How the Middle Class Can Help India’s Poor

Former American Presidential candidate John Edwards was known for his “Two America” speech during his campaign trail.  He says “today, under George W. Bush, there are two Americas, not one: One America that does the work, another that reaps the reward. One America that pays the taxes, another America that gets the tax breaks.

One America – middle-class America – whose needs Washington has long forgotten, another America – narrow-interest America – whose every wish is Washington’s command ..”  In a rich country the apparent struggle is always between the middle class and the rich.

In India the struggle is between the middle class and the rich on one side and the poor on the other.  There was a semblance of balance between the two up until the early 1990’s.  Then the opening of the Indian economy began and the Indian middle class became its primary beneficiary.  I do not like to use the word “liberalization” in the Indian context.  What we are seeing are changes in certain economic policies in specific areas of the economy.

Even in the financial sector we are still a centrally planned economy, our currency is artificially regulated and the Indian Rupee continues to be one of the few major currencies in the world that is only partially convertible.  The way India is administered fiscally and politically, land, labor and electoral law reforms and so on remains untouched for more than 150 years (in most of these areas we are still following British era laws).  What we are doing is picking the “low hanging fruits”.  The real battle is ahead of us.

So the question that I want to ask myself and my fellow Indians is what can we do to help about 500 million of us who live on less than 20 rupees a day?  The following are my suggestions and I would be thrilled to hear your suggestions.

Focus on economy is not enough: I am confident when I say that the Indian economy will continue to grow for the foreseeable future unless something catastrophic happens.  The growth is all around and is no longer limited to the IT sector.  Indian economic growth is also not export dependent as is the case in China.  But it is time for us to shift our focus on equally important issues affecting the nation.

Governments just like all other institutions have limited resources and cannot do everything at the same time.  If we give the impression that the economy is the key factor then the government and media will be glad to oblige us.  The reason why we do not hear about the poverty, hunger, malnutrition and other important issues is because we the middle class do not want to hear about them, discuss them or find solutions.

The poor in India unfortunately have nobody to represent them.  We should do it on their behalf.  How can we make people like Bal Thackeray talk about providing affordable housing for Mumbai’s poor instead of trying to teach Marathi to poor taxi drivers?  Can we not pressurize the owners of the IPL, cricket players, Bollywood celebrities and other rich and influential individuals about setting up charitable organizations in addition to giving them free publicity, reviewing their movies and discussing how “great” they are?

Do not force the government on China and Pakistan: It is very clear that the Indian government is under pressure to take a hard line stance against both Pakistan and China.  This is a middle class agenda (majority of Indians cannot point out China or Pakistan on a map).  We have fought wars with both these countries and it is a smart decision to keep a close eye on the developments in both these countries.  But let us not overreact.

The Indian government is on a unprecedented spending spree to acquire weapons, planes, ships and submarines that are totally disproportionate to the perceived threat and cannot be justified considering that there are 500 million of us who are living on a dollar a day.  There is hardly any opposition to this spending spree.  On the contrary many of us have taken a lot of pride in these acquisitions.

We should maintain minimum deterrence but should understand that an all out conflict with both Pakistan and China is highly unlikely.  Even if it happens we do not need three aircraft carriers, an array of nuclear submarines and stealth fighters to defend our borders.  Three nuclear armed countries rarely go to war with each other.  The build up of our forces unfortunately indicates that we have offensive aspirations (US is the only country that has more than one aircraft carrier.  France and Britain have one each.  Why do we need three? America has discontinued building the stealth F-22 plane.  But we are trying to build one with Russia’s help.  Why?).

End the fuel subsidies: The mother of all subsidies is the fuel subsidy.  Studies by organizations like the International Energy Agency have shown that this subsidy is about $30 billion per year.  The direct beneficiary of this is the middle class.  But the issue is a little murky.  The government forces the companies that drill and refine oil which in most cases are government companies themselves to sell the product at a discounted rate.

Obviously this forces the companies like ONGC and HP to run under a loss.  Then the government turns around and provides these companies with government bonds (which is taxpayer money) to compensate for the loss and keep these companies solvent.  The government then sells these products to the people and then taxes them heavily (60% of the price of petrol at the pump is tax and 40% of the price of diesel at the pump is tax).

What kind of scheme is this?  $30 billion is a lot of money (our total IT exports for the year 2009 was about $50 billion).  I think it is fair to say that if we want to drive cars then we should be willing to pay for the gas.  My preference would be to at least divert some of this subsidy and apply it towards projects that will provide affordable stove and LPG cylinders to the majority of Indians who are still cooking using coal and wood.  I would also like some of it to be applied to basic food and cereals in backward regions of the country.

Related posts:

1. Grading Middle Class India on its Republic Day
2. Corruption in India: Excuse for Uncaring Middle Class
3. Pakistani Experience Relevent Against China
4. Myth or Reality: India is prospering but not Indians?
5. Time for India to Rethink its China Policy

Tags: Charity, China, Fuel, India, Indians, Middle Class, military, Pakistan, Poverty

Category: Culture & Religion