Good Politics is not the same Good Policy

Outcomes of elections cannot be a barometer of the wisdom of economic policy

By Somasekhar Sundaresan

An election result is upon   India’s most populous state and her neighbour have emphatically voted the party in power at the Centre into government. Two tiny states have returned fractured verdicts and coalition governments led by the party in power at the Centre have been installed.  The single-largest winner in these two states is having to sit in the   Another state elected the principal party to power.

The polls were seen as a referendum on whether demonetisation, announced in November, met with approval by the people of India. Shortcoming in psephology skills is now equated with shortcoming in appreciation of public policy. The outcome of the polls, it is widely believed — even among critics of now mired in serious self-doubt — underlines that was for the larger good and the common man could see what policy wonks failed to see.

Outcomes of elections cannot be a of the wisdom of economic policy. The merits of public policy choices are quite different from the merits of assessing the capacity to sell evidently unpopular choices at the hustings. The latter is reflective of political acumen. The former requires the capacity to take hard decisions for the right reasons. The inability to gauge the intensity of anger of the man on the street is not the same as the inability to think clearly about what is good policy.

inflicted serious hardship on the common man. The costs it imposed evidently outweigh the benefits — mind you, computation costs and benefits can itself be quite controversial. The courts had refrained from restraining the government although judges are said to have expressed fear of riots on the streets.  There were no serious riots despite acute hardship. The reasons that were said to have motivated the measure appear to have been belied — stashes of slush money in crisp newly printed Rs 2,000 notes are already being unearthed; in crisp Rs 2,000 notes are being apprehended; and most of the corrupt rich seem to have tided over the crisis with some bearable cost being borne.

did not hurt the electoral prospects to the extent it would rationally have. Nor for that matter have laws that imposed a near-100 per cent tax on income. If winning elections were a relevant of what constitutes good public policy, and the Congress’ consistent wins for decades would place all their measures in a great position — it is another matter that today they are being pilloried.  Despite (or perhaps, thanks to) ridiculous tax rates, black money got built up.  The narrative of electoral wins making policy immune from critique was a well-honed model.  leaders saw her as Durga, commentators said she was “the only one wearing the pants in the Cabinet” and yet, India kept slipping in governance, and institutions kept getting weakened to stay “committed” to her approach to policy.

Perhaps, politics’ dependence on cash led to materially impacting the outcome. Count that among the benefits of if it evenly impacted all in the fray. Perhaps, the choice of chief minister after the win is a pointer to what issues really mattered at the polls. Perhaps, was an electoral side-issue — a reflection of the disconnect between commentators in the cities and the realities on the ground.

None of this can dilute the need for a clear-headed empirical approach to policymaking, with costs and benefits being weighed and a cogent case for a policy intervention being necessary. In the and the UK, policy thinking is currently on the lines of having to remove more than one past regulatory measure if a new regulatory measure is sought to be introduced. Akin to “carbon offsets” where reduction in emissions of carbon dioxide or in one process is necessary to enable initiating new emissions elsewhere, regulatory offsets are part of current policy-thinking in other parts of the world. Computing of costs and benefits to show that costs that would get imposed by a proposed regulatory measure is not only counterbalanced by the benefits from that measure but are also compensated for by the removal of costs imposed under past regulatory measures, is a controversial but integral part of governance.

Brushing all policy arguments about aside with a people-have-spoken argument is a reminder of Nani Palkhivala’s favourite quip about how majority decisions need not be the right decisions. His favourite examples: Christ’s crucifixion, and of course, the quality of elected governments during most of his lifetime.

This column was published Without Contempt in the March 23, 2017 edition of Business Standard at: http://www.business-standard.com/article/opinion/don-t-mistake-good-psephology-for-good-policy-117032201432_1.html

 

No aadhar to impose Aadhar for kids meals

Corruption in the scheme may have nothing to do with fake children being shown to siphon out money

A new storm is brewing. After demonetisation, it is the backdoor enforcement of identification for children to qualify for midday meals. The move is threatening to take the shape of the next direct conflict between academic policy implementation and the practical problem of unintended consequences on the ground. Added to the mix is the evident violation of the Supreme Court’s orders that cannot be made a mandatory requirement for government welfare schemes.

