"If India is to return to a GDP growth rate of 9% a year," Dr Ahluwalia warns, "subsidies must be reduced." The deputy chairman of the Planning Commission, Montek Singh Ahluwalia, is fighting a rearguard action to staunch the flow of unproductive subsidies. Meanwhile, the (heavily-underestimated) subsidy bill for 2012-13 has spiralled to over 1.9 lakh crore, swallowing 25% of the budgeted direct and indirect tax revenue of 7.7 lakh crore, net of allocations to the states. Pouring more money into this leaky system without first fixing it - as the NAC, to its credit, has suggested in its detailed submission on the proposed food security Bill - will lead to the worst possible outcome: the poor remain poor even as politicians become richer. Undefined A study by Shikha Jha of the Asian Development Bank and Bharat Ramaswami of the Indian Statistical Institute has shown that only 10% of the benefits of the public distribution system (PDS) reach the 'deserving poor'.Īround 43% is siphoned off illegally, 28% goes towards administrative costs of the Food Corporation of India (FCI) and the balance 20% is misappropriated by other vested interests.
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