Clearly, if the purpose is to address poverty, the act is most inadequate and out of proportion with the wealth possessed by the one who is giving a mere trickle.
For, the giver is merely getting the beggar off the back. The only lesson learnt thus far is not to show outrage at the one stretching out his hand and pestering while the giver is busy in personal wealth maximisation pursuits. It is now understood by many that the beggar should be accommodated and the best way to do that is to throw a coin or two on the begging palms.
It is this attitude that is reflected at the macro level too. Poverty issue is more of a nuisance and a distraction away from GNP growth rate and per capita income maximisation obsession of neo-liberals promoted in the country by the international lending agencies. So, the poor have to be accommodated as neglecting them visibly is not a wise politico-economic move. The more visibly they are accommodated the easier it is for the policy makers to defend their position on the poverty front, not that it might make a tangible dent in poverty in the country. Let us see how federal budget 2007-08 attempts to accommodate the concerns of the poor.
A closer examination reveals hardly anything significantly new. That government employees’ salaries are to go up by 15 per cent is nothing out of the ordinary. Since the current prime minister was inducted, government employees’ salaries increase has been a routine phenomenon. What has been the impact though? It is only the salaries of government employees’ that go up. Private sector organisations or autonomous units may or may not follow suit. In many cases, they do not. Private sector employees and those working for autonomous units are left high and dry as their annual pay increase is not even adjusted for inflation in many cases
As for government employees’ pay increase of 15 per cent, it may only account for inflation or may not as actual inflation rate is usually higher than the officially stated rate of inflation. So, in both these cases, even the government employees may not be experiencing real gains. Same goes for pensions’ increase. The policy makers, however, have a claim of 15 per cent salaries’ increase to make, however inadequate and limited it may be.
For private sector workers, old-age pension, old-age benefits, disability benefits, workers welfare fund have all been revised. Crucial question is the extent to which workers already benefit from these facilities, the numbers that benefit, and the extent to which employers contribute to some of these funds with ease. If there are schemes, they must work promptly for the benefit of all in the target group with active contribution of all the actors.
Up-gradation of government employees in BPS 5, 7, and 11 to BPS 7, 9, and 14 respectively is also limited to not just a few grades but to government employees. Employees of autonomous units do not usually benefit from these decisions even if they are in BPS. Budget announcements usually assume that what is true for a part is also true for the whole. They, therefore, commit fallacy of composition. And their claims need to be discounted.
Minimum wage increase from Rs4000 to Rs4600 per month may make newspaper headlines. The real marginal impact for a poor wage earner needs to be known. Another Rs500 per month may amount to another about 29.4 kg of good quality flour. But flour is not what one can go on consuming. If it was to be combined with other nutritious foods for a family of five or six, another Rs500 will vitiate in thin air in much less than a week leave alone housing, education, transportation, and healthcare, all of which are luxury expenditures for a wage earner of Rs4500 per month. So, while it may be a 12.5 per cent increase in minimum wage, by itself, it is not significant in these inflationary times. Its real impact is even less significant.
However face-saving a 12.5 per cent minimum wage increase may be for the policy makers, no country can boast of a minimum wage that amounts to only about 8-9 days of nutritious food for a family of six. Unless this threshold is breached, poverty will remain unaddressed. All nominal measures will tantamount to tossing a few coins in the hat of an earner who is reduced to a beggar as he is not compensated adequately for his/her toil.
As we lament over this minimum wage, it needs to be noted that even this minimum wage is not paid by many in various sectors. These include factory workers, informal sector, and domestic help. Factories have a tendency to run with contract labour in violation of many labour laws. While the government may increase minimum wage and be about the only one to feel content about it, does it try to ensure that, at least, this bare minimum wage is complied with by all employers who all have a tendency to pay as low as they possibly can?
Prices of pulses, sugar, and tea would be reduced at the Utility Stores whose numbers are planned to increase from 1000 to 5000 in a country of over 152 million. Out of this, at least, 60 per cent that is over 91 million would want to avail the lower prices at the USCs’. A total of 5000 utility stores would mean about 18,200 people per utility store if they are accessible. A family size of six would mean over 3000 families per store. Is it a feasible proposition to provide access to all those who need to buy subsidized food and now medicines too from the utility stores?
So, in terms of percentage and if implemented, there would be an increase in utility stores by 400 per cent that is a good defence tool but the real impact would be as in the preceding paragraph. Further, solution to price hike is not in increasing the utility stores and providing more subsidy. Greater subsidy indicates not just a rise in the number of needy or continued unmet needs, it is also a sign of market failure. Market failures require effective government intervention otherwise it is also a sign of government failure.
That market prices of food items do not reflect their true scarcity value but are hiked indicates a market that is not free but that is being manipulated. If this goes on unabated, it shows the weakness of the government that cannot touch the manipulators as these are big power groups. These vested interests if touched can cause political harm to the incumbents. That market players distort but go scot-free and cannot be reined in by the government is its huge all-time political consideration based on expediency. An attempt is then made to compensate for this injustice by showing improvement on crucial scores in the federal budget that may end up in only face-saving percentage increases with little or no real impact on the financial crunch that people experience routinely before and after the budget.