Abhijit Banerjee, co-author along with Esther Duflo of Poor Economics, an exploration into why the poor sometimes decide differently from what economists expect them to, is surprised why the Congress party thinks the Food Security Bill will help it electorally.
Writing in Hindustan Times, Banerjee says he is "skeptical that the passage of the bill right now is in the interests of the ruling coalition". His reasoning runs like this: the states that do have a well-streamlined public distribution system - Chhattisgarh, Tamil Nadu, Odisha and Andhra Pradesh, three of them opposition-run and the fourth heading that way - will be happy to take the money to ease their own fiscal pressures. They will then tweak the scheme a bit to claim theirs is better. So no great political benefit to the Congress.
The states which are not run by the UPA will take the money but focus on its flawed implementation to claim their own food security idea would have done better and that the Congress was insincere about the idea anyway. The Congress-run states, on the other hand, will have to defend the scheme despite its flaws. Unlike Narendra Modi or Nitish Kumar, they can't blame anyone else for it. So they too won't benefit much from it.
So why is the Congress so gung-ho about it?
The answer, of course, lies in a few political realities.
First, the Congress wants to deflect the public's focus away from misgovernance and corruption scams. The Food Security Bill gives it something to talk about even if it is not a vote-winner. It is hoping that the opposition will scuttle the bill so that it can claim good intentions, and expose the opposition. But the game isn't going its way so far - for the BJP seems to want a more ruinous bill.
Second, the Congress is convinced that farm loan waivers and NREGA-like doles were what won it a bigger mandate in 2009. Sure, these could not have damaged its prospects, but it was fast growth and the failure of the opposition that left Congress holding the trophy four years ago. Fast growth helped in the urban areas, and an Advani-led NDA simply did not look like a good enough alternative. When an economy is booming, few people want change without a very good reason. Advani did not provide that reason. This time the Congress knows Modi is a good reason to consider a change - though he comes with baggage - and hence the Food Security Bill has become even more important.
Third, family-dominated dynastic parties are particularly prone to believing in such fallacies - that freebies will elections - because they are often cut off from ground realities, and their courtiers are happy to suggest pork-barrel schemes as vital for success. This is particularly true of the Gandhi family, which chooses to operate behind high walls, and less true of dynasties that are more rooted in the soil (Mulayam Singh, Sharad Pawar), but even they feel the need for freebies when the next generation gets into the picture. Dynasties are by definition insecure, and ultimately they try to buy votes to sweeten the deal for an electorate which asks 'why should I elect your son/daughter'?
Fourth, both the Congress and the BJP drew the wrong lessons from the latter's 2004 defeat: that the BJP lost because it talked about growth and India Shining when it should have done handouts to woo the poor. The truth is the BJP chose the wrong allies in Tamil Nadu and Andhra Pradesh, and didn't fare too well in its non-core states. With better allies, it could have come back, albeit with a smaller majority.
Fifth, the Congress party does not want to be seen as acting even against vested interests because they may matter electorally. A case in point is the kerosene subsidy. Today's BusinessLine reports that the government is having second thoughts on direct cash transfer (DCT) in the case of kerosene subsidies, probably because it fears that raising kerosene prices - even if people are compensated in cash for the loss of subsidy - will damage it electorally.It will defer the scheme even though the pilot project to validate the hypothesis of massive diversions proved to be correct. In the pilot in Alwar, Rajasthan, only 22 percent of targeted recipients of DCT showed up to claim their cash - which indicates the massive levels of corruption the scheme has seen in the past.
Obviously, the Congress fears that even kerosene diversions must be benefiting somebody and their votes cannot be written off. The diversions may have gone into the pockets of favoured political recipients - a constituency that cannot be angered on the eve of elections.
The final answer to Banerjee's query is thus simple: if Poor Economics explains why the poor don't seem to act rationally on food and other subsidies, it is his poor understanding of politics - and how it is actually played out in India - that explains the irrational acts of our politicians.
His next book should clearly be called Poor Politics.
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Updated Date: Dec 20, 2014 19:46:34 IST