Economic Highlights
New Delhi, 30 August 2013
Food, Poverty & Politics
NEW SCAM ROUTES MAY OPEN
By Shivaji Sarkar
The Food Security Bill is a classic case
of putting the cart before the horse. It increases subsidy on food grain by over
Rs 33,000 crore immediately and progressively in the next five years to about
Rs 179,000 crore while almost eliminating subsidy on agriculture. The US did not do this despite the WTO, but India, which believes
in action without a perspective has done it.
At the same time, there is a
positive side unwittingly to the Bill. For the first time since Independence the Government
has officially accepted that there is hunger in the country and people die of
it. Else the officials always state that deaths are due to “malnutrition” and
not starvation. Additionally, there is an admission that inflation has gone
through the roof. People are unable to buy food at high prices. It also accepts
that the Government has virtually not acted to keep the food prices under
check.
The bill also admits that the number
of poor are 67 per cent of the population – 81 crore and not the various
figures shelled out by the Planning Commission which range from 26 per cent to
36 per cent or a bit more liberal ones at 40 and 50 per cent. The Arjun Sengupta
Committee, however, had put the figure at 77 per cent. Undeniably, food remains
the centerpiece of politics, as India
is only a few notches above some sub-Saharan countries in the Global Hunger
Index. Indeed, it pays dividend to keep the masses in abysmal poverty. A lot
can be promised as freebies - laptops, TV sets, saris - a dreamland could be
created to lure votes.
The Bill virtually censures all Governments
that have ruled this country since 1947. There has been complete failure by
all. During the past 66 years, almost an additional 67 crore more people have
slipped into abysmal poverty. The number of poor have more than doubled with the
population at the time of Independence
being 34 crore.
Additionally, the Bill is a sure
prescription for the impending collapse of Government finances. It has taken
upon itself to be legally obligated to provide food grains at the fixed rates
of Rs 3, 2 and 1 without ensuring whether it would be available to it at
affordable rates. Undoubtedly, the Government would play into the hands of the
food mafia, which include some large corporates, both domestic and
multi-national.
The nation shouldn’t be surprised if
the Government is forced to buy food grains at high prices and sell at the
lowest it has fixed. This would open up new routes for scams, as the poor,
which constitute the largest vote bank, would need to be fed. Thus, the motto
of feeding them and getting the votes is natural. But at what cost? Obviously,
this is not a problem for a political party which wants credit at public
expense.
Sadly, nobody wants to learn from
recent history. The best model State in terms of welfare was the Soviet Union. It collapsed not because of a failed
ideology, but under heavy unaffordable expenses on its commitment to provide food,
commodities and shelter to everyone. Entitlements kept the citizenry happy but
eroded the nation’s financial base.
What India is doing today reminds one of
late Indira Gandhi’s famous slogan “garibi
hatao”. Are we putting the clock back to 1971? Maybe, but Indira didn’t raise
entitlements. She ensured a green revolution to guarantee food availability and
stopped imports of rotten wheat and rice from the US. She made people in large parts
of the country less dependent on the public distribution system (PDS). And, in
the initial days, she was able to check spiraling prices.
Successors of Mrs Gandhi should have
learnt something from her-- that country’s path to better days was ensured
through investment and research in agriculture. Chariman of Agricultural Costs
and Prices Commission states: “We shall have to change the rules of the game”.
The farmers cannot be paid less and asked to subsidise the economy. The present
minimum support price is almost 30 per cent less than what he invests in each
of the crop.
Since 1991, public investment in
agriculture has drastically fallen and private corporate investment has
increased in a selective manner. Today, the corporate have emerged as the
biggest zamindars (landlords). Their
profits are soaring and prices of food items are rising. The recent National
Spot Exchange (NSEL) scam has exposed betting in food items, something the UN
agencies had warned about years ago.
Yes, Manmohan Singh’s market has
failed the poor. The middle class has been pulled down to the edge of poverty
line. Massive entitlement without proper mechanism to deliver would only drain
public finances. Surprisingly, even the Opposition did not object to the Bill. Perhaps,
rightly as it too cannot risk losing votes on a sensitive issue.
The impending dangers are far too
many. Even now, the Government doesn’t have any control on prices. Under compulsion
of buying food at a high price and supplying it at the lowest price, it has burdened
all future Governments with enormous unwanted expenditure. It will be very difficult
to undo the damage by withdrawing it as the political fall-out would be just too
intimidating.
With the new Land Acquisition law,
there would be further strain on farm land. Over the past two decades over 27
lakh hectare arable land has gone for other uses. The new bill is likely to
ensure a further diversion. How would food production, even at the current rate,
be ensured?
It would play havoc not only with Government
finances but with the economy as a whole. As the Government would become the
largest procurer, the farmers are likely to see freezing of the MSP, another
disincentive as inflation soars. As this also may create shortage of food for the
33 per cent left out of the scheme, food prices may rise. Since this chunk of
the market is being controlled by the corporate, it is likely that they would
offer better prices to farmers and choke the Government supply line.
In such a case, would the Government
buy food from the corporate houses at very high prices to meet its commitment? In
an extreme situation, India
may even have to approach the international grain market. No sooner this happens,
will the international prices rise. With the ongoing forex crunch what would be
its implication on the rupee, no one has even tried to foresee. Ultimately,
food may not only elude the poor but shall also open the flood gates of
corruption in the purchase of food grains. A double whammy! --- INFA
(Copyright,
India News and Feature Alliance)
|