Opinion Entitlement design
We need to maximise self-selecting measures for subsidies
The joint press conference and statement by Deputy Chairman of the Planning Commission Montek Singh Ahluwalia and Rural Development Minister Jairam Ramesh came as a whiff of fresh air. I have argued for almost a decade now that the old poverty line must go. On October 3,it did.
The poverty line was not developed by the Lakdawala Committee or the Tendulkar Committee. The Lakdawala Committee only gave the price adjustment formulae at the state level,among others,and did not do what was set down in its terms of reference,namely develop a new poverty line. The Tendulkar Committee said the old urban poverty line must now be the national poverty line. It also did not do what it was asked to develop a new poverty line. As the author of the old,or what was called the official poverty line,I said last week again that a poverty line developed in 1977 in a hand-to-mouth economy had no relevance to the aspirations of our people now. Ahluwalia is quite right in saying that a line developed in 1973 cannot be relevant now for,although the report was signed in 1977,the data used was the NSS 1973.
A member of the Planning Commission very correctly made the point recently that we cant go from a figure to entitlements,as the Tendulkar Committee report suggests; it has to be the other way round. I too have argued the former would amount to a reversal of the causal chain. The old poverty line was determined on the basis of the calories one needed in urban areas. That was turned around to suggest that the poverty line,corrected for prices,determines the food one would get. Jairam Ramesh and Ahluwalia swept all that away.
Entitlements,as the joint statement says,will now have to be designed according to present realities. Old exercises will give way to a new one for each household. There will also be an expert committee to develop national entitlement criteria consistent with the food security legislation. It will have to do its work. In a sense,its task will be easier than earlier exercises for indicators. Because you dont have to have the same indicators for every government service. The indicators for entitlements to higher education will be different from those for food,for example. Also,many entitlements will be for development expenditure,and not for subsidies,unless we abolish development plan expenditure altogether,as some want. Subsidies will have to be carefully targeted. One of the drawbacks of the formula worked out by the empowered group of ministers on food security is that the targeting of the neediest households as well as those headed by women,having physically challenged persons or poor girl children or pregnant women,is left to the states as residual,while the Centre is entrusted with giving foodgrain to the not-so-needy. The usual inverted pyramid is therefore perpetuated.
The joint statement makes it explicit the survey of households will actually lead to the inclusion of the neediest. That is its greatest purpose,not that everyone gets subsidies. The entitlement issue,as it has been resolved for food security,will have to be resolved elsewhere as well. The more we use self-selecting measures,the better off we will be.
For example,we should design food coupons for the very poor. They should have access to nutritious food rather than just foodgrain. They will not in fact want the mountains of grain our policy-makers are threatening us with. As income goes up,poor households demand,other than some grain,milk,vegetables,oil,sugar and fruit. If you load on them foodgrain without looking at these changes,it will come back to the market. The advantage of thinking with a comprehensive approach is that the link between development and need becomes evident in grounded policies.
The writer,a former Union minister,is chairman,Institute of Rural Management,Anand,express@expressindia.com
Share
