtoa

significantimprovementinservices.ButinmostpartsofIndia,whilelocalelectionsarenow

regularlyheld,effectivedecentralizationismissing,onaccountofaseveredearthofdevolved

fundsordelegatedpowerorappropriateprofessionalpersonnel.Localelectionsareusually

foughtonsupralocalissues,andmoreoftenthannotthestatelevelpoliticiansand

bureaucratshijacktheprocessofmandateddevolution.Suchhijackingismadeeasierbythe

lackofinnerpartydemocracyinalmostallpoliticalparties,sothatlocalpoliticalleadersareat

themercyofthehighertierleadership.IthasnotbeenwidelyrecognizedinIndiahowthelack

ofinnerpartydemocracy,apartfrommakingpoliticalpartiesstructurallyundemocratic,hasthe

sideeffectofcorrodingthevitalsoflocaldemocracyinIndia.

Thesituationisparticularlyironicinthecities,wheretheelectedmunicipalgovernments,while

presidingoverareaswheremuchoftheboomingwealthofIndiaiscreated,haveneitherthe

autonomynortherevenuestosignificantlyimprovethequalityorquantityofmunicipal

services.Theelectoralprocessalsoencouragespoliticalclientelism,politiciansfinditeasierto

lurevoterswithpromisesofprivategoods(say,colorTVsetsorloanwaivers)thanthoseof

longtermimprovementofpublicservices(say,qualityofschools).Bothcapture(bythelocal

elite

and

the

state

level

parties)

and

clientelism

have

ensured

that

local

democracy

remains

the

weakestpartofIndiandemocracy.

Therearesomeextraincentiveandstructuralissuesinhealthservices(qualitativelysome

similarissuesarisealsoineducationornutritionprogrammes).Atthemomenthealthcarein

Indiaisprimarilyprivate(andlargelyunregulated).Householdsurveydatasuggestthat85per

centofallvisitsforhealthcareinruralareas,evenbythepoorestpeople,aretoprivate

practitioners.

While

the

poor

quality

of

service

in

public

clinics

and

hospitals

(and

absenteeism

bynursesanddoctors)oftendrivepatientstoprivatedoctors(someofthemquacksorcrooks),

insomecasesevenwhenthepublicservicesareavailable,thepatientsprefergoingtoprivate

medicalpractitionerswhomorereadilyobligethemwithunnecessaryantibioticsandsteroids.


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Thepublichealthdeliverysystemisafflictedbypoorproviderincentives,coupledwithlow

accountabilitytothepatients.Themedicalpersonnelarepaidafixedsalaryindependentofthe

numberofpatientsoroftheirvisits,sotheyhavenoeconomicincentivetoservetheminthe

publicclinic(theyhavealltheincentivetoaskpatientstocometotheirprivatechambersfor

paidserviceandsendthemforunnecessarydiagnostictestsatlabsinwhichtheyhavea

monetaryinterest).Thepoorhaveverylittleorganizedvoiceinsanctioningtheerrant

provider.Theyareassertiveinelections,butevenalocalelectionisabluntinstrumentof

sanctionforanyparticularservice:electoralplatformsaremultidimensionalwherespecific

grievancesaboutanyparticularpublicserviceprovidergetdiluted,oftenbylargerstatewide

issues.Inaddition,comparedtocurativemedicalservices,theIndiansystemisparticularly

deficientinsystematicplanninganddeliveryofpreventivepublichealthservicesorsustained

programmesoflargescalediseasecontrol(thepublichealthadministrationinTamilNadu,I

understand,isamajorexception).Oneofthecostviabilityproblemsforanypublichealth

insuranceserviceforthepoorinIndia(liketheasyetfledglingprogramme,RSBYRashtriya

SwasthyaBimaYojana thatissupposedtocoveruptoRs.30,000forhospitalizationrelated

expensesforBPLfamilies)isthatthepoorinmostcasesgoforhospitalizationwithillnesses

(likediarrhoeaortyphoidormalaria)whichcouldbepreventedbybasicpublichealth

programmes

like

provision

of

clean

drinking

water,

sanitation,

spraying,

etc.

Thus

the

deficienciesofpublichealthadministrationinIndiaincarryingoutitsprimarydutiesmake

healthcareinsurancesocostly.

Outsideofgovernmentorprivateprovisionofhealthservicestherecanbeotheralternatives.

