Nectar in a sieve
The Prime Minister’s assertion that subsidies provided by the government of India do not reach the poor and are counter productive for their well being are a welcome sign for any cardiologist watching his political heartbeat. Apparently there is a stubborn reassertion of the reform spirit in his cardiogram. Perhaps the fact that the lecture was delivered at the institute of economic growth in the environs where the professor Prime Minister feels at home was something to do with his reform self resurfacing. As any sensible student of economics knows, in a pork barrel economy like India where pubic policy is hostage to the whims of clan oriented priorities, economic subsidies are dead on arrival.
Coming from the Prime Minister such candor is welcome. The Prime Minister has been candid and has admitted to, even with an election looming, a crisis in governance. The fact is that in any sphere from public distribution system to fertilizers to primary education and onto public health the deliverables on the money invested in subsidies are in terrible shape. The poor are being denied their due by an entrenched system of government functionaries and political patrons. The working of the Indian administrative services, the state and local level counterparts is nothing less than scandalous in its inability to deliver projected results. The reason for this is not far to seek when you allow the state to allocate who should get what - as apart from letting the market distribute the same, discrepancies are inevitable.
The flagship public distribution system is the real culprit. It leaks like a sieve. It has a pronounced urban bias and despite spending billions of dollars a year on the subsidy the Government does not give social return. The story is repeated across the subsidy domain.
The prime ministers statement should be a wake up call. Alas it is unlikely to be anything but rhetoric. As a background one may consider an earlier promise in August during the Independence Day speech where the PM promised an increase of $6 billion in agricultural sector spending. Without a serious re look at the governance issues and delivery problems involved with public policy subsidies in India the coming budget may remain more of the same. That would be a pity for his reform legacy and a tragedy for the Indian poor. .
The Prime Minister’s assertion that subsidies provided by the government of India do not reach the poor and are counter productive for their well being are a welcome sign for any cardiologist watching his political heartbeat. Apparently there is a stubborn reassertion of the reform spirit in his cardiogram. Perhaps the fact that the lecture was delivered at the institute of economic growth in the environs where the professor Prime Minister feels at home was something to do with his reform self resurfacing. As any sensible student of economics knows, in a pork barrel economy like India where pubic policy is hostage to the whims of clan oriented priorities, economic subsidies are dead on arrival.
Coming from the Prime Minister such candor is welcome. The Prime Minister has been candid and has admitted to, even with an election looming, a crisis in governance. The fact is that in any sphere from public distribution system to fertilizers to primary education and onto public health the deliverables on the money invested in subsidies are in terrible shape. The poor are being denied their due by an entrenched system of government functionaries and political patrons. The working of the Indian administrative services, the state and local level counterparts is nothing less than scandalous in its inability to deliver projected results. The reason for this is not far to seek when you allow the state to allocate who should get what - as apart from letting the market distribute the same, discrepancies are inevitable.
The flagship public distribution system is the real culprit. It leaks like a sieve. It has a pronounced urban bias and despite spending billions of dollars a year on the subsidy the Government does not give social return. The story is repeated across the subsidy domain.
The prime ministers statement should be a wake up call. Alas it is unlikely to be anything but rhetoric. As a background one may consider an earlier promise in August during the Independence Day speech where the PM promised an increase of $6 billion in agricultural sector spending. Without a serious re look at the governance issues and delivery problems involved with public policy subsidies in India the coming budget may remain more of the same. That would be a pity for his reform legacy and a tragedy for the Indian poor. .
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