India's Poor Need More Purchasing Power, Not Doles

While most of these social sector schemes have attracted severe criticism for their repeated failure to deliver the contemplated benefits to the targeted groups, a grandiose welfare scheme named as the National Food Security Bill is proposed to secure food for two-thirds of our population. The proposed programme is to provide 5 kg of subsidised food grain per person per month, which would cost the exchequer around 124, 747 crore ($21 billion) in the very first year. This scheme has raised several doubts amongst notable economists and professionals, both in the country and abroad, about the rightness of spending such a huge amount out of the exchequer, especially at a time when the country's economy is at its lower ebb.

India's growth trajectory is at present shaky due to increasing gaps between the government's annual revenue income and expenditure. India's present growth reversal has raised several doubts on the viability of such policy initiatives of the government. According to Deepak Lal, James S. Coleman Professor Emeritus of International Development Studies at the University of California at Los Angeles, the growth rate has slipped in India due to the diminishing tax revenues but enlarged spending, especially on politically-motivated unsustainable welfare schemes. According to Lal, the "trickle-down" from rapid growth cannot redress India's poverty; it showed a shocking failure to recognise the outcome of the recent period of rapid growth in reducing poverty in India.

Ashok Gulati, chairman, Commission for Agricultural Costs and Prices in India's agriculture ministry, in a recent interview stated that the country has largely followed a 'price policy approach' to achieve essentially what are the equity ends. It has subsidized food and agricultural inputs so that poor consumers and small farmers can have economic access to these. But the ground evidence suggests that this may not be the best way to achieve equity objectives. It has led to major distortions in markets besides high costs in handling food grain over and above diversions to non-targeted groups. These have resulted in large 'efficiency losses' without achieving commensurate results on the equity front.

Also Read:
9 Simple Ways to File Your Income Tax Returns
Why India Should Have Women Centric Banks?