Rice for Votes

Chief Minister, Mufti Mohammad Sayeed, Wednesday announced the decision of the State Cabinet to implement the National Food Security Act (NFSA) in the state, which is expected to benefit 1.19 crore people of Jammu & Kashmir.. Disclosing the contours of the implementation of the NFSA in the state, Mufti Sayeed said 74.13 lakh persons from poor and marginalized sections of the society will be provided ration at highly-subsidized rates of Rs. 2 per kg for atta and Rs. 3 per kg for rice. “Another 45 lakh people will also be provided atta @ Rs. 8 per kg and rice @ Rs. 10 per kg,” he added.

Shorn of accretions and rhetorical obfuscation, the implementation of the Bill is a subsidy- a perverse subsidy whose nature and intent is purely political. It is in the nature of overt and obvious patronage meant to garner flagging support for the PDP-BJP coalition and hide the broader governance failures of the coalition. We will qualify and support this broad assertion but first we will take on the Bill and its perverse consequence from a generic perspective.

Our starting point is the Food Security Bill. Food Security is an important and a noble goal especially for developing countries like India. This prima facie observation needs to be qualified. Providing food security to people even after categorizing them under the Below Poverty Line(BPL), Above Poverty Line(APL) presents obvious issues of an economic nature. First, all subsidies are price distorting. This along with overconsumption of staples like wheat and rice will inevitably lead to a production- consumption disconnect and hence a price-supply-and demand mismatch. The obvious consequence will be food inflation. The ancillary victim will be  a disincentive to diversify crops and hence  inability to move up  the value added chain-nationally and globally. Second , the fiscal consequences will be perverse as well. It is not at this stage clear what methodology, the government of  India  is using to fund the Bill, but it would appear that the implementation of the Bill will eat into a substantive chunk of the budget expenditure. The question is who will foot the bill: the tax paying middle classes is the obvious answer. This is a question of political economy: one segment of society subsidies another; one is helped at the expense of the other. Then, there is the issue of governance of the whole scheme. How will the Government ensure that the subsidy reaches and helps intended recipients? If the past is any guide, the Public Distribution System( PDS) through which subsidies have been historically routed have been a den of corruption. Will the Adhar card system help prevent distortions and leakages?  How will access to this subsidy be determined? If the Government thinks it has clear answers, then its premise is dubious.

The most important question regarding the subsidy is: will it be welfare enhancing?

 Here our analysis will be localized and we will use the state of Jammu and Kashmir as a unit of analysis. The state of Jammu and Kashmir is not self sufficient in terms of food. However, generally speaking, in terms of both absolute and relative poverty levels, the state is not a portrait of food deprived people. Yes: there is poverty but it is all relative and in relative terms, poverty in the state is not abysmal. However, the state is a capital starved state. The political economy of the state privileges the state over markets. In this schema, the state appears to keep the peoples of the state-especially Kashmiris- dependent on the state. Hence the more or less consumption oriented nature of Kashmir’s economy and a perverse system of subsidies. The Rice and Atta Subsidy then falls into a clear pattern. This feeds into the patronage aspect of the whole idea and extraction of political benefits from it. The PDP’s popularity in Kashmir has plumbed depths and reached a nadir. Broad governance failures along with the political failures of the party account for the dismal popularity graph of the party. The subsidy appears to be a prop for the PDP to bolster its flagging popularity. The party perhaps along with the BJP appears to have taken a segmentation approach towards the subsidy. It is aimed at a segment of society that is not inert and apolitical –unlike the middle classes of Kashmir. That is, the poorer classes or segments of society. These segments of society vote not because they are politically aware or even wedded to the Idea of India but merely because of bread and butter issues. For these deprived segments of society, a paisa saved is a paisa earned. Lower food or staple prices leads to savings-howsoever paltry. It is this segment of society that the PDP is buying or bribing. From a historical perspective, the subsidy is an echo of the past when Bakshi Ghulam Mohammad, remembered  as a traitor and quisling, tried to buy Kashmiris by fostering a culture of subsidies in the  state. Did Bakshi, in the long or even the mid term success? No, not if the outbreak of widespread and paradigm shattering onset of insurgency and militancy is held to be a yardstick. Mufti Sayeed and his party may have bought a ‘buy in’ from the BJP in terms of power political considerations after state elections. But , from a welfare enhancing and political resolution of the conflict in and over Kashmir is concerned, Mufti can at best be accused of a siren song. He should know better that people of the state of Jammu and Kashmir are not hungry for rice and atta but they are hungry for leading peaceful, dignified and conflict free lives-something only a resolution of the conflict can do.

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