A double-burner system

Context:  Practising social democracy in India requires certain steps to be followed.

Social democracy vs Democratic socialism (A double burner system political-economic system)

• Social democracy: It is democratic and functions broadly within a regulated capitalist framework.
  • Budgets in such systems will benefit the poor more than the rich. E.g. elderly care, a public school system
• Democratic socialism: It emphasizes state ownership or control of production within a democratic polity.’

Issues with double burner system in India: While France enjoys both Social Democracy (liberal social benefits) and Democratic Socialism (waves of nationalization), India’s double burner is stranded -

• Public sector: burns taxpayers money; state takeover of hundreds of textile, engineering and other firms were unable to perform.
  • For E.g. Air India, the two sick telecom firms and the nationalized banks have continued to burn cash.
• Unaffordable social welfare system: including the right to employment in rural areas, cash pay-outs and free medical insurance. This resulted in -
  • Tendency to take over the market that they could not run properly. E.g. foodgrain procurement, mandatory state trading for imports etc.
  • Prioritization of saving jobs over efficient use of scarce capital.
  • E.g. social democracies of Western Europe had discarded universal basic income

Way Forward: Steps to be taken to become a social democracy

• Disband non-performing public sector companies.
• Effective collection of tax: There is a need to stop evasion of both the goods and services tax and income tax because tax-Gross Domestic Product ratio for India is low (16-17%).
  • Only a third of the eight million (earning Rs 1 lakh/month) pay the tax due from them.
• Create course equality: India is currently moving in the direction of pre-socialist Britain, with powerful billionaires controlling the state. This direction has to be changed.

Conclusion:  If India is to be a functioning social democracy, it has to stop practising state capitalism while creating a disciplined tax system and reining in corporate power.