Ask any foreigner who visited India in the 20th century and his last impression would be that of gut-wrenching poverty. Governments and citizens alike have been aware of this problem. Vast amounts of treasure and administrative effort have gone into “poverty alleviation" since independence. All this has been to no avail. Yet, these efforts have not died a natural death. The irrational pursuit of this dream of ridding poverty by simply handing out food and money to the poor persists to this day.

Illustration: Jayachandran / Mint

If implemented, it will prove financially ruinous for many states. A simple calculation shows this. The economic cost of 1 quintal (100kg) of wheat and rice in 2009-10 was Rs1,504 and Rs1,893, respectively. An increase of 10kg of grains every month (from 25kg to 35kg) translates into an increase in the government’s bill by Rs1,804 per family every year in case it consumes wheat and Rs2,271 in case it eats rice.

The Planning Commission had in 2007 estimated the total number of poor (defined as those below the poverty line or BPL) at 27.5% of the population (for 2004-05). In absolute terms, this number stood at 301.7 million people. One can only imagine the staggering expense involved here in case the 10kg increase is carried out.

Here it is important to point out that it is grossly misleading to say that the increase in cost should be seen as Rs3 per kg of grains (or Rs30 per month). That cost excludes the massive subsidies involved in funding these expenditures. The economic cost of wheat and rice is Rs15 and Rs19 per kg.

Matters don’t rest here. Food security activists want to do away with the BPL numbers and make this an open-ended scheme. Anyone who does not have the means to buy food should be entitled to get it for free, virtually. They, of course, don’t say where the money will come from for this task.

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