In an earlier post I argued that we should subsidize everything for everybody as a way to un-subsidize everything for everybody. Well I have come to realize the errors of my thinking. This is a post to make amends.
Why are we, the middle class who enjoy subsidies to the hilt, against subsidies to the poor? And, equally importantly, the same class is pretty much oblivious to the subsidies garnered by the rich. This dichotomy in thinking cries out to be explained. And, I am not the one to take up that task, not the least because I am ill-equipped.
I am aware in detail of what happened when a subsidy (not reckoned as one, but it was) pulled up someone above another who did not enjoy that facility. There must have been some heartburn in the latter. It was a classic case of a boat being lifted in a canal lock to a level higher than the tide level.
I understand that was a single instance, though likely to have been repeated many times and as such does not invalidate the subsidy regime. I agree. But, the possibility of such corruption – mercifully not reckoned exclusively by bribes given and taken for once – is a matter that needs to be attended to.
It is a complex situation but not too difficult for quantum physicists to play with and come up with an acceptable solution (why did I pick on these esoteric creatures, the quantum physicists? Graduates in pure science are becoming unemployable and this is a nice opening for them!).
I offer the opening strain. The subsidy regime should be graded. We are already along the path. “The draft National Food Security Bill … does not seek a return to a universal PDS,” writes R. Ramamkumar in PDS in peril, Frontline, December 2, 2011. He adds, “Instead, it disingenuously renames BPL households as “Priority” households and splits APL households into two: (a) “General” households; and (b) the rest, who are totally excluded from the PDS.”
First point – “BPL”, Below Poverty Level, is a distinction that is nominally objective from a norm, say, as in the case of malnutrition, access to a defined level of calorie intake. On the other hand, “Priority” is based on policy prescription. Food security is dependent on the priorities of the government. If an SEZ is to be subsidized in preference to providing food to people, the “Priority” goes out the window! True, that is facetious, but not unthinkable under what is termed the neo-liberal policy set.
But, the second point is more substantive. The line dividing the “General” and “the rest” under APL has to be starker than the one dividing “Priority” and APL. Now, go back to the instance when someone got subsidy and on the strength of the same shot past the other who did not enjoy that facility. This is what the bifurcation of APL is bound to lead to.
The response is to devise a system that ensures that there is a ceiling to the subsidy gains of the “General” and that “the rest” do not descend below that ceiling for the exclusive reason that the group is not subsidized. (This, of course, is valid for the line dividing “Priority” and APL.)
There was a time, about 20 years ago, when I was an avid follower of the US PGA circuit; and I had favorites and disfavorites. In the stroke play format, only the winner is necessarily alone, at the top and it is ensured that his winnings will be above that of the players coming second, third and on down the line. But, the second position could end up being shared amongst a number of athletes and so also the third, fourth … The way it was devised was that, say the second position was shared by three people, the prize money for positions 2 to 4 were added and divided equally amongst them. This way it was ensured that no matter the number of players at any position, they will not be overtaken by those following.
That is very close to an asymptotic curve, particularly in the asymptotic extremes. This is the kind that is relevant in the context of this post, given the large number of poor and the truly marginal differentiation amongst them. Of course, the math is way too complex for me and that is why I had suggested that we need jobless Ph.Ds in pure science to come over and help and devise such a system!
The asymptote is always reaching but never does reach the limit. Therefore, taking the logic to extreme, even Mukesh Ambani has to be given food subsidy, measured just so he does not enjoy an exclusive subsidy-driven-advantage over Lakshmi Mittal (or, is it the other way?). And Lakshmi Mittal over Bill Gates and on up the line.
And, now this is the argument for universalizing PDS. This sports a viewpoint distinctly different from what my earlier post did. Yet, the conclusion is the same.
Universalize PDS, either as un-subsidy or as asymptotic.
Raghuram Ekambaram
Why are we, the middle class who enjoy subsidies to the hilt, against subsidies to the poor? And, equally importantly, the same class is pretty much oblivious to the subsidies garnered by the rich. This dichotomy in thinking cries out to be explained. And, I am not the one to take up that task, not the least because I am ill-equipped.