While midday meals are the most emotive of the schemes to which the unique identification under has been made mandatory, this paper has reported that 14 similar notifications have been made under 11 schemes, including schemes involving access to primary and secondary education.  Interestingly, the news was broken not in the “mainstream” print media but by online paper Scroll.in.

Effective July 1, 2017, a without the ID would not be fed the given free in school.  “Individuals desirous of availing the benefits under the (midday meal) scheme offered at the schools are required to furnish proof of possession of number or undergo authentication,” reads the gazette notification. “An individual desirous of availing the benefit under the scheme offered at the schools, who does not possess an number or has not yet enrolled for shall have to apply for enrolment by 30th June, 2017.”

This is a disastrous approach.  Indeed, there will be arguments for it.  Some of the usual ones are about leakage of government welfare — small doles to the poor somehow make bigger news that large-scale subsidies and tax concessions that get routinely abused.  According to reports, at least 100.3 million elementary students from the first to eighth standards, studying in 1.15 million schools benefit from the scheme. The scheme also provides part-time employment to an estimated 2.53 million workers for implementation of the scheme.

Midday meals are provided to school children under the food security law, substantially using central government funds granted to state governments and then down to local municipal governments that run schools. The costs are shared broadly in a 60:40 ratio in most states and in the north-eastern states and in Himachal Pradesh, and in a 90:10 ratio. Central government funding in the last Budget for this is a mere Rs 10,000 crore, with a marginal increase of Rs 300 crore since the last Budget. The idea of a is to ensure basic nutrition to schoolchildren since it is under-nourishment that essentially leads to lack of absorption of education in formative years.

There is no credible and rigorous evidence of any material leakage under the scheme. Every scheme, public or private, will be gamed to see if benefits can be wrongly extracted. If the response to any leakage, real or potential, material or immaterial, is to indulge in carpet-bombing by threatening the very scheme, we will soon have another demonetisation-type problem on our hands. Crooks will find a way to get around the solution and many genuine and sincere beneficiaries could be put to avoidable hardship — akin to burning down a house to kill a few insects that have entered it. Also, akin to US President Donald Trump’s ban on entries from seven Islamic nations, which would have kept even US nationals and residents out of the US if they happened to be outside the country when the ban was sought to be imposed.

Worse, the has clearly prohibited the mandatory usage of the for government incentives except for specific schemes that the court permitted. In short, in this case, there is already a restraining order from the judiciary on such usage of   Yet, the government has brazened it out.  The ball will now be literally in the Last heard, lawyers appearing in the challenge to such use of have been pushing for an early hearing of the privacy concerns arising out of the implementation and the court has been struggling with bench strength issues to constitute a bench to hear the matter. However, the introduction of new mandatory requirements to quote could lead to contempt proceedings, too.

Indeed, there could emerge problems with implementing the schemes. For example, as some experts point out, corruption in the scheme may have nothing to do with fake children being shown to siphon out money. In fact, the leakage would be in terms of substandard food being given, or companies that make and sell pre-packed and processed food seeking to get their products approved as substitutes for midday meals (there have already been reported attempts of the government nearly approving biscuits in place of midday meals). Insisting on can never fix such leakages and corruption. Therefore, before doing something drastic such as asking children to go hungry if they do not have an card, there has to be an empirical basis to demonstrate that the proposed solution is necessary for a clearly-perceived and real problem.  Without a problem statement being defined, enforcing a good-to-have-and-feel-good “solution” would come quite close to declaring that 85 per cent of live currency stock would cease to be legal tender.

This column was published Without Contempt in the March 9, 2017 edition of Business Standard.

http://www.business-standard.com/article/opinion/is-there-a-case-for-linking-aadhaar-with-midday-meal-117030801232_1.html