SeveralNGOsinIndia,aspartoftheirdevelopmentprogrammes,haveinitiatedcommunity

healthinsuranceschemesforpoorpeople,oftenlinkingupwithaninsurer(withalargerrisk

pool)andpurchasinghealthcarefromanexternalprovider.SEWAinGujaratisanimportant

exampleof

organizing

community

health

insurance

for

its

members

and

their

families

in

this

way.Thisandothersimilarmodelsneedtobestudiedandreplicatedinamuchlargerscalein

workerassociationsandcooperativesinIndia,particularlyintheinformalsector.Inthehistory

ofGermansocialwelfareprogramsworkerassociationsplayedaleadingrole.InIndiawhere

theinformalsectorismuchlarger,smallscaleassociationsneedtobemobilizedforsocial


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insurance,theNGOscanplayamediatingrolewithinsurersandhelpprocessingpaymentsof

premium(apartfromidentifyingbeneficiariesandgivingthemtherequisiteinformation),and

thegovernmentcanintroducesomeprovideraccreditationsystemstohelpthechoiceof

providers.

IV LivelihoodProtectionaspartofSocialProtection?

Whentheinformalsectorislargeandthemajorityofpeopleareselfemployedintinyfarmsor

firms,theboundarybetweenahouseholdandanenterpriseisblurred,whichmeanssocial

protectionprogrammesmayhavealsotoinvolvevariouskindsofprotectionoflivelihoods.

Theseincludeprovisionofcredit,developmentofmarketingnetworks,insuranceagainst

productionrisks(say,rainfallinsuranceinagriculture,rentingoutserviceforgeneratorsto

coverpoweroutagesinmanufacturingfirmsorrepairshops),roads,extensionservices,etc.For

thosewhoworkinthecasualwagelabormarketandfortheunemployed,skillformation,

vocationaltrainingandpublicfacilitiestoconnectthemupaftertrainingwithpotential

employerscanallbepartofageneralsocialprotectionprogram.

Ofcoursealltheseprogrammeswillcostagreatdealofmoney(apartfromorganizational

resources).Tosomeextentandtotheextentpoliticallyfeasible,somerestructuringofexisting

wastefulorineffectiveprogrammeswillsavesomemoney.Butultimately,astheEuropean

experienceshows,socialdemocracyisexpensiveonthepublicexchequer,itllbemoresoin

Indiawherepovertyanddeprivationaresomassive.IndiastaxtoGDPratioisatthelowerend

amongmajordevelopingcountries(muchlowerthaninChina).Whilekeepinginmindthat

highertax

rates

often

encourage

more

tax

evasion,

there

is

alot

of

scope

for

raising

the

tax

to

GDPratio,particularlyfromcapitalgains,inheritance,andtheburgeoningrentalincomesof

variouskindsinrealestate(thecorruptpropertyassessmentsysteminourcitiesleavesout

muchoftheenormousriseinvalue),inruralandsemiurbanlandaroundinfrastructural

projects,andinminesandotherextractiveindustries.Thiswill,ofcourse,immediatelyraise


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loudscreamsfromIndiasrich,butsanerelementsofthelatterwillrealizethatsocial

protectionforthepoorwillultimatelyhelpthemaswell,particularlysincethehumancapital

chainsarepresentlybrokenwithoutwhichtheirbusinesscannotthrive.Aswehaveindicated

before,therearemanywaysequityandefficiencycangotogether.Ofcourse,thetaxing

governmenthastoimproveitscredibilitybyminimisingwastefulsocialprogrammes.Atthe

locallevelifpanchayatsandmunicipalitiescanraisepropertytaxes(assessedmaybeonarea

basednondiscretionaryratesasisbeingcurrentlytriedinMumbai,reducingthepowerofthe

assessorofficials)andiftherevenueisearmarkedforspendingontransparentandtimebound

specificlocalbenefitprojects(whichcanbepubliclydiscussedingramsabhasandward

meetings),thetaxpayersmaybemorewillingtocontribute.

Ifsocial

protection

has

to

involve

livelihood

protection,

at

some

point

one

has

to

grapple

with

thecontroversialissueofhowmuchofthetraditionalextremelylowproductivitylivelihood

patternshavetobeprotectedagainsttheonslaughtofmarketsandcapitalistdevelopment.As

thelatterhasoftenbeenidentifiedwithdispossessionanddislocationofpeoplefromtheirland

anddespoliationofthelocalenvironment,therearenowstrongmovementsinIndiaagainst

acquisitionoflandfromfarmersandadivasisforthepurposeofindustrialandcommercialdevelopmentandmining.Idonothavethespaceheretogointothedetailsofthisimportant

