Mr Bhalla, in his inimitably irate style writes,
Before proceeding further, I want to set up some ground rules for discussion of the FSB and the poor. In a recent panel discussion on CNN-IBN, noted food security expert and principal advisor to the commissioners of the Supreme Court, Biraj Patnaik, alleged that I “molested” poverty data. For long, I have held the belief that policy discussion should be centred on evidence, not ideology, and especially not, “you have to believe me because I am arguing for the benefit of the poor”. Hence the title of my column, “No Proof Required”. So when you look at the evidence presented in this article (above, below and in the table) please inform me which piece of data, or estimate, or conclusion, is incorrect, and whose evidence is proof of molestation
The basic premise of this calculation is wrong. NSS data for PDS access reflects effective coverage, and includes estimated PDS leakage (~40%). In essence, Mr Bhalla is calculating the increase in subsidy under the NFSB by dividing the proposed coverage (67%; 5 kgs) by effective coverage (44.5%; 2.1 kgs)! This is completely incorrect because the government outlay does not account for leakages (that is additional allocation is not made for leakage). Mr Bhalla is effectively calculating the cost of a food security bill which covers 112% of the population and not 67%.
Since when have budgetary outlays been calculated this way? Mr Bhalla could have used the current stated coverage as a baseline to calculate the increase in subsidy. Or he could have done what everyone else is doing – calculated ground up using population estimates, proposed coverage, admin costs etc. Why Mr Bhalla chose to use this unconventional method is clear, and has to do with his ideological predilections and not to undertake a real investigation into the cost of the FSB. Mr Bhalla may argue that this is the cost if the bill was “honestly implemented” – but that’s really an absurd argument completely divorced from both political reality and the ABCs of budgeting. In any case, can the estimated cost of any targeted welfare program be more than that of a universal program however much leakage? Even in a universal PDS, it is likely that offtake will not be more than 70%-80% since the upper income groups opt-out of the PDS given the inferior quality of grain.
Mr Bhalla concludes,
This is an open challenge to Sonia Gandhi, Manmohan Singh and P. Chidambaram. Your minions are stating that the ordinance-induced food subsidy bill will only increase by about 25 per cent and will amount to 1 per cent of the GDP. I get a conservative increase of 336 per cent, or a total subsidy level of 3 per cent of GDP with an honest implementation of the bill, sorry ordinance. One of us is massively wrong. I believe it is not me. But prove it otherwise
Who is “massively wrong”? I believe it is Mr Bhalla.
Update (July 27, 2013): Dipa Sinha Rebuts Estimates by Surjit Bhalla and Ashok Gulati