I am aware in detail of what happened when a subsidy (not reckoned as one, but it was) pulled up someone above another who did not enjoy that facility. There must have been some heartburn in the latter. It was a classic case of a boat being lifted in a canal lock to a level higher than the tide level.
I understand that was a single instance, though likely to have been repeated many times and as such does not invalidate the subsidy regime. I agree. But, the possibility of such corruption – mercifully not reckoned exclusively by bribes given and taken for once – is a matter that needs to be attended to.
It is a complex situation but not too difficult for quantum physicists to play with and come up with an acceptable solution (why did I pick on these esoteric creatures, the quantum physicists? Graduates in pure science are becoming unemployable and this is a nice opening for them!).
I offer the opening strain. The subsidy regime should be graded. We are already along the path. “The draft National Food Security Bill … does not seek a return to a universal PDS,” writes R. Ramamkumar in PDS in peril, Frontline, December 2, 2011. He adds, “Instead, it disingenuously renames BPL households as “Priority” households and splits APL households into two: (a) “General” households; and (b) the rest, who are totally excluded from the PDS.”
First point – “BPL”, Below Poverty Level, is a distinction that is nominally objective from a norm, say, as in the case of malnutrition, access to a defined level of calorie intake. On the other hand, “Priority” is based on policy prescription. Food security is dependent on the priorities of the government. If an SEZ is to be subsidized in preference to providing food to people, the “Priority” goes out the window! True, that is facetious, but not unthinkable under what is termed the neo-liberal policy set.
But, the second point is more substantive. The line dividing the “General” and “the rest” under APL has to be starker than the one dividing “Priority” and APL. Now, go back to the instance when someone got subsidy and on the strength of the same shot past the other who did not enjoy that facility. This is what the bifurcation of APL is bound to lead to.
The response is to devise a system that ensures that there is a ceiling to the subsidy gains of the “General” and that “the rest” do not descend below that ceiling for the exclusive reason that the group is not subsidized. (This, of course, is valid for the line dividing “Priority” and APL.)
There was a time, about 20 years ago, when I was an avid follower of the US PGA circuit; and I had favorites and disfavorites. In the stroke play format, only the winner is necessarily alone, at the top and it is ensured that his winnings will be above that of the players coming second, third and on down the line. But, the second position could end up being shared amongst a number of athletes and so also the third, fourth … The way it was devised was that, say the second position was shared by three people, the prize money for positions 2 to 4 were added and divided equally amongst them. This way it was ensured that no matter the number of players at any position, they will not be overtaken by those following.
That is very close to an asymptotic curve, particularly in the asymptotic extremes. This is the kind that is relevant in the context of this post, given the large number of poor and the truly marginal differentiation amongst them. Of course, the math is way too complex for me and that is why I had suggested that we need jobless Ph.Ds in pure science to come over and help and devise such a system!
The asymptote is always reaching but never does reach the limit. Therefore, taking the logic to extreme, even Mukesh Ambani has to be given food subsidy, measured just so he does not enjoy an exclusive subsidy-driven-advantage over Lakshmi Mittal (or, is it the other way?). And Lakshmi Mittal over Bill Gates and on up the line.
And, now this is the argument for universalizing PDS. This sports a viewpoint distinctly different from what my earlier post did. Yet, the conclusion is the same.
Universalize PDS, either as un-subsidy or as asymptotic.
Raghuram Ekambaram
2 comments:
Pds wheat is sold to millers..
I wonder who is the beneficiary?
who is the ultimate gainer for subsidies..not the middle class but the upper class?
would your argument hold good looking at the realities of the real beneficiary?.
Yes DS sir, it WILL hold good ... One cannot penalize those who need subsidies to survive because the supply chain is rotting at the top for no fault of theirs... this is where the logic of Aadhaar fails ... while it may curb false ration cards etc. (which anyway is not the main cause of leakages in PDF), it will be totally useless at stopping leakages in the upper end, from godown to supply points. This is the reality of the real benficiaries ... we do ourselves great disservice by clubbing leakges at pointss all along the supply chain ... the downstreamers pay for the greed of the upstreamers and that is no good ...
Thanks and regards,
RE
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