Of Subsidies, Food Security and the Dynasty
Late one evening last week, I was asked by a well-meaning friend why did I hate the idea of “Food Security Bill” so much? Surely no one can reasonably object to making sure every Indian is well-fed and healthy? He was right. No one can reasonably argue with the aim of ensuring that our population is well-fed, literate, healthy etc etc. What I was railing against was the “means” – and the misplaced belief that subsidies are the way to solve these problems; the misplaced belief that all we need is more money for “pro-poor” schemes and the illusion that giving someone a “fish” is the same as making sure they will not be hungry again.
In an article published last week in the Indian Express titled, “Patronising the poor, in perpetuity” Dipali Rastogi  highlighted how the misguided “Food Security Bill†will  “…translate to subsidies worth almost Rs 1 lakh crore for close to 75 per cent of our population (after including the various categories such as children under 14, pregnant women, destitute, homeless etc)â€. She also mentioned that although the
…direct burden for food grain subsidy on the state exchequer would be about Rs 1 lakh crore for the country as a whole, the indirect cost implications will be manifold (since this will involve creation of national and state food commissions, grievance redressal offices and grain banks in addition to large amounts needed for creating storage infrastructure and distribution systems
and..
What’s more, this whopping subsidy is going into an area rife with leakage and corruption…any government that imagines it (eradication of extreme poverty and hunger) can be achieved through direct food subsidies is fooling itself.
Subsidies are a “hot potato” in India – no one wants to touch them although I suspect almost everyone recognises they are quick fixes that have long ceased to have any enduring effect. In addition, they divert precious resources from other pressing needs (e.g. infrastructure, power) and create long-term fiscal imbalances that will one day come to haunt us. But subsidies win votes – and as Vikram Singh noted on the facebook page, “..who’s to argue against naked populismâ€?
On the same post, Geetali Tare mentioned in her comment that “The state has responsibility towards the poor and the dispossessed. They are not our burden, they are our responsibility. …If people think that the fiscal deficit is ”spiralling” because of these schemes, they need to read the budget documents carefully. The spending on defense is currently Rs. 1,64,415.49 crore. Spending on the social sectors? Rs. 1,37,674 crore. Two things directly impact govt. spending: corruption and inefficiency. But no one’s focussing on thatâ€
While subsidies can help the poorest (and yes, the state has the responsibility to meet the basic needs of all of its citizens), surely there are better ways of doing this than doling them out – in kind – and via a system that leaks like a sieve? Why has the government not considered cash transfers? Why have education vouchers not been implemented to provide for better education? Geetali identified two things that impact government spending: corruption and inefficiency. Knowing this, why do we still continue to pin on our hopes on this apparatus to deliver relief to the poor? (as an aside, I believe the numbers mentioned by Geetali may not be entirely correct. In an article published in Jun ’11, Surjit Bhalla mentioned that spending on just food and NREGA in 2011/12 is Rs 130,000 crore).
Regardless of the numbers, is India unique in the matter of corruption and inefficiency in government and delivery of basic services? Far from it. 50 years of failed socialism provides numerous examples of entire economies that went bankrupt – thanks to overarching government control of economic activity, subsidies, leakages, corruption and fundamentally flawed policies. The extent of subsidies and what they *could* have achieved had the transfer been more direct is illustrated by this factoid from “Poverty and Hunger in India: What is Needed to Eliminate Them†by Arvind Virmani, Feb 2006 (emphasis added):
In 1993-94 the Central government expenditure in the budget category “subsidies†was Rs. 12,682crore of which Rs. 10,099 crore were for food and fertiliser subsidies…During the sameyear the Central and State governments together spent another Rs. 14,160 crore on the budget categories ‘Rural development,’ ‘Welfare of SC, ST & OBCs’ and ‘Social Security and Welfare.’ ..These two sets of expenditures (Rs. 25850) would have been more than sufficient to eliminate16poverty in 1993 if transferred directly to the poor and disadvantaged (SC, ST, handicapped, old, poorfarmers).
