Beyond Handouts: India's inclusivity push must shift from cash to careers

India's economic future depends on its ability to equip its workforce with the skills required to compete in an increasingly complex and automated global economy.

In a country of 1.45 billion people where elections sometimes seem to turn up more frequently than seasonal vegetables in the local markets, the approach to inclusion and equity is beginning to attain a risky hue driven by competitive promissory notes of cash handouts.

The significance of the Supreme Court's observations on February 12 deprecating the practice of announcing poll freebies lies in the nuance of making the voting process a transactional activity and its impact on work culture.

By providing free ration and money, the government may inadvertently create a class of people who are not willing to work, as observed by Justice B R Gavai . This phenomenon can be attributed to the sociology of work culture, where people may prefer to rely on government handouts rather than seeking employment.

The issue of freebies promised by political parties during elections has been a longstanding concern in India. In2022, the Supreme Court emphasized the need for an apex body to regulate these freebies, comprising Niti Aayog, the Finance Commission, and other stakeholders. This move was prompted by concerns that such promises can lead to fiscal instability and undermine the country's economic development.

On an earlier occasion, Prime Minister Narendra Modi too has also cautioned against the "revari (sweet) culture" of promising freebies to secure votes, warning that this can be "very dangerous" for the country's development. Moreover, top bureaucrats have alerted the government to the risks of states falling into debt due to excessive borrowing to fund non-revenue yielding expenditure.

The Reserve Bank of India (RBI) has also expressed concerns about the rising risks to fiscal consolidation, particularly in the context of farm loan waivers, income support schemes, and other non-merit subsidies.

There is a compelling case for rationalisation of the so-called non-merit subsidies. According to Sudipto Mundle and Satadru Sikdar non-merit subsidies amount to over 5.7 per cent of GDP (gross domestic product). “Elimination of these unwarranted subsidies could free up considerable additional fiscal space. However, the bulk of these non-merit subsidies – over 4.1 per cent of GDP – are actually being provided by the states. Hence, the rationalisation of these subsidies would mainly have to be undertaken by them”, Mundle and Sikdar wrote in their essay.

The Learning Paradox: India's Education Conundrum

Prudent policymaking should rather focus on rationalising non-merit subsidies and focusing on empowering voters through health, education, and infrastructure.

India's impressive strides in increasing access to education have not translated into commensurate gains in learning outcomes. Despite a near-universal enrolment rate in primary education, a staggering 50 million students lack foundational literacy and numeracy skills. This learning crisis threatens to undermine India's economic prospects and perpetuate social inequality.

The National Education Policy (NEP) 2020 acknowledges the curriculum's role in this paradox, emphasizing the need for a robust focus on reading, writing, and arithmetic skills. However, the policy's success hinges on its implementation, which requires significant investments in teacher training, infrastructure, and assessment frameworks.

India's education challenge is intertwined with its economic and social aspirations. As Polish sociologist Zygmunt Bauman astutely observed, modern society casts employment as the key to resolving issues of personal identity, social position, and collective survival. Education, skills, and healthcare are essential for improving employability and unlocking India's demographic dividend.

Rather than fixating on vowing cash handouts to conquer an electoral combat, political grandstanding should prioritize investments in human capital. This entails not only increasing education spending but also ensuring that resources are allocated efficiently to address the learning crisis.

The stakes are high, and India's economic future depends on its ability to equip its workforce with the skills required to compete in an increasingly complex and automated global economy. By acknowledging the learning paradox and taking concerted action to address it, India can unlock the full potential of its human capital and secure a brighter future for its citizens.

Ultimately, the issue of freebies highlights the need for responsible and sustainable public finance management in India. By prioritizing fiscal prudence and investing in critical areas like health, education, and infrastructure, the government can promote economic growth, reduce inequality, and ensure a brighter future for all Indians. This approach can help promote inter-generational upward social and economic mobility, rather than relying on short-term giveaways that follow an electoral calendar.