'Action completed'!

Arun Shourie: Wednesday, March 26, 2008

Arun Shourie puts the Budget to the aam aadmi test and argues why the UPA fails miserably

The document is Implementation of Budget 2007-2008, and is one of the important documents that have been distributed with this year’s Budget. ‘In keeping with the endeavour of the Government of India to promote transparency and accountability,’ writes the Finance Minister, P. Chidambram, in his Foreword, the document has been compiled. It contains ‘the status of implementation of announcements’ that were made in the preceding Budget. ‘I am happy to place this brochure before the House,’ he writes.

The item for which those words appear in bold italics – it is one of the several items for which they appear in the same way – is ‘Mumbai as an International Centre.’

‘Action completed’? Has Mumbai become the International Financial Centre that the Government had said it would be made?

You will recall that over the last three years, three big announcements have been made for Mumbai – and each of them has been splashed across our papers in huge, bold headlines. Mumbai was inundated by a traumatic flood on 26 July, 2005. The Government announced a special package of Rs. 1,260 crore to ‘rejuvenate’ the Mithi river – this was to be one of the steps that would prevent that kind of a flood. Not one paisa has been disbursed since then.

Next, the Prime Minister announced that funds would be given to metamorphose Mumbai into another Shanghai. Not one paisa has been given since that announcement. A power-point presentation has indeed been made to the high-ups – it is a compilation of sundry projects that have been conceived and commenced by a succession of governments.

And then came the announcement that Mumbai would be made into an International Financial Centre. Another ‘special package’ was announced – to much fanfare: a ‘special package’ of Rs. one thousand crore. For months, my friend and colleague, Kirit Somaya tried to find out how much money has actually reached the Maharashtra Government. Nobody would tell him. But he is not the kind to give up. He filed an application under the Right to Information Act – just imagine the commitment of our governments to -- what was that expression of Chidambram? -- ‘transparency and accountability’ that to get to know how much they have given in their generosity for such a worthy cause, a citizen has to take recourse to the Right to Information Act! Kirit strained for two months. Eventually, he received the information in July 2007: the total amount that has been given by the Centre is Rs. sixteen crore sixteen lakh.

The proclamation? Rs. one thousand crore. Actually given? Rs. sixteen crore sixteen lakh.

Then how is the ‘Action’ ‘completed’?

That tract of transparency and accountability explains:

‘The Report of the High Powered Expert Committee to make Mumbai an International Financial Centre has been released. The full text of the report has also been placed on the Ministry’s website… inviting feedback from the public.

‘A presentation was made to the Prime Minister on August 24, 2007. The recommendations identified for priority implementation have been circulated to the concerned regulators/agencies for comments/views on the process of implementing the recommendations. An Action Plan has been drawn up and is being implemented.’

Thus,

•Report received

•Put on the Ministry’s website

•A presentation made to the PM

•Recommendations circulated to regulators/agencies for comments/views

Action completed!! Not that the project has been implemented. Not even that ‘the process’ by which it will be implemented has been settled. Just that the ‘comments/views’ on the process by which it is to be implemented have been invited.’ But ‘Action Completed’, it is!

And the sequence is typical. Given the concern of this Government for the poor, it is de rigueur to talk about the unorganized sector, and that is what Chidambram did in his Budget for 2005/06. ‘The unorganized or informal sector accounts for 92 per cent of the employment and absorbs the bulk of the annual accretion to the labour force,’ he said. The ‘possible solution’ is PURA or Provision of Urban Amenities in Rural Areas. A Commission has proposed action along these lines. And then the typical commitment, much praised recently for cleverness: ‘Once the proposals are firmed up, Government will take up the creation of a few growth poles, as pilot projects, in 2005-06.’

President Abdul Kalam was still in office. He used to propagate this idea of Professor PV Indiresen. Hence, a few ‘pilot projects’, but those also in the indefinite future – when the proposals have been firmed up. Kalam gone, PURA gone. No mention in subsequent budgets.

But commitment to the poor continues. The poor are at the heart of the Government’s thinking, the Prime Minister and the Finance Minister have proclaimed times without number; to the poor, what matters most is food; for delivering food to them, the Public Distribution System is the key; and for making that system effective, the key is to improve the working of the Fair Price Shops.

‘Fair price shops constitute the backbone of the food security system for the poor,’ Chidambram told Parliament in his Budget for 2004/05. ‘We shall address the weaknesses in the system and strengthen public distribution,’ he promised. ‘I shall return to this subject a little later.’ That was in para 15. You had to wait for 60 paragraphs to learn what Government would do on this vital matter. An idea has been suggested, he said – that Government should distribute food stamps to the poor, and the poor should be able to go to any designated shop and procure the food. And so, another pilot: ‘I propose to introduce a pilot scheme for distributing food stamps, instead of distributing food through fair price shops, in two or three contiguous districts in a selected state. I sincerely hope that one of the States will come forward to associate with the Central Government in this experiment.’

