The big picture of Modi’s welfare state: Same budget, new schemes, more coverage, but education hit

Many explanations for Modi’s political success seem to lack a dispassionate engagement with data, which this six-part series looked into.

WrittenBy:Chintan Patel
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Rarely in post-1991 India has a Lok Sabha election felt so bereft of suspense. Most predict a third term for PM Narendra Modi, and an overwhelming number of forecasts revolve around the BJP’s victory margins. And yet, most of the explanations have been in a binary. 

One side points to a “vishwaguru vision”, decisive leadership, and fast-tracked progress. Another side says it’s all because institutions have been hijacked, the opposition targeted, with a servile media inflaming communal passions and playing up the government’s achievements. 

But what’s lost in this battle of narratives is a will to dispassionately engage with the facts on the ground with data. 

Over the last two months, this six-part series made that attempt, focussing on some signature welfare schemes of the Modi administration. The first piece looked at the PM’s ‘housing for all’ scheme, the second at health insurance, the third at cash assistance to farmers, the next at the rural roads programme, the fifth at the scheme aimed at safe drinking water, and the last at the free foodgrain programme.

And this piece is a distillation of some meta themes that emerged from our analysis.

Where’s the money going?

The welfare state has undergone a major structural change under PM Modi. His election sloganeering of 2014, promising “Maximum Governance, Minimum Government”, and his mocking of the rural employment guarantee scheme introduced by the Manmohan government, had suggested a propensity to trim government welfare schemes. 

However, under his watch, the government has instead launched new benefits and scaled up existing schemes, often with much fanfare. It has provided gas cylinders under Ujjwala, toilets under Swachh Bharat, water connections under Jal Jeevan, houses under PM Awas, cash transfers under PM-KISAN, food grains under PM Gareeb Kalyan Yojana and health insurance under PM Jan Arogya Yojana in record numbers either free or at subsidised costs. 

But where has the money come from, considering that the economy hasn’t done better in the last 10 years, compared to the previous decade? (The annual  GDP growth over the 10-year NDA period is 4.86 percent, whereas the corresponding figure for the UPA years was 6.14 percent.) 

An analysis of budget documents shows that in 2013, the UPA government was spending almost 27 percent of its annual expenditure on the following items – subsidies (food, fertiliser and fuel), rural employment, mid-day meals, integrated child development services, rural water delivery and other miscellaneous welfare schemes. 

But despite adding a slew of new schemes, government spending has not exceeded that 27 percent mark under the NDA government – except the surge in food subsidy in 2020-21 as part of Covid relief.

This is partly explained by a reduction of the subsidy bill, driven by the tapering off of the fuel subsidy. The government has also prioritised its signature schemes over other initiatives – for example, the amount allocated to education has consistently shrunk over the last decade while the health allocation hasn’t varied drastically as compared to 2013.

The political capital of welfare

Prominent commentators have offered different theories to explain these changes. 

Arvind Subramaniam terms this policy shift under PM Modi as ‘New Welfarism’. He argues that in the new welfarist approach the government “does not prioritise the supply of public goods such as basic health and primary education as governments have done around the world historically; it is also somewhat ambivalent about strengthening the safety net which past Indian governments have pursued with mixed success. Instead, it has entailed the subsidised public provision of essential goods and services, normally provided by the private sector, such as bank accounts, cooking gas, toilets, electricity, housing, and more recently water and also plain cash.”  

Yamini Aiyar points out that Modi’s new welfarism is distinctly different from UPA’s approach when the emphasis was on creating a legally protected rights-based regime to bolster the social security net. So, when the government gave employment under the National Rural Employment Guarantee Act, or food grains within the public distribution system, the benefactors were claiming their rights, not enjoying government largesse. In the Modi model, she argues, “welfare is reframing itself as a gift offered by the party leader, almost as an exchange of loyalty rather than a fundamental right that ought to frame the terms of the social contract between citizens and state.”

Rathin Roy interprets this phenomenon as an admission of failure on the part of the Indian state. Rather than trying to improve the delivery of public goods and services that improve the lives and capabilities of the entire population, governments (state and central) are resorting to compensating citizens for this failure in cash and kind. He argues the Indian state has abandoned attempts to deliver development and instead morphed into a ‘compensatory’ state.

While one can argue that these formulations have merit, the Modi model of welfare delivery is more pragmatic, and is informed by being in touch with day-to-day struggles faced by the poor. Plus, it may be more optimal from a public perception and an electoral payback perspective. 

