If there was one piece of good news that Union finance minister Pranab Mukherjee had on Monday, it was that by March next year, direct transfer of subsidy for kerosene, liquefied petroleum gas (LPG) and fertilizers could become a reality. If successfully implemented, it will be the harbinger for cash transfers for most government schemes.
Earlier last month, the government had appointed a task force led by UIDAI chairman Nadan Nilekani to map the roll-out for this. Mukherjee said in his budget speech that the task force would submit an interim report by June and the system would be in place by 2012. The minister said that “the debate now has to make way for the decision”. These are hopeful words and given the gigantic scale of leakages, this is the only way forward.
In recent months much intellectual effort has gone to deny the validity of direct cash transfers. First, when the debate centred around one person-one unique number (the UID number), issues of violations of privacy were raised. When a promise was made to resolve the matter—by way of legislation taking care of privacy issues—the tack? changed.
Now, it is being argued that direct cash transfers, especially routed through UID, make no sense as the problem lies elsewhere—where people get “excluded” from the programmes meant for the poor.
This is an argument that can be dismissed easily: basically all that it says is that business as usual is fine—any effort to exclude those who do not deserve subsides runs the danger of excluding the poor and hence most such targeting programmes are illegitimate.
Clearly—in the face of massive leakages in the public distribution system and other programmes— it is getting rid of the undeserving that is the problem, not the other way round. It is unfortunate that such ruinous ideas come with catchy and humane appellations—“universalization” being the latest of the best.
Fortunately, for once, the government has the right idea on what needs to be done. In fact even before it begins tackling food subsidies, the government should focus its attention on two other commodities that need serious targeting—fertilizers and fuels (especially LPG and kerosene). Much of the food consumed in the country is also produced within India. But fertilizers and fuels depend on supplies of crude oil that is imported and is paid for in hard earned foreign exchange. If anything, keeping out rich farmers who make the most of cheap fertilizers and the urban middle class that accesses cheap LPG and fuel should be a priority for the government.
Is the government serious about targeting subsidies? Tell us at email@example.com