Opinion A costly morality?
It is election time,perhaps even time for mid-term polls,after the assembly elections in February.
It is election time,perhaps even time for mid-term polls,after the assembly elections in February. Time,therefore,for a mid-term review of the UPA 2s policies. Much has been written about the lack of leadership on the part of Prime Minister Manmohan Singh. So in interests of balance and equal opportunity,I would like to discuss the performance of the chairperson of the UPA,Sonia Gandhi. Actually,there is more than equality that dictates that her performance be judged she has been,after all,the major leader of the Congress for almost 15 years.
It was March 31,1997 when Sitaram Kesri was ousted from the Congress party leadership and Sonia Gandhi assumed leadership. Her political acumen was tested a year later in February 1998. In the general elections,Ms Gandhi was able to garner 141 seats one more than those obtained in 1996. But this wasnt really a test of her political leadership because she had only a year to gear up the moribund Congress,a party in steep decline because of the lack of a Nehru-Gandhi at the helm. A year and a half later,in September 1999,there was yet another general election,this one precipitated by Sonia Gandhis statement that she was ready to take over the government because she had 273 seats. In the 1999 Lok Sabha,the Congress hit a historical low of 114 seats.
But it wasnt really a test of Sonia Gandhis leadership because in India,coalition politics really determines who wins. In the May 2004 elections,Gandhi chose well and was able to bring up the Congress tally back up to the 1996 and 1998 mark of 145 seats! So a decade after the decline of the Congress,and with seven years at the helm,she was not able to make any difference to the misfortunes of the Congress party. The political record got much better in the most recent May 2009 election,when the Congress-led UPA came back with the solid achievement of 206 seats. How much of this was due to her leadership,and how much due to the solid 8 per cent-plus GDP growth rate,and how much due to Manmohan Singhs honesty,is a matter that historians will decide. What we do know is that the accelerated GDP growth rate had precious little to do with any policies that the Sonia Gandhi-Manmohan Singh government introduced between 2004-2009.
Indeed,the populist policies that were introduced by UPA 1 sowed the seeds of the economic disaster that India has witnessed since 2008. Our GDP growth rate has decelerated more than most other countries,and there has been more volatility in inflation,especially food inflation, in India than any other country in the world. This volatility has been induced and juiced up by the populist policies of UPA 1 and 2. It is an open question whether these economic policies were the doing of Mr Singh or of Ms Gandhi.
The PM can be blamed for many things,including the unnecessarily tight monetary policy,but it is incredible to think that a fiscal conservative like him approved of the Greece and Venezuela-like populism that has been engineered by Gandhi and her social and economic think (not)-camp called the National Advisory Council. Whether it is loan melas for farmers,destructively high procurement prices for foodgrain,employment programmes or the food subsidy bill,it is Gandhi and her NAC who should get the credit or the blame.
Words come cheap,so let us look at some facts. Soon after Sonia Gandhi came to power,she introduced the national employment scheme,NREGA. True to expectations,the Congress introduced the employment guarantee scheme as its own invention,so it could ostensibly get political and left intellectual credit for caring so much about the poor. Proclaiming morality has always come easy to the hubris-filled chests of the Congress leaders. Never mind that the employment scheme was as old as 1973,when it was first introduced by the Mahrashtra government as a food for work programme for the poor. Since then,it had been introduced all over the country as an anti-poverty programme. With economic growth and economic development unknown only to the Congress party leadership,such programmes had declined in importance. Until in-your-face populism was introduced by Sonia Gandhi and the NAC,and expenditures on such programmes averaged Rs 40,000 crore over the last few years.
Today it is acknowledged that the NREGA scheme is rife with corruption. But Sonia Gandhi and the NAC want to introduce the food security bill. Again,much like the invention of employment programmes,the Congress believes it is introducing this morality into Indian policy making for the first time.
Morality does not come cheap and maybe accompanied with intolerable corruption. At present,the public distribution scheme (PDS) works as follows the government procures the foodgrain from the farmer and ostensibly delivers the same to the poor at heavily subsidised prices. The table shows the performance of this scheme in 2004-05 and 2009-10,the two years for which NSS data are available,data that can cross check the governments claims of expenditure. The first two rows show the discrepancy in terms of tonnes of food that disappear into thin air. In 2004-05,the government claimed to have delivered 41.5 million tonnes to the PDS shops for delivery to the people. Only 13.2 tonnes actually got delivered. The difference,28 million tonnes,was not delivered to the poor or the rich by the PDS shops. This food went from the PDS shops to the market and the market sold it to the poor at,well,market prices.
We can all take heart from the fact that the situation improved in 2009-10 now close to half of the food delivered to the PDS shops were bought from these shops. How much got lost? 24 million tonnes. The subsidy value of this taxpayers loss,and the gain for so-called middle men and women,was a healthy Rs 30,000 crore. This number closely matches the lower bound estimate of 2G corruption.
Scams like the 2G scam happen once in a decade. PDS corruption goes on every year. And the food security bill will only enhance and glorify this ongoing corruption. To be sure,the bill enhances the moral stature of the Congress,Sonia Gandhi and the NAC. But it enhances corruption even more. Anti-corruption stalwarts like Vinod Rai,or even Team Anna,where are you when we really need you?
The writer is chairman of Oxus Investments,an emerging market advisory firm
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