In 1999-2000 the total subsidies provided by the Central government were Rs. 25,690 crore ofwhich Rs. 22,680 crore were for food and fertiliser. During the same year the Central and Stategovernments together spent another Rs. 28,080 crore on ‘Rural development (RD),’ ‘Welfare of SC, ST & OBCs and ‘Social Security and Welfare.’
Either of these..if transferred directly to the poor and disadvantaged (SC, ST, handicapped, old, poor farmers) would have eliminated poverty. Together these subsidies and poverty alleviation expenditures (Rs. 53,770 crore) would have been sufficient to eliminate poverty in 1999-2000, even if administrative costs and leakages used up half the allocation (and the small fraction of RD expenditures on water supply were excluded).
But these subsidies do actually benefit someone – the man in the middle i.e. the bureaucracy involved in the system. Unsurprisingly, even when measures to reduce leakages and improve effectiveness are recommended, the government blithely ignores them.
This is what Sh Virmani found out:
In the formulation of the tenth Plan as Advisor (Development Policy) responsible for food policy/ PDS system the author proposed the gradual introduction of a credit /debit /smart card system to replace the existing PDS system characterised by enormous leakages and high administrative costs (see Virmani and Rajeev (2001)). In this system the entitled person could obtain the specified subsidy from any participating supplier of food/cereals. The person would pay the supplier the difference between the market price and the unit subsidy, and the supplier would collect the subsidy from the government.
The formal proposal was to carry out an experiment (as a first step) to determine its effectiveness and to learn about and iron out any problems that may arise. Consequently funds were allocated in the tenth plan for introducing it in a sample of urban areas along with the introduction of food stamp system in a sample of rural areas. Not a single State govt has agreed to undertake this experiment so far, as it has the potential of dramatically reducing leakages and administrative costs.
In the end, a leaky system that is piled high with subsidies will end up with only one outcome: A government that is left with no money to provide for basic services & infrastructure and a continuous decline in standards of living of the poorest (Indeed the NREGA scheme for example has actually ended up pushing people in poverty – thanks to rural inflation – and has neither created skilled manpower or any worthwhile, productive assets).
And what has been the impact of this mountain of subsidies? In a prescient article written almost 3 years ago (Mar ’08), the Economist noted how these subsidies had failed in their objectives.
But as he (Finance Minister Chidambaram) himself conceded, outlays and outcomes are not the same thing. Standing between the two is an administrative machine corroded by apathy and corruption. The government’s subsidies fail to reach the poor, its schools fail to teach them and its rural clinics fail to treat them.
It further noted (emphasis added):
The government’s debt burden leaves it short of money for infrastructure. It is reluctant to free banks, pension funds and insurers to serve the market better, because it needs them to buy its bonds. The miserable record of its social spending deprives firms of well-nourished, well-schooled workers, and saps the political will for reform. State governments are left scrabbling to appease rural disgruntlement rather than investing in efforts to lift the productivity of land and labour.
Even more damning evidence comes from the record of food subsidies of the past decades – in the figures for hungry people in India. Their number have actually increased in the last 2 decades.
According to Oxfam, the number of hungry people in India increased by 65 million between 1990 – 2005. With a total of 230 million undernourished people, India today has the dubious distinction of being the ‘world’s hunger capital’.
Which is not a surprise considering that Parliament was informed in March ’08 of a Planning Commission study which found only 42% of subsidized grains reaches the target group.
Wait, there is more. A single-minded focus on subsidies has a far more damaging side-effect. As Lalatendu mentioned in a comment on facebook: “In my village…(thanks to subsidies) A generation is being brought up as skill-less and work-shy!There is no reason to believe this trend is confined to my village only. This is a dangerous trend that will aggravate with meaningless populist schemes like FSB.† That NREGA is contributing to a generation of unskilled people has been noted and remarked upon by experts and others too (e.g. see “NREGA is money down the drain” and “NREGA and the law of unintended consequences” . A Washington Post report quotes S. Baskar Reddy, head of agriculture at FICCI as saying:
It is de-skilling our people at a time when we should be training them for new skills.
