PDS and cash transfers

There are people who say PDS does not work and cash transfers is the way. Some give example of Bihar where it is said to be 92% effective.

If PDS does not work it should be scrapped. That does not mean people should be given cash. When it is said 92% effective it means 8% ineffective which can become 80% or more. Fictitious accounts can be opened. There is swindling in NREGA and complaints are not investigated. One person in Uttar Pradesh who got an award for his work in NREGA returned it as his complaints were not investigated and swindling continued. Whether the swindling in NREGA is 5% and in road transport 50% as Chidambaram said in Davos or more is a matter of debate.

India has to dismantle welfare state system. Wide gap between PDS prices and market prices is the reason for corruption. Most of the grains acquired rot in godowns. If they had not been acquired market price would have been less. Kerosene is subsidized. Difference in the prices of kerosene and diesel has resulted in adulteration and oil mafia. As time passes maintaining welfare state becomes more expensive and printing notes to finance deficit is not a solution as it leads to inflation.

European countries are finding the hard way that they can not continue as before and are trying to cut down expenditure. India has to get rid of its white elephants and black holes.

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