The Poverty Question

…and why social schemes are linked to reform

   The Rs 32 per capita urban poverty line is a measure only of extreme poverty, not of acceptable consumption-linked daily expenditure. Planning Commission deputy chairman Montek Singh Ahluwalia and rural development minister Jairam Ramesh have clarified this. They’ve also stated that prevailing BPL figures won’t determine selection of the beneficiaries of social schemes. This hopefully will put an end to the high-decibel protests of opposition parties and activists. Let’s keep in mind that the definition in question doesn’t anyway guide welfare delivery, be it subsidy benefits or job guarantee. In that sense, the ongoing fracas over the poverty issue is contrived.

   Some advocate universalisation of schemes to make the question of poverty numbers redundant. But, as Ramesh suggests, that’ll amount to a fiscal nightmare. Criteria for choosing eligibility and entitlements of rural households are to emerge from a socio-economic and caste economic census being conducted. That’s doubtless a long haul. The government will also seek consensus on the methodology for routing benefits to the poor that an expert committee must ensure is in tune with the upcoming food security scheme’s provisions. This too will be a complex, time-consuming process. Clearly, we’re nowhere near preparing ground for the food entitlement plan that’ll set the poverty benchmark for all schemes.

   There’s another reason why we’re not ready. Though functioning relatively well in some southern states, the PDS is ramshackle elsewhere. If a study has said that around 67% of PDS wheat doesn’t reach BPL households, it’s estimated that around two-thirds of all subsidised foodgrain get diverted for open market sale. Such a system can’t surely be the vehicle for a mammoth welfare project. Reassuringly, some states have started pilot projects with food coupons and biometric smart cards that deter identity theft. Cash transfers are also being looked at seriously. Direct subsidy transfer through any of these UID-linked alternatives will help free the poor from bureaucratic bungling and worse.

   Social schemes can’t work in a bubble. Their success or otherwise depends on proper identification of their target groups and structural reform to plug costly leakages. The food security plan’s huge financial implications also link it to efficient resource mobilisation and fiscal consolidation. Raising farm output to match burgeoning and diversified food needs is as critical – or we’ll absurdly have to uphold food entitlement in part via imports. A government whose borrowings routinely overshoot budget calculations must surely kickstart stalled reforms. Higher growth means more revenue to plough into social spending. Subsidy, however, is ultimately no substitute for enabling the needy via delivery of education, health and infrastructure. As they say, if giving someone a fish is good, teaching him how to fish is better.

source: TOI