Over the past few weeks, at least two senior politicians have made the point that the UPA read the 2009 mandate all wrong.
Over the past few weeks, at least two senior politicians have made the point that the UPA read the 2009 mandate all wrong. Finance minister P Chidambaram was the first to admit this when, at a book launch in the capital, he said the UPA’s 2009 mandate was very largely from cities, which meant it was a vote for development—the party instead chose to read the mandate as one from rural India, and so continued to spend more money on dole in rural areas. And now, urban development minister Kamal Nath has gone and told a television channel that the Congress had lost because it failed to realise that India had changed, and that its rights-based policy was bringing no dividend. Indeed, even if the Congress vote did come from rural areas, there is enough evidence to suggest that the returns would be higher if, instead of on subsidies, the money was spent on building rural roads or creating more irrigation canals.
In the case of the massive Narendra Modi vote, you’d think there would be no such confusion. Modi projected himself as a man who could deliver on growth and, to all intents and purposes, he has been given a vote for precisely this. It is, therefore, disconcerting to hear leaders from the party—indeed, the party’s manifesto says the same thing—talking of how the BJP will find ways to fix the current system of, for instance, PDS rations, to improve the delivery. Presumably Chhattisgarh’s PDS system is the one the BJP has in mind when talking of fixing delivery. But even in this case, it is evident the system isn’t delivering. For one, in even Chhattisgarh, between 2004 and 2011, NSS data suggest the poor have reduced their consumption of rice—as tastes change, they are buying more of milk and vegetables, for instance. Theoretically, a well-designed PDS could still provide them the rice at a subsidised rate, freeing up money to buy milk and vegetables. The problem, however, is that to maintain the PDS, you need to have an FCI, and for political reasons, FCI has to buy whatever is sold to it. So, even if you have perfect targeting as Chhattisgarh claims it has, FCI still ends up having stocks of 2-3 times what it needs; and since it doesn’t have the space to store this, large parts get pilfered or simply rot. The BJP’s best bet, under the circumstances, is to move to cash transfers—this can help it save around 1% of GDP each year after giving the poor their food subsidy in cash. This money can then be spent on development, which is what the BJP got its mandate for.