When Polonius said in Hamlet, 'to thine own self be true', he was not thinking of Part I of the UPA government's forthcoming Budget. Polonius was saying that integrity and success lie in being true to oneself. This Budget is expected to announce a massive give-away of rice and wheat at Rs 3/- per kilo, and the scheme is likely to fail because it fails Polonius' test. Eighteen years of slow, incremental economic reforms have fashioned a certain kind of nation which was captured brilliantly in the film, 'Slumdog Millionaire'. If the movie caught the character of the nation's poor, the Indian Premier League (IPL) of cricket mirrors it for the middle class. The character quite simply is of a vibrant and energetic private sector that is hemmed in by an arid eco-system of weak governance. As if to underline this, our bureaucracy has recently been rated the worst in Asia in a survey of twelve countries.
While we deeply admire the UPA's commitment to the poor, we are repelled by its inability to understand our state's limitations. As it is, there is huge corruption in the public food distribution system and it would be far better to make cash transfers to the poor via smart cards. It will not harm the poor farmer either, as selling grains at Rs 3, which will inevitably end up in the black market. Smart cards are being successfully used in the national health insurance scheme (RSBY).
Millions of Indians are stuck between the factory and the farm but they do not sit around and complain. Each morning they pull themselves up and go out and create a livelihood in the informal sector. Our regulations, alas, do not make it easy—hence India is rated 128th in the ease of doing business. In a massive new study, Moving out of Poverty, people claim that they have risen out of poverty through their own initiative, and not through hand-outs. The poor prefer an enabling environment that lets them work with dignity. Our advantage over China is that we respect property titles and Karnataka and Andhra are showing that when secure titles are on-line, the poor capitalize on them to start businesses in the informal economy.
Unlike the statists behind the Rs 3/- scheme, many UPA ministers are refreshing in seeking to create enabling conditions for the poor. The new minister of HRD, Kapil Sibal, understands that teacher absenteeism is forcing even the poor to desert state schools and he is focused on better delivery through public-private partnerships. The energetic Kamal Nath has begun to cut red tape and remove bottlenecks in pursuit of an ambitious target to build roads, putting greater onus on the private sector. M M Kharge plans to spend Rs 30,000 crores to develop skills, and knows that the only way to impart vocational education is with the involvement of companies. Sivaprakash Jaiswal has announced the end of state monopoly in the corrupt coal mining sector, and it raises the hope of finally bringing efficiency to a sector that accounts for 55% of India's energy basket. Veerappan Moily has promised 'sweeping, holistic judicial reform' that will tackle the backlog of 30 million pending court cases among other reforms. All these five ministers are following Polonius's advice.
In the past year both China and India held a sports event. The magnificent Beijing Olympics were a tribute to the efficiency of the Chinese state. The Indian Premier League (IPL) is a testimonial to our private sector. When the timing of the IPL clashed with the elections this year the IPL did not give up. It played off the English and South African boards to get the best deal and the result was an amazing sight--Delhi playing Hyderabad in Cape Town and Mumbai playing Chennai in Johannesburg. With bold ambition, quick thinking, meticulous planning and brilliant execution—all the skills that are making Indian companies successful on the world stage—the IPL filled stadiums, shuttled ten of thousands of Indians to South Africa, and enticed millions to their TVs back home. It took a hundred years for Major League Baseball in America to hold its first game outside the US and fifty for the American Football League to play outside. The Indian Premier League has gone global in its second year.
The two sports events are metaphors for two models of development. The Chinese state can deliver rice and wheat at Rs 3 to the poor. But India's cannot. The UPA government would do well to remember Polonius advice and be true to our nation's character.