Are We Prepared To Promote Inclusion Or Risk Growth? |
In these columns, I have pointed out often that the pursuit of long-term growth necessarily involves focusing resources on infrastructure, better service delivery, rule of law, an investment-friendly climate, and enhancement of human capacity and productivity. However, democratic politics demands willing consent of the people to govern. Therefore, it is always tempting and easy to offer instant, transient benefits like cash transfers, free water, electricity and transport, and other bonanzas to maximise the short-term gain to the voter. But the first rule of economics is that resources are always limited, and needs are many. Prudent public financial management always involves trade-offs. Short-term appeasement of voters is inevitably at the cost of long-term growth and productivity. Not surprisingly, policies and programmes aimed at the short-term maximisation end up perpetuating poverty and misery.
The Bihar elections, once again, showed us how our politics is mired in this vicious cycle of competitive populism. By now we are all familiar with the NDA’s cash transfers to women and the MGB’s promises of one government job per family and larger cash transfers. In this populist milieu, it is a miracle that our country is somehow recording an impressive growth rate. But it is also abundantly clear that we are just one election away from chaos. Every election is fought as a life-or-death struggle, and nothing seems to be off-limits. If competing political parties broadly agree that economic growth and enhancement of productivity and incomes are vital national goals, then we are safe. Instead........