A MATTER OF ECONOMICS
Subsidy for rich four times more than for the poor
By Dr R. Balashankar
Don’t get deceived. Food bill is yet another big fraud on the nation. As a slogan it sounds good. A close look at the schemes which the NDA had introduced during its six-year term will reveal that the new proposal in comparison will prove a logistical nightmare and centralise all existing ones making food security fiscally unsustainable and practically unviable.
Last week this column, explained how major industries have taken loans amounting to Rs 10 lakh crore that have stymied the Indian banks. And how Rs 47,000 crore taken from public sector banks by elite customers have become irrecoverable.
The reality is the subsidy for the poor has been dwindling steadily under the UPA. At the same time, government has been pampering the rich by all possible means. According to the Finance Ministry statistics, tax sops for the rich last year was Rs 4.60 lakh crore where as the subsidy for the poor including the farmers stood at Rs 1.5 lakh crore, just one-third of what was given away to the industrial houses.
For instance, the centre gave away potential revenue of Rs 4.6 lakh crore on account of various tax exemptions and incentives to industrialists. These are direct tax incentives and exemptions to business houses in the form of profit and investment linked deductions and other freebies. Only on this head, according to the Finance Ministry response to a question in Parliament last week, the government had given away Rs 88,000 crore to the rich. The incentives on various exemptions for central excise and customs duties were Rs 3.73 lakh crore in 2010-11. This, however, does not include revenue foregone on input tax nutralisation schemes for export and service tax exemptions. If we add that also into the subsidy for rich bracket the amount will increase manifold. An interesting aspect of all these concessions is that while the subsidy for the poor make banner headlines and are projected as manna from Sonia’s bountyful milk of human kindness, the largesse for the rich never make news. It is neither discussed, nor its impact on the bulging deficit never debated. This is perhaps because the economists and pink dailies paint all concessions to industry as growth incentive and all concessions to the poor as wasteful expenditure. This, in fact, is a capitalist bias.
The UPA, that makes so much song and dance about its concern for the common man, on the contrary spent only Rs 1.54 lakh crore on poor man’s subsidy schemes last year. Consider the disparity. Less than one per cent of the population takes away more than 75 per cent of government subsidy where as the rest 99 per cent of the population is given less than 25 per cent of the subsidy bill. Yet all talk is about the so-called huge subsidy for the poor. Congress even hopes to make an electoral fortune flogging it ad nauseam.
The poor subsidy is made up by Rs 60,000 crore spent on food, Rs 56,000 crore on fertilizer subsidy, Rs 36,000 crore on petroleum, kerosene and LPG subsidy. But consider the propaganda on populist measures of the UPA that ruling party politicians, the media and the ministers make. And they pretend as if the government is emptying its coffers promoting welfare schemes and pampering the poor.
The stark fact post-liberation India has ignored is that the subsidy for the rich has been going up every year geometrically while the poor subsidy has been shrinking annually. The poor subsidy in 2011-12 was reduced to Rs 1.44 lakh crore against last year’s Rs 1.54 lakh crore. Compare this with the subsidy for the rich which was Rs 4.20 lakh crore in 2008-09, which increased to Rs 4.37 lakh crore in 2009-10 and Rs 4.60 lakh crore in 2010-11.
It is in this background we have to analyse the big bang food security bill, which the Congress and the media are projecting as some kind of magic wand that Sonia has invented to erase poverty from India. No doubt, Congress is a past master in poverty politics. The proposed food bill, like all the other pet schemes of Sonia Gandhi, is more hype than substance. Congress gets away, taking political mileage, without ever being challenged on the economic viability, efficacy and inbuilt deception because of the lethargic opposition which persistently refuses to do its home work. Equally frustrating is its morose approach to issues pertaining to economics.
How much money will the centre throw down the drain in the name of subsidy is secondary. It is actually not much. Funds and schemes are already in place. Sloganeering is the name of the new game. Is Sonia so poor friendly or is she only promoting cronyism using food security as a veneer? The new binge will add only an additional subsidy of Rs 27,663 crore. And there by hangs a tale of a well orchestrated populist campaign that the Congress has been selling for the last seven years.
All the flagship schemes, which Sonia acolytes claim as her innovation are nothing but imitations, rehash and rechristening of existing schemes with funds allocated and executed over a time. For instance, right to education was passed during the NDA. Right to information was again in the process during the NDA. The NREGA and the Right to food bill are mainly made up of merging all the existing schemes which were implemented separately under different departments under the NDA. They were decentralised, more effective and targeted. It is the propaganda war the opposition has lost.
The efficiency or the sincerity in the implementation of the right to education, right to information, and NREGA is already a matter of intense despair. Right to information is now being accused of misuse and has become a headache for the ruling establishment. So on a daily basis the government is trying to censor its reach and content. The right to education is only on paper. Any parent will vouch for the trauma she undergoes to get a child admitted into a school. Even in the best case scenarios the NREGA efficiency is only fifty per cent.
The NDA was running schemes like Antyodaya Anna Yojana, the largest food security programmes in the world. Two crore poorest families (nearly 10 crore Indians) got 35 kg of foodgrains per month at cheapest rates ever – rice at Rs two per kg and wheat at Rs three per kg. Subsidised ration facility increased from 10 kg to 35 kg cereals per family per month for 26 crore people living below poverty line under the PDS. During one of the worst ever droughts in 2002, the NDA allocated 87 lakh MTs of foodgrains free of cost and provided cash assistance of Rs 4,200 crore to 14 drought affected states. Foodgrains were provided at subsidised rates to NGOs and religious establishments to run mid-day meal programme for poor children. Fifteen kg of foodgrains per resident per month was given at subsidised rates to SC/ST/OBC hostels and welfare institutions. For inmates of Nari Niketan and hostels run by NGOs, foodgrains were supplied at BPL rates during this period. Thus the ongoing schemes like PDS, mid-day meal scheme, maternity benefit scheme, integrated child development services scheme, free affordable meals to destitute, homeless and people living in starvation and affected by disaster—all of which were introduced during the NDA and earlier regimes are now merged and repackaged to create the food security bill. And we are being told it is Sonia’s dream come true.
In many ways instead of helping the target groups under different departments, this clubbing into one behemoth will harm and most likely deprive the needy sections of society. An aspect the sensitive parties should be fighting and exposing.