The Hindu Business Line : Food stamps not foolproof either

Much has been written about the efficacy of food stamps vis-à-vis the public distribution system in vogue for decades in this country. Sub-Saharan Africa has embraced the system of food stamps with satisfactory results on the poverty alleviation front, gush enthusiasts of the scheme.

They go on to say India, which spends Rs 163 billion on fertiliser subsidy and Rs 266 billion on food subsidy ostensibly for the benefit of poor, has the mortification of seeing these subsidies being wasted and diverted. The famous Rajiv Gandhi quote that out of every rupee of subsidy only 15 paise reach the targeted populace is readily touted to buttress this argument. The government should, therefore, discontinue the fertilizer subsidy — given to manufacturers in the hope that the benefit will ultimately be passed on to the poor farmers who in turn would pass it on to the poor consumers — and the food subsidy that is given directly to the poor, is their refrain. Print food stamps and distribute it amongst the poor and see for yourself the dramatic results, they declare triumphantly.

This, they claim, would entail a payment of Rs 6 per day per person assuming the amount of money hitherto spent on fertiliser and food subsidy is spent on printing and distributing food stamps. Impressive!

But the apologists of the food stamp regime have not reckoned with factors almost unique to India. India is a country where Telgi has happened. Telgi, who is now in jail pending trial, had the temerity to print stamp papers allegedly in cahoots with politicians and police for several years until nemesis caught up with him. He printed stamp papers largely used in property transactions. His followers may print food stamps for a change but certainly not for a loose change. The payoff, let us not delude ourselves, would be as gigantic as the one obtained in the infamous Telgi scam.

They have also not reckoned with the possibility of food stamps themselves being encashed at a discount at the altar of greed and poverty. A destitute widow might for example sell her food stamps steadily for years only to marry off her daughters. And the beneficiary of this despair would be the kirana storeowner happily lapping up these vouchers at a discount as manna from the heaven.

They have also not reckoned with the fact that the babudom and its shenanigans would not after all be completely eliminated from the scene. The bureaucracy, which distributes food stamps, would certainly continue to make money on the sly. This time round it would be by taking a receipt for 30 stamps but delivering only let us say 25. No sir no, we have to dream up something better to ensure that the amount spent by the government for the poor actually reaches them.

(The author is a New Delhi-based Chartered Accountant.)

S. Murlidharan

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