After over a year in power, the Narendra Modi government’s decisions to cut federal welfare spending on the poorest of India’s 1.25 billion people have come in for a sharp criticism, including from within his cabinet.
In a break with India’s Socialist past, Modi saved money on federal social and subsidy expenditure, and pumped it into an infrastructure stimulus he hopes will trigger a spurt in economic growth, a Reuters report had said.
Co-founder of Microsoft, Bill Gates in this op-ed piece, which was published in The Times of India, has addressed Modi and said that even though the healthcare system in India has improved quite a bit, it still is uneven from state to state:
Resources matter, but how they are used is just as important. India is immense and immensely complex. There is no existing health system model that can simply be applied to India. You need to generate new models. How can you provide high-quality care in vast rural areas where there are very few doctors? Given that so many Indians use private health providers, how can the government work with the private sector to improve care? How can such a sprawling health system produce and use data in real time to respond to what is happening on the ground? These are challenges India is wrestling with. You have the creativity and intellect to solve them, and I believe you also have the political commitment.
Microsoft co-founder Bill Gates with PM Narendra Modi. AFP
In this May 2015 article, Reuters quoted government sources and said that lower welfare spending will be compensated for by giving state governments a larger allocation of tax revenues to spend as they choose. But state chiefs, government officials and a cabinet minister have warned that the spending shakeup endangers the country’s most vulnerable.
Maneka Gandhi, women and child development minister in Modi’s cabinet, had said the impact of the policy will borne by India’s estimated 300 million poor. “This may result in a situation where the focus is lost on critical programmes related to malnutrition of children… nutrition for pregnant and lactating mothers,” Gandhi wrote in an 27 April letter to the finance minister, Reuters said.
In his first full-year budget, approved by Parliament on 7 May, Modi halved funding for a scheme that gives millions of poor children free food and drastically cut allocations to make clean water available in rural areas.
On the other hand, funding for roads and bridges more than doubled, and is now higher than the sum allocated to education.
The cuts to nutrition and water stand out because of the precarious condition of India’s impoverished. Four out of 10 stunted children in the world are Indian — which is more than sub-Saharan Africa.
In his op-ed, Gates pointed out that statistics show how the quality of life in India has become much better. “But the second thing is how uneven it still is from state to state. The child mortality rate in the worst-performing states is three times higher than it is in the best states.”
In 2013, the country recorded 50,000 maternal deaths. About 1.5 million children die each year before the age of five.
Modi’s first year in office has seen a string of successes, including forging closer ties with major trading powers, boosting foreign investment and cutting red tape.
His approval ratings remain high, although he faces growing headwinds in the countryside, where bad rains and low crop prices have affected the 70 percent of the people that live there. The fear is that the spending squeeze will hit when the most vulnerable need more help.
“Increasing signs of rural distress in India make Modi’s cuts politically risky,” said Milan Vaishnav of the Carnegie Endowment for International Peace.
Modi’s gamble is that infrastructure investment will generate dividends for the poor in time for the next general election by increasing the economy’s capacity to grow through better roads, ports and railways.
At the same time as taking away central funding, Modi has increased the share of taxes given to states to 42 percent from 32 percent, money that, if well spent, can cover the shortfall from the spending cuts.
The policy shift is championed by economists in a new body called Niti Aayog, or policy commission, Modi’s replacement for the Soviet-style Planning Commission set up by post-independence leader Jawaharlal Nehru.
It is headed by Columbia University’s Arvind Panagariya, who advocates fiscal stimulus to invest in infrastructure and restore growth, and rely on the growth to later finance health and other social spending.
With inputs from Reuters