Renowned economist Pranab Bardhan emphasized the critical need for long-term structural economic reforms beyond immediate welfare measures, while also raising an alarm over the growing trend of 12-hour work shifts in several Indian states. The professor emeritus at the University of California, Berkeley, shared these insights on Wednesday while receiving a prestigious award in Kolkata.
Welfare vs. Structural Change: A Key Distinction
Speaking at the Indian Statistical Institute at a program organized by the Indian Econometric Society, Bardhan was honored with the C R Rao Centenary Gold Medal for his lifelong contributions to economics. During his address, he analyzed the role of direct benefit transfer schemes.
He acknowledged that initiatives like West Bengal's Lakshmir Bhandar provide essential short-term relief. "Such projects can help in the immediate scenario," Bardhan stated, giving the example that the financial aid could assist in educating a child. He clarified that these are not mere freebies, noting that BJP-led states like Madhya Pradesh and Maharashtra are also implementing similar programs.
However, Bardhan, a known advocate for Universal Basic Income (UBI), stressed that cash transfers are insufficient on their own. "We may not build physical assets through schemes like Lakshmir Bhandar, but we cannot forget about human assets," he said. The core solution, according to him, lies elsewhere. "A structural change in production conditions is required in the long run for people to get sustainable jobs," he asserted.
Critique of the 12-Hour Workday Model
Shifting focus to labor reforms, Bardhan flagged a concerning policy adopted by multiple states. "In India, several states, particularly a few southern states, have installed a 12-hour workday," he pointed out. He criticized this move as short-sighted, arguing that exhausting schedules ultimately drain worker productivity.
"The data shows that in many cases, the 12-hour workday will not be productive," Bardhan explained. "You can save some money in the short run and then lose money in the long run." He also highlighted the limited scope of such labor codes, which apply only to the organized sector comprising about 10% of India's workforce, leaving the vast unorganized sector untouched.
Expressing worry over job security, Bardhan made a case for improving working conditions. "Improving the condition of workers ultimately helps capitalism," he said, citing European examples where industry benefited from looking after labor welfare.
The Path Forward: Beyond Political Cycles
Bardhan concluded with a broad critique of the political discourse on the economy. "We have to think in terms of not just welfare measures. Welfare measures are necessary but not sufficient," he reiterated. He called for larger structural changes in the economy, a focus he finds lacking across the political spectrum. "None of the parties in India are giving enough attention to these structural changes," the eminent economist lamented, underscoring the gap between immediate populist measures and the foundational reforms needed for lasting job creation and growth.
