The Two Ways to Solve Social Problems

There are two broad ways to solve any social problem. One is a direct action and the other is a policy-based action. Which one is better?

There are two broad ways to solve any social problem. One is a direct action and the other is a policy-based action. In both cases, the intention of the government is wellbeing of its people. But the impact of both methods is different. While direct action provides a temporary relief to a few, it does not provide a sustainable solution for everyone. Whereas, a sound policy-based action addresses the root cause of the problem and aims to create a permanent solution.

Over the last 70 years, India has seen many governments, but the approach taken by all of them to solve social problems has broadly been the same – that of direct action. Politicians prefer direct action as their effect is visible quickly to the voters. Whereas, implementing a policy-based solution generally yields results only in medium to long term.

Let us look at some examples –

Swachh Bharat Abhiyaan
State of public health and sanitation in India is abysmal. Even after implementing various programs such as Nirmal Bharat Abhiyaan, the sanitation woes of India continues. The latest in the series of actions is Swachh Bharat Abhiyaan. Politicians and bureaucrats are often seen with a broom and a mask for a photo op. However, this does not give us a sustainable solution. A cess was also levied, collections from which was to be used to improve sanitary conditions.

A policy-based solution that could solve the problem is to empower local governments. Today, cities and villages in India are dependent on State and Central governments for their needs, including funds for local sanitation and waste management. A directly elected and empowered local government will have resources and incentives to improve sanitation.

Demonetisation
In November 2016, the government demonetised high denomination notes of ₹500 and ₹1000 to tackle corruption and wipe-out the hidden stashes of black money belonging to corrupt individuals. But the root cause of corruption had nothing to do with the currency in circulation or those hidden away. Corruption stems from a variety of causes such as unaccountable officials, arbitrary laws, excessive regulations, red-tapism and other loopholes in the system. Direct action in terms of demonetisation did nothing to solve any of these problems. No wonder that corruption continues to live on and the episode of demonetisation caused nothing but hardship for all Indians.

Instead of banning notes, a policy-based solution would be to focus on fundamental reforms such as dismantling of license-permit-quota Raj, removal of redundant regulations and fixing accountability of government officials. These changes to policy would reduce incentive and opportunity for corruption.

Make in India/ National Manufacturing Policy
To generate employment, especially through the manufacturing sector, the government has introduced short-term measures such as increasing custom duties and creating other entry barriers for foreign products. The government also provides subsidies and tax relief to domestic companies and shields them from foreign competition to give a boost to domestic companies. As we know from theory and experience from around the world, besides hurting all consumers who now have to pay extra for goods, such protectionist measures do not help in generating employment in the long term.

If the government really wants to create more jobs in the country, it should remove entry barriers to start a business and do important factor-market reforms in land, labour and capital markets. Doing business should be made easier in India. Currently, a start-up needs to do as many as 85 regulatory filings per year. In such conditions, entrepreneurs cannot start businesses and create jobs.

Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)
The government tried to curb rural stagnation and unemployment by providing at least 100 days of wage employment through MGNREGA to every rural household for manual work. Governments have changed, but the dependency of people on MGNREGA has only grown over the years.

Apart from making it easier to start and run a business in India, public infrastructure should be provided to improve connectivity between rural and urban areas. It will make it easier for rural people to get employed and create more opportunities for employment.

Farm Loan Waivers
Farmers have been debt-ridden and distressed for decades. Every time an election is close, announcements of loan waivers start pouring in. Loans of individual farmers are paid off by the taxpayers. But this does nothing to solve the farmer distress in the long term.

One sector in India that has been left untouched by economic reforms is agriculture. If the government were serious about finding a long-term solution, they should take a relook at policies such as Minimum Support Price, lack of property rights, etc. There is one policy-based action that the government has taken to better the agriculture scenario in India. Most states are doing away with the APMC Act which forced farmers to sell their goods in a government designated mandi. This is a good policy based solution which leaves farmers with more choice to sell their goods to whoever they want and thus secure a better price for their produce. More such policy-based actions will help to reduce the distress facing farmers.

These are just a few examples, there are hundreds of other instances wherein politicians choose to cater to their vote bank through a direct action, rather than working on a sustainable solution. If we continue only with direct actions to solve our social problems and not fix problems at their root, we will be stuck doing the same things over and over again with no change.

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