Saturday, October 15, 2011

Everybody loves an entitlement in India

So, our politically correct activists have forced Planning Commission Chairman, Montek Singh Ahluwalia to eat crow. They have got him to accept that a statistical device through which poverty is measured in India will not be the means of determining who is provided entitlements. Actually it was never intended to be so and it is good that Union Rural Development Minister Jairam Ramesh has clarified that the government will take into account other elements of deprivation before considering specific entitlements for  rural households. 
The statistical constructs to define poverty are something that economists have debated for years, but it has spilt over into the public domain for a variety of reasons. First, the Rs 32/26 construct  had all the usual suspects, Harsh Mander, Aruna Roy and their ilk foaming at the mouth.
Then even politicians as diverse as  Mayawati and Murli Manohar Joshi jumped into the issue. The reason was not difficult to find. Poverty lines in India have been a means of giving entitlements, and in turn the grant of entitlements is a means of harvesting votes. And right now, the government is in the midst of preparing an Act that will provide subsidised food for half the population of the country.
The 32/26 construct has its roots in food consumption. It was set in the 1970s from the monthly consumption expenditure of a family whose members consumed 2,400 calories of food in rural areas and 2,100 in urban. This has since been monetised and indexed to give us the 32/26 value of today. The calorie consumption index has had a chequered history. They emerged from pre-World War II studies in Germany of the physiology of work of European loggers. How they relate to Indian physiques and conditions is a mystery.
No one can deny the state’s responsibility in providing food for its destitute citizens. In line with this, the state has two approaches before it. First, to buy vast quantities of food grain, store it and arrange for its distribution. The second approach is to provide cash directly to the beneficiaries.
The first approach is marked by massive leakages. First, the FCI’s acquisition process is riddled with corruption—poor quality grain purchased and passed off as good. Second, it is stored in such awful conditions that a good amount of it
simply rots. Third, on its way to the
fair price shops, as well as in those shops, it is diverted.
Last year, under the pressure of the courts and following investigation by an SIT, the CBI was asked to probe the diversion of food grains meant for the poor in Uttar Pradesh which was being shipped out by the trainloads straight from their storage areas to Bangladesh and Nepal.
The value of the foodgrains ran into tens of thousands of crore rupees over several years. The food was meant for a slew of entitlement programmes that activists swear by—Sampoorna Gramin Rozgar Yojana, a food for work scheme; Antodaya Anna Yojana, meant to provide food security for the poorest families; the Midday Meal Scheme to give children a nutritious meal on all working days.
Yet, there seemed to be little outrage of the kind that accompanied the 2G scam, perhaps because the villains were the cogs of the system—district officials, FCI managers and railway personnel. There were no well-known political faces in the cross-hairs of the media.
Faced with diversion, many specialists have been suggesting a variety of alternate measures—food coupons, direct cash subsidies which will go into the bank account of the recipient through a smart-card. But this looks like a bit of day-dreaming. There are unlikely to be banks and even post offices in the poorest areas  in India. Those who reach Delhi or Mumbai, even in the most menial of jobs, are not poor compared to the many, mainly women, children and the aged, who live in the contiguous villages of Orissa, Bihar, Chattisgarh, West Bengal border, or in Bundelkhand.
When middle-men can gouge the middle-class in Delhi, who will guarantee that the poor in the remote rural areas are given food grain at actual market prices and not at sharply marked up ones? As for coupons, not only can they be forged, but you can be sure, unscrupulous traders will trade these for half their value for cash with the indigent.
The UPA government is set to make food into an entitlement. Estimates vary, but you could have some half of the country’s population lining up for subsidised food grains. Given the quality of governance in the country, this huge exercise is likely to lead to massive fraud and you can be sure that the really poor and needy will somehow slip through the net.
 The other issue is the question of allocating valuable resources. Despite the growth of its economy, India’s fiscal situation is not all that good. Taking on the burden of a massive food entitlement programme could mean depriving vital areas—education, health, infrastructure— of much needed investment.
These are areas which could yield dividends in terms of higher productivity, both in the city and the country-side. Indeed, these are vital if the country wants to ensure that the 500 million or so people it thinks in need of entitlements are to be shifted from farming marginal land into gainful employment where their incomes will be much more than the dismal 32/26 we are stuck with for now.
 Indian academics, people like Amartya Sen, Jean Dreze and Utsa Patnaik, have been debating the issue for years. Yet we have no clarity on what it is to be poor. In trying to include food to its list of entitlements, the government seems to be going the wrong way. Figures show that there is widespread malnutrition in India, not only among the poor, but the richer people as well. The issue is not so much the quantity of food they eat, but its quality.
What is needed is an enhancement of proteins in the diet through inclusion of eggs, fish, meat and milk. Getting all that into the entitlement list would be impossible. What can be done, instead, is to make programmes like the Mid-day Meal Scheme effective.
Actually, probably the most important fix that will improve health and nutrition would be access to safe drinking water. Much of the poor health of children and adults is on account of water borne diseases. Fix that and a large part of the poor health and nutrition problem will be fixed. To do that you need some determination and less hypocrisy about poverty. 
But most political parties find it useful to use a promise of entitlement to garner votes. This has been carried to ridiculous limits in states like Tamil Nadu where the poor are being gifted colour TVs and mixers.The politicians need to pause and think about these policies which could easily lead to the emergence of a class of people who find it more convenient to remain allegedly poor. This is what the current crisis in Europe is all about.
While it is true that there can be no comparison between poverty levels in Europe and India, it is also true that human responses to a particular situation, in this case, the convenience of living in an entitlement culture, are similar.
There is a need, therefore, of targeting  the helpless poor— the children, old folk, mothers and the sick— for entitlements, while the able-bodied need to be helped to get on the track of better education and gainful employment.
Mail Today October 5, 2011

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