Sunday, January 31, 2010


Transferring public money to private pockets is an established game in India and no one is concerned about the ethics or the consequences of such heinous action that is eating into the very vitals of our society. Politicians and bureaucrats of various hues aspire to amass fortunes during their so called "service" through bribes and kick backs under a regime of high corruption. Not to be satisfied with "cuts" from contractors and "commissions" from suppliers, the new game seems to be to declare "subsidies" to be met out of the public exchequer for the benefit of poorer sections of the society under different schemes by state and central governments from time to time. It is an established fact that only a fraction of such earmarked funds reach the ultimate beneficiaries. Of course providing subsidies is not confined to India only as many countries adopt this route to support agricultural and export activities and protect their citizens. Even the WTO regime, now in place has not been able to stop the subsidy practices by its members.

Subsidy is not a bad word by itself but the purpose and beneficiaries of such financial largess must be very clear and the mechanism to award such economic benefits must be transparent. For example providing export subsidy to face competition in the international market cannot be questioned as long as other countries are doing the same blatantly. It is known that the US, Japan and EU countries subsidize their farmers heavily to the extent of almost a trillion dollars, presumably to prevent bankruptcy amongst them who, though less in number, raise all the food necessary for the entire population. 2% of American population engaged in farming provide food to remaining 98% and imagine the consequences of collapse of the farming system on the food security of that country. It is true that the subsidy amounts go to some of the richest farming families in the world but it just cannot be helped.

The subsidy thrust in India took another ugly turn when the Maharashtra State Government quietly put in place an obnoxious scheme to grant financial aid to some of the distilleries there which could switch over from molasses to food grains. It is one of the most devious plans to siphon off the public funds in the name of development and interestingly majority of the distilleries identified belonged to politicians and their supporters. If this is not a blatant favoritism and citizen-unfriendly measure what else it is? It does not bother the government that the country is in the throes of a crisis of gigantic proportion with shortages of foods all around and sky rocketing prices due to inflation and any diversion of food grains can vitiate the situation further. Alcohol industry is one of the few in the manufacturing sector which is rolling in money and why it needs cash infusion at the expense of the poor citizens is begging the question.

Though the present CEO of the state government was responsible for initiating this policy during his previous incarnation, some credit is due to him for scrapping the scheme mid-way heeding to all round criticism about the logic of this strange strategy. Probably the judiciary deserves major credit for injecting some sense in the government when the Bombay High Court sarcastically posed the question 'whether alcohol is an essential commodity' on a petition filed by activists about the logic of the scheme. Consequently the government stayed subsidy to some of the existing units that were granted huge amounts earlier, almost two years ago and assured that no further licenses would be given to new grain-based alcohol distilleries in future. The amount involved is not too small to be ignored as about Rs 1000 crore was set aside for distribution to 21 distilleries, each getting Rs 35 crore to 50 crore under this dubious scheme. Is it not a paradox that when the whole world is moving towards a regime that would preclude use of edible plant foods for bio fuel production, in India the opposite is being encouraged. If there were no an independent judiciary, it would have been a field day for those supposed to guard the interests of the citizens, to divert public funds for personal benefits under one pretext or the other, a case of "the fence eating the crop"!


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