Developmental economist Jean Drèze, a member of the recently constituted Economic Advisory Council to the Chief Minister of Tamil Nadu, is clear that the State must focus on comprehensive social security. Besides, with Tamil Nadu being one of the main destinations of migrant workers from India’s poorer States, he says if the government is able to do something to make their lives easier, it will be an example for the whole country. In an e-mail interview, Mr. Drèze, who sits on the council with Nobel laureate Esther Duflo, former RBI Governor Raghuram Rajan, former Chief Economic Adviser to the Union government Arvind Subramanian and former Union Finance Secretary S. Narayan, shared his thoughts on how doing more to support the poor will help revive the economy in the midst of the COVID-19 pandemic. Edited excepts:
Can you tell us what you expect from this exercise and how you came to be part of the first Economic Advisory Council to the Chief Minister of Tamil Nadu?
I was approached by Tamil Nadu Finance Minister Palanivel Thiaga Rajan. Initially I was a little hesitant, partly because I know so little about Tamil Nadu’s economy. The State already has a very competent State Development Policy Council, and an excellent economic report prepared last year by a high-level committee headed by [former RBI Governor] C. Rangarajan. I doubt that Tamil Nadu needs much advice from Ranchi [where he is based]. Still, I agreed to join for an initial period of one year. Hopefully, the council will be able to bring a fresh perspective of certain issues, drawing on the recent research and experiences across India and the world.
What would be the focus and goal of this council?
The terms of reference are fairly broad. The first item is “economic and social policy, social justice and human development-related issues”, with a special focus on disadvantaged groups. But, of course, the council’s work will have to be selective. The main thing, I think, is to identify issues on which we can give some useful advice, given our respective domains of competence and also our areas of agreement. For instance, I think that all of us will agree about the urgency of doing more to support poor people in this crisis. That would also help to revive the economy. Of course, it may require some resource mobilisation.
Are there specific sectors that would need immediate attention since economic activity has severely been affected by the pandemic and the lockdown?
Any sector that generates mass employment needs attention. In Tamil Nadu, this would include textiles, construction, agriculture, software, electronics, the leather industry and so on. But I am not sure that the council is well placed to go into sector-specific economic policies, as opposed to wider proposals. For instance, migrant workers need attention across sectors. Tamil Nadu has become one of the main destinations of migrant workers from India’s poorer States. They are among the worst victims of the current crisis. If Tamil Nadu is able to do something to make their lives easier, it will be an example for the whole country.
Successive governments in Tamil Nadu have pursued welfare-based economic policies for many years successfully. How do you think welfare politics could be pursued during a pandemic-induced economic disaster and at a time when the State seems to have lost its fiscal powers in the past few years?
Tamil Nadu has been a pioneer in many welfare schemes and social security policies, from school meals and old-age pensions to maternity benefits and community canteens. The COVID-19 crisis is making things difficult right now, but I am hoping that Tamil Nadu will continue to play a leading role in this field. In fact, one of the main lessons of the current crisis is that India needs a more robust social security system. Despite being relatively well developed, Tamil Nadu’s social security system still has many gaps. For instance, the coverage of old-age pensions is still quite low, and so is that of maternity benefits. Aside from consolidating the existing programmes, some new initiatives may be required for comprehensive social security. For instance, a well-designed system of emergency cash transfers would be quite useful in this situation of recurrent crises, which may last for years. And, of course, public health must receive even more attention than it has already received in Tamil Nadu. Public expenditure on health is just 0.6% of the State Domestic Product…that looks far too low. As far as resource mobilisation is concerned, many valuable suggestions are available in the Rangarajan Committee report. The question is how much can be done before the economy revives and, of course, how to make sure that the burden falls mainly on the privileged.
