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That's the new plan, anyway.
Part of a breathtaking array of landmark changes to public policy — many of which will also present a hefty bill to the exchequer — the new food security law will cost the government more than $10 billion at today's exchange rate. To foot the bill, the government will need to push
forward with the sale of stakes in state-owned companies in the oil and gas sector and complete the sale of 3G telecom licenses. In a sense, therefore, it is both the mother of all social welfare policies and the biggest impetus for the growth-spurring economic reforms that business has long demanded.
More importantly, together with the UPA's groundbreaking Right to Information Act, which was passed in 2005, the national food security guarantee will be used to bring about broader systemic reform in the Public Distribution System (PDS) through which India already
distributes subsidized food to the poor. Notorious for corruption — yes, people steal from the starving, too — the PDS was vulnerable to exploitative vendors because nobody was able to track where the food actually went.
But with the introduction of national identity cards with biometric and radio frequency technology to prevent fraud, which is also part of an anti-terrorism initiative of the home ministry, many believe there is a real chance of plugging the holes in the sieve.
Not everyone is convinced. According to Bibek Debroy, an economist at the Centre for Policy Research, a New Delhi-based think tank, the vague plan to reform the PDS doesn't go nearly far enough to succeed. “It's a terrible idea,” Debroy said.
Citing the silence about just how the distribution system will be reformed and drawing attention to several past efforts that have failed ignobly, he argues that the solution is actually much more simple. Instead of funneling even more money through the PDS and making an unwieldy behemoth still larger, he said, India should put the monster out of its misery.
“The simple point I'm making is that it's far more efficient to have direct cash transfers,” he said, echoing an argument that has recently gained credence in international development circles.
Through the NREGS, India already has a database of the working poor, including their bank accounts, so it would be easy to transfer food subsidy money directly to them in the form of cash — a move that would slash the government's bill by as much as two-thirds and put thousands of corrupt officials out of business overnight. It would also eliminate an internal conflict between India's food policy and its farm policy: For farmers, the government continually tries to push prices up, while for the poor it struggles to push prices down.
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