Even with an economist as the prime minister, economic considerations take a backseat to politics. There was a time when Manmohan Singh was fond of saying that good economics make for good politics. He obviously does not hold that belief any more. The national food security bill, which the Lok Sabha passed on Monday, is going to be the source of a huge drain on the exchequer. The cost on this account for 2013-14 is going to be to the tune of Rs 130,000 crore; out of this, Rs 90,000 crore has been provided for in the budget. Obviously, the government feels that this is a small price to pay for the political returns that the bill is calculated to bring. A government that is beleaguered on all sides expects the bill to rescue its fortunes in the forthcoming general elections. What is also significant is that the president of the Congress, Sonia Gandhi, not known for being either vocal or emotional, identified herself completely with the fashioning of the bill and its safe passage in the Lok Sabha. This piece of legislation was considered to be one of the most important acts by the second United Progressive Alliance government.
At the very heart of the food security bill is the idea of subsidies and a mindset that endorses government handouts. The argument often made in the context of the food security bill is that there are other sectors that receive more subsidies than what this bill will entail; and that many of those sectors have nothing to do with the underprivileged, who are the targets of the food security bill. This is somewhat of a specious argument since it neglects the simple premise that two wrongs do not make a right. The question to ask is why and where are subsidies necessary. The assumption is that food grains cannot be made available to the poor at affordable prices without massive outlays on the part of the government. This assumption needs to be questioned. Moreover, the bill provides no safeguards regarding the benefits of the subsidies actually reaching the target group. The history of welfare measures meant for the poor in India is replete with examples of cash and kind not reaching those for whom the benefits are intended. The problem of leakages is embedded within the way subsidies are actually implemented in India. The national food security bill might appear noble on paper but in reality its economic implications are dangerous and its political fallout illusory.