Rajiv Kumar

Subsidies sans rationale

RAJIV KUMAR | Updated on April 01, 2011

PDS kerosene seized from a private godown. Such incidents continuedespite official pronouncements of zero tolerance for corruption.   -  The Hindu

Sonawane's ultimate sacrifice should be a galling reminder to all concerned that it is time to scrap the dysfunctional system of kerosene subsidies and redirect resources to actually help the poor.

The recent horrific and brazen murder of Yashwant Sonawane by the kerosene mafia in Maharashtra has left us numbed. But this was not the first murder related to the dysfunctional system of kerosene subsidy that many senior policy-makers know is a Rs 10,000-crore scam perpetrated, year after year, in the name of the poor.

Unfortunately, public memory, in these days of instant sound-bytes and 24x7 sensationalism, is terribly short.

Very few commentators in the print and electronic media connected Sonawane's being burnt alive to the daylight murder some years ago of a young IOC engineer in the prime of his life by the same kerosene mafia in UP. It is, indeed, alarming that our governance systems no more protect the honest.


But the more disturbing feature of these subsidy-related murders is the predictable official response. In both cases, there was the expected flurry of official activity, with some arrests of known criminals, official pronouncements for zero tolerance of corruption and promises to end the leakage. Fat chance.

Within a week of the horrific incidents, officials slipped back into their humdrum but important businesses of representations, delegations, convocations and felicitations.

The media too, driven mercilessly by TRP ratings, conveniently switched to the next attention-grabbing story which, ironically, dealt with incredible India showing off its resilience in Davos!

Unfortunately, the murders of honest, upright and brave public officials by the mafia have no glamour quotient to be exploited. And discretion demands that one can take on a lone deviant politician but better not to pursue an entrenched mafia and its money-backed nexus with the ruling establishment.

Is it not time to get away from the mere symptoms and try and plug the financial flows that nurture these criminal networks that are spreading criminality in our social fabric?

Subsidies and beneficiaries

First, let us debunk the myth that such activity can be stopped by administrative actions. Well-meaning leftist friends must recognise that, given our national realities, even the proletariat government in West Bengal with an unbroken rule of more than three decades has not been successful in ensuring that public subsidies flow to targeted beneficiaries.

All the awards for good performance and fanfare accompanying them cannot hide the fact that, even under the MGNREGA, by far the most closely monitored subsidy scheme, huge resources are hijacked by the intermediaries. There is another kind of network and nexus at work here that benefit the middle-level political agents, in collusion with the local officials and with the active connivance of their seniors.

Sonawane's ultimate sacrifice, coming in the midst of the Budget-making exercise, could not be better timed. It should have been a galling reminder to all concerned that it is time to try and wash away the bloodstains from this dysfunctional system of subsidies by closing the spout and redirecting the resources to actually help the poor.

I am reminded of the early 1990s — when policy-makers were actually undertaking reforms, rather than only professing and proclaiming their benefits — when, in order to stop the mafia activities arising from bullion smuggling, the simple but far-reaching measure of legalising gold imports at a nominal Custom duty was implemented. Haji Mastan's (remember him?) empire collapsed in no time.

So, for us who would not like to see such murders repeated, the most effective and far-reaching measure that could be announced in the forthcoming Budget would be the abolition of kerosene subsidy. To reiterate, everyone knows that it only benefits those who use it for adulteration of petrol and diesel and does not reach the poor.

Is it not extreme dishonesty and callousness not to stop this huge drain on the public exchequer in the name of the aam admi while actually feeding the corrupt and murderous criminal gangs?

Will this happen only after the judiciary intervenes and takes up this case suo motu and asks to be given an estimate of the percentage of this subsidy that actually reaches the poor? Has there ever been even at attempt to evaluate the effectiveness of this subsidy?

Scholarships, instead

Lest this writer be charged with speaking against the interests of the poor, being stereotyped as a representative of big business, let me suggest that this amount of Rs 10,000 crore can be far better utilised as scholarship money for poor students.

I am an actual beneficiary of the government scholarship system, having received my first scholarship at the age of twelve that propelled me from a ‘rote-shop' in Lucknow to a well-endowed public school in Delhi. So, I know it works.

Given the times and the governance breakdown, the critical feature, however, would be to allocate Rs 9,800 crore for scholarships and Rs 200 crore for the scheme's implementation by a private agency that is regulated directly by the CAG. Perhaps expand the Budget allocation for the National Skills Development Corporation, which can implement the scheme.

The poor will be benefited far more by this measure and the Government will not have to waste time and resources going after the kerosene mafia. It will collapse overnight.

(The author is Director-General, FICCI. The views are personal. blfeedback@thehindu.co.in)

Published on February 05, 2011

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