And yet, the government continues with its populist schemes – deaf to the opinion of experts and blind to overwhelming data, figures and statistics that betray its own incompetence and failure.  Instead of using “growth..as the principal strategy for inclusive development†(in the words of Prof Jagdish Bhagwati), it relies on “redistribution†which in the words of economist Arvind Panagariya, “..keeps the poor and marginalised out of the mainstream of the economy†locking them “into unproductive agriculture†and preventing them “from moving into gainful employment in the urban manufacturing sector†[link]
Obviously such vast amounts of money diverted to populist schemes (with the introduction of Food Security Bill, the total outlay on subsidies will exceed the outlay on defence), leaves little left to invest in crucial infrastructure – or health or education – which are the only solid foundations for  sustained progress, development and prosperity.  If you think these amounts are trifling, think again. The numbers involved in such “welfare schemes” announced by UPA in the last few years is staggering:
- Farm loan write-off of Rs 72,000 crore in 2008.
- Subsidies paid for keeping diesel, cooking gas and kerosene prices low:Rs 2,23,203 crore in 2005-11. Add under-recoveries for FY11-12 of Rs 1,32,000 crore.
- Add the National Rural Employment Guarantee Act (NREGA) that has cost Rs 1,00,000 crore so far, and by March, 2012, is expected to cross the figure of Rs 1,40,000 crore.
- And finally the Food Security Bill. “The official estimate of costs is around Rs 1,00,000 crore, but since these are likely to be underestimates intended to force a foolish bill through a reluctant cabinet, we should look at more realistic estimates. .. Ashok Gulati and Jyoti Gujral – the former is chairman of the Commission of Agricultural Costs and Prices, and thus should know what he is talking about – wrote in The Economic Times that the real cost of the FSB, taking both the direct cost of subsidies and the accompanying investment in infrastructure (godowns, higher food procurement prices, et al), should be reckoned at Rs 2,00,000 crore per annum in the next three-year period [link].
Even assuming that all politicians will indulge in some form of subsidies or the others (although the NDA government introduced subsidies totaling less than half this amount), FirstPost estimates that
..the bill the dynasty has already racked up to keep itself in the good books of the electorate and to get Rahul Gandhi the gaddi in 2014…is Rs 5,45,000 crore.
Read that again: Rs 5,45,000 crore or $102,830 million or $102 billion or approximately Rs 5000+ for every Indian. This is the true cost of keeping the “dynasty” in power – or to be more precise, the amounts that have been spent to get them to power in 2014. This money is coming out of your pocket – and mine. And it is hastening us on the road to fiscal ruin.
It is creating an entire generation that only knows how to survive on handouts. It is creating a class of under-employed, unskilled and malnourished who will be unable to contribute anything to the economy – thus condemning themselves and the society to a semi-permanent state of under-development. Worse, these vast amounts of money will do nothing to eradicate hunger – or to provide meaningful employment – or education to the unfortunate millions. On the other hand, they are very likely to cause further distortions in the economy and are almost certain to lead to a crisis that might set India back at least by a decade in terms of economic growth and development.
Is it not time we wake up? Is this the legacy we want to leave for our future generations? Think, debate and discuss these issues…And share them with your friends and family – and the next time a politician comes to you to solicit your support, ask them what have they done to stop this loot of our money and our taxes.
As for the “Food Security Bill”, Tavleen Singh says it best:
…The reason why Indian children continue to starve is because the schemes that our ‘socialist’ rulers have devised to prevent this happening have never worked. They have been too centralised, too tangled in red tape and run mostly by corrupt and wicked officials who could not care less if children, other than their own, starved to death. The food security law will fail for exactly the reasons listed above.
…If Sonia Gandhi is genuinely concerned about food security, what she needs to do is start by accepting that centralised schemes of the kind envisaged in her new bill can never work…My objection to this food security bill is that not only is it not the solution but it will lull our political leaders into believing that they have solved the problem. And, if 45 per cent of our children continue to be declared malnourished by international standards, they will simply say at election time that they have done the best they can but corrupt state governments have not done their bit. It is a movie we have all seen so often before that it should never, never be made again. So please Soniaji, respected and honourable Soniaji, withdraw your wretched bill and give us some real change instead.
