Khao Aur Khilao budget



There is no point moaning about corruption while encouraging it. This Alternative Budget suggests a series of measures to Finance Minister Pranab Mukherjee that will actually help the poor and the miserable and raise growth rates despite corruption

They say that if a lie is repeated a 100 times, people not only start accepting it as the truth, but also change their behaviour and actions accordingly. But this is India, the land and civilization which perplexes, frustrates and exasperates even hardened pundits by being the exception to God knows how many rules. In India, I have noticed that even if a truth is repeated a 1,000 times, people shrug their shoulders with cosmic apathy and move on. It is almost as if truth and people’s lives and actions move in a series of parallel lines that could confound even the ultimate Vedic scholar and mystic. You might wonder about my detour into confused philosophy at a time when I get ready to present my ninth successive Alternative Budget; this time to Finance Minister Pranab Mukherjee, who will present a full fledged budget after 27 long years. I am sure your eyebrows must have twitched that wee bit and your lips curled in the slightest hint of an amused snigger when you read the headline – The Khao Aur Khilao Budget. Some of you might even recall the theme and headline of 2008 – Ban the Budget, that raised many hackles, apart from eyebrows.

But my quasi-philosophical detour and a mention of the headline themes of the Alternative Budgets of 2008 and 2009 would become more apparent when we confront the most fundamental lie and the most basic truth related to economic policy making and governance in India.

Fundamental Lie & Truth

Rhetoric apart, what is the most fundamental lie that has been repeated more than a 100 times? It is the perception and propaganda that Indian governments and successive finance ministers have actually worked since 1947 to improve the lot of the poor. Inclusive growth is not a new age mantra that the Congress and UPA strategists have suddenly discovered; it has been repeated ad nauseum from pulpits and platforms for more than 60 years. The fact is: it is the most fundamental lie that has let government after government get away with empty slogans and zero performance. India had about 250 million people living in dire and desperate poverty in 1947; the number has gone up to more than 350 million after 60 plus years of emphasis on inclusive growth and redistributive justice for the aam aadmi.

And what is the most basic truth that has been repeated more than a 1000 times without the fundamental lie being exposed for what it is? It is the fact that virtually all the money and resources meant for the poor never reach the poor. Repeating facts might appear jaded to the cynic; but it still does not take away the chilling implications for India. Many years ago, the then Prime Minister Rajiv Gandhi lamented that barely 15 paisa out of every Rupee earmarked for anti-poverty and welfare schemes reaches the intended beneficiaries. India has made tremendous strides since then. That is why his son and the Prime Minister-in-waiting Rahul Gandhi now laments that barely 5 paisa out of every Rupee meant for the poor actually manages to reach them. When I read about the Maoist takeover of Lalgarh and the “Liberated Zones” that Naxalites have created in states like Orissa, Chattisgarh, Jharkhand, Bihar, West Bengal and Maharashtra, I sense the power of the most fundamental lie and the most basic truth. It is the power behind this most fundamental lie and the most basic truth that had prompted me to proclaim Ban The Budget in 2008. And it is this, mixed with a sense of the unique ethos of India that prompts me to appeal to the ever pragmatic Finance Minister Pranab Mukherjee to present a Khao Aur Khilao Budget this year. But let us demolish one more powerful, insidious and oft repeated myth about governance in India before I move on to the concrete suggestions, proposals and solutions that I have to offer.

Corruption is Global

Virtually all analysts, economists, political scientists, pundits and activists unanimously say that corruption is the root cause why money and resources meant for the poor never reaches the poor. In fact, this consensus has been held with unwavering certitude for most of the last six decades. Ipso facto, if corruption is somehow eliminated through reforms or revolution, distributive justice and inclusive growth will become a reality in India. No sane person would disagree with this diagnosis and the prescription. But I think it is quite simplistic to merely leave it at that and cry hoarse for reforms as activists do or raise the banner of revolt against the State as Maoists are doing today.

I want to recall a famous statement made by the late Indira Gandhi when a foreign journalist had asked her questions about corruption in her government and party. Always regal, she had dismissed the hack by pointing out that corruption is actually a global phenomenon. You might say that Indira Gandhi was being extremely cynical. But that happens to be a fact. Within a few weeks after the historic victory of Barack Obama in November, 2008, all hell broke loose in America. Not because he was black. But because the Senate seat that he was vacating was actually being ‘sold’ to the highest bidder! Yes, the Governor of Illinois Rob Blagoyevich was caught red handed by the FBI demanding money from potential candidates for the Senate seat. Most of you must be familiar with the recent Expense Scam in the British Parliament where honourable members were caught using public funds for private indiscretions. As the scam unfolded, it was discovered that public funds were used by one MP to buy pornography for the spouse! God knows how many prime ministers of Japan have been directly implicated in corruption scandals. In May, 2009, a former President of South Korea Roh Moo-hyun committed suicide even as he faced serious allegations of corruption. And of course, the Chinese regime routinely executes or hangs party officials caught red handed with their hands in the till to give the citizens an impression that corruption will not be tolerated in the Middle Kingdom!

