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LATEST NEWS UPDATES | Cash for food

Cash for food

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published Published on Mar 16, 2010   modified Modified on Mar 16, 2010

There is little or no doubt that the idea of direct cash transfers to India’s poorest has some heavy hitters behind it now. Besides the now famous second chapter of the Economic Survey and definite hints (and some statements that were more than hints) from Finance Minister Pranab Mukherjee, several state leaders have spoken up in favour of it. Bihar Chief Minister Nitish Kumar has more than once said that transfers would be a more effective method than any reformed public distribution system. This might well be the case, though the discussion is certainly still ongoing. And wholesale reform — or even, perhaps, replacement — of the PDS is certainly overdue. But the suggestion that has been reported as emerging from the Centre for a “food security fund” for each state might not be the way to go about it.

The idea is that each state will have its own fund; if any family below the poverty line — a BPL family — doesn’t receive the quota of foodgrain the legislation will say it should, then it can demand that its state government give it cash instead. This continues the process of watering down what started off in the manifesto, too ambitiously perhaps, as a justiciable right. And, if implemented, it will be part of a complex set of mechanisms for sharing responsibility between the Centre and the states once the act comes into force. But the claim that many in favour of transfers have been making, that given the choice between the PDS and a system of transfers, people will prefer transfers, is simply not going to be put to the test here: this is not a contest, since the transfers will kick in only if the PDS apparently fails. And, thus, it is being set up to fail in certain places.

After all, the PDS is not currently a failure everywhere. In the southern states, in particular, it is largely free of leakage, and considerably more efficient. Any reform that ignores this will be doomed to founder, especially as states’ consent will be needed. Nor will this piecemeal approach help answer another central question that voucher advocates must address: in a food deficit area, will more cash with consumers help — or only drive up prices? Or do we believe that the rural economy has modernised beyond that being a concern? Either way, this is one area where what looks like a step towards reform may not be. The idea behind food security was a comprehensive remapping of an individual’s entitlements. Anything short of that will be a failure.


The Indian Express, 16 March, 2010, http://www.indianexpress.com/news/cash-for-food/591266/
 

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