Saturday, March 8, 2014

Noble intentions, ignoble outcomes

"The road to hell is paved with good intentions," so goes an old saying. Unfortunately, we are travelling on that road, oblivious to where it leads.

We have put in place vast number of policies with noble intentions, that produce exactly the opposite results. The latest example of this is the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. The primary objective of the Act is to protect farmers from predation by the government and businesses in the course of land acquisition. But it pushes the protections against acquisitions so far that anyone wishing to acquire land will first look for land on Mars.

Children of farmers today aspire to jobs in cities or business of their own. In the forthcoming years, many of these farmers will be looking for buyers of their land at decent prices. But with the onerous demands placed on the buyer by the new Act, they will find few takers. Alongside, infrastructure building and industrialisation will suffer enormously, limiting the opportunities for their children. They, their children and the country will be stuck in a low-income equilibrium.

Sadly, this is not new territory for us — we have been here before. We have done to the labour market for decades what we are now poised to do to land markets. Cumulative legislations — more than 50 of them at the Centre and three times that in the states — aimed at protecting the rights and interests of workers in the organised sector so terrorise entrepreneurs that few of them dare operate large-scale enterprises in labour-intensive sectors such as apparel and assembly activities.

These are precisely the enterprises that have created vast numbers of well-paid jobs for the Chinese workers migrating from the countryside to the cities in droves during the last three decades. Unlike their Chinese counterparts, Indian entrepreneurs either rush to the safety of the highly capital- or skilled-labour-intensive sectors such as automobiles, engineering goods and software, or become invisible in the swath of tiny firms in the unorganised sector.

The stark result: less than 5% of Indian workers benefit from the ultra-high protection that labour laws provide in the organised sector while more than 95% of them toil for a pittance and without any protection whatsoever in the unorganised sector.

But we refuse to learn from experience and keep adding to our woes. The Right to Education (RTE) Act of 2009 carries the seeds of undermining the very right it proposes to guarantee. If the letter of this law had been enforced, all unrecognised schools, which on average provide better education than the nearest recognised government school, would have been shut down as of April 1, 2013, turning the "right" of tens of millions of children into a curse.

Likewise, if the input norms in the RTE Act had been fully enforced, a large number of even government schools would have lost recognition and shut down on April 1, 2013, forcing yet more children on to the street.

The ban on mandatory board examinations by the RTE Act all the way up to eighth grade and consequent automatic promotions have eliminated the last available tool of measuring teacher performance, turning them yet more complacent. The result has been a rapid collapse of already low levels of student achievements. NGO Pratham reports that the proportion of third graders in rural government schools who can identify numbers from 1 to 100 has dropped from 70% in 2010 to 54% in 2012.

Undeterred, we keep piling social goals on what are principally commercial transactions. When indifference, indeed disdain, towards economic reforms finally produced an economic disaster, the government returned to reforms by opening multi-brand retail to foreign investors.

But then it imposed the restriction that the entrants source at least 30% of their goods from local small- and medium-sized enterprises. In the event, no entry took place with even Walmart, which had knocked hard on the door for years, choosing to stay out. An embarrassed government had to later relax the local sourcing condition.

The list of self-inflicted wounds with noble objectives goes on. Genetically modified (GM) foods have been in existence in the United States for nearly two decades. Even the European Union, which once fiercely opposed these foods, has begun embracing them. Our own farmers have experienced vast productivity gains from Bt Cotton seeds permitted since 2003.

Yet, when the Genetic Engineering Approval Committee, the apex regulatory body under the environment ministry, gave Bt Brinjal its approval in October 2009, the then environment minister overruled the decision because he saw in it a threat to farmers producing the existing brinjal varieties. With the scientific evidence pointing in exactly the opposite direction, the decision wound up hurting rather than helping the farmers and has greatly set back the second technological revolution in seeds after the Green Revolution.

Policies with good intentions but disastrous results were the order of the day under Prime Minister Indira Gandhi. Prime ministers Narasimha Rao and Atal Bihari Vajpayee fought hard to reverse them and the country reaped huge gains in the 2000s. Unfortunately, we have returned to the same old road under the UPA. Absent another course correction, fires and flames await us.

The writer is professor of Indian political economy at Columbia University.

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