Three years later, the pilot had disappeared, but more managerial types had alighted. Chidambram has continued to feel the urgency of improving the public distribution system. And so in the Budget for 2007/08, he took the definitive step for improving them: ‘A Plan scheme for evaluation, monitoring, management and strengthening of the targeted PDS will be implemented in 2007-08, and this will include computerisation of the PDS and an integrated information system in the Food Corporation of India.’

Come this Budget, and Government has moved higher up the technology scale: not mere stamps, not mere computerization and integrated information systems, an all together new, and technologically more advanced pilot. ‘An idea that has been growing,’ Chidambram says in this year’s Budget, ‘is to deliver subsidies to the target group through smart cards. Finally, I have found two willing partners -- the State of Haryana and the Union Territory of Chandigarh. They will introduce, on a pilot basis, a smart card based delivery system to deliver food grains under the PDS in Haryana and Chandigarh, respectively…’

And in the meantime, all the weaknesses of the Public Distribution System, to correct which Chidambram was going to revert later in his Budget of four years ago, continue unabated, all the leakages continue unchecked. In its report of April 2005 on the Targeted Public Distribution System, the Planning Commission records some of these ills:

•The implementation of TPDS is plagued by targeting errors, prevalence of ghost cards and unidentified households;

•Though the off-take per household has shown some improvement under TPDS, yet only about 57% of the Below Poverty Line households are covered by it;

•Leakages and diversions of subsidized grains are large and only about 42% of subsidized grains issued from the Central Pool reach the target group;

•Over 36% of the budgetary subsidies on food are siphoned off the supply chain: in several states, much higher proportions are siphoned off – 42% in Assam, 82% in Bihar, 42% in Gujarat, 56% in Haryana, 43% in Karnataka, 62% in Madhya Pradesh, 76% in Punjab, 61% in UP;

•Another 21% of the food subsidy reaches households that are above the Poverty Line;

•The cost of income transfer to the poor through PDS is much higher than that through other modes.

The Comptroller and Auditor General released his own findings in 2006. In his Performance Audit on Management of Foodgrains, the CAG concluded, first of all, ‘The results of the 59th round of the National Sample Survey of NSSO revealed that: almost 71 per cent of farmers had not even heard of the concept of Minimum Support Price. Even in Haryana and Punjab (which together contribute 56 per cent of all rice procured and 85 per cent of all wheat procured in the country), 37 per cent and 38 per cent of farmers respectively were unaware of MSP; and almost 81 per cent of farmers were effectively unaware of how to use the MSP programme.’ Second, the Audit once again laid bare all the holes with which we are familiar:

•The number of households Below the Poverty Line in the records of the state governments is a third higher than in the records of the central Government. This has the effect of scaling down of rations, says the CAG.

•Lists of beneficiaries are not updated, and this enables bogus cards to continue.

•Large number of cases have come on record in which ration cards have been issued to households that are not eligible for them: cards issued far in excess of numbers who are Below the Poverty Line; cards issued to households whose income is far in excess of the poverty line; households managing to get food under one scheme as well as another one; ration cards issued on the recommendations of VIPs with no further verification; the cards issued in one state are almost double the number of households that have been found to be Below the Poverty Line by a survey of the Rural Development Department.

•Foodgrains are distributed at lower than the prescribed scale of issue by four to 25 kg in several states and Union Territories.

•Grains are diverted in state after state.

•In Punjab and Haryana substandard rice is accepted on a vast scale.

It is not that ‘solutions’ have not been thought of. It is just that they have all met the familiar fate. To ensure proper monitoring of ration shops an Area Officers Scheme has been devised. The officers are to inspect the shops regularly. The CAG’s finding? ‘There was 96% shortfall in inspection by Area Officers under this scheme between 2000 and 2004/05…’ Vigilance Committees are to be formed, and they are to independently monitor the shops: in 24 states and Union Territories, the CAG finds, the Vigilance Committees have not been formed or are defunct and ‘non-functional’…

Nothing surprising in any of the findings – they are endemic. They have marred the Public Distribution System for decades. It was precisely to purge the system of them that Chidambram was flying all those pilots… The assurances are being implemented, the work is in progress, Chidambram’s brochure informs us.

The system, of course, remains as it has been.

(To be continued)

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