Modi has just repackaged old schemes
K.C. Mittal
Obfuscation, diversion and smokescreens have become commonplace with the Narendra Modi-led NDA government. The Prime Minister has given two speeches in the past one week. One was the address to the nation on New Year’s Eve while the other was at the election rally in Lucknow. In both these speeches, we wanted to know details about demonetisation, but facts were assiduously avoided by Mr Modi.
For 50 days the PM led this nation to standing in lines to get their own, legitimate and banked money. Figures show that more than 100 people lost their lives in this process. Now at least we ought to know whether the stated objectives of demonetisation have been achieved or not? How much black money has been unearthed by the government post-November 8? What was the amount and volume of counterfeit currency which was detected? What impact did it have on terror funding? What was the total volume of old currency returned to banks? These are the questions on which the PM should have elaborated his stance. Instead, on New Years’ Eve, he appeared as if he was donning the role of finance minister, repackaging old schemes.
If we do some back-of-the-envelope checks on the so-called sops announced by the PM, it will be clear that all this is repackaged. The Pradhan Mantri Awas Yojana is a revised version of the Indira Awas Yojana that ran prior to the NDA regime. It is the schematic version of housing for all commitment of the government under which it wants to build 20 million houses by 2022. The provision for RuPay and other debit cards against Kisan Credit Cards has existed since 2012, but it has not been mandatorily provided to all farmers taking credit. The RBI has since May 2012 provided that banks can give debit cards to farmers to withdraw credit through ATMs. In November 2012, the UPA finance minister announced that 19 banks would provide RuPay cards to farmers availing KCC. A reply in the Lok Sabha shows that 56.60 lakh RuPay cards against KCC were issued in 2013-14.
Now let’s come to micro, small and medium enterprises (MSMEs), the fact is that only five per cent of MSMEs have access to institutional loans; over 95 per cent of these businesses take loans from informal sources at steep interest rates. Besides, this measure should have been accompanied by a shoring up of the capital base of the Credit Guarantee Fund Trust for micro and small enterprises.
The PM added that the government will not allow them to pay senior citizens anything less than eight per cent on deposits up to Rs 7.5 lakhs made for 10 years. Fact check: Under the Senior Citizen Saving Scheme (SCSS) at post offices, interest at the rate of 8.5 per cent per annum is given on deposits of up to Rs 15 lakhs with a maturity period of five years. There does not seem to be much of a gain for senior citizens if one were to compare interest rates on deposits of similar or even shorter tenure offered currently.
In all, the PM as usual did not reply to the promise which he had made that if things do not normalise within 50 days he should be taken to task. All the restrictions imposed by the RBI are very much present. He has just announced some so-called sops to take the heat off his government for demonetisation, which has been a colossal blunder done by the Modi government on the poor farmer and the common man of this country.
K.C. Mittal is the Congress’ legal and human rights department secretary
No reason to wait for the Budget
Rajeev Ahuja
The shaping of policies and programmes is a continuous process. These policies and programmes get announced or launched as and when they get finalised. There is no reason to wait to bundle all new initiatives with the Budget, which happens only once in a year. Yet Prime Minister Narendra Modi’s announcement of new schemes on the eve of New Year — at a time when the Budget Session is around the corner — is bound to create doubts in some quarters about the motives behind these announcements. But those who understand
Mr Modi would know that he is a hands-on PM who doesn’t shy away from going to the public and who is in a hurry when it comes to promoting development.
Mr Modi’s New Year “gift” to the public can be grouped in three broad categories: (i) interest subsidy on home loans, farm loans and on term deposits by senior citizens; (ii) credit guarantees and enhanced credit limits for small businesses; and (iii) cash transfers to expectant mothers. The intended beneficiaries of these schemes are the low-income people, small businesses and farmers, senior citizens and expectant mothers.
An examination of the scheme suggests continuity of pro-poor and pro-development thrust of the Modi government. For example, housing for low-income people, both in rural and urban areas, has been high on
Mr Modi’s development agenda. Interest subsidy is a clever way to encourage people to seek home loans to buy or build homes for themselves and their families. Further, the Modi government’s ambitious target of “housing for all” by 2022 just got a little tougher with his recent announcement of adding 33 per cent more houses in villages under the Pradhan Mantri Gramin Awas Yojana.
Similarly, schemes aimed at promotion of small businesses are in keeping with the Modi government’s thrust on employment creation. Given the multitude of small businesses across the country, and their role in employment generation, doubling of credit guarantee to Rs 2 crores and raising of cash credit limits will only make it easier for such businesses to run their operations.
The extent of subsidy that these schemes would entail is not known as this would depend on their scale-up and uptake. But their analysis suggests that these are certainly not designed in a reckless manner as to create unreasonable burden on the exchequer. These are not doles but “smart” subsidies with a strong rationale behind them.
However, the scheme of cash transfer of Rs 6,000 to expectant mothers is an odd one on the list. If it were just a maternity benefit scheme, it is fine. But the scheme is actually aimed at improving maternal and child health outcomes. Now improvement in these outcomes is also dependent on the public healthcare delivery system, which we all know is not in good shape, specially in rural and remote areas. Yet, its inclusion may have been to lend some weight to the package announced by the PM.
All attention is now focused on the forthcoming Budget, which is also the first Budget post-demonetisation. It would be interesting to watch how the government proposes to allocate collections under the Pradhan Mantri Garib Kalyan Yojana.
Rajeev Ahuja is a development economist, formerly with the Bill and Melinda Gates Foundation and the World Bank. Email: ahujaahuja@yahoo.com
