What’s missing from India’s monetisation debate

Tamoghna Halder

On August 23, India’s Ministry of Finance launched the National Monetisation Pipeline with an intention to generate about Rs 6 trillion (US$81bn) over the next four years. It said it will achieve this goal by leasing out some of its core assets, such as roads, pipelines and railways, to non-governmental entities for a fixed 25-year period.

India’s politicians, as expected, responded to the policy according to their political alliances – those in the government camp presented it as an efficient way of financing government spending, while those in the opposition framed it as an attempt to sell public sector units (PSUs).

There is undoubtedly much to be criticised about the policy. But some problematic aspects of the political opposition to this policy require further scrutiny as well.

First, the opposition leaders over-simplified the implications of the policy by deeming it equivalent to the “selling” of these public assets. There is an argument to be made that, in practice, a 25-year lease transfer is very similar to a sale. But most opposition figures, especially those from the Indian National Congress, found themselves unable to make this argument effectively. After all, the current scheme of leasing out public sector units is just a scaled-up version of neoliberal economic policies adopted and/or proposed by the Congress-led governments of the past. The half-hearted approach in opposing the policy is thus a reflection of their own hypocrisy regarding neoliberal reforms.

Furthermore, most opposition figures used rhetoric that does not necessarily resonate with the Indian public in their attempts to criticise the policy. In their interviews and social media posts on the subject, they repeatedly stressed how leasing these public assets would be the equivalent to selling off the “crown jewels” or the “family silver”. In fact, almost every leading media outlet ran headlines with similar phrases while covering the debates around the asset monetisation policy.

Perhaps only historians remember, but the usage of the phrase “selling off the family silver” in the context of economic policies geared towards privatisation has a very specific connection to the Thatcher era in the UK.

In the mid-1980s, former British Prime Minister Harold MacMillan famously criticised Prime Minister Margaret Thatcher’s privatisation policies by likening them to the selling of family silver. That was the first time the phrase came to the fore with regards to the matter of privatisation. It is a different matter altogether that MacMillan, a lifelong Tory himself, was perhaps not criticising privatisation itself as much as he was opposing the treatment of capital and income as equivalent, but regardless of MacMillan’s intentions, the replication of this phrase by Indian politicians and the media in the current context is astonishing at multiple levels.

To begin with, it is just another instance of how every other narrative adopted by India’s ruling class elites continues to suffer from a lack of collective imagination – one that should be rooted in the Indian context. Whether in their notion of development, or in their opposition to the same, they keep drawing from the West (and often, the British) as if they are in a perpetual state of colonial hangover, either at a conscious or subconscious level.

The matter is not merely a hopeless imitation of narratives though. It also reflects how shamelessly India’s elites resort to classist and more specifically, casteist rhetoric. In a country where more than half the population are from the lower castes and are still beaten up by the upper castes for wearing gold jewellery, one can easily imagine why it is unlikely for most Indian families to own any asset that can even remotely be imagined or metaphorised as “family silver”. That precisely shows how disconnected the Indian elites are from the immediate social context in which they are trying to operate.

Moreover, using metaphors such as “family silver” or “crown jewels” when describing a public asset also amounts to a misrepresentation of the basic qualities and the purpose of that asset. State-owned assets, at least in theory, exist for utilisation by every citizen, irrespective of socioeconomic status, whereas family silver stands for private ownership and therefore privileged access. This is not a difficult contradiction to see, but India’s ruling elites appear to be blind to it.

India’s economists responded to the policy relatively better than its politicians – to the extent that most of them managed to refrain from employing such colonially-influenced and out of touch rhetoric. However, just like their political counterparts, they failed to engage efficiently with the underlying theoretical framework of the policy.

Of course, those who generally favour neoliberal measures or are supportive of the BJP government were not even expected to voice any meaningful criticism in the first place. But even those who are generally critical of the policies adopted by the current government have been quite shaky in their opposition to the policy.

Take, for example, the response of Kaushik Basu, former chief economic adviser to the Government of India (during the rule of the Congress-led alliance government), who is otherwise critical about the present BJP government and most of its economic policies. Basu criticised the National Monetisation Pipeline only from the implementation aspects but did not engage with the theoretical underpinnings of the sweeping neoliberal measure. And it is not just Basu. It is becoming a defining feature of India’s liberals over the last few years to oppose government policies on the grounds of implementation – as if the policies are “good in theory” or otherwise well-intended.

