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Food Security Bill: A few pertinent questions

Last updated on: August 30, 2013 14:01 IST

Indian ParliamentOn Tuesday, foreign institutional investors sold Indian paper heavily and the 30-share Sensex crashed 590 points, or 3.18 per cent.

They were spooked by the passage of the Food Security Bill by the Lok Sabha the previous day.

This, they fear, will throw this year’s fiscal deficit out of gear. Finance Minister P Chidambaram’s assertion the next day that the deficit would not exceed the target did little to allay their fears.

Actually, that sinking feeling had started to set in the previous day when Sonia Gandhi, the chairperson of the United Progressive Alliance, was speaking in favour of the Bill in the Lok Sabha.

“Some people ask whether we have enough resources to successfully implement this Bill. But it is not a question of how we find the means to implement the Bill; we have to find the way,” she said.

“The question is not whether we can do it or not, but we have to do it.”

What does inexpensive grain mean to the farmers?

“We have always given prominence to farmers and agriculture,” she said.

“We have given top-most priority to their issues and will continue to do so.”

Can the leaky public distribution system, or PDS, deliver the subsidised grain to two-thirds of the population?

Wasn’t it Rajiv Gandhi, her husband, who had famously said that out of every rupee that the government spends only 15 paise reach the intended beneficiaries?

“There are leakages in PDS and this has to be plugged.

“We want to reform PDS so that its benefits reach maximum people and this is one of the main focuses in the food security Bill,” Ms Gandhi added.

The import is clear: if there is a problem, fix it; but roll out the programme quickly.

The demerits of the Bill and its adverse impact on the economy have been discussed elsewhere.

The point to note is that none of it has moved the person who holds the most powerful office in the country.

Does it matter if the investment climate worsens in the process?

Ratan Tata wasn’t exaggerating when he said that India had “lost the confidence of the world”.

The fact is the First Family still swears by the socialist template written by Jawaharlal Nehru several decades ago.

In Nehru’s world, if bloodsucking zamindars were bad news for the country, industrialists were worse. His run-ins with businessmen were numerous.

M J Akbar, in his book Nehru: The Making of India, recounts the bad blood between Nehru and Ghanshyam Das Birla.

Normally restrained in his comment, Birla would once in a while let off steam.

“In London, Nehru was making speeches that Russia was India’s best friend and Japan a weakening power.

“I don’t know about Russia, but I definitely know that Japan is not a weakening power,” he wrote to Mahatma Gandhi in 1936. J R D Tata too did not approve of Nehru’s economic policies.

Nehru once told Tata that he hated the word profit.

“Jawaharlal, I am talking about the need of the public sector making a profit,” Tata protested.

“Never talk to me about the word profit; it is a dirty word,” Nehru replied.

Indira Gandhi, Nehru’s daughter, took it to the next level when she nationalised banks, insurance companies and coal mines.

She was close to industrialists like R P Goenka and K K Birla, but that did little to change her heart.

What about her son, Rajiv Gandhi?

In 1985, during the centenary celebrations of the Congress, he was talking about how “through the exertions of the working class and talented managers and technologists, the public sector became the pivot of India's industrial progress.”

The enormous range and depth of India’s industrial progress, he said, were ‘centred on the public sector’ and it ‘has served the nation well’.

After praising the public sector to the skies, he came down heavily on businessmen in the speech.

“There are some reputed business and industrial establishments which shelter battalions of law breakers and tax evaders.

“We have industrialists untouched by the thrusting spirit of the great risk takers and innovators. The trader’s instinct for quick profits prevails.

“They flourish on sick industries,” he said. “Many have not cared to learn the fundamental lesson that industrialisation springs from the development of indigenous technology, not from dependence on others.

“Industrial empires built on the shaky foundations of excessive protection, social irresponsibility, import orientation and corruption may not last long.” Whatever else one might say, deep down he knew that the licence raj had bred inefficiencies in industry, which would be exposed with disastrous results in an open economy.

Rajiv Gandhi also spoke out against the trade unions at the event.

“Today, they are a mere shadow of their past.

They now protect the few who have, oblivious of millions who have not.

“They feel little concern for the creation of national wealth,” he said.

“Nothing is considered illegitimate if one marches under the right flag. Power without responsibility and rights without duties have come to be their prerogative. Will productivity arise from such stony soil?”

This brings us to Rahul Gandhi, who might one day occupy the country’s most powerful office.

His speech at the recent annual general meeting of the Confederation of Indian Industry did not hold many clues about his economic thought, though he talked of partnerships to create jobs, exchange ideas swiftly, build infrastructure and nurture entrepreneurship.

He has, in the past, defended vigorously the decision to open up retail for foreign direct investment, saying it would help farmers get a better price for their produce by cutting off the middlemen.

This shows his liberal side.

But he is also the moving force behind the land acquisition Bill, which many fear will be the final straw that breaks investors’ confidence.

Bhupesh Bhandari in New Delhi
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