controversyhere,

Ishall

only

register

here

aplea

for

some

balance

between

the

need

for

economicdevelopmentthatcreatesproductivejobsandenhancessocialsurplus(whichcan

potentiallyberedistributed)ontheonehand,andontheotherhandtheneedforminimising

(andadequatelycompensatingfor)thedislocationbymeansofaprocessinwhichthelocal

stakeholderscanbefullparticipants.Useoflandandmineralsbyprofitseekingcompaniesfor

nontraditionalhigherproductivityactivitiesisindispensableifwewantanychangeinthe

miserablewayoflifethatthefarmersandadivasishaveenduredforcenturiesastheMarxist

economistEmmanuel

once

wrote,

the

horrors

of

capitalism

fade

in

comparison

with

the

horrorsofprecapitalism,orasJoanRobinsonfamouslyremarked,whatisworsethanbeing

exploitedisnottobeexploitedatall.Thereistoomuchromanticizingofthetraditionallife

amongsomeotherwisewellintentionedactivistsandtoolittleinterestinassessingthe

complextradeoffsinvolved.Infactthereisalargersocialorganizationalissuehere.Voluntary


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groupsandNGOsmoreoftenthannotbeingessentiallysingleinterestadvocacylobbieslack

themechanismoftransactionalnegotiationsandgiveandtakeamongdiverseinterestgroups

aroundthosetradeoffsthatlargepartyorganizationsrepresentingandencompassingthese

diverseinterestscouldfacilitate. Thattheexistingpartyorganizationslackingininnerparty

democracydoabadjobofitdoesnotnegatethegeneralpoint.Ontheotherhand,aswehave

mentionedbefore,inthecurrentdispensationthesurplusgeneratedintheprocessof

developmentintheseareasisgrosslyinequitablydistributed,muchofitgrabbedbythe

corporateoligarchy,realestatetycoons,theminingmafia,andtheirpoliticalpatronsand

collaborators.Thereisneedfortransparentandcarefullymonitoredauctioningofminingrights

amongcompetingcompanies,andforasubstantialannuitypaidtothelocaldispossessed

peopleandforanenvironmentalimprovementfundoutofthemoneythusraisedandsharesof

thecompanies.Wehavetofindabalanced,equitable,andsustainablewayofdividingthe

surplusandminimisingtheloss(bothprivateandsocial,includingenvironmental). Inthis

balancingNGOscanplayanextremelyvaluableroleinespousingthecauseofthedeprived,

increasingtheirawarenessandinformation,catalyzingtheirorganizationsandactingas

watchdogsagainsttheabusesofstateandcorporatepower.

V SocialProtectionandDemocraticMobilization

Finally,thebigpuzzleinIndiandemocracyisthis: thenumericallylargepooraresoassertiveat

electiontime,andyetsocialprotectionforthemcontinuestobeweak,andelectionafter

electiontheyselect(orfailtopunish)leaderswhodosolittleforthemintermsofsocial

protection.Theremaybeseveralfactorsatplayhere:

(i) Itispossiblethatendemicpovertyandlackofsocialprotectionarewidelyregardedamongcommonpeopleasacomplexphenomenonwithmultiplecauses,andthey

ascribeonlylimitedresponsibilitytothegovernmentinthismatter.Themeasuresof

governmentperformanceareinanycaserathernoisy,particularlysoinaworldof


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illiteracyandlowlevelsofcivicorganizationandformalcommunicationonpublic

issues.Aperceivedslightinthespeechorbehaviourofapoliticalleaderfeltbya

particularethnicgroupwillusuallycausemuchmoreofanuproarthanifthesame

leaderspolicyneglectkeepsthousandsofchildrenseverelymalnourishedinthe

sameethnicgroup.

(ii) Thelattersuggeststhatwhatismoresalientthansocialprotectionisdignitypolitics.Ofcourse,inalargersensesocialprotectionshouldincludedignityissues.Ifelecting

alowcasteleader,howevercorrupt,reducesthechancesofupper castethugs

harassingorrapinglowcastewomen,thatsurelyshouldcountasagaininsocial

protection.

(iii) Sincethepoorusuallygetmobilizedoncasteandethniclines,themodalitiesofsuchmobilizationareoftenmultidimensional,andpovertyalleviationorsocial

protectionisonlyoneofthemanyissuesthatgetarticulatedinthepublicdomain.

Also,theprocessofsuchethnicmobilizationisofteneasytobehijackedbytheelite

ofthesegroups,whochannelalionsshareofthebenefitstowardsthemselves.The

intendedpoorbeneficiariesareoftenunorganizedanduninformedabouttheir

entitlements,andtheyalsolacktheabilitytoevaluatethequalityoftheparticular

educationorhealthserviceprovided.

