A short but extremely significant statement that Prime Minister Manmohan Singh made during his interaction with newspaper editors went largely unnoticed. About the proposed Food Security Bill, he said, “Maximum that has been procured is 57 million (tonnes of foodgrain); the average procurement for the last couple of years is 55 million tonnes. We have to work out a system within this.”
This is an unambiguous refutation of the obstinate position taken by the Sonia Gandhi-led National Advisory Council (NAC). The NAC wants to give legal entitlement to highly subsidised foodgrain to 70 per cent of the population. This translates into about 80 million people getting with monthly ration of 7 kg for every member of families below the poverty line and 3 kg to each individual from “general households.”
As is wont, the Leftist-infested NAC is trying to expand the role and scope of government in foodgrain distribution, while Singh is trying to limit the populism to whatever extent it can. Earlier, it looked like the Prime Minister was fighting a losing battle, for his own ministers are seem keener to follow the NAC chief’s diktats than to obey his commands. Food Minister KV Thomas, for instance, told The Economic Times in an interview (May 30), “(The Food Security Bill) has been drafted under the direction of Madam Sonia Gandhi.”
The Prime Minister’s Economic Advisory Committee (PMEAC), headed by former Reserve Bank Governor C Rangarajan, has serious differences with the NAC on a variety of issues. But it must be noted that the PMEAC’s resistance to the NAC’s big state measures is feeble and based on practical considerations. While the NAC wants its indulges in demagoguery to increase the number of beneficiaries of subsidised foodgrain, the PMEAC meekly favours such subsidies for 46 per cent of rural population and 28 per cent of the urban people.
So, nobody is talking about, let alone opposing, the moral hazard of Leviathan statism; there is no ideological or principled opposition to the giant strides being made in government spending. This is despite the fact that, in absolute numbers, the fiscal deficit stands at Rs 3.69 lakh crore, which is much higher than Rs 139,231 crore in 2004-05, when the Manmohan Singh government took charge.
The NAC jihadis, of course, have no regard for the concept of fiscal prudence. Like spoilt brats who, unbothered about the family income, always pester their parents with ever-rising demands, they incessantly work on schemes that would be ruinous for the exchequer.
Apart from the strain on public finance, there is the ethical issue of creating and nurturing an entitlement mindset among vast sections of society. They would be eternally looking for succor from the state.
And since pilferage and graft are the inevitable consequences of state expenditure, one can safely assume huge rise in the spread and scale of corruption in the public distribution system.
Instead of looking for novel ideas for improving foodgrain distribution and increasing the role of private sector for efficiency, the government remains stuck with linear thinking. Among other things, it is trying to transform the inherently inefficient Food Corporation of India (FCI) into a modern, competent machine to address the gigantic task of grain distribution. As Thomas said, “Compared to earlier periods, the recruitment in Food Corporation of India has risen by 10 per cent. We have modernised FCI godowns through computerisation. Sitting in my office, I know the quantity, quality and distribution of grain from each godown. We have put CCTV cameras to watch operations. We have also enabled e-transactions; every payment above Rs 1 lakh will be e-transacted. To complement all this, PDS will be improved through Aadhar.”
In short, the idea is cure socialism with more socialism. The endeavour is doomed, for the capabilities of FCI are grossly inadequate. A recent study conducted by, among others, chairman of the Commission for Agricultural Costs and Prices (CACP) Ashok Gulati said that FCI’s efficiency was half that of private traders.
Further, the proposed food security legislation can be pervasive enough to drive out private companies. The study also recommended that the government, instead of embarking on a massive exercise in foodgrain distribution, should explore the options of cash transfers and food coupons.
“Strangulating the private sector could impact other key areas in agriculture, including seed and storage where its role would become even more crucial now,” the study said. Ad hoc government policies have already adversely affected the private sector in a few states.
The left-leaning activists of the NAC are not satisfied by higher government expenditure and the attack on the private sector; they want more; the Council reportedly wants complete ban on foodgrain exports.
More radical leftists are dissatisfied by even the NAC’s recommendations. Jean Dreze, who is credited with conceiving the rural employment guarantee scheme, is not comfortable with the existing NAC proposals. Appeasement of the left is a Sisyphean task.
(The author is a senior journalist)