Comment, thoughts welcome as always. Pl also read:Â 2 simple reasons why socialist economies always fail.. and how subsidies can actually kill innovation.
Related Post: Sujalam, Suphalam..and yet..
There was a good article in WSJ few months back about the benefits of direct cash transfer.
http://blogs.wsj.com/indiarealtime/2011/03/07/economics-journal-the-case-for-direct-cash-transfers/
The Food Security Bill (FSB) is an absolutely naked attempt at buying votes ahead of elections. This bill should be called Dynasty Security Bill.
The profligate nature of government and complete lack of fiscal discipline is showing up in the weakness of Indian rupee and instead of getting alarmed by it and getting its act together the government decides to announce its most expensive scheme yet. Incredible!!
With a few substitutions of figures, government agencies, and NGOs, one can see a parallel pattern emerging here in the US. Over the last 2 or 3 decades, the shift to an ever more paternalistic national government has gained speed. With the current US administration, whose bent is decidedly hard Left, it is not subtle any more.
I fear that what made America a great nation in the last 60 years or so (self-reliance, hard work, pride of accomplishment/achievement, compassion, spirituality) is slowly eroding. In its place, there is the “occupation” mentality: my problems are not of my doing but yours because you have what I want. Whoever has more can sacrifice for those who have less: we’ll tell you when you’ve sacrificed enough.
There is such a misconception that government has the best interests of its citizens at heart. If times are good, this may accidentally be true. A government is a bureaucracy. All bureaucracies function to perpetuate themselves by whatever means. A bureaucracy is inherently inefficient and ripe for graft and corruption.
In the private world, mismanagement will lead to a company’s demise no matter how big or small. Government’s mismanagement leads to proclamations of defending the poor (no matter that its mismanagement caused a significant portion of the poor). And so, it gives itself the power to tax ever more in the name of subsidizing the poor. And of course, only the government can disburse the funds to the poor. If the citizens doesn’t like it, well, it gives itself the power to punish them through fines, confiscation, imprisonment. To whom can one appeal about the mismanagement when the government declares itself not liable for any of its actions?
This may be an over simplification but a better way, perhaps, would be to give grants to local agencies (state, municipal, social, religious) with specific goals tailored to various regions. These agencies know the needs of their respective regions and how best to invest the funds for the best possible outcome. Appropriate metrics can be required to measure the progress toward achieving the goals. No doubt that possibility of corruption exists at this level as well. However, the idea would be minimize it.
From Guaranteed Work + Guaranteed Cheap Food = Disaster by Sridharan Ramakrishnan (emphasis added):
First the facts: The Food Security Bill will expand the universe of those eligible for subsidized food grains from 180 million to astaggering 810 million. Nearly 46 million tonnes of wheat, rice, and coarse grain are to be given away to eligible people at prices between Rs 1 and 3 per kg.
The country will need to spend about Rs 1 lakhcrore (roughly 20 billion dollars) to start with and with inflation,the bill will only balloon. According to at least one estimate that ETNow’s weekly news feature show ET Insight reported a while ago, the bill could double to Rs 2 lakh crore before this decade is out.
So, what’s wrong this? Many things.
For one, the government does not have the money it needs to sustain this programme. For another, unless it addresses the fundamental inefficiency in food distribution (the sclerotic public distribution system or PDS), it will end up throwing truck loads of good money after bad. Already, according to World Bank estimates, just 11 per cent of the families targeted under PDS end upreceiving the benefits. The UPA doesn’t need the World Bank to tell it that….
From No Proof Required – Enhancing Corruption the NAC Way
By Surjit S Bhalla, Indian Express, Jan. 7, 2012:
The present Public Distribution Scheme (PDS) works as follows – the government procures the foodgrains from the farmer and ostensibly delivers the same to the poor at heavily subsidized prices. The table shows the performance of this scheme in 2004/5 and 2009/10, the two years for which NSS data are available, data that can cross-check the government’s claims of expenditure. The first two rows show the discrepancy in terms of tons of food that disappears into thin air.
