People starving and thirsting, grain elevators are bursting.
Oh you know it costs more to store the food than it does to give it away.
Legendary songster Bob Dylan sang these words in 'Slow Train Coming', in 1979. Over a quarter of a century later, in 2006, Indian economist Arvind Virmani concluded pretty much the same thing in a paper he wrote for the Planning Commission.
Though not quite as lyrical as Dylan's words, Dr. Virmani's several pages of facts, figures, and analysis allow one conclusion to ring out clearly - our current food and fertiliser subsidies are doing a horrible job of serving the poor. If we wound up these two subsidies, and gave the same amount of money away every year, it would be enough, not just to tackle their hunger, but to lift all the poor in the country above the poverty line. If we added to this governmental expenditure on welfare programs under the heads 'Rural Development', 'Welfare of SC, ST and OBCs', and 'Social Security and Welfare', there would be as much money all over again; perhaps, Dr. Virmani suggested, this could be used to pay for the government's administration costs and system leakages.
Subsidies and welfare programs alone cost us twice as much money as required to eliminate poverty completely. And then there's NREGA. Yet, poverty persists: in writing the conclusions above, Virmani estimated that 30% of Indians lived below the poverty line. Every year, we spend twice as much money as should be required to keep all of India's poor out of poverty. Yet less than 1% actually cross this 'rekha' every year, whether through welfare measures, employment or other means of material advance. Clearly, Rajiv Gandhi was being hugely charitable to the Indian government
when he famously said that 15% of the money meant for the poor reached them.
Now that the Indian government's fiscal deficit has become a matter of concern, one of the expenditure heads that is being questioned is the food subsidy. To better target the recipients of subsidised grain, government agencies have been talking about introducing smart cards, which would carry coded information about the card-holder of the card and his entitlement of subsidised grain, sugar, kerosene and other essential items. This technological fix, it is hoped, will reduce the leakage from the system.
Madhya Pradesh had run a pilot project based on a smart card concept in 2009, but found it unsuccessful. Press reports suggest that shopkeepers were reluctant to use the machines provided. Now the state intends to achieve similar objectives by linking the Unique Identification project to food coupons. This poor UID project - even before it has been birthed, it is being loaded with all manner of expectations. According to Wikipedia, it is believed it will help address everything from rigged elections to "widespread embezzlement that affects subsidies and poverty alleviation programs such as NREGA." Not to mention, illegal immigration and terrorist threats.
Wow, I'll have 1200 million of those please!
Hey, but wasn't the Right To Information Act supposed to solve the problems of embezzlement and corruption? That was UPA Mark I. The UID is UPA Mark II - new, improved, and tech-savvy.
Forget it. Technology is no cure for corruption. The Indian Railways has been there, done that. The computerised railway ticketing system was supposed to eliminate touts and black-marketing in railway travel. When seats are aplenty, the system is a treat. But at the first hint of a rush, seats disappear. During the holiday season, tatkal tickets disappear before the first home-user can log in. But contact a reservations clerk at the originating station, and the same ticket is produced -- for a service premium over and above the tatkal premium.
Technology, in other words, can be fixed. And will be, in an environment where the stakes are high, the ethical milieu supports it, and the guilty are never brought to book. Leakages are a political and cultural phenomenon, not a technological one.
In his paper, Dr. Virmani mentioned that he had proposed a smart card to streamline the PDS in 2001. At the time of his writing, no state government had taken it up, "as it had the potential of dramatically reducing leakages and administrative costs". The under-stated implication is clear - state governments didn't want to reduce leakages and administrative costs.
You're welcome to believe that the nature of our governance has drastically changed since then. I don't.
Mohit Satyanand is an entrepreneur and portfolio investor.
Article Originally at Yahoo!