From the NYAY proposed by Rahul Gandhi to the recent transfer of money to farmers’ accounts by the government, Direct Cash Transfer (DCT) is a model accepted by all political parties in our democratic socialist republic. And now, with strong pressure from the government to make banking services accessible to all, DCT is clearly here to stay and is very likely to thrive.
It is easy to see that the DCT has clear advantages in a country (as admitted by former Prime Minister Rajiv Gandhi) where out of every rupee spent by the government, only 15 paisa were supposed to reach the intended beneficiary through the corruption driven by red tape. . And if we add Keynesian economics to the DCT, it can also be seen as a catalyst for the economy by making more money available in the market for spending and thereby accelerating the nation’s economic growth.
But the reason the DCT arrived isn’t just to stop corruption.
The real problem before the incoming governments is that India’s seventy years of policymaking had only one goal and that is how to stop corruption when the administration spends the treasury money. for the greater good (you can read the statement again if you have I haven’t laughed heartily since the morning).
The net result is that the great Indian state has developed a severe lack of competence to spend thanks to too many levels of checks and balances that block the process of spending (while each level works wonderfully as an opportunity for a Babu).
As the economy moves towards five trillion dollars, this loophole now hurts and so it is easy to understand the frustration of the elected government now seeing the DCT as an issue.
But, like all ideas that look great in theory, the idea of DCT also has a heck of a thing hidden in the details and that’s what we humans prefer to do with our money.
The problem with us human beings is that our brains are motivated by gratification. Having fun here and now is a higher priority for us than securing the future or dealing with a long-term problem. So with money, we’re more likely to go to the country’s liquor store or mobile recharge than to a school to pay our children’s school fees.
Thus, the central problem of the DCT is the lack of control over the social orientation of the spending of treasury money.
When the state spends the money, it is easy to focus on the common good, but when a person has a choice, the chances of the money going in the right direction are greatly reduced.
Our brain’s gratification trait isn’t the only problem with DCT.
If the money from the chessboard is only channeled through the DCT, we may have a situation where a rural Indian has money on hand but has a public school across a river that sinks without a bridge. So, without having completed the construction of all the social infrastructure (as we see in the case of developed countries), handing the money from the treasury directly to the people will not make any real sense.
If we study the reality on the ground in India, even though the DCT model has merits, it is easy to see that we cannot rely on it beyond a point to deliver the greater good.
What India really needs to resolve is the political bottleneck blocking public spending.
As policymaking in India is largely in the hands of the bureaucracy, part of the reason DCT is here is because of their failure to develop appropriate spending policies. They may have a reason to focus on preventing corruption as the sole focus of policymaking in a poor post-independence India, but today we need a paradigm shift in the way whose policies they design.
As the Indian bureaucracy has very talented people, all they will need is a change of focus and they can fix this provided that an empowered and dedicated bureaucracy arm is established that is mandated to focus on this statement. very specific problem on urgent bases and ensure the turnover out of the new spending policies in a time-limited manner.
Just as we are seeing with developed countries where governments spend over 40% of GDP, the Indian government also needs to exceed its current bar below 30% and develop its capacity to spend more of GDP.
Improving the government’s spending capacity towards 40% of GDP is also a goal that we must have as we gallop towards a five trillion dollar economy where we can have the money but we will not be a developed nation in the sense proper of the term.
The opinions expressed above are those of the author.
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