Daily Times

Public policy responses to the most pressing of society’s needs sometimes do more harm than help the problem for which they are seemingly intended, for either being ill-devised by a non-professional bureaucracy or shrewdly crafted to serve underlying political ends. The Sasti Roti Programme of the Punjab government, which is running into its third consecutive year with a cumulative expenditure exceeding Rs 20 billion, attracts several questions about its soundness of design, implementation and outcome. Though it is currently on the back burner due to the diversion of resources to the larger challenge of combating the aftermath of the floods, the Punjab government vows to resume the programme with renewed zeal as it was institutionalised and given permanence through the Sasti Roti Act of 2010, which created the Sasti Roti Authority and provided a legal framework for implementation.

The programme was initiated by the Punjab government, apparently, as a response to the prevalent poverty among the masses, aggravated by persistent inflation to the extent that securing such basic needs for survival as food is becoming more difficult. Any government’s response to such a situation could be prodded by equity considerations only if the market is otherwise competitive. An initiative to this end could find expression in two ways: income supplement to the low-income category population or subsidy on prices. More stable economic measures could, however, be either the removal of inflationary pressures by monetary measures or interventions aimed at strengthening the supply side by pursuing a local production boost or import of wheat. The former being out of the purview of the provincial government was not available for pursuance; the latter failed to catch the fancy of policy makers.

The provincial government chose to respond in a novel way by providing subsidised wheat flour to a number of selected retail roti sellers and binding them to sell roti prepared with subsidised wheat flour at a price almost half that of the market rate. Thus, an artificially parallel market for roti was created where both wheat flour supply and baked roti sale was to be made at half the market prices. Monitoring of the system was assigned to the district administration, involving both food and revenue departments at the district level to ensure two critical aspects of the programme: regular, uninterrupted supply of wheat flour from the flour mills to the tandoors (underground ovens) and to see that roti was being sold at cheap rates to the common public without compromising the weight and quality of the product. Thousands of existing tandoors were selected in the province to work under the programme.

The programme envisaged segmentation of the market with price discrimination, which was a unique innovation with very serious self-defeating undercurrents. The subsidised rate of roti was common for all without recognising the economic ability of the buyer. This was the most basic flaw of the programme as it ignored funnelling the entire benefits of the initiative to the targeted income group — the poorest of the poor. Secondly, no watertight compartmentalisation of the two markets, i.e. artificially created low-price and normal competitive price markets could be ensured as it militates against the nature and dynamics of a market economy, and there remained a strong likelihood of the interplay of common market forces necessitating the siphoning off of supplies for maximising easy profits.

Even normal subsidies given on the supply or demand side rarely win favour with economists who argue against these for efficiency reasons as the cost-benefit analysis tilts towards dearly earned output due to the presence of sizable deadweight loss. The visible hand of government impedes, by pumping in subsidies, the invisible hand of market forces, which strive to attain efficiency by enlarging the pie both for the producer as well as consumer.

It is hard to imagine that the state could ensure leakage-free, consistent, long-term supply of wheat flour. The system suffered from unpluggable porosity, the biggest of all being the provision of subsidised wheat flour to low-income tandoor operators who had the fanciest bait to make easy bucks by just selling part of the supply in the open market at double the rate of procurement. It is unthinkable for any government to monitor tandoor owners all day through government servants from various unrelated departments. The other two characters of the system, i.e. flour millers and the officials responsible for ensuring the supply chain, could also be tempted to collude for mutual benefit by fudging supply accounting in their favour. Last but first of all in importance, how far and how long can a government sustain the financial burden of feeding 80 million people at half the market price? Any such ambitious plan is doomed to fail even with the most resourceful and welfare-oriented governments.

What are the alternatives? A simple programme focused on directly hitting the target group by supplementing income through providing them purpose-specific food vouchers on a monthly basis would have been a better option. These vouchers can be used by beneficiaries at any nearby tandoor and can thereafter be redeemed by tandoor owners from government appointed banks. Careful selection of qualifying families could be made from the National Database and Registration Authority (NADRA) followed by authentication through elected representative at the tehsil/union council level. A counter-check of the beneficiary selection can be made through the district government or any other state agency. Release of vouchers can be made through banks and post offices requiring the beneficiaries to open an account to ward off faking possibilities. The most vital task in the proposed plan is to carefully choose the beneficiaries so that only the deserving can reap the benefits, but this would be a one-time exercise only.

Another indirect approach can be aimed at boosting the production of wheat by subsidising inputs like fertilisers, fuel and pesticides. Cheap supply of inputs can improve the profit margin of wheat growers, providing them with the ground to grow on more acres and produce more tonnes. A bumper crop would improve the supply side of the market, which will help lower the prices of the raw material of our population’s staple diet.

Public policies are seldom impeccable as their creators, being human, are prone to errors. Learning from errors leads to perfection but insisting on errors leads to irreparable damage. The Punjab government needs to thoroughly revisit its Sasti Roti Programme, as it seems to be highly ineffective, misdirected and a sheer wastage of scarce resources.

The writer is a student at Lee Kuan Yew School of Public Policy, National University of Singapore. He can be reached at ishaque8@hotmail.com