Indian Parliament passed the Food Security Bill. This bill was a brainchild of Sonia Gandhi’s unaccountable group of cohorts assembled under the name NAC (National Advisory Council). Of course it is a good thing that Sonia Gandhi decided to form a group to advice her on policy matter. It is a welcome thing, what is wrong with NAC is that these people are not accountable for anything, yet capable of influencing the direction the nation is supposed to take.
Food security bill is wrong at multiple levels. The bill is immoral, bad economic policy, has operational and systemic flaws and also highlights our political class’s inability to provider pragmatic policy for India’s future.
The Moral Side
Let us look at the moral side of the bill.A lot of people claim that since this bill helps poor feed themselves it is a good thing. That we must support such an initiative even if it hurts us in the short term. Or in other words if we oppose FSB we are acting against the interest of poor in the country and hence doing something immoral.
Government can do whatever it wants with its own money. But unfortunately almost all the money that government has is not Government’s money but the money of taxpayers. Most of the taxpayers pay the taxes assuming that money will be used for the public good such as roads, better government services and so on. Instead this money is arbitrarily given to some “poor”. For individuals this is called stealing and is a crime. Stealing is immoral in almost all moral codes. FSB is bad for the same reason why stealing is bad.
It is wrong morally because it harms the poor more. Giving away free food is same as printing more money. In fact that is one way government will attempt to finance the bill. It is basic ECON101 lesson that printing more currency leads to inflation sometimes hyperinflation. People who are hurt the most by devaluation currency are the poor because they do not own assets such as a car or flat or gold whose value scales with inflation. This makes them more poor thus making it difficult for them to afford other basic necessities. As correctly pointed out by Narendra Modi in his letter, the bill actually reduces the food supply to the most poor in the society by 30%. [link]
Food Security Bill or for that matter any other entitlement based schemes lead to slower economic growth, reduces employment and thus pushes several other non-poor into poor category. The reason is simple, in order to fund the FSB government will tax us or someone else at higher rate. If taxes are not sufficient government will borrow from banks and other institutions (or print more money of course). In case of former the business entities will be left with less money to invest and expand their business, in later case government’s demand for loans will increase the interest and loan rates making it difficult for entrepreneurs to borrow more money. Unfortunately, the Ambanis and Tata will not be affected as much. If you reduce their income by 10% they are still filthy rich. But with every 10% they lose millions of Indians will lose jobs and livelihood. That is precisely what FSB aims at fighting.
It is immoral to make poor more poor. It is immoral to steal. It is immoral to support FSB.
Food Security Bill will put our economy into Comma resulting into more poverty.
I will not list out why Indian economy is in trouble. It is almost a well accepted fact that economy is in trouble. [link] But Food Security Bill is bad economics in any scenario. Indian government has to fund this Bill by using taxpayer’s money, borrowings or by simple printing more money.
Each of these cases lead to either unemployment or inflation both of which will affect the poor in the country negative whatever benefits that the free food might have on them.
A lot of people argue against the timing of the bill but such people fail to see that this bill is a bad thing irrespective of the current state of economy. Poor people can have enough food when the food becomes cheaper. Food will become cheaper only when the supply of food greatly increases. With the current scheme government proposes that by purchasing large amount of grains and then distributing it to poor for free some how helps the poor people afford the food. This is simply not true. India’s food supply is limited. If government decides to distribute free food it will have to purchase it in large quantity generating an sudden spike in demand. This will inflate the prices of the food further. The rest of the population will have to pay more money for their food.
Some people will argue that it is okay if poor people get food at other people’s expense but they ignore the fact that the non-poor people who are engaged in productive activities will compensate for their additional expenses by increasing the prices of their produce and services. Poor people will end up paying more for everything other than food. For example as the food prices go up, the barber will increase his charges and a poor man who wants to get his hair cut will have to pay a few bucks extra.
Passage of food security bill highlights what is wrong with our political system.
It is important to note that almost all political parties have supported the bill in some form or other. No political party has outright rejected it citing either the moral issues or the economic disaster it is. All parties have smart people They clearly know that this bill is a disaster. But they also know that opposing the bill would help their opponents paint them as “anti-poor”. This “anti-poor” shit works well in India. This is because we are a democracy where half the population is illiterate.
It clearly shows that UPA can come up with more dole giving schemes and no party will have the balls to oppose it.
Winter is Coming.
I think we all need to buckle up now. Winter is coming and it is going to be a long one. The first step towards solving this problem is voting out the government who made such decision. It is also important that UPA’s loss be attributed to it’s poor performance on economy and development rather than some communal-secular shit they would like us to believe.