Dirty Doles and Perverted Poors

Kuffir has been a strong votary of direct money transfer to eradicate poverty instead of numerous employment generation programmes which have been in operation under various names. Initially, like many others, I too was not very keen about the idea. My apprehensions were the usual ones like misdirection of expenditure of the allotted doles and a possible dent in the potential creation of infrastructure. The second one had virtually disappeared when the NREGA programme in Vizianagaram literally adopted the Keynesian suggestion of digging and filling of trenches. This recent post had once again set me thinking on why such direct transfer of money should not succeed. I now feel that the conventional apprehensions are not really very sound.

Cash would lead to unproductive expenditure, they say, and even I thought so. But if you are really worried that the money would go into booze, why do you auction liquor licenses? On a serious note, irresponsibility towards family is matter of personal perversion. It is not and cannot be linked to poverty. The chances that a father would be irresponsible in a rich household are in no way lesser than in a poor one.

But we cannot come into terms with this fact. For us, the poor have to be ignorant and irresponsible. Else how can we justify our capacity to teach them their way out of poverty? Hence don't give them cash. Instead give them work, even if it means filling and digging the same wells. Give them grains, even if it means that they have to be transported over thousands of kilometers benefiting rich farmers and transport companies.

Speaking about food subsidy, the Planning Commission admits that it spends Rs 3.65 to transfer Rs 1 of food subsidy. The case would not be very different in other subsidies. Effectively it means that for every one rupee that goes to the poor, Rs 3.65 goes to the rich. Wow! What a means to achieve our socialist goals! It is in this scenario that I feel that direct transfer of money would be more cost effective.

I agree that there is a chance of leakage and corruption in the identification of beneficiaries. But that is common to all approaches. But where doles might score against others is that there is no additional leakage in terms of deciding what "asset" should be created, which contractor should create it, how much should it cost, etc.

With a wide network of banks and growing computerization the administrative costs of such programme would be very low. Secondly, since the programme would just have to identify beneficiaries and not the contractors or assets to be created or the procedures to be adopted, decision making would be faster. Thirdly, doles wouldn’t be subject to seasonal vagaries. Most of the works which employment generation schemes undertake come to a standstill during monsoon as manual labour cannot be performed under rain.

However, unlike Kuffir, I am not asking for scrapping of all employment generation programmes. What I say is that when there is no work or if a particular task can be performed more effectively and economically using machines, it is cruel to create work just for the sake of the programme. It is even crueler to leave the allotted funds unused like it happened in Raichur District where of the 10 lakhs not a single paisa has been spent. [Link via Kuffir] It is in such cases that we should not shy away from distributing money among the needy.

One of the criticisms of doles is that it discounts the need for work and that unearned money is frittered away recklessly. Considering the gargantuan proportion of poverty in India, any possible dole would hardly be a few hundred rupees per month at its fanciful best. As most our programmes promise, it would at best alleviate poverty but not eradicate it. Thus, doles would never do away the need for work. As far as frittering away unearned money is concerned, I wonder if people who are starving, who are chronically diseased and whose kids are congenitally malnutritioned, have even the energy, let alone a heart, to spend on things other than food.

Why is it then that we don’t consider doles? I think the problem is fundamentally in our mindset. Cash is a very dirty word. I remember till I left my school, I was never given money at home. My parents always said sternly "Money would spoil you. Tell us what you want and we would get it". The unsaid tag attached to it was "if we think it is worthy". It is the same psyche that runs through out. Right from the most basic social institution, the family, to the most complex ones, the Government and international agencies like World Bank. Everyone thinks that the poor and the weak are unintelligent, unimaginative and irresponsible. Hence, the Government (read babus) have to shoulder the "white man's burden" of "guiding" (read deciding, regulating and monitoring) the amelioration of the poor. If the Government can think of making PSUs and Panchayats autonomous, why can’t it give the freedom to the poor to decide their priorities in spending the money allotted to them? Ultimately, all the welfare schemes must ensure capacity building, not infrastructure (a very catchy word in the 10%-growth aspiring-era) building.