In 2004/5, the government claimed to have delivered 41.5 million tons to the PDS shops for delivery to the people. Only 13.2 tons actually got delivered. The difference, 28 million tons, was not delivered to the poor or the rich by the PDS shops. This food went from the PDS shops to the market and the market sold it to the poor at, well, market prices.
We can all take heart from the fact that the situation improved in 2009/10 – now close to half of the food delivered to the PDS shops were bought from these shops. How much got lost – 24 million tons. The subsidy value of this taxpayers loss, and gain for so-called middle men and women, was a healthy Rs. 30,000 crores. This number closely matches the lower bound estimate of 2G corruption.
But 2G scam happens once in a decade. The PDS corruption happens every year. And the Food Security Bill will only enhance and glorify this ongoing corruption.
Courtesy my friend Kavim Bhatnagar, here are a bunch of links that make the case for direct cash transfers stronger:
http://in.news.yahoo.com/direct-cash-transfers-improved-quality-life-study-113308165.html
…
One of the major improvements noticed was improved food sufficiency. Cash recipients were significantly more likely to have enough income for their food needs than those in the control group of villages.
There was a significant reduction in the proportion of malnourished female children in the villages that received the cash grants, the study said.
The number of livestock owned by cash recipients increased significantly, contributing to improved nutrition as well as savings and insurance, the project study revealed.
On a different note, there was no increase in alcohol intake in the households that received the cash grants. In the tribal village, alcohol intake actually reduced.
Receipt of cash grants was associated with lower incidence of illness, more regular medical treatment and more regular intake of medicines, besides an increase in the school attendance of children in households that received cash grants.
The households under the project were three times more likely to start a new business or production activity than households not covered under it. There were reduced borrowings and increase in savings, the study said…
http://articles.timesofindia.indiatimes.com/2013-06-05/india/39763788_1_cash-transfer-experiment-villages
..”What this shows is that with slightly higher incomes, households spend on important things like schooling and health, and not alcohol,”..
Placing this here for the record http://www.firstpost.com/economy/food-bill-is-the-biggest-mistake-india-might-have-made-till-date-1062841.html
Also
http://www.economist.com/news/asia/21584042-huge-cheap-food-scheme-influence-voters-will-not-end-malnutrition-mess-pottage?fsrc=scn/tw/te/pe/amessofpottage
From Sonia Gandhi’s $20bn bid for Political Security, a brief excerpt:
..The Food Bill is of course an easy high profile measure to introduce, emulating the way that politicians lay foundations stones without worrying about whether projects are actually built and well maintained. The much harder task would be to tackle what really ails the poor, which is malnutrition and the supply of clean-safe drinking water, improved sanitation, and piped sewerage or other hygienic systems to avoid outbreak of water-borne diseases.
And from Food Security Bill and The Global Hunger Index:
..The FSB is motivated by two significant facts. First, disturbing statistics: According to National family Health Survey 2005-06 that 43.5 percent of children under the age of five years are underweight, 33 percent of women in the age group of 15-49 years have a body mass index below normal and 78.9 percent of children in the age group of 6-35 months are anemic. Second, the influential Global Hunger Index (GHI) developed by the International Food policy Research Institute (IFPRI), which has successfully galvanized policy makers across the world. IFPRI has computed a GHI of 22.9 for India in 2012, with countries like Libya, Iran, Mexico, Brazil, Sri Lanka, Pakistan and many others recording much better performance.
Unfortunately, the term “Global hunger index†is a misnomer as it does not, in its construction take into account the ‘hungry’. Actually, the terminology “hunger†itself is very confusing and means different things to different organizations and policy makers.
… GHI takes into account, in equal weights, undernourishment, child underweight and child mortality. The indicator, undernourishment, is based on the share of population with insufficient (relative to a norm) calorie intake.
