Last week, two of the seniormost ministers in the Congress-led United Progressive Alliance (UPA), Sharad Pawar and Pranab Mukherjee, revived a debate on the sustainability of the government’s social sector spending, especially under its entitlement programmes, and subsidies. Pawar, in a very matter-of-fact manner, dismissed the proposed Right to Food as non-workable given the present state of the food economy; Mukherjee went a step further and said, “As finance minister, when I think of the enormity of the subsidies to be provided, I lose my sleep. There is no doubt.”

Interestingly, both remarks came in the same week that the government announced a “bailout” for the aviation sector—a Rs33,000 crore fund infusion over the next 10 years for Air India Ltd, and tweaking the import regime for jet fuel that will allow air carriers to prune input costs.

Is that fair? Absolutely not. And, it is imperative that this dispute be addressed before the government firms up its mind on the next Union budget, especially given that industry lobby groups are already hitting the government for fresh sops.

For one, as argued previously in Capital Calculus titled “Stop blaming the poor” (published on 26 December) and at the risk of inviting another round of vicious comments, the numbers simply don’t stack up. Secondly, and more importantly, we overlook the basic fact that the government gives out far more handouts to Indian industry and the consuming middle class—if indeed this was efficient spending, then the economy should logically have been growing at double the present pace; and what do we know, we may not have needed a debate on what is wasteful and what is not.

Going by Union budget documents, which since the past few years have also been estimating revenue giveaways—besides payouts under entitlements and subsidies—this argument can be easily addressed. According to this, the total revenue forgone—as corporate income tax, individual income tax, excise duties and customs duties—in 2010-11 is estimated at Rs5,11,630 crore (one is not even adding the bailouts that the government has outsourced to banks for ailing companies and industry segments).

In the same year, the total subsidy bill (the bulk of which is made up of petroleum subsidies and hence not necessarily targeted at the less well off) was estimated at Rs1,64,153 crore. Throw in the Rs40,000 crore under the Mahatma Gandhi Rural National Employment Guarantee Scheme (MGNREGS) and it is still less than 50% of what was given away as revenue c2oncessions (even if the spending under the Right to Food estimated at Rs80,000 crore is included, the revenue sops far outweigh the spending on social sector programmes). Yet, it is a habit to pick on subsidy payouts and some even hold it responsible for the fiscal ruin that the UPA finds itself in.

Strangely, neither in the government (especially of one that constantly espouses the cause of inclusion) documents nor in the rhetorical claims being flung around against entitlements is there an attempt to classify both as subsidies. That is why it is important to recall the political economy of the usage of subsidies and sops. The selective usage conveys wastefulness and usefulness.

This is patently unfair. One is considered good for the economy and the other for the populace. While one is to ensure Indian industry stays healthy and competitive, the other is to guarantee that those not economically empowered have a fighting chance to be included in the growth process.

At the cost of sounding repetitive, as argued in the previous column, a part of the reason for this is the lack of skills and their circumstance. Nearly one in two children below five years suffers from malnutrition; social rules (that keep Dalits at the fringe of society) often impede access to education, water and a basic livelihood. The government’s estimate of the official number of poor (or those in the so-called below-poverty-line level) is around 400 million.

The entitlement regime is trying to level the playing field for this economically disenfranchised segment. So how is this not considered useful spending, while frequent bailouts of Indian industry and taxpayers are?

So to restore balance to the debate, the government may be advised to take its recent initiatives to another level. It can in a separate section identify the giveaways, regardless to whom these are extended—revenue forgone is as important as additional expenditure incurred to fund an entitlement.

To get back to where we began, if indeed the UPA is facing sleepless nights, it should be for the fact that it is unwilling to foot the bill for inclusion—its mantra for governance.

Anil Padmanabhan is a deputy managing editor of Mint and writes every week on the intersection of politics and economics.

Also Read | Anil Padmanabhan’s earlier columns