So please perish the thought that India is unique in the sense that those who rule it are hopelessly corrupt. As just some examples given above show, politicians all over the world are corrupt. Khao Aur Khilao is truly a global phenomenon! And yet, poverty was virtually eradicated from countries like Japan, America and Britain many, many decades ago. And even in hitherto ‘Third World’ countries like South Korea and China where corruption and crony capitalism are rampant, the rulers have performed miracles in delivering livelihoods, basic education and healthcare to hundreds of millions of poor people. As some of the tables and charts accompanying this piece show, the real shame for India is not that it lags behind Japan and America; but that it so hopelessly lags behind China and South Korea in human development indicators.

Red in China and West Bengal

So what have corrupt rulers in China and South Korea done that has so dramatically given economic and livelihood security to the poor while corrupt Indian rulers have failed despite resounding rhetoric and pompous slogans? You only need to visit West Bengal and immediately understand why. Like in China, the Marxists have been in power in Bengal for God knows how many years. In both places, professed concern for the proletariat and public disdain for Yankee Imperialism are a way of life and a badge of honour. In both places, the comrades have never hesitated to ruthlessly use brute force to quell protests. And yet, the differing outcomes – when it comes to the lives of the poor – are so glaringly stark that Chinese comrades might take offence if they are put in the same category as their Red counterparts in Bengal! What intrigues me even more is the fact that India has been blessed with a free and allegedly fearless media right since 1947, while the State ruthlessly controls, regulates and monitors what comes out in the media in China and even in South Korea till recently!

I personally think that the rulers, the ruled and the pundits in India are obsessed with rhetoric, hypocrisy and double speak, while the rulers in South Korea and China have minted billions while simultaneously letting enough resources and money “trickle down” to actually lift hundreds of millions from poverty. That is where the idea of Khao Aur Khilao came to my mind. Come to think of it, Jugaad, Adjust & Khao Aur Khilao are uniquely Indian traits! I totally agree with citizens and activists who say that corruption must be eradicated for the poor to get benefits of economic growth. But then, that is akin to saying that people must not be superstitious and spouses must never stray! Quite a few people will remain superstitious, many spouses will not be able to resist the lure of adultery and most politicians and their cronies will remain corrupt!

It is when we painfully accept this reality that we can actually start thinking of what concrete steps Pranab Mukherjee can take, were he to implement a Khao Aur Khilao Budget. I won’t waste your or his time by giving gory details, annexures and reams of statistics. The numbers will come when we get the big picture. Let me start first by listing out a few concrete ideas on how and where the Finance Minister Pranab Mukherjee can spend money and resources in the Khao Aur Khilao Budget

1: A Census, a national database and Biometric Cards for the Poor

The government is anyway gearing up for the Census of 2011. Pranab Mukherjee can allocate Rs.2,000 crore to this task and specifically ask the office of Census Registrar of India to immediately start work on preparing a master list of individuals and families who live below the poverty line. The task is not easy, for the poorest of the poor do not have a fixed address. But tougher things have been achieved by the Census of India in the past. This database must be organized state by state and district by district. It is only when we identify who the poor are and where they actually live that we can take the next logical step of trying to help them with anti-poverty and welfare schemes. Sure there will be mistakes and leakages; but it is better to have a flawed national database of Indians below the poverty line rather than have no database at all.

In the Khao Aur Khilao Budget, the Finance Minister must allocate another Rs.2,000 crore and rope in the Election Commission to provide the poor with biometric photo identity cards. Smart card technology is already easily available and the Ministry of Health has already successfully implemented a pilot project where the poor are given biometric health insurance cards that can be redeemed even in private hospitals. There must be no insistence on poof of residence. I estimate that at least 250 million Indians will get these smart biometric identity cards that can become the principal parameter for claiming welfare scheme funds and resources. Knowing Indians, many undeserving people will sneak into this database while many deserving ones get left out. But we are not talking about achieving perfection in this Budget.

2: Triple Allocation for NREGS

The vote on account Budget that Pranab Mukherjee had presented a few months before the 2009 election had earmarked Rs.30,000 crore for NREGS. The Khao Aur Khilao Budget will allocate Rs.90,000 crore for the NREGS and promise a minimum of 250 days of work to at least one member of a poor family whose name will be in the new national database. There will be many positive benefits of tripling this allocation. First, just like big farmers in Punjab and Haryana now struggle to get field workers from Bihar as the latter get some work and money at least under the NREGS, big cities will see less migration and incomes of servants, maids, drivers and other unskilled workers in cities will rise because of demand-supply economics. Of course, there will be that much less pressure on urban infrastructure too. Then, local politicians, contractors, officials and their cronies will make more hay even when the sun is not shining. A lot of that “loot” will be spent in rural areas and small towns, positively impacting their economies. And what the hell, if a limited 80-day a year work promise could deliver such electoral results to the UPA, imagine the impact on the 2014 General Elections! The only proviso Pranab Mukherjee should add is that the additional Rs.60,000 crore be utilized in building durable physical infrastructure like concrete roads, school buildings, primary health care centres and irrigation canals. Currently, there is a laughable proviso whereby things like cement can’t be used for NREGS projects. Whoever dreamt up this proviso surely deserves the Khao Aur Khilao Nobel Prize!

