Radical suggestion

The Supreme Court's concurrence with the recommendation of a committee to more than double the cut-off income limit for households deemed to be below the poverty line (BPL), for the purpose of receiving highly subsidised foodgrains from the public distribution system (PDS), is bound to have sweeping implications if handled independently of other issues. The suggestion to push up the definition of poverty line to an annual household income of Rs 49,284, from the present Rs 24,200 in Delhi, has come from the committee headed by a former Supreme Court judge, D.P. Wadhwa, in a "right to food" case filed in the apex court by a non-government organisation. There is undeniable logic to raising the qualifying limit, because a typical Delhi family living on Rs 4,000 a month will certainly be straining to make both ends meet, and subsidised grain could make the difference between malnutrition and eating well. Technically, this proposal applies only to Delhi, but other states are unlikely to remain unaffected as the Supreme Court has asked the same panel to review the position of other states as well.

The fiscal cost of expanding the poverty bracket could be mitigated substantially if some of the other recommendations of the Wadhwa panel are implemented. The most significant among these is the exclusion of families deemed to be above the poverty line (APL) from the PDS, and a door-to-door campaign to identify the genuine poor so that the "ghost" cards are weeded out. The Wadhwa panel's position is logical in that better targeting of subsidies has long been called for, and that is what the panel has suggested. After all, there is no justification for supplying foodgrains that carry a 60-70 per cent subsidy to the holders of bogus BPL ration cards and to APL families. At the same time, there is little logic also in leaving out a large population of the genuinely poor, including migratory labour and shelter-less people who do not possess ration cards and are therefore denied access to subsidised PDS supplies. The number of households falling in these categories is substantial. A recent study by the National Council for Applied Economic Research has reckoned that the bogus BPL cards in circulation in the country total no fewer than 20 million, with Uttar Pradesh alone accounting for nearly half the total. At the same time, about 11 million families of the genuinely poor, including the poorest of the poor eligible for getting rice and wheat at Rs 3 and Rs 2 a kg, respectively, under the Antyodaya Anna, do not possess food cards. Indeed, when all these facts are viewed along with the diversion of nearly 40 per cent of PDS grain supplies to non-targeted destinations, the hollowness of the PDS in its present form becomes starkly apparent. There is, therefore, a valid case for revisiting every aspect of the PDS and bringing about changes to sharpen its focus on the deserving population.

The question is whether the exclusion will happen, or whether the government will adopt the soft option in the run-up to nearly a dozen state elections and the parliamentary election in the next 16 months. That would mean adopting the suggestion with regard to changing the definition of BPL families, but taking no action on either bogus ration cards or APL families. Should this happen, governments will have to either cut down the monthly rations or raise PDS prices if the subsidy bill is to be contained. Both will be challenging decisions for a government that depends on Left support for its survival. So the likelihood is that the food subsidy bill, already in excess of Rs 24,000 crore, will climb sharply. Assuming that the subsidy bill doubles, it increases the fiscal deficit by about 0.5 per cent of GDP. If fiscal rectitude is to continue regardless, the axe will fall on other spending programmes.