The Food Security Bill - the issues(could be a disaster)!

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yashas nataraj

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Dec 19, 2011, 4:59:45 AM12/19/11

to parag Khairnar, Sushruth Donthi, Rajat Talak, karthik.a...@gmail.com, rahul meshram, Sachin Bhardwaj, Salil Kashyap, sainath bharadwaj, parthajit mohapatra, Sreenivasa Murthy, K V Krishna Chaythanya, mukesh kundal, iisc_pp, Ponnanna Uthappa, Srinath Narasimha, Sunil G.R., vishwanath c, Chetan Ganjihal, Ajit Phadnis, aditya Jr, Yogendra IISc

Attached is the NAC approved version of the FSB
http://www.firstpost.com/politics/true-cost-of-dynasty-sonia-sends-us-a-rs-545000-cr-bill-159602.html

It is all well, fashionable and moderately legitimate to vouch for the
RIGHTS of the POOR..But, the question is DO WE HAVE THE CAPACITY and
Would we be going beyond our means?

Political:
The Opposition ranks wuld get divided OR even the BJP might not oppose
this Bill!
Just to rejuvenate the LOST credibility!
Could be a revenge for the FDI-in-retail opposition!
FSB being PUSHED DOWN the THROAT despite opposition WITHIN the CABINET
and from ALLIES!

Supply side:
Can Agriculture produce the requisite amount of food grains required
to sustain this scheme?

Who will foot the Bill and HOW? - Increased taxes(Direct/Indirect),
more Disinvestment, more borrowing (High inflation) etc - ANyway, the
direct tax accruals of 2011 are estimated to be falling short of the
Budget estimate by Atleast Rs 25000 cr. To WHAT EXTENT could TAXES be
raised for the NEXT FISCAL AND to what extent it SHOULD be RAISED to
FOOT the FSB expense?

Indian Economy wuld be in shambles - Higher Fiscal Deficit which wuld
mean higher inflation, more Rupee depreciation(but, not a
corressponding increase in Exports due to lack of LOCAL CAPACITY
INVESTMENT) - higher Import Bill - higher Revenue Deficit - Lower
Foreign Investment - Recession!
===========

IDEAL ECONOMIC CYCLE:
GROWTH(Service sectors, Industry - MIDDLE-CLASS-Engine of growth) -
APPROPRIATE TAXATION - channel taxes towards a combination of schemes
which
a. Further existing GROWTH Sectors(Better ROADS, Infrastructure,
SECONDARY EDUCATION)
b. "MODERATE" Capacity building of AILING Sectors like Agriculture,
Small-Medium Industries COMMENSURATE with the GROWTH OBTAINED - Eg :
PROPER IMPLEMENTATION of Schemes like NREGA, National Rural Health
Mission, PRIMARY Education - Schools etc.
As can be seen (b) STRENGTHENS and BOLSTERS (a) and vice-versa.
For (b), the DELIVERY STRUCTURES have to be STREAMLINED(atleast to the
tune of 75%) else, the FUNDS would be funneled into a BLACK HOLE as
has been the CASE with NREGA, Public Distribution Systems(PDS) and
other schemes.

We also need GOOD POLITICS to PERSUADE the MIDDLE-CLASSES to renounce
more IN TERMS of TAXATION(UPTO a LIMIT) to transfer them to the POORER
CLASSES.....ALAS, this POLITICAL MEDIATION is NON-EXISTENT TODAY and
the MIDDLE-CLASSES have NO TRUST in the GOVT that it WOULD UTILIZE the
TAXES HONESTLY and NOT siphon off!
One way to gain this trust is to REFORM the DELIVERY
MECHANISMS which are FAULTY!

The Food Security Bill(FSB) is NOT the MIDDLE-GROUND, "NOT"
COMMENSURATE with the GROWTH we have which is DECLINING and UTILIZES
the same FAULTY DELIVERY MECHANISMS such as the PDS. -
Hence, fits the adage of Marie Antioinette " THERE is
NO PRODUCTION of FOODGRAINS, LET them EAT the FOOD SECURITY BILL"