India and the socialist Betaal

For those who may not know the reference to Betaal, it is from the Vikram-Betaal stories. Ancient India was once ruled by a wise and brave king called Vikram from Ujjain. One day he was approached by a priest with a request for help. He had to fetch a dead body hanging upside down from a tree (Betaal) at the far end of a forest so that the priest could use it for some ritual. Since Vikram had already promised to help, he had to go through and fulfil the request. When Vikram reached the tree to fetch the corpse, Betaal agreed to come only under 2 conditions. First, Vikram should not utter a single word through out the journey and if he did, Betaal would return to the tree. Second, during the journey, Betaal would narrate some puzzles and if the king doesn’t solve them despite knowing the answer, his head would break into a 100 pieces. This created a conundrum. Vikram, remember, was a wise man and so, knew the answers to most puzzles Betaal asked. That meant that he had to talk to answer, lest his head break into pieces and as soon as he talked, Betaal would fly back to his tree abode requiring Vikram to undertake the entire journey, repeatedly. This went on till Betaal asked a question which was beyond even the wise King’s intellect.

India’s relationship with socialism is like that of Vikram and Betaal, with a small twist – the more we try to get rid of it, the deeper it gets rooted into our society. As you may know, the socialist ideology was not part of our original constitution that came into force in 1950 but was introduced later in 1975 by the government of Indira Gandhi through 42nd amendment to the Constitution at a time when Emergency was imposed and all fundamental rights were suspended. Even though it became part of our Constitution much later, in reality, India was administered as a socialist state since independence in 1947 with centralized 5-year plans and strict control over businesses and profit making. “Tax the rich” might be a new slogan in the United States, but in India it was the uncontested state policy since the beginning of the republic. So much so that profits and wealth creators are demonized to this day. Nationalization of the banks in 1969, by Indira Gandhi, was probably the first formal step in the process of unleashing the socialist nightmare in the country. In one stroke the number of banks controlled by the government increased from 1 to 15. After the second round of bank nationalization in 1980, another 6 banks were taken over by the government.

The 44th amendment to the constitution was ostensibly enacted to undo the distortion of the constitution due to the 42nd amendment. Like with everything else about governance in India, this correction too was one step forward and three backwards. One of the consequences of the 44th amendment was to remove right to property as a fundamental right. The government gave itself the power to take over any private property for the purposes of “public good” after providing a compensation to the extent that it deemed fit.

The best demonstration of the Indian socialism in action is the is the farming sector in the country. Almost every input into the business of farming, except probably the land, is heavily subsidized by the government. Let me say that again; not subsidized but heavily subsidized. Bank loans (low or no interest, and often waived off when not paid), seeds, water, electricity, urea, fertilizers, and anything else that is demanded. Once the crop is harvested, government guarantees to buy the produce at or above a minimum price (called minimum support price). Since there is a very large constituency that is dependent on agriculture (about 70% of the rural population as per the UN Food and Agriculture Organization), governments of different parties compete with each other in procuring the produce from this constituency as possible, in quantities that often exceed the storage capacity in the country leading to decay and wastage. Above all this, the entire income from farming is exempt from taxation.

The above described pampering of the farming community is a by-product of what is proudly described as the Green Revolution. The motivation for the green revolution is the food deficits in the decade immediately following the independence resulting in famines and starvation deaths leading to Prime Minister Nehru being mocked as the man with a begging bowl on his foreign trips. Through the use of high yielding varieties of seed, extensive (and often indiscriminate) use of chemical fertilizes and pesticides, green revolution ensured that India not only became self-sufficient in food but even surplus. Another outcome of green revolution was the increased prosperity of the farmers, especially in states like Punjab and Haryana. In fact this program was so successful that Punjab for a long time was the most prosperous state in the country.

