Sonia's reckless food security largesse could bust the bank

The virtue of making donations of food (or annadhanam) to the poor has always been upheld in scriptural parables and in popular culture as worthy of emulation. It has traditionally been pitched as an effective way for the wealthy, even those lacking in empathy towards those less privileged than themselves, to earn karmic brownie points.

Given the widespread income inequality that prevails in India, compounded by the caste-based and feudal nature of our society and the sheer wretchedness of abject poverty that millions of Indians continue to live in, one can make a persuasive case for charity as the quickest way to get food on the plates of the abysmally poor.

Yet, in pushing the Food Security Bill, which provides for cheap, subsidised foodgrain as a legal entitlement to over 63 percent of the population, Sonia Gandhi, whose brainchild the bill is, has taken the government on the fiscally ruinous path of converting the government into a charitable organisation.

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[caption id=“attachment_144167” align=“alignright” width=“380” caption=“The Food Security Bill is ill-conceived and badly timed. Reuters”]  [/caption]

Taken with the earlier ‘charitable projects’ her government has devised - from the farm loan waiver to the rural employment guarantee scheme, which is leaking like a sieve and has had an unforeseen negative impact on rural wages and inflation - the ill-conceived food security initiative has the capacity to bust the bank.

The earlier initiatives were at least undertaken at a time when economic circumstances were somewhat more propitious. India had the cushion of higher economic growth, and our public finances were slowly, but steadily, getting into shape.

But in terms of timing, the Food Security Bill betrays a cavalier attitude to the ill winds that are sweeping across the domestic and the global economies, and the very real risk of undertaking such a costly project at a time when India’s fiscal deficit is about to overshoot and the economy is slipping into a lower orbit of growth.

Sovereign rating agencies are beginning to get downbeat on India’s economic prospects. The corruption scandals of recent years, each more mind-boggling than the next, have already bled the country dry by robbing it of revenues that should legitimately have come in. That, effectively, is money down the drain, and at a time when the need was for prudence in spending, this proposal to send spending through the roof with an ill-conceived scheme without fixing the leaks in the public distribution system only compounds the folly. There is a serious risk of India’s sovereign rating being downgraded, which will push up the cost of our external borrowings, and take us further down the spiral of an economic slowdown.

Despite some initial opposition from some Cabinet Ministers to the scheme - in itself an extraordinary thing, given that Sonia Gandhi’s proposals normally get a free pass - the Food Security Bill has been steamrolled through Cabinet, working on a Sunday (another extraordinary thing), without addressing in any meaningful way the concerns relating to cost and implementation of the proposal.

Even the most charitable estimates from the government put the additional subsidy burden at Rs 28,000 crore. But those estimates vastly understate the price that the state will pay for Sonia Gandhi’s liberal largesse.

According to more forward-looking estimates, the total financial burden to the state exchequer could be of the order of Rs 2 lakh crore a year for the first three years. Writing recently in the Economic Times, A Gulati, chairman of the Commission for Agricultural Costs and Prices, and J Gujral, director with Infrastructure Development Finance Co, explain why the government estimates are overly optimistic.

The fact that so many Indians continue to live below the poverty line is itself an indictment of the failed welfare policies that the Congress has implemented for much of the time that it has been in power since independence. Without any reflection on the demerits of the politics of do-goodism, Sonia Gandhi has embarked on another fiscally reckless ‘charitable project’ - and has steamrolled her way through the Cabinet.

The reflexive instinct to throw money to win political goodwill shows the government’s utter lack of imagination in conceptualising models of economic growth that can empower and enrich people. It also blurs the distinction between a caring government and one that sees itself as an outpost of charity.

Under the traditional models of charity, karmic good accrues to those who typically donate to the cause from out of their own wealth. But Sonia Gandhi’s model of the government as a charitable organisation works a little differently: it rests on her making ‘donations’ by dipping into state finances as if they were merely an extension of her personal khazana, but the electoral reward that she reasons will accrue from it will flow to her.

Sonia Gandhi’s political do-goodism and her bleeding-heart liberalism, subsidised by the state exchequer, is bleeding the country dry.