Futile Gradualism
The government's intentions are, of course, clear: trimming the foodgrain mountains and keeping the burgeoning food subsidy in check. But, it has not yet been able to evolve an equally clear-cut strategy to achieve the twin objectives. The trial and error method adopted so far has failed because it has consistently ignored ground realities. As the government is trying to operate in an open market in a situation of plenty, it has to go by the prices determined by the market forces. Anything priced higher than the ruling rates is bound to go abegging. This is exactly what has been happening to wheat that has been offered under the open market sale policy. By lowering prices only gradually and being unable to fully accept the price the market is willing to pay, the government has failed to make its policy work.
A policy aimed at off-loading grain at below the economic cost or at subsidised rates, to be more precise, is sure to raise questions. If the objective is to cut down the overall food subsidy, its purpose is partly defeated. It helps only to the extent of saving the carrying cost incurred in holding on to the grain and of course prevents the total write-off that is necessary when the grain has fully rotted in the godowns. But if the aim is to shed excess stocks it is necessary to sell at prices which will find takers, that is at the prevailing market rates.
Moreover, if the government is willing to subsidise wheat sales for the trade, why not for the users of the public distribution system (PDS), be they below or above the poverty line? In fact, slashing of PDS prices for people in the poverty bracket, or lifting of the upper limit of 20 kg per month would be politically, socially and even economically a better proposition than offering subsidy to the trade which may or may not pass on this benefit to the consumer. The plea that a reduction in PDS prices will set a precedent which may be difficult to maintain or reverse in future is hardly tenable. There have been instances of supplying additional quantities of items like sugar and edible oils through the PDS on special occasions. Something similar can surely be conceived about wheat as a one-time or short-term measure. Since reduction sale, so to speak, is inescapable at the present juncture, why not do it boldly and in a socially more acceptable and transparent manner?