Unfortunately, neither is true. As far as the theoretical aspects are concerned, only a few economists have so far pointed out where the policy falls short.

Sonali Ranade, for example, argued that the current policy will neither lead to any kind of inclusive development of infrastructure, nor will it solve any existing economic challenges that the Indian government is facing.

Zico Dasgupta explained that the policy is grossly inadequate to tackle the “impossible trilemma of stabilising debt-GDP ratio, increasing government expenditure to invoke recovery and maintaining the existing structure of revenue generation”. Prabhat Patnaik, meanwhile, argued that it will “put more wealth in the hands of the wealthy” while increasing the existing pressures on common citizens.

In their criticisms of the policy, however, even Ranade, Dasgupta and Patnaik failed to touch one aspect – caste. While they all presented convincing arguments as to why the asset monetisation policy is essentially “anti-poor”, they did not emphasise that even among the poor, the policy would hurt the lower castes the most.

Let’s look at the two sectors that are supposed to generate 52 percent of the income coming from the entire monetisation plan – railways (25 percent) and roads (27 percent).

The ecosystem of Indian Railways, while not free from discrimination, is nonetheless the largest public sector where Dalits, Muslims and Tribals have gained some prominence as economic stakeholders. Data from 2020 suggest that about 25 percent of all employees in Indian Railways belong to Scheduled Castes and Tribes. This was achieved only because the Railways is an equal opportunity employer and bound to follow the reservation policy in the hiring process.

The private players on the other hand are not required to follow reservation policy in hiring and thus, the representation of marginalised caste groups in this sector is bound to stagnate under the monetisation policy.

And the impact will not be restricted to the direct, organised labour force either – lower castes participating in the informal economy will also likely lose out as a result of this policy.

An overwhelming majority of hawkers and vendors who sell products or cater to railway passengers also belong to lower castes and tribes. The specific guidelines that Indian Railways lays out in its code for commerce, provides, at least in theory, space for small businesses run by Dalits and Tribals: “…in case of small and roadside stations, preference will be given to Scheduled Caste/Scheduled Tribe candidates.” Will such small businesses flourish after asset monetisation? Will the Dalit hawkers have equal access to the privately managed platforms, or be allowed to board the trains owned by private companies? The answer is “no”. With the private sector getting ready to take over the 25-year lease for running a chunk of the Railways’ operations, one should wonder about the fate of India’s constitutional promise of uplifting its most marginalised groups.

The National Highway system in India has never been free from caste-based discrimination either. But there is reason to believe monetisation will exacerbate some of the existing exclusionary practices.

Even with the government in charge, the construction of new highways or expressways in India often translates into the forcible acquisition of land from Dalits, and not from their wealthier upper-caste neighbours. Even when Dalits try to resist this injustice with days-long protests, their pleas fall on deaf ears. Once built, most of these expressways cater to the owners of four-wheelers and prohibit the movement of two-wheelers. This is despite the fact that marginalised groups are way more likely to own two-wheelers, while a majority of four-wheeler owners are from the forward castes. Thus, roads built on Dalit land using Dalit labour, are put to use in a way that leads to further socioeconomic exclusion of the Dalits themselves. Instead of rectifying these disparate treatments, the government is now transferring the responsibility of constructing, maintaining and managing the country’s highways to the private sector. If anything, the very logic of investment and profit will now ensure that exclusion will increase, since the patterns of vehicle ownership and landholdings are already tilted in favour of upper castes.

The situation is the same, to differing extents, in other public sectors, which leads to one undeniable conclusion: India’s new privatisation drive, through the National Monetisation Pipeline, will hurt the poor – and especially the lower castes and tribes.

The fact that India’s government is failing to comprehend this is worrying. But what is even more worrying is that leaders of the opposition are viewing India’s core public assets merely as “family silver” and failing to even mention how the move is going to affect the country’s most marginalised communities.

And most of India’s economists, it seems, are also making the same mistake. It is simply not enough to use caste as a control variable in regression equations. Economists, and especially those from the upper castes, need to come out of their comfort zones to learn the ways in which their thought processes are contaminated by the casteist society we all live in.

Only then, perhaps, we as a nation will learn to always consider and talk about caste when we support or criticise an economic policy, since in the Indian context the latter continues to be inseparable from the former.

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