Policy Driven Poverty in India

I was hurt to read a statement yesterday by the Chairman of India’s Niti Ayog (a relatively newly found body in place of the former Planning Commission) that wages in India were 2 or three times lower than in China and it would be advantageous for Chinese industrialists to relocate to India.What hurt me is the knowledge that wages in India today were 2 or 3 times lower than in China even though both the countries started on the road to development practically at the same time.

Another report that appeared in some financial paper yesterday said that salaries/wages in the lowest slabs had remained frozen for the past several decades while those in the highest slabs had risen substantially. Another report said that while the sales of high end consumer items like cars had risen dramatically in recent years, those of lower end consumer items were flat. (I realise that the implication of the last mentioned development may not be entirely negative).

It is often made out that India, ruled by Congress party for most of the past 69 years since Independence, had followed socialistic policies laid down by Mahatma Gandhi and the first Prime Minister Jawahar Lal Nehru. The results do not support this. In a socialistic regime, tangible policies are made out to level the gap between the highest and the lowest classes. The reverse has taken place in India.
The past regimes have no doubt spent lots of money in trying to provide some relief
to below poverty line people by providing highly subsidised food grains or launching schemes like MNREGA providing low paid work to one member of a family for part of the year. But such schemes were neither intended to nor have they produced sustainable uplifting results. In fact, allegations have been afloat that much of the money that was released by the government for these scheme was swallowed by corrupt intermediaries.It is only after the BJP government came into power in 2014 that the scope for corruption was minimized by introducing direct payments to the beneficiaries’bank accounts. Never-the-less, the schemes remain alleviatory in nature and are no long term solutions.

The policies followed since independence have had the effect largely of benefiting the affluent sections. The expansion of the economic activity, especially in the tech. sector has no doubt created a middle class but it is not due to government’s economic polcies.

The wage earning class in India is mostly in the unorganised sector and accounts for nearly 95% of the labour force. The Government does not concern itself with this sector at all. It only formulates policies for the orgnaised sector which is just about 5%.Even in the organised sector, employers manage to circumvent the government’s rules and policies to the detriment of the working people and the government agencies either collude or look the other way. For example, regular employees of an establishment are mandatorily required to be extended certain benefits like annual increments, provident fund, gratuity, medical reimbursement and earned leave etc. However, to get over these obligations, companies outsource parts of their establishments to companies whose only business is to maintain musters of these outsourced employees and pay their salaries in return for reimbursement of such salaries and commission by the real employer . As most of these entitlements accrue on completion of a year’s continuous service, the rule is circumvented by effecting a day’s break in service of the employee before he/she completes a year of service. The government partially remedied the situation by making the benefit of provident fund accrue from day 1 of service. In respect of rest of the benefits, the government chose to let the immoral and illegal exploitation continue.
The Government must not evade its moral and legal responsibility by not taking any steps to end this exploitation in the organised sector and also frame suitable policies to ensure that labour in the unorganised sector is also saved from exploitation.

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