A recent paper by the Carnegie Institute finds that voters seem to care about the number of touch points over the value of each touchpoint. Incredibly, voters seem to find equal value in a $10 gas cylinder and a $2,000 house. Therefore, politicians are better off providing 200 benefits worth $10 each than one benefit of the total amount. By increasing the number of schemes that offer more consumables, the BJP has effectively increased the number of touchpoints between the voter and the government. 

Moreover, at each of these touchpoints, the voter is reminded that the Prime Minister is the primary architect – in a possible boost for the BJP’s political prospects.

It’s only with the brawn of states and brains of bureaucrats 

Claiming sole credit for every government initiative is disingenuous - it undermines other stakeholders who play a significant role, most notably state governments. .

It is eventually the federal nature of the state that decides how the scheme is implemented.

While the Centre announces initiatives and provides frameworks and funds, many of the new welfare schemes target subjects that fall under the state list. And most of the heavy lifting of execution falls on the states. 

In every scheme, the magnitude and quality of execution vary significantly from state to state, depending on the scheme, indicating not an overall lack of state capacity but rather differing regional and stakeholder priorities. Whatever gets prioritised at the state level gets delivered, regardless of the overall perceived state capacity. For example, Bihar gets nearly 100 percent Jal Jeevan Mission penetration while Kerala struggles to hit even 50 percent, upending commonly held beliefs about both states.

While political will determines government priorities, the primacy of the bureaucrats and technocrats in the nuts-and-bolts of government functioning is hard to miss. Most schemes that are announced or tweaked are informed by prior learnings that have been captured in various committee reports. In popular perception, these are viewed as procedural, perfunctory dead-weights, but a closer examination reveals that they serve as very useful repositories of knowledge. 

An encouraging implication is that even when elected parties change, there is considerable continuity in government policies and practices. Case in point: the Aadhaar framework that was conceptualised and introduced under the UPA but has become synonymous with the NDA administration. This stream of continuity amidst the usual political bickering bodes well for a mature democracy.

What’s done is what’s easily done

While the NDA seems to have improved the delivery of welfare remarkably, Parliamentary Standing Committees and other experts repeatedly assert that third-party inspections and social audits need to be streamlined post-haste. Without these third-party ground reports, there is always an asterisk attached to government-provided dashboard data. 

Building assets and their upkeep are two entirely different matters. Between the two, the government is still good at first, but it struggles with the latter – be it maintenance of roads or drinking water infrastructure. Thus, social audits to assess the ongoing performance of different schemes assume even greater importance.

Another aspect that needs improvement is coverage. 

Most welfare schemes have coverage holes due to two systemic shortcomings. 

First, coverage targets are based on the 2011 Census. The population of the country has grown by almost 15 crore since then, and the rural/urban distribution has also undergone changes. However, these changes are not accounted for in scheme targets, leading to many invisible beneficiaries. 

Second, the issue of the 'missing middle' that came up in the context of PMJAY is real. As Niti Aayog identified, the lower-middle and middle-middle classes can afford a wide range of services on their own should a small chunk of subsidy help them out. However, they are often missed out in the policy architecture. Besides extending benefits to an unserved section of the population, focusing on this segment can also help boost aggregate demand in the economy. 

They say politics is the art of the possible. Sometimes, this could extend to governance too.

Cases in point: helping those with access to land and capital build houses under PM Awas while the much worse off urban homeless are left out; targeting in-patient care through PMJAY even though out-patient care forms 40 to 80 percent of the healthcare expenditure burden on households; targeting landed farmers through PM-KISAN though landless farmers are left out; and overreliance on groundwater for water provision even though the risk of slippage looms largest with this strategy, etc. 

All these examples do not point to malfeasance or malintent, but that practically what is done is what is easily done. 

But credit where it’s due

To give credit where it is due, women empowerment is a common thread across many consumables offered under this “New Welfarism”. 

LPG cylinders eliminate the need to forage for cooking fuel and prevent inhalation of pollutants produced from cooking fire. Similarly, a household tap removes the drudgery of fetching water from distant places. Since women are generally tasked with these chores, they disproportionately benefit from these initiatives. Even access to toilets offer freedom and dignity to women, in addition to the health benefits to both genders. In a highly patriarchal and misogynistic society like India, all efforts that meaningfully empower women need to be acknowledged and applauded. And any political gains achieved by the goodwill generated by improving the lives of half of the electorate are well deserved.

Finally, as PM-KISAN illustrates, cash transfer as a policy tool has firmly made its place in the Indian psyche. 

The electorate has rewarded such transfers repeatedly, and now, equipped by the DBT framework,  the policy elite has begun deploying it on large scales across parties. 

Whether these cash transfers constitute a compensation for state failure, a sensible hybrid combining redistribution with individual choice and market forces, or an abject withdrawal from providing important public goods and services, may be a key debate in the coming years.

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