The long search for an effective system to target subsidies on food, fertiliser and fuel has finally ended with the Planning Commission accepting the idea of an Aadhaar-based rechargeable smart card. Ideas like direct cash transfers and food stamps have been rejected in favour of the Aadhaar smart card. The new proposal can help target the food subsidy with the tamper-proof biometric cards – Aadhaar unique identity cards – being...

The government plans to restrict subsidised domestic LPG cylinders to six per household every year. For additional cylinders, consumers will have to pay the market price. Data show 65-70 per cent of households use 5-6 cylinders (14.2 kg) a year, while the remaining use more. In Calcutta, PSU oil marketing firms suffer a loss of Rs 329.73 by selling an LPG cylinder at Rs 365.10. A senior oil ministry official said the proposal...

Ahead of a crucial meeting, on the coming Monday, of a group of ministers to finalise the Food Security Bill, a consensus is emerging on a dual system of subsidy. This is that families below the poverty line (BPL) be given food subsidy through direct cash transfer. And, those above the poverty line (APL) be distributed foodgrains at a level equal to the minimum support price (MSP) offered to farmers, which...

Distribution of basic food grains and fuel at controlled prices every month through the Public Distribution System (PDS) could be the largest service provided by the Indian State, touching as it does over 65 million families through a network of nearly half a million retail shops. Given that the urban middle class has little stake in the health of the PDS, there have to be some compelling reasons for the...

Cash transfer as substitute for state service provision is a dangerous recipe for callously anti-poor and corrupt governance. THE staggering number of recent articles, papers and books on the virtues of giving cash in place of public services to the poor has created an impression that a sort of epidemic has broken out. Economists, policymakers, bureaucrats and newspaper commentators are all infected by it and are in turn infecting others. The central...