3: Quadruple Allocations for Sarva Shiksha Abhiyaan & Mid Day Meal Schemes

The 2009 interim budget together allocated Rs.21,000 crore for both the programmes. The Khao Aur Khilao Budget will increase allocation by four times to Rs.80,000 crores. The logic behind this is very simple. While the NREGS will help a landless labourer escape starvation, the Sarva Shiksha Abhiyaan along with the Mid Day Meal Scheme will help his children acquire the education and the skills that can enable them to decisively leave poverty behind in just one generation. In fact, if the twin schemes are implemented effectively for just 10 years, the government can then actually afford to drastically reduce allocations for the schemes, for they would become redundant in many cases. But for this to be effective, there should be an incentive scheme for school teachers and principals. About Rs.10,000 crore should be earmarked as cash rewards for teachers and principals whose students do well in board examinations. But these cash awards must be disbursed every five years only after board results are announced. The prospect of a few lakhs of rupees as cash incentives might prompt many absentee teachers and principals to pay more attention to the educational and nutritional requirements of their students! And of course, in keeping with the Khao Aur Khilao spirit, siphoned off funds will dramatically enrich tens of thousands of products of India’s unique system of socialism. The Finance Minister should set aside Rs.2,000 crore out of this Rs.80,000 crore for the creation and maintenance of a national database of school children as well as their progress through successive classes.

4: Ten Fold Increase in Allocation of Post-Matric Scholarships

About Rs.1,700 crores are allocated now for post matric scholarships to poor students belonging to SC, ST and general categories. This should be increased by ten times to Rs.17,000 crore. The logic is very simple again: the Sarva Shikhsa Abhiyaan will create a generation of poor students who do not have the money to pay for their higher and professional education. This corpus will ensure that no student – no matter of what caste or religion – is deprived of higher education for lack of resources.

5: Five Fold Increase in Allocation for National Rural health Mission

The vote on account budget allocated about Rs.12,000 crore for this. The Khao Aur Khilao Budget should increase it to Rs.60,000 crore. Once again, money will be siphoned off and many planned outcomes will not be achieved. But some smart incentive-based schemes can lick this problem at least partly. Around Rs.5,000 crores should be set aside for doctors and support staff who run primary health care centers and who can provide proof that they have actually spent the whole of one year in the village or rural area assigned to them. Once poor families don’t starve because of NREGS and their children get education and skills thanks to the Sarva Shiksha Abhiyaan, even minimum basic attention to their health and sanitation needs will create a virtuous cycle that will trigger the much vaunted about demographic dividend.

6: Allocate Rs.5,000 crore to Create RTI Awareness

Many Indian companies, brands and celebrities are known to virtually every Indian despite advertising and promotional spends that rarely exceed Rs.100 crore a year. Imagine how empowered Indian citizens in both urban and rural areas will be if there is a massive and sustained campaign that actually tells people how to use the Right to Information Act. This revolutionary law has not yet been utilized to its potential simply because citizens simply don’t know how to use it. But spending Rs.5,000 crore a year on creating RTI awareness will surely act as a transformational initiative even if some money is siphoned off by some powers that be in the government and their cronies to make terrible ads and promotional material!

Where will the Money Come From?

In the new Khao Aur Khilao Budget, about Rs.200,000 crore (Two Lakh Crore!) of additional funds have been allocated. That sounds like a lot of money. But if you look again, that is even less than the personal wealth reported by our top industrialists and tycoons. And that is barely 2.5% of India’s GDP, not counting for ‘Black income and wealth’! Many of you have probably read the book The Great Indian Dream that I co-authored with my father Dr. Malay Chaudhuri many years ago. Those who have read the book will know my position that it will be easy for Pranab Mukherjee to raise the funds without affecting corporate profitability or economic growth. Our tax and cess regime is so riddled with loopholes that there are tens of thousands of Indians who earn millions and pay a pittance in taxes – either directly or indirectly. In fact, once the national database of poor people with biometric cards is established, Finance Minister Pranab Mukherjee can simply announce that no subsidy of any type will be given to citizens who don’t possess these biometric cards. That means you and I might pay Rs.600 for an LPG cylinder instead of less than Rs.300; will 300 bucks a month beggar you? That means you and I might end up paying a few thousand rupees more for our child’s education in SRCC, Xaviers and Loyola instead of the few hundred rupees we pay now. That means we might end up paying more for petrol and diesel for our cars. That means we might need to pay a few thousand more when we go overseas and spend more than a lakh. These simple measures will alone ensure that the new expenditures can be taken care of.

Look at it another way. Currently, the budget allocates about Rs.65,000 crore for the major welfare schemes mentioned above. If you buy the Rajiv Gandhi doctrine, about Rs.10,000 crore reaches the poor. Even if India fails spectacularly in implementation yet again, The Khao Aur Khilao Budget will ensure that Rs.20,000 crore more will reach the poor every year. Just imagine what would happen if Pranab Mukherjee announces bold initiatives that will allow our system to siphon off 50% of the extra expenditure. The poor in India will still be left with Rs.1 lakh crore a year. And the corrupt will anyway remain happy.