Why the government shouldn’t interfere with healthy markets
deja vu with the launch of Bharat Atta in 2023. It’s as if the world’s fastest-growing large economy is suddenly regressing to a past socialistic pattern – one in which the state produced and sold Hindustan Salt, Hindustan Machine Tools (HMT) and Modern Bread. The government must draw a line beyond which it will not intervene in the economy, especially in the food sector, the distorting impact of which is well recognised.
Yes, ensuring food security for India’s large vulnerable population is essential. India took major strides towards this decades ago with the green revolution of the 1960s, measures such as procuring and maintaining enormous and costly stocks of foodgrains, and an elaborate public distribution system (PDS). To exempt its huge stocks of foodgrains from trade-distorting measures, India has fought off pressure from grain-exporting rich countries and wrecked consensus at multiple meetings of the World Trade Organisation.
The government runs a National Rural Employment Guarantee Scheme, essentially a dole, in which the requirement of manual work functions as a screening mechanism to weed out the non-poor. It ensures the poor have the purchasing power to buy grains from the PDS even in the lean season for farm work. The government has been distributing free grains at the rate of 5 kg (10 kg during the pandemic) per person per month to some 80 crore Indians (57% of the population).
The prime minister recently announced at an election rally that this will continue for another five years. Is India so poor that more than half the population cannot buy food? The scheme will cost some ₹2 trillion a year. The outlay for the rural employment guarantee scheme has been close to ₹1 trillion in the past couple of years.
. Read more on livemint.com