(iv) ItispossiblethattheobservedpreoccupationinNorthIndiawithsymbolicvictoriesamongtheemerginglowercastepoliticalgroupsmaybejustamatteroftime.The

socialandpoliticalchangeshavecometoNorthIndiaratherlate;inSouthIndia,

wheresuchchangeshavetakenplaceseveraldecadesback,itmaynotbea

coincidencethattherehasbeenalotmoreeffectiveperformanceinthematterof

publicexpenditures

on

social

protection

projects

like

food,

health,

education,

housinganddrinkingwater.ThisreflectsthefactthatinSouthIndiatherehasbeen

alonghistoryofsocialmovementagainstexclusionoflowercastesfromthepublic

sphere,againsttheireducationaldeprivation,etc.inawaymoresustainedand

broadbasedthaninNorthIndia.Onemayalsonotethattheuppercasteopposition


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tosocialtransformationissomewhatstrongerinNorthIndia,asdemographically

uppercastesconstituteingeneralalargerpercentageofthepopulationthanhas

beenthecaseinmostpartsofSouthIndia.Sonewpoliticalvictoriesoflowercastes

inNorthIndiagetcelebratedintheformofdefiantsymbolsofsocialredemption

andrecognitionaimedatsolidifyingtheirasyettentativevictories,ratherthanin

committedattemptsatchangingtheeconomicstructureofdeprivation.

OnemajordifferencebetweenIndiandemocracyandtheWesternisthattheemphasis

hereismoreongrouprights,lessonindividualrights(whichareoftencrasslyviolatedwhen

thereisevenaremotechanceofsomegrouporothertakingoffence).Oneindicatorofthe

emphasisongrouprightsisthatreservationsareoftenthemostpopulartoolof

redistribution.Public

sector

job

reservations

for

some

historically

disadvantaged

groups,

for

example,ferventlycatchthepublicimagination,eventhoughobjectivelytheoverwhelming

majorityofthepeopleinthesegroupsmayhavenochanceofeverlandingthosejobs,as

theyandtheirchildrenlargelydropoutofschoolbythefifthgrade.Attentionisthus

directedatsymbolicpolicies,andthepatronagebenefitsareprimarilyenjoyedbytheelite

ofthesegroups,deflectingpublicattentionawayfromthemoreurgentanddifficult

challengesofimprovingthedeliverystructureofbasicsocialservicesincludingeducation.

Reservationsoften

become

asurrogate

for

effective

action

on

the

social

protection

front.

Thereisscopehereforimaginativepoliticalleadersbuildingongroupsolidaritiesof

hithertosubordinategroupstofocuspoliticalattentiononbasicsocialservicestheyare

denied,notjustinlobbyingwithhigherauthoritiesbutinmobilizinggroupfinancialand

organizationalresourcesforthispurpose(includingrevitalizingthevarioustraditional

groupbasedcharitableorganizations).Theemphasishastobeongroupbasedsocial

movementsthatemphasizeawarenessoftheirpublicentitlements,ofsomejudgmentand

adviceonthequalityofelementaryhealthcareandeducationalservicestheyreceivefrom

villageprivateprovidersofeducationandmedicalcare,oftheadverseeffectsof

superstition,ignoranceandfaithhealing(somewhatonthelinesofthehistorically

successfulpeoplessciencemovementinKerala),andofbasicsanitation,drinkingwater


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purification,personalhygieneandenvironmentalpracticesthatimprovetheirlives. As

Indiabecomesmoreurbanized,thedifficultiesandcostsofsuchcommunityorganizations

andsocialmovementsshoulddeclinecomparedtothoseindispersedruralsociety.There

arealreadymanywardcommittees,residentsassociations,cooperativesandselfhelp

groups,whichcantrytointegratesocialinsuranceasapartoftheirgeneralactivities,at

leastinnegotiatingwiththeauthorities,processingpaperwork,monitoringandsocial

auditsofgovernmentwelfareprogrammes.Inruralareaswherelivelihoodscrucially

dependonthemanagementoflocalenvironmentalresources(forests,fisheries,irrigation,

grazinglands),historicallycommunityorganizations(panipanchayats,wateruser

associations,vanpanchayats,jointforestmanagementcommittees,etc.)havebeenactive.

Therearenowmanystudiesthathavetriedtounderstandtheconditionsunderwhichthey

succeedandwhentheyfail. Oneshouldderivetheappropriatelessonsfromthis

experience.Aboveall,socialprotectionhastoinvolvethebeneficiariesinactive

participation,awayfromthecurrentframeworkofdolegivingfromthetopbyan

insensitive,unmotivatedandcorruptbureaucracy.

