Indian sugar mills association

An essential balance

Date:	24 Oct 2011

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News ID:	614

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Food and Agriculture Minister Sharad Pawar has estimated, given his experience in the ministry, that the food subsidy would shoot up, under the bill, to around Rs 1.15-1.2 lakh crore. When you put that together with the subsidies on fuel, which would be about the same, and the Rs 80,000 crore on fertiliser, as well as the Rs 40,000 crore on the rural employment guarantee scheme, you would be forced to ask hard questions about priorities. Or, as he put it during an Idea Exchange with Loksatta: “If so much is spent on subsidies, what is left for development?”

Pawar deserves credit for kick-starting a discussion that few in the ruling dispensation want to have, but one that is essential. The Congress-led UPA has built its policy platform around welfarist schemes and growth. The first, it is clear, cannot happen without the other. In order to keep growth going, we need investment, private and public — and that cannot happen if the government overspends. In order to solve the problem of poverty in the longer term, we need development — and, as Pawar points out, that will not happen if all the money that the government has goes in subsidies, some of doubtful value. And the welfarist schemes themselves cannot be maintained, leave alone extended, by a government which is overextended in its expenditure commitments. And any impetus to growth from external demand, or from local private-sector demand, is shuddering to a stop, given the weak global recovery and the lack of confidence that bedevils Indian investors. Clearly, the consequent strain on a welfarist model of politics is a conversation that those in our policymaking space must start to have.

Political discussions of policy cannot treat areas like the food security bill as off-limits. It is necessary for our politicians to lay out to us clearly how much it or its variants will cost; and where the money is coming from. If nothing else, this will require them to come clean on how dependent such spending is on reform-driven growth, and allow them to create a constituency of beneficiaries that will serve to help push reform measures through.

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