The positives of the green revolution were accompanied by negatives; several, long-term, sustained negatives. As described above, an important factor that enabled the green revolution was the large scale use of chemical fertilizers that has now left the soil in these areas polluted beyond redemption. Water intensive nature of several of the crops adopted for farming as part of the program means that the water table has been severely depleted. And the outcome of the green revolution most relevant to the subject of this blog, it resulted in increased income disparities among farmers in the country. As I said above, the fruits of the green revolution were seen mostly by farmers of Punjab, Haryana and to some extent UP and Rajasthan. There was very little improvement in the economic status of farmers in the remaining states of the country. In fact most of the rice and wheat procurement at or above MSP by the government of India is in these states.

Additionally, the continued hand-holding and subsidisation of farming by the government at the expense of the rest of the tax paying population of the country has dis-incentivized Indian farmers from investing in innovation and exploring diversification. So much so that the states that benefited disproportionately from the green revolution are now falling behind the rest of the country in their economic output. Despite all this support and freebies and incentives from the government, farming in India is still a loss making business driving many engaged in it to suicide. It is loss making not only for the farmers engaged in the activity but for the country as well. Despite employing more than 50% of the country’s workforce, agriculture contributes to less than 20% of the economic output.

From this examination of the highly socialized agriculture sector in India, we get to know that these policies have resulted in economic disparities, unequal distribution of wealth, effect of climate and health of people, lack of innovation, discouragement of diversification, freeze and gradual erosion of incomes leading to loss of lives, inefficient use of national resources and tax payer money. Yet, the poison of socialism is such a strong drug that those addicted to it will resort to even most extreme measure to ensure a continued access to it. This is what is being witnessed in Delhi now after the government brought in a few laws after much delay to open up the sector and give farmers the freedom to choose where to sell their goods and who to do business with, while not doing away with any of the freebies that were being doled out. Since this might result in greater competition and a challenge to their hegemony, the farmers from Punjab and Haryana are currently engaged in blockading the national capital for many days now. And the response from the government has been in keeping with its socialist character. Not only has it handled the protests with kid gloves, but also offered to amend the new laws and announced even more doles to pacify them but to no avail, as yet. These moves of the government have only turned the protesters more brazen in demanding the repeal of more laws related to collection of electricity bills and prevention of stubble burning that has been choking most of north India in toxic smog for many years now.

Before I end this blog, one more example of how socialism manifests in our country. One of the outcomes of our socialist planning and governance is the abysmal condition of the infrastructure and services, through out the country in general but particularly worse in our towns and cities; this includes our public transportation. There are very few buses and trains, forcing people to travel like animals packed into boxes; whatever is there is aged and on the verge of collapse. The little said about the cleanliness, both in terms of sanitation and emissions, the better. Then there are the taxis and autorickshaws which are just another name for exploitation. They operate as they wish and charge irrationally. And since most of these are owned by politicians and bureaucrats, they are never brought to book.

Seizing this opportunity, entrepreneurs stepped in to fill the gap through aggregator services like Uber, Ola, Rapido, etc. The service they offered was convenient – you get the cab or auto or scooter where you want, reliable- you get the transport when you want, mostly and transparent – you know what you need to pay upfront and that is all that you need to pay. Considering they provide a valuable service which is actually the duty of the government but was never delivered, these services have become quite popular, especially in the cities and towns. Being private enterprises, it is mandatory for these companies to make profits if they want to grow or even survive in the market. After all, they do not have a safety net provided by the government and funded by the tax payers to support inefficient business practices like the great annadatas (farmers) of our country. But, like I said at the beginning of this post, the socialist nature of our government means that it cannot tolerate any activity that generates profits for those who take risks and invest their money and ideas to improve the lives of others. So, it has now come out with new regulations to limit how much these services can charge and how they run their business.

To conclude, we Indians have to find a way to free ourselves of this Betaal called socialism if aspire for dignified living and if we want to leave a nation for our children that appreciates and encourages innovation, hard work, honesty, risk taking and prosperity.

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