rnin o io onomi ss es 21.17
But the challenges are not insurmountable; besides economic transformation today, provided the
several possible ways are available to address them. Government can mobilise adequate amount of
As the support for the idea has come from a broad fund for the process of redistribution. One very
ideological spectrum, it looks as if the time for weak link to tapping fiscal capacity of the economy
such a scheme has arrived in the country. We has been the lower legitimacy in the State.9
should think proactively in the direction.
8. legiTimAcy iN STATe AND Socio- Higher legitimacy in state strengthens democracies
ecoNomic TrANSformATioN in general. In case of tapping the fiscal capacity of
the economy legitimacy in state has been found
introDuction to be among the most important variables. In this
regard, the history of developed countries suggests
Democracies of the world have evolved much
two important things:
since they came into being. India joined the
club late though it is among the most vibrant (i) The foremost duty of the State is to
democratic economies of the world today with supply ‘essential services’ such as,
its own set of strengths and weaknesses. Socio- physical security, healthcare, education,
economic transformation of the country could infrastructure, etc.
be considered as the most prime aspiration of (ii) Redistributive role of the State comes
India. The same resonance we find throughout later on.
the period of freedom struggle, in the debates of The above-described sequencing is not
the Constituent Assembly and the Constitution accidental. Unless the middle class in society
of India also. Numerous efforts have been made perceives that it derives some benefits from the
by the governments in this direction though the government/state, it will be unwilling to support
performances have not been up to the desired (i.e., finance) the government moves of income
levels. There have been several minor reasons redistribution. In other words, we can say that
responsible for it, but the major reason has been the a government needs to earn the legitimacy to
lack of financial resources to push it. The revenue redistribute income from the effectiveness of its
that governments get by way of taxes is not a form public service deliveries.
of income only, but it is a measure of the fiscal If the Government tries to redistribute income
potential of the nation, too. India has not been without guaranteeing effective deliveries of the
able to tap its actual fiscal potential by now. While public services, the middle class starts ‘exiting
its potential of tax collection is estimated to be the state’ (the famous idea of Albert Hirschman,
53 per cent of the GDP, it collects only about 17 1978)—the middle class ultimately shies away from
per cent. It means a vast fiscal potential remains financing the schemes of income redistribution.
untapped. Given the resource crunch faced by the One important sign of exit is fewer number of tax
country, it is high time that the country moved in payers—abundantly evident in case of India. By
the direction of enhancing the fiscal capacity of reducing the pressure on the state, middle class
the economy. exit will shrivel it, eroding its legitimacy further,
In case of India, ‘income redistribution’ (the
recent proposal being UBI coming from the 9. The write-up is primarily based on the Economic
Survey 2016-17 and 2015-16 together with the Union
Economic Survey 2016-17) is suggested to be the Budget 2017-18 and other releases of the Government
single most important way out to promote socio- of India.