Inconclusion,whilethediscussiononsocialdemocracyinWesterncountriesoftenputsthe

emphasisonitshighcosts(particularlyinviewoftheausteritiesnecessitatedbyintense

globalcompetition)

and

issues

of

incentives

for

work

and

enterprise,

in

India

high

inequality,massivepovertyandavastinformalsectormakethechallengeofimplementing

socialdemocracyextremelydauntingasmuchasitishighlyimperative.Theparticular

governanceissuesinIndia,withinept,corruptandunmotivatedpublicofficialsinchargeof

thedeliverysystem,makethemobilizationofsocialgroupsandcommunityorganizations

andvariousparticipatoryprocessesallthemoreimportant.Butthereisamore

fundamentalissueherethatinvolvestheinteractionoftheproductivesystemandthe

politicalculture.

As

we

have

mentioned

before,

European

social

democracy

is

the

outcome

ofaclasscompromiseandasocialpact:theworkerswhoareelectorallypowerfulenough

toexpropriatethecapitalistsandendthecapitalistsystemhavechosennottodoso,they

havefiguredoutthatcapitalismistheonlyviablewayleftforadequatelyexpandingthepie,

sotheyarepreparedtobearsomecost(exploitation)andletthecapitalistshavea


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reasonableshareofthatpiewhichinducesthelattertokeepontheireffortsat bringing

aboutdynamicinnovations.IamnotsureiftheIndianelectoratehasyetbeenconfronted

withthissocialpact,andifsoconfrontedhowtheyllreact.

Afterthe

demise

of

the

short

lived

Swatantra

Party,

India

has

not

had

afull

scale

pro

businessconservativeparty;eventherightwingpartiesarelargelypopulistonmany

economicissueswhentheygototheelectorate.Inspiteofthegreatfloweringof

entrepreneurialenergiesinrecentyearsthroughoutthecountry,Ibelievethereisastrong

anticapitalist(particularlyantibigcapital)streakinIndianpoliticalculture.Thisisnot

surprisinginacountrywheresmallpeople(smallandmiddlepeasants,selfemployed

artisansandshopkeepers,bazaarmerchantsandpettymiddlemen,clerks,schoolteachers

andservice

workers)

constitute

an

overwhelming

majority

of

the

population,

and

their

ranksareswelledbytheinexorabledemographicpressureandbythetraditional

inheritancepracticesinvolvingsubdivisionofproperty.Thereisadeepsuspicionofmarket

competitionwherebythelargereconomicinterests,oftenutilizingtheiradvantagesof

economiesofscaleandbetterpoliticalconnections,candevourthesmall.Gandhijihad

givensensitiveandeloquentexpressiontothisantimarket,antibigcapital,smallis

beautifulpopulismandmobilizeditinthefreedommovementagainsttheBritish.Inrecent

decadesthose

bearing

the

legacy

of

the

Gandhian

moral

critique

of

market

expansion

and

competitionhavejoinedforceswiththoseespousingtheleftcritiqueofcapitalist

exploitationofworkers,peasants,andothersmallpeopleandtheirrightsovernatural

resources,inbuildingactivegrassrootsmovementsinmuchofthecountryforthe

protectionoftheenvironmentandofthetraditionallivelihoodoftheindigenouspeople,

againstthedepredationsofthecapitalistoligarchy.Eventhoughtheprivatecorporate

sectoristhrivinginIndiaandinsomesenseitshegemonylooksmorepervasivetodaythan

before,it

is

involved

in

the

work

life

of

too

few

people

(as

it

directly

employs

only

about

2

percentoftheIndianworkforce),anditisnotclearthattheelectorateisstillreadyto

accepttheclasscompromiseliketheonebehindthesocialdemocracyenterpriseinthe

West.Ontheotherhand,thepopulistopposition,foralltheirstrengthinnumbers,have

notyetsucceededinpointingtoanyviable,incentivecompatible(i.e.notentirely


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dependentonrevolutionaryormoralzealforsustenance),systemiceconomicalternative,

outsidetheesotericconfinesoftheirwishfulthinkingorutopiananarcho

communitarianism.Thepassionateintensityoftheirnegativecritiqueofcapitalismisnot

matchedbyaconvincingdemonstrationofasustainedpositivealternativesystemthatcan

generatethenecessarysurplus.Untilthistensionisresolved,thesocialdemocracyproject

inIndiawillremainsomewhattentative.

Social_Democracy Pranab Bardhan

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