What is populism? Is populism per se bad? These questions have been haunting me for very long. Populism as defined would be representing the interests of ordinary people. So populism is not per-se bad.
As a youngster who graduated in Commerce, I was dead opposed to any type of subsidies (read populism). However with age I have realised the importance of subsidies in India and full endorse them. However I abhor populist schemes like Free Color TV, DTH connections but I fully endorse the Rs.1 per KG of rice. It is just that target audience has to be clearly identified and reasonably good quality of rice has to be supplied.
Subsidies in India are in the form of Food Subsidy, Agricultural Subsidy and Middle Class Subsidy.
Let me start with food subsidy. Most Indian families have availed this subsidy and if you include the subsidy on domestic gas cylinder, even the economist who cries his throat hoarse against subsidy has availed it. I feel that this subsidy can easily be graded. There is no point in giving the same amount of subsidy to a slum resident and the one residing in a posh flat. Food subsidy was essential to India’s growth given that growth of income was limited as also job opportunities. One form of food subsidy was the mid-day meal scheme. Initially it was highly criticized but over a period of time it has contributed a lot to reducing school drop-outs. This should be made compulsory in all schools having students from the Below Poverty Line.
Agricultural subsidy comes in the form of subsidized urea prices; subsidized electricity; loans write-off; no income tax on agriculture and minimum support price. I will stick my neck out and say agricultural subsidy was essential for India given the food situation at the time of Independence. Whether it is relevant today? My answer would be a partly yes and partly no. Minimum Support Price has to be given for all class of farmers because we can’t compromise on availability of food. However, all forms of subsidy have to be given only to the small and marginal farmers. It does not matter whether many of those holdings are mere benami but the small and marginal farmer has to be supported. The big fish have to be treated on par with other citizens. However, I don’t understand the absurdity of not taxing farmers of commercial crops; will somebody please explain this to me?
A strong middle class in the country could be created only because the Government for nearly 4 decades made everything affordable and kept the prices under control. How much ever, the educated upper middle class denies this; the truth is there for all to see. This attitude lingers on and every time there is a price rise, we cry from the roof tops. Middle/Elite Class is as hypocrite as it can get. We don’t vote but complain about bad governance. We crib about subsidy given to the poorest of poor but cry when the price of petrol is increased. Middle/ Elite class are as much a beneficiary of subsidy (read populism) as the poor are. What else do you think the stimulus packages are? How do you define the tax breaks given to IT companies? Is tax deduction on housing loans not a form of subsidy?
A poor man contributes to this country as much as a citizen from Elite/Middle Class. Contribution to a society must not always be measured in monetary terms. As per a survey conducted by the National Survey Organisation in 2008, 20% of the population survives on an income of Rs.12 per day. To get this income of Rs.12, they have to slog really hard. This population has to be kept in good humor and hence populist measures like Rs.1/kg of rice are essential. Just imagine if this hungry lot turns violent across the country, the cost of containing them would be very high. It is not about yielding to the demands but accommodating various sections of the society in an amenable manner.
Populism is essential to attain growth (read tax deductions; tax breaks; stimulus packages, etc) but it is essential also to ensure that the larger majority of the country is kept in good humor and most importantly atleast with a partly filled stomach.