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 Limited Government
 
It’s social spend boom, stupid
Swaminomics, India Sunday, February 06, 2011

Swaminathan S Anklesaria Aiyar
Amartya Sen recently said that it would be “stupid” to focus on double-digit GDP growth without spending more on social sectors. Jagdish Bhagwati, a potential Nobel Laureate, stressed that second-generation economic reforms should accelerate growth to finance withore targeted social spending. Sonia Gandhi’s key policy innovation has been a National Advisory Council brimming with NGOs. This led to the Right to Information, a sort of Right to Work , Right to Food and Right to Education. To claim that this is a mindless neoliberal search for double-digit growth is nonsense. I hope Amartya Sen will denounce such claims as stupid, writes Swaminathan Aiyar in Swaminomics.org.

Economists have, for over a month, had an internet debate on growth and social spending. It started with the Financial Times citing Nobel Laureate Amartya Sen as saying it would be “stupid” to focus on double-digit GDP growth without spending more on social sectors. The newspaper also cited Jagdish Bhagwati, a potential Nobel Laureate, as stressing second-generation economic reforms to accelerate growth to finance more targeted social spending.

...

Rather than enter this debate, let me simply expose the scandalous mendacity of left analysts and politicians on this issue. Sen did not actually accuse the government of failing to expand social spending. But a cavalcade of left analysts and politicians has endlessly repeated the myth that the government is a neoliberal fiend that focuses on fast growth while ignoring social spending. Which planet do they live on? Social spending has actually been booming.

Recent scams make it blindingly obvious that the last thing this government focuses on is GDP acceleration. When Ashok Chavan and other worthies wangled lucrative flats for relatives and friends in what was supposed to be a defence services building, were they aiming for double-digit GDP growth? Was this a neoliberal abandonment of all regulations, or a classic case of the neta-babu raj imposing regulations in the holy name of socialism, and then using them to line their pockets and create patronage networks?

...

When former telecom minister Raja manipulated 2G spectrum to favour some businesses, causing revenue losses of possibly Rs 176,000 crore according to the CAG, was he trying to accelerate economic growth? No, he was illustrating the strategy of the political class: no matter how many controls are abolished to facilitate growth in some areas, controls must be expanded and milked in other areas to ensure that politics remains the most profitable business of all.

...

Every political party in India is an investor with considerable expertize in ways to improve profits and shareholder value. But the Congress has always been the biggest business house of all. It knows that to stay profitable in a democracy, a ruling party must provide visible hand-outs for the masses, even while raking in black money itself. This principle has been the lodestar of seven years of Sonia-Manmohan Singh rule. Second generation economic reforms have taken a back seat.

...

Between 2004-05 and 2009-10, central plus state social spending more than doubled from Rs 1.73 lakh crore to Rs 4.46 lakh crore (and from 5.33% of GDP to 7.23%). So, social spending has actually risen faster than GDP.

...

Sonia Gandhi’s key policy innovation has been a National Advisory Council brimming with NGOs. This led to the Right to Information, a sort of Right to Work (through an employment guarantee), Right to Food (to be implemented through a Food Security Act) and Right to Education. To claim that this is a mindless neoliberal search for double-digit growth is nonsense. I hope Amartya Sen will denounce such claims as stupid.

This article was published in the Swaminomics on Sunday, February 06, 2011. Please read the original article here.
Author : Mr Aiyar is consulting editor of Economic Times and writes the Swaminomics column in Times of India
Tags- Find more articles on - NGOs | social spending

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