By Rishit Jain
The recent tribute to Sardar Vallabhbhai Patel in the form of the Statue of Unity is the worlds tallest statue standing high at 182 metres, almost double the height of Lady Liberty who stands at 93 metres. Despite its name, the statue has left the nation divided as many feel that it is nothing more than a colossal waste of resources.
Hefty price tag
The primary argument against the statue is its massive price tag. It cost the government roughly Rs. 3,000 crores. Furthermore, unlike other such statues including the Statue of Liberty which are built through private donations, our Statue of Unity used public funds and private firms CSR contributions. That too, at a time when locals have been desperate for government support to help them get through the severe water crisis in Gujarat. It is no wonder that protests had erupted, and locals were upset.
The opportunity cost related to the spending of government funds is immense in this project. At a time when the government has been vocal about complaining that the nation is largely tax non-compliant, with less than 2% of the tax base paying their taxes, why are such strained resources being thrown around for statues? Why arent these resources being used to better our infrastructure, to combat social and environmental problems, and to fund the myriad of government projects that have been initiated in recent years? Certainly, allocating resources to such projects would be better than diverting funds to vanity projects?
Multiplier Effect
Despite the relevance of these arguments, the monument is not actually such a monstrous waste.
For one, there seems to be a common misconception about the project that money spent by the government simply vanishes. The fact is that government expenditure in an economy, or expansionary fiscal policy, is one of the finest, and often one of the most effective forms of intervention. Money goes from the government to another private or public entity, Larsen & Toubro in this case, which the entity uses to pay the domestic labour force and source materials from across the nation, boosting employment in the process. The industrial policy in Gujarat mandates that 85% of the labour force has to be domestic. The Statue of Unity used 75,000 cubic metres of concrete, 5,700 metric tonnes of steel structure, 18,500 steel rods, and 22,500 metric tonnes of bronze. Industries are bound to benefit from such a massive project. And this is what happens in the short-term.
Through a ratio known as the Keynesian multiplier, we see the long-term benefits that such expenditure can reap. For example, if a worker earns Rs. 100 today, s/he may hypothetically save Rs. 50 and spend the other Rs. 50. Similarly, a business that earns the Rs. 50, spends Rs.25 from it and the cycle goes on and on. Eventually, we observe that a small contribution of Rs. 100 to the national income in the form of the workers wages, has an impact of Rs. 200. Now, scale this initial income to Rs. 3,000 crores.
The biggest complaint about demonetisation was the consequent, reduced consumerism that had shattered the small businessman. Now, when the government has initiated a boatload of expenditures to help promote consumerism and employment, the nation continues to abuse the government for inaction.
Moving away from welfare state thinking
Furthermore, we can enable a shift in the common citizens dependence on public services. What we see today is an immense dependence on the government for some of the most basic necessities such as shelter, healthcare and education. This is despite the fact the Indian government has been globally notorious for its scams, from the toilet scam depicted in Akshay Kumars Toilet: Ek Prem Katha to the Wakf Board land scam that misappropriated land reportedly worth Rs. 2,000 billion. As a result, the common citizen is dependent on services that are poorly provided by public agents, rife with corruption as the various middlemen involved in the provision of such services leave little room for genuine action.
This dependence of the public on these public services that can be tackled. This can be done by improving peoples incomes, thereby reducing their dependence on subsidised services provided by the government. Consequently, the common citizen will be able to afford better goods and services provided by the private sector.
Apart from the merits of government expenditure, there are several benefits of the monument itself. The Statue of Unity can replicate the success of Taj Mahal, which earned Rs. 75 crores in revenues between 2014 and 2016, with only Rs. 11 crores spent in maintenance costs. In the 10 days after its inauguration, the monument witnessed more than 1.1 lakh visitors. To put these numbers in perspective, in 2016, Taj Mahal had 62.4 lakh visitors while the Agra Fort had 22.1 lakh.
It would thus seem that the benefits of Statue of Unity will be realised over a period of time. It is a far more thought-out project than what many of its detractors would like to believe.
Undoubtedly, allocating resources to government projects could have been one way of catering to government objectives. However, it is necessary to evolve from a welfare state that leaves its citizens dependent on poorly funded public services that are susceptible to corruption to a prosperous economy where citizens are incentivised to work hard and are provided opportunities to work.
It would certainly be far-fetched to assume that a lone statue is single-handedly capable of dissolving an entire nations dependence on public services. However, it certainly proves that where there is a will, there is a way.
Rishit Jain is a writing analyst at Qrius