India Insight

A look at some of India’s cheap food schemes

Nearly 70 percent of India’s population lives on less than $2 (around 120 rupees) a day, according to World Bank data. The country, the world’s second-largest producer of wheat and rice after China, is also home to a quarter of the world’s hungry.

Helping the poor has always been on the ruling government’s agenda since independence. India, which currently spends 900 billion rupees on giving the poor access to cheap food, hopes to increase it to 1.3 trillion rupees ($22 billion) and widen its scope with an ambitious food security programme launched this month.

The problem is many of the intended beneficiaries don’t realize they’re missing out on existing schemes.

In 2005, a study found that families living below the poverty line in India did not receive more than half of the grains earmarked for the poor due to identification errors and unethical practices. In 2011, the economic survey said leakages in the system are “far too high”.

While the new food security bill aims to bring cheaper food to millions more, there are various welfare schemes which already offer subsidized food to Indians. But one such scheme is at the centre of a storm after 23 children died after having their mid-day meal at a Bihar school.

Petrol price hike – oil retailers’ logic fails to convince

India’s state-run oil marketing companies launched a media blitzkrieg on Tuesday to justify a recent price hike in petrol prices and came out strongly against allegations of profiteering at the consumers’ expense.

Their logic, however, failed to answer why, while being entirely dependent on state subsidy, they are still eager to reward shareholders with rich dividends.

Here is the background.

A flurry of protests swept India recently after oil retailers announced the steepest price rise in the country’s history, leading to a partial rollback.

Why should the government control inflation?

A labourer pulls a plastic sheet to cover sacks of paddy from rain at a grain market in Chandigarh January 13, 2010. REUTERS/Ajay VermaThe ‘reform agenda’ understood as ‘market-oriented reform’ or giving more space to market mechanism in food and fuel economy seems to have been held up.

The government can not be seen to be doing away with subsidies just as prices are up. Its hand is stayed for now.

But is that enough for say the gross national happiness?

Food and fuel inflation has been in the news for a while.

The government has no short-term control over supply side issues causing price rise like a bad monsoon leading to a low harvest or floods, but it can control the rising demand by reining in liquidity.

Has India got it right on fuel prices?

So it’s official. India has finally raised fuel prices, by more than most people expected. A hike in diesel prices in particular is sure to feed through into overall inflation. At the same the government removed the import duty on crude oil.

A petrol station attendant counts currency notes in Jammu.We’d be keen on your opinion. Has the government got it right?

Despite the price rises, oil companies are still going to be losing huge amounts of money and gas-guzzling cars are still going to be heavily subsidized by ordinary taxpayers. The oil ministry had even argued for steeper price hikes.

Are subsidies really the right way to go in the modern world? Is the government sacrificing good economics on the altar of political populism?