No free lunches

The free food scheme is driven by electoral considerations, but its long-term fiscal risks outweigh the short-term gains

The Union government’s decision last week to allow free food grain supplies under the National Food Security Act (NFSA) has come under attack for good reasons. Instead of reducing the food subsidy bill by raising the central issue price of grain supplied to 810 million beneficiaries under the public distribution system (PDS), the government has made it free. The principle of fiscal prudence has been undermined. Worse, the move might also encourage political parties ruling in many of the states to embark on this perilous path of fiscal irresponsibility by rolling out other such schemes.

Make no mistake about it. With