The ruling elite often forget, that what constitutes productive spending in its mind may not necessarily reflect in the priority list of the people it governs. While the rulers may fancy modern and big-ticket infrastructure projects because they perhaps massage their egos and make them feel high and mighty, the general public instead only appreciates work that not only caters mainly to their immediate requirements but also measures to meet them at their level; not embarrassing them in anyway. For example, the Chinese government recently had to re-adjust its lavish spending plan on uplifting Beijing’s public toilets, simply because the public did not approve of it. As the government endeavored to improve sanitation and reduce environmental waste across the country by planning a major overhaul of public toilets over the next three years, the plan met with resistance as the people thought such high-end toilets were nothing but a waste of money. When polled, more than 65% people responded to the effect that why do they have to make it such a nice one, as after all it is only a toilet. The other most popular response was that what was wrong with the old one, it looks like the government has too much money and it does not know how to spend it. Believe it or not, but the feedback that really brought about a re-think in the plan opined that there is a visible disconnect between the leaders and the common public. A total of 57,000 restrooms were to be built or renovated to bring them to a hygiene level surpassing even that of the ‘European Hygiene Standards’, and to market them as a sort of public stop that was to include facilities like a vending machine, an A.T.M. machine, Wi-Fi and as well a charging station (on the outside of course) for electric cars. With this ambitious plan now scaled down the money saved is instead being diverted to ensuring a free service that aims to efficiently collect filth and garbage from poor neighborhoods.

Likewise, the Indian government recently woke up to two stark realities where they initially felt that were undertaking some very good policy decisions in the agriculture and employment sectors, only to find out that ‘good’, yes, but in the wrong priority order. First, cotton farming, where the government seemed at a loss that despite its efforts to introduce high-yielding varieties of cotton and its support in promoting horticulture farming, the Indian farmer suicide rates remain one of the highest in the world, especially amongst the cotton farmers where in fact the suicides’ momentum is growing. As we know, both horticulture and cotton farming are the success stories of Indian agriculture: production of fruits and vegetables in India today surpasses its food-grains production by more than 30 million tones; and in cotton, its introduction of high-yielding varieties of cotton seed in recent years has dramatically increased the yield per hectare (ha) to almost two and a half times. Rising from 190kg per ha in 2000-01 to 491kg per ha in 2011-12. A temptation the farmers couldn’t resist and naturally cultivation areas under cotton and horticulture witnessed an increase of over 40% in the corresponding period. However, with this shift the risks increased as well – Mainly the increased risk of managing the shift away from the traditional two-crop cycle. And the new research and recent surveys have now made it clear to the Indian leadership that this is precisely where its policies were failing this sector and hence the high suicide rate.

To counter this, the Indian government has now altered its facilitation mix to the farmer by diverting a significant chunk of the subsidy it provides to instead launching a new type of crop insurance scheme Pradhan Mantri Fasal Bima Yojana that mitigates crop risks for the farmer, whereas, its tab is mainly picked up by the government. In essence, it reduces the premium payable by the farmer to: 1.5% on rabi crops, 2% on kharif crops and 5% on commercial/horticultural crops, and in addition it frees commercial and horticulture crops from risk assessment on actuarial basis, which otherwise used to previously push up the premium to as high as 25% in certain cases. Further, direct transfer instruments like mobile phones and bank accounts are to be used for paying compensation (when due) by the government to avoid transactional deductions and unnecessary claim processing delays by the insurance companies.

Second, was a realization that has come about in the government’s viewing of growth. Policymakers became conscious that despite high growth numbers the country remained unable to seriously dent its poverty level. Obviously something was amiss. In response, a conscious shift has now been orchestrated by this Indian government to move away from aimless growth rate’s race to focusing on employment generation and providing advance healthcare to the workers. This new strategy gives priority to shoring up national competitiveness to ensure that home manufacturing thrives and by taking a leaf out of Obamacare, aims to provide a more inclusive and affordable healthcare insurance especially to the low-wage segment. The Modi Sarkar is preparing to launch India’s biggest overhaul of labor laws since independence in a bid to create millions of manufacturing jobs and also plans to simultaneously announce a mandatory workers’ (and families) insurance program, albeit its premium cost to be substantially subsidized by the government so that it can easily be subscribed both by the industry and the individual worker. The proposed bill, which includes initiatives to loosen strict hire-and-fire rules and make it tougher for workers to form unions, but also at the same time guarantees workers a severance package three times the size of the current one, is to be put up in the upcoming parliamentary session. If approved, it is being billed as the harbinger of biggest economic reforms since India opened-up its economy back in 1991. As a precursor the states of Rajasthan and Madhya Pradesh have already taken the lead by independently (at state level) adopting these reforms, in-turn, providing a prototype model for the federal government to replicate across the country. More importantly, a poll conducted last month amongst the unionized workers of Madhya Pradesh clearly endorsed their satisfaction over these new reforms that are already resulting in an increased demand for specialist workers.

According to a study conducted last year by the consultancy firm McKinsey & Co., on behest of BRICS offices, to look at economic reforms and public spending in emerging economies, the primary recommendation to respective governments was to concentrate on policies that help generate employment and prioritize public spending in sectors that in-turn reflect people’s priorities and aspirations. The advice by the way is in no way limited only to leaderships of the BRICS nations!