Thin line between populist vote-buying and jobs for poor, says Raghuram Rajan
“We must remember that the line between equipping the poor to get decent jobs and populist vote-buying is a thin one, and governments must be careful not to cross it,” said Raghuram G. Rajan, Chief Economic Adviser, Union Ministry of Finance. Mr. Rajan’s remarks come at a time when the country is poised for the general elections next year, and when Karnataka is barely a month away from Assembly elections.
Delivering the keynote address at the 38th convocation of the Indian Institute of Management, Bangalore (IIMB), in Bangalore on Monday, Mr. Rajan, speaking about ‘populist policies’, said: “Because agricultural productivity has lagged behind overall growth, and because so much of our population is still tied to agriculture, the pressure to offer sops such as cheap credit and loan waivers, TVs and cellphones, has increased. Populist policies are so much more attractive because they pay off before the elections and not in the longterm — you can almost hear the politicians say, ‘so what if we risk ruining the government’s finances, at least we will stay in power’.”
Advocating for providing jobs as it is “the best form of inclusion”, he said those in power should not assume that the poor need an array of handouts.
“We should not make them supplicants for service from an indifferent government monopoly provider. Instead, where they need help, they should get targeted cash transfers, which they can spend on the education, food, or healthcare they want, whether from a private provider or a government provider,” he added.
30 years from now
Also participating in the convocation programme, Mukesh Ambani, Chairman, Reliance Industries Ltd. and Chairman, Board of Governors, IIMB, said the opportunities offered in India in 2013 are much bigger than those in the 1980s.
“Dismiss the profits of doom and the temporary despondency that exists. This generation will perform many times better. India, 30 years from now, will be a much more powerful and a recognised country,” he declared.