…It is much too simplistic to assume without evidence that either underweight or mortality is due to under-nutrition (signifying deficiencies in energy, protein, essential vitamins and minerals). Child stunting and wasting, and mortality is equally if not more likely to be due to infections and illnesses due to insanitary conditions that result in inadequate absorption of nutrients. These in turn may be linked to inadequate maternal health or child care practices, inadequate access to health services, safe water and toilet facilities. Thus, supply of food may be a necessary but not a sufficient condition for improvement of a part of the hunger index.
GHI is too simplistic and does not take into account the complexities of the problem but sways the opinion makers in developing countries. …
To improve India’s ranking in the GHI, we have to identify the causes of stunting and wasting and to eliminate these causes. Thus the solution is to improve the supply/availability of clean-safe drinking water, improved sanitation, preferably piped sewerage system, septic tanks or pit latrine with slabs, to avoid outbreak of water-borne diseases like diarrhea, dysentery and cholera; and improved personal hygiene. According to WHO, less than 30 percent of households had access to piped drinking water and nearly 60 percent of Indians still practiced open defecation in 2006. We also need better governance of medical facilities in rural areas, providing more effective primary health centers for maternal and child care. Even with respect to food, though per capita availability of cereals has improved, that of pulses has declined from 69 grams per day in 1961 to 39 grams in 2011. Pumping free cereals into a leakage prone system will not improve even calorie intake as these have a near zero price elasticity and low income elasticity.
The need is to directly address these serious issues and not the imposition of simplistic FSB that is driven more by philosophy than by pragmatic problem solving.
From Government spends Rs 3.65 to deliver food worth Re 1, so citizens pinch pennies, Feb 28, 2014:
…
Aggregate central subsidies in 2012-13 on items as varied as food and bank loans to farmers totaled to Rs 2.57 trillion. After adding to this subsidies bill the spending on many of the Manmohan Singh government`s pet projects such as those concerning education and sanitation, final tally runs into more than another trillion rupees. Despite this scale of spending there has been little effort to measure its impact. It’s only recently that an attempt has been made to measure the effectiveness of all this immoderate outlay by establishing an Independent Evaluation Office (IEO).
First results are dismal: it costs Rs 3.65 to deliver food worth Re 1. To worsen matters, 57% of subsidised grains do not reach target groups.
…If the high profile Public Distribution System which has been around for decades is so ineffective, there is not much hope for education
…
IEO’s studies also serve as a timely pointer to a root cause of some of the uncertainty which chokes potential investment. Following the financial crisis in 2008, government spending has expanded rapidly even as the economy has slowed down. Resultant pressure on tax administration to raise more and more revenue has led to a rise in litigation and also to negative perceptions about India’s business climate. IEO’s study hints at the price India’s economy has paid for its government’s unaccountable spending spree.
Somewhat related excerpt from Stop Loss Alert: Whose Tax Money Is It Anyway? by Shankkar Aiyar, 22nd February 2015:
The following nuggets from the loss parade give you a scent of the rot.
In 1999, leakage/diversion aka theft accounted for 23.9 per cent of the total grains supplied through the public distribution system. The leakage is worst in UP, Bihar, MP, Maharashtra and West Bengal—home to 60 per cent of India’s poorest. In 10 years, the quantum of theft/diversion has nearly doubled. In 2011-12, nearly half or 46.7 per cent of the 25.7 million metric tonnes of shipped grains—over 11 million metric tonnes—did not reach the intended beneficiaries. The economic cost of wheat is Rs 22,537 per tonne and that of rice is Rs 29,242 per tonne. Do the math to get a fix on losses per year.
And losses persist. Government, the largest industrial house in India, owns 229 Central public sector enterprises. On an average, a third are in the red—79 were losing money in 2012-13. Just in the past three years, these PSEs lost over Rs 77,000 crore—that would be Rs 72 crore every day. Some PSUs have been losing money for a decade—for instance, HMT where loses have shot up from Rs 134 crore in 2004 to Rs 233 crore.
