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MMS and the PDS May 25, 2007

Posted by Sharath Rao in America, economics, india, politics.

Okay, so Mr. MMS has something to lecture the corporates about – conspicuous consumption, CEO pay and the like. How about starting by putting your own house in order, Prime Minister ? Here is an example :

The Planning Commission study shows that less than half (42 per cent) of subsidised food grains issued from the central pool reaches the poor. The leakage through ration shops constitutes the bulk of the leakage. In Bihar, while the intended subsidy was Rs 4.52 per kg, if we take into account the total subsidy to what actually reached the poor, the subsidy ended up being Rs 50.98 per kg due to leakages and diversions. In Punjab, while the intended subsidy was Rs 4.22 per kg, it ended up being Rs 40.15 per kg of foodgrain.



So Prime Minister, when you are already robbing the middle-class and the rich, why go after them all over again. Instead. clean up the political system first and then the corporates will have an example to follow.


Its a classic case of violating the PCB theory I linked to. In the Public distribution system :

Payer : Tax-payer ( middle-class+upper class)

Chooser : Government Bureaucrats

Beneficiary : The poor, presumably

A solution as suggested by Ila Patnaik in the same article :

If the government decides that it wants the poor to consume dal and oil at subsidised rates then it needs to find more efficient ways of targeting and delivering the subsidy. One proposal is to provide them with smart cards with the required amount of money credited to them and which can be used at certain retail outlets who will get reimbursement from the government. The expenditure will be limited largely to Rs 10 per kg or litre of the dal and oil actually bought by BPL households instead of more than double of that amount lining the pockets of traders on the way. No procurement for the PDS or supply chains will have to be set up as would need to be done for delivery of the PDS.

More comments on this.

Ofcourse, why should stupidity be the monopoly of the Indian Government alone, how can the Americans be far behind. Okay, without reading the previous link, a response sent by a GMU economics professor says it all. It about an act that “requires Federal employees and their dependents, consultants, contractors, grantees, and others performing United States Government financed foreign air travel to travel by U.S. flag air carriers.”

Update: My previous post on CEO pay and wage differentials.



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