Dole-nomics: Why AAP is headed down the same hole as Sonia's NAC

Arvind Kejriwal's party is headed down the same road as Sonia Gandhi's NAC - more doles. Even doles supervised by honest people stoke corruption.

R Jagannathan December 10, 2013 14:38:05 IST
Dole-nomics: Why AAP is headed down the same hole as Sonia's NAC

The Aam Aadmi Party (AAP) wants to change the "system" using honesty and probity as its calling cards. However, while it can impact short-term politics by the power of example and idealism, it cannot really change the system on the basis of good intentions alone. In fact, a large chunk of its policies will end up increasing the potential for corruption, not reduce it.

This is exactly why the Congress government, advised by a dole-oriented National Advisory Council under Sonia Gandhi, is sinking in corruption and price-rise. Does Arvind Kejriwal want to repeat a bad experiment? An honestly executed bad idea is still a bad idea.

For this we have to understand the role doles play in increasing corruption. A dole is, by definition, about giving someone a benefit without seeking a price for it, or at least an adequate price for it.

If it costs Rs 14-15 to procure and store a kilo of rice and you sell it at Rs 3, it is an open invitation to corruption: the people who hawk it will see a potential to sell it in the black market, and deny the poor their cheap grain. Even the people who finally get it at Rs 3 might sell it to use the money for buying something else. Put another way, long-term doles make all of us corrupt - even the poor.

If diesel costs far less than petrol, and kerosene even less than diesel, it is an open invitation to adulteration.

Surjit Bhalla of Oxus Investments notes that large parts of AAP's manifesto reflect a Luddite tendency, as it opposes privatisation, wants the common man's necessities (water, power, food) to be subsidised, and tax the rich and middle classes more.

Dolenomics Why AAP is headed down the same hole as Sonias NAC

The top leaders of the AAP with its manifesto. PTI

Leaving aside the question of taxing the better off classes aside for a minute, the mere prospect of increasing subsidies if the AAP is voted to power should scare any sensible person. It would mean that AAP has learnt no lesson from UPA-2, where the pursuit of mindless subsidies has not only slowed down growth but increased corruption to mind-boggling levels.

The link between doles and corruption is very direct. Since doles are meant for the poor, they are easy to justify politically. This is why politicians love doles - and Kejriwal surely does not want to be thought of as any other politician. Once you commit yourself to doles, you are essentially committing yourself to a degree of corruption by interfering with market forces in the pricing of goods and services.

It is not an accident that UPA-2 saw the highest levels of corruption and highest levels of dole too.

Consider the big two scams - 2G and Coalgate. They were about helping the poor and keeping prices of power down - exactly what Kejriwal wants.

What was the justification offered by A Raja for selling spectrum in 2008 at 2001 rates? He said he wanted to make mobile services affordable to the common man. This is the argument the UPA bosses ultimately bought, since there was no other way to justify Raja's decision which got the backing of Manmohan Singh and the UPA government.

In short, the poor are always used to justify a policy that can only result in corruption. By selling spectrum far below market prices, UPA ensured gigantic corruption. How can Kejriwal rail about 2G and then want subsidies too?

Next take Coalgate, which came directly under the Prime Minister after the exit of Shibu Soren as Coal Minister. The ministry wanted to sell coal blocks by auction, but ultimately coal blocks were given away virtually free and non-transparently - again creating scope for enormous corruption.

Why give coal blocks free? The objective was, and is, cheaper power. But did we get cheaper power or costlier corruption?

Almost all state governments give electricity at throwaway prices to farmers. The net result is huge theft of cheap power from the grid. Once again, a deed done in the name of the poor farmer ends up benefiting someone else.

So when Kejriwal comes up with his cheap power and free water scheme, he can be sure that every crook will be salivating at the prospect. Kejriwal will be watering the soil of corruption further. A water mafia will develop, and power theft will become endemic.

But, no, AAP sympathisers will say, we will have a powerful Jan Lokpal who will police the administration and ensure that the right people get the cheap power and water. There will be no corruption.

Will an all-powerful anti-corruption force reduce corruption or make it worse? What is the guarantee that the Lokpal's agents will do their work diligently rather than merely accept bribes to look the other way. Don't the police, protectors of the law, do precisely this? Ask the Stalin-Brezhnev era Russians and they will tell you that when Big Brother is watching, corruption goes underground and become endemic. Corruption will become more systemic - precisely the thing Kejriwal is said to be fighting against.

The only way forward is to make doles restricted only to the ultra needy - and self-dissolving. Once it becomes universal and widespread, it becomes self-perpetuating and self-defeating.

Consider NREGA, the rural jobs scheme, which is universal. In 1999-2004, when there was no NREGA, jobs grew by 60 million, thanks to the NDA government's infrastructure investments. In the next five years, jobs growth vanished. Among other things, the entry of NREGA pushed rural wages up and drove women out of the workforce.Is the purpose of a jobs scheme to help people temporarily in distress and without jobs or to destroy the market for real jobs? Atal Behari Vajpayee's infrastructure spending created more jobs than the UPA's make-work schemes. And NREGA is one of the most corruption-ridden schemes in the country after the public distribution system. (Read here, here and here)

Kejriwal is barking up the wrong tree by mixing up old-style corrupt populism with the idea of integrity. He should remember that the post-independence Congress, and the early BJP were honest parties run by fairly clean politicians - of the kind Kejriwal himself is promising. But by embracing statism and dole politics, both Congress and BJP descended into corruption, bit by bit.

Memo to the most honest kid on the block: doles and corruption go hand in hand. Even a Jan Lokpal cannot break that invisible link.

Sonia Gandhi's National Advisory Council has pushed the UPA government into a deeper hole with suggestions for more and more doles, and look where the economy has landed.

Does Kejriwal want to dig his own hole with the dole?

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