Opinion | When cows become white elephants

Opinion | When cows become white elephants

Cow cess in Uttar Pradesh | The Uttar Pradesh government aims to build shelters for cows across the state, the cost of which the public has to bear in the form of a

Long before Swacch Bharat was a gleam in Prime Minister Narendra Modi’s eye, China’s Mao Zedong started a hygiene campaign in 1958. Prime among the measures: the citizenry was encouraged to kill four pests – mosquitoes, rats, flies and sparrows. To whip up fervour, the government also declared birds as the “public animals of capitalism.” As enthusiastic Chinese killed sparrows leading to a near extinction of the species, locusts multiplied and led to the Great Chinese Famine of 1959-1961. Later, the government changed the fourth pest from sparrows to bed bugs.

The key lesson from the four pests campaign is this: policy makers have to think through the effects of changes they want to introduce. Often, policy changes, that on first blush look like they would have great benefits, could have unintended consequences. They could have unintended costs. As Milton Friedman said, “One of the great mistakes is to judge policies and programs by their intentions rather than their results.”

India has rich examples of such policies with supposedly good intentions but unintended consequences. In the current climate, there are two that spring to mind. One is, of course, farm loan waivers, which is supposed to provide succour to the indebted and impoverished agriculturist. Such waivers end up vitiating the credit culture as farmers (usually, the richer ones get bank loans, others still go to moneylenders) borrow in the hope that some political party down the line will waive off these loans.

The second is banning cow slaughter. It will have the unintended consequence of increasing the fiscal deficit, debilitating the dairy economy, shutting down industries and in general being a drag on the economy. The first manifestation of this can be seen in Uttar Pradesh where the state government has imposed a gau kalyan (cow welfare) cess of 0.5 percent on alcohol, toll taxes and profits of public sector infrastructure companies to fund and maintain cow shelters.

UP is not the only state to collect a cow cess. In Punjab, such a cess is levied on electricity in urban areas and liquor. Indeed, according to Vikas Rawal, associate professor at Jawaharlal Nehru University’s Centre for Economic Studies and Planning, India will have to spend 1.5 times its current defence budget to take care of unproductive cows and bulls that are abandoned by farmers. Others have warned that the cow itself will disappear over time.

That’s because the economics of owning a cow is not favourable anymore. Earlier, once the productive life (milk-yielding for females and physical work like pulling a cart or plough for males) of cattle is over, farmers would typically sell them. The money they get from the sale of such cows would be used to buy newer heads of cattle. Typically, the unproductive cattle would end up in the abattoir, but farmers would turn a blind eye because they were not the ones killing the cow.

Now, with the rise of cow vigilantes and lynch mobs, trade and transport of cows, unproductive or otherwise, is fraught with danger. Several people have been killed by the cow vigilantes. As a results, the prices of cattle have come down because people are afraid to do even legitimate trading of bulls and buffaloes. With no money to spend on the upkeep of unproductive cows, farmers have taken to abandoning them, or shutting them in public schools and warehouses to protest. Stray cattle have taken to pilfering fields hitting the livelihood of farmers. In a bid to contain the menace of these feral bovines, the state wants to build cow shelters, but where will this end? According to some estimates, Uttar Pradesh  alone had a million head of stray cattle in 2012. The number would have only gone up  since then. The state government is now trying to impose fines on farmers for abandoning cattle.

Clearly, pandering to the vote bank that venerates the cow has backfired because it has deeply affected another powerful vote bank  – that of farmers. Besides the unintended economic costs, this move could hurt the government, both at state and centre.

While the government is at last trying to find sensible alternatives to farm distress (reports say it is considering income/investment support schemes), it has to find a way to tackle the stray bovine menace. Curbing cow vigilante lynch mobs and ensuring that trading of bulls and buffaloes doesn’t get affected would be a good start.

[“source-moneycontrol”]