It is almost certain that the government will announce during the Budget session of Parliament a schedule for providing national food security to everyone below the poverty line. This was one of the Congress party’s biggest promises during the Lok Sabha elections, and a law is to be passed that makes 25 kg of rice every month at Rs 3/kg a justifiable entitlement for all poor families. Since there are some 50 million such families, the subsidy in such a programme has been calculated at Rs 50,000 crore—rather more than the Rs 31,000 crore that was spent last year on the rural employment guarantee programme. Before the government plunges into implementing its promise, it needs to consider alternative options.
One of the claims made on behalf of the rural employment programme was that it would by and large abolish poverty. Such a claim was far-fetched; spending about 1 per cent of GDP would never have achieved the abolition of poverty. Besides, the programme covers only the rural areas, and has not been able to deliver the promised 100 days of work per family; indeed, less than half that. Now the plan seems to be to expand the programme to cover the urban areas as well, and to increase the entitlement to 100 days of work for every willing adult (and not just one member of a family). This amounts to nearly trebling the size of the programme. If implemented correctly, the annual bill could climb to Rs 1,20,000 crore and more. A programme on such a scale should have the capacity to more or less make sure that all families rise above the poverty line as presently defined.
If it is assumed that a food entitlement law is required even after poverty is abolished, questions need to be asked about how best this is to be translated into reality. The public distribution system simply does not have national reach, and is especially missing in the areas which have a preponderance of poor people. Creating a government-run or government-supervised foodgrain supply system to cater to the poor is almost certain to be hugely wasteful, and subject to leakages of all kinds. Such a parallel supply system is especially unnecessary when every village in the country already has grain stores. What the poor need therefore is not access to grain but money with which to buy the grain.
This brings the country back to the issue of introducing a cash transfer scheme for all poor people. Examples of such transfer schemes exist in several countries. Preparatory work will need to be done, like the issuing of identity cards, the opening of bank accounts, and such, but the management challenge is small compared to creating a nationwide public distribution system that works as it should. It will also be virtually immune to operational leakages and large-scale overheads. If properly implemented, it could even make it unnecessary to have a rural employment programme.