Top losers BSNL and MTNL symbolise why government should not be in business. BSNL has lost over Rs 27,000 crore in three years. MTNL (with losses of over Rs 10,000 crore) had to borrow Rs 492 crore to pay its taxes (MAT). Air India is a case study on why government should get out of business. Everything that can go wrong goes wrong with the airline—be it aircraft, crew, pilots and engineers. The airline has lost over Rs 22,700 crore in four years—that is roughly Rs 15 crore a day. The root cause is “missing†aircraft and cancelled flights. To curb losses, the airline chief has threatened to cut salaries of ground staff if flights are delayed!
A fourth of power transmitted by state electricity boards—200,000 million power unit worth around Rs 1 lakh crore—simply disappears off the grid. The loss: around Rs 275 crore a day. Unsurprisingly, SEBs report losses of over Rs 60,000 crore every year and accumulated losses are over Rs 3 lakh crore. The devilish detail: while losses are those of state governments, bailouts have and will be paid by the Centre.
Every domain managed by the government is afflicted with inefficiency of process. Take project implementation. Thanks to delays, the cost of 727 infra projects (of Rs 150 crore and more) have shot up from Rs 9.45 lakh crore to Rs 11.34 lakh crore—an escalation of Rs 1.8 lakh crore or 20 per cent. Worse, there are no commissioning dates for 317 projects, and 282 projects are delayed between 12 and 60 months. Imagine the opportunity cost of lost growth.
Take the banking sector. Gross non-performing assets have gone up across the sector. But what is significant is that while gross NPAs of private banks have gone up 13.6 per cent (from Rs 19,986 crore to Rs 22,708 crore), those of PSU banks have risen 39 per cent—from Rs 155,890 crore in March 2013 to Rs 216,739 in March 2014. The big elephant is political interference. The consequences are borne by taxpayers and consumers.
Somewhat related: The Millet Momentum by Moinak Mitra, 16 Sep, 2022
Adding this here for reference: India’s real food problem isn’t hunger but loss and wastage by Shweta Saini and Pulkit Khatri, 17 October, 2022
…. how is it that we are the largest producer of some critical staples in the world, yet our population is nutrition- and food-deprived? One of the plausible reasons contributing to this can well be India’s high level of food wastages and losses. We explain it below.
…
Before food reaches the plate, it travels from the farmer to wholesalers, retailers, and sometimes processors. At every stage, some proportion of crop production is lost.
Several studies have assessed these losses. …
…
As per the ICAR-CIPHET 2015 report, anywhere between 1 per cent (in the case of milk) to 16 per cent (guava, for instance) of the agricultural produce is lost by the time it reaches the retailer. As per SFAC (2015), these losses range anywhere from 9 per cent (in potato) to 32 per cent (in peas). The FAO estimates are on the higher side. They range between 6.3 per cent (cottonseed) and 30.2 per cent (marine fish).
…
A brief excerpt from Freebie culture may garner electoral triumphs, but India can hardly sustain resulting public debt by TN Ninan, 17th Jan ’23:
…
In the recent Karnataka elections, the Congress promised Rs 1,500/Rs 3,000 a month to every jobless diploma-holder/graduate, Rs 2,000 a month to every female head of a family, free electricity, and free grain. Elsewhere, parties have offered free TV sets, smart phones and laptops, gold and cattle, fans and bicycles.
….
The obvious counter is that these are a poor substitute for jobs, quality education, and health care. But if the state can’t find a way to deliver those, then welfare schemes are unavoidable. That is how a democratic system keeps a lid on economic distress and social unrest.
…
It might even be argued that India is moving in an unplanned and haphazard way towards setting up a social safety net, with the free provision of grain and medical insurance; public works programmes to create work; cash payments to vulnerable sections like the old, indigent, and unemployed; plus free or subsidised access to basic goods like electricity and cooking fuel, even housing…
(but)…is India creating a sufficiently large productive economy that generates the taxes to pay for a welfare system? The answer is that the tax-to-GDP ratio has shown little improvement, despite a quadrupling of per capita income over three decades.
So are we simply piling up public debt, servicing which eats up about 40 per cent of tax revenue? There is an urgent need for public debate on this central political-economy question.