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UPA’s challenge: rural government reform

The media have gone overboard in ascribing the election victory to schemes such as the National Rural Employment Guarantee Act, says Mihir Shah. These ascriptions might erroneously suggest new directions for Government, he says, and goes on to examine the issue of rural reform.

A serious problem created by facile electoral analyses is that they give rise to even worse prescriptions for the new government. The commonest of these, much like a Bollywood formula for a hit film, is a juicy mix — reforms plus handouts — a little-bit-of-the-Right and a little-bit-of-the-Left, kind of please-all concoction. This formula has two dangerous presumptions — one, reforms are identical to disinvestment and privatisation, and two, India’s poor deserve condescending dollops of sympathy and money.

This formula reduces inclusive growth to inclusion through handouts. But if a sop like the farm loan waiver were to become policy, it could irretrievably compromise the integrity of India’s banking system, whose robustness has been a lifeline for the rural poor, especially since the nationalisation of banks in 1969. Similarly, in the absence of a far-reaching governance reform, NREGA is nothing but a handout. And it will do little to dent rural poverty. On the other hand, if it fulfils its promise of overthrowing the contractor raj, it could provide the big push for a new vision of sustainable development that grows organically from the soil, both literally and metaphorically.

Read the entire article here.

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