Amidst all the uproar of the Lokpal in this Winter session of the Parliament, we saw the tabling of the much talked about Food security bill , which many of the reviewers criticized in terms of difficulties of implementation.
But I'm afraid I'm against the bill in principle, because of a lot of reasons, out of which the major and my burden of proof would be;
When the economic policy of the nation turns to pitying the poor rather than empowering them, the economy is bound to take a down turn.
What I mean by this is, for those who have studied economics will know, for those who have not , the basic point is people earn so that they can feed themselves and their family, by providing them such a subsidy , the government is also providing them a disincentive to work, or to empower themselves through work.
It has been a much agreed fact, that the growth of entrepreneurship in an economy is also related to the poverty level. Consider it like this , low income level (poor) people develop micro or macro entreprise to raise their well being and standard of living (of course this is not true for all individuals , the few who do it out of interest) , elimination of poverty diminishes the incentive for entrepreneurship; and provision of subsidies gives a disincentive to work This is just a comparison to outline the principle flaw in the bill.
Realizing I'm talking at extreme end, I admit there are some sections of people who can't afford to buy at the present rate of disproportionate food inflation; and I of all the people realize this , cause I am never able to forget every time there has been a child begging in front of me ,telling me he is hungry ; I say, I would have liked to agree on the bill , had it come at some other time , but coming at a time when the fiscal deficit is only growing ,and the economy already being in the downturn, the bill might do more harm than good; and then its only a short term solution to the hunger problem.
In addition, the outreach would be imperfect because of the unavoidable corruption, and that I can say with surety because of having the privilege to talk with people working on field. Another major flaw as pointed out by critics is suppose if you are providing grains at subsidized rates to a person earning 10 rupees a day, are you going to deny it to the one earning 11 rupees a day.
This in conjunction with the policy of giving grains to other classes above BPL also at subsidized rates, dear government you are ruining the working of economy by not letting the market forces operate where the people have purchasing power; and once again to emphasize a burgeoning fiscal deficit does good to none.
Now, you might question me, that, then how do I propose to see to the well being of poor.
I, in principle have always supported economic inclusion of the poor but through financial inclusion and not by giving subsidies on long term, Subsidies have never have been, and never can be , a long term solution.
If you really care about the poor, please grant them a long term solution and do not fool or appease them for the sake of upcoming elections.
Empower them.
The good thing is atleast the principle of financial inclusion of poor (especially women) is already in place , with the concept of Microfinance, first born in 1992; but its hard to say how much of financial inclusion of poor we have been able to achieve, because like all other noble initiatives, this also falls prey to corruption in some areas save south; where other problems like commercialization by the likes of SKS MFI blemished the scenario.
What my idea is , that the government should focus on completing this movement of empowering the poor, rather than coming up with another less practical and difficult to implement scheme, just to increase its vote bank (I know that is a stupid utopian idea that crossed my mind, nevertheless).
To conclude, an observation that came across in a short discussion with my grandfather ; a consequence of the implementation of MGNREGA was reduction in the supply of agricultural labour, because in case of NREGA , most of the workers would go for merely 2 hours work to mark their presence , while the agriculture labour demanded more and paid less. Obviously most of the people chose to work less and earn more through NREGA, which led to small farmers not having enough labour, because they can't pay more than the government
And I can't doubt government's intent on NREGA; but the crux is consequence of subsidies on a long term has never been tangible.
The failure of the scheme has only made more prominent the fact that subsidies and short cuts are not the best solution and only decrease the size of national corpus.
Hoping that the government realizes this and comes up with more concrete and long term solutions, with the strong team of economists that they have, I henceforth conclude.