The problem is elsewhere. Accepting cash transfers is equivalent to recognising the non-poor won’t receive subsidies. It requires pinning down the “aam aadmi”. To take liberties with Lincoln, political parties love the common man and have made so many of them. If a hand no longer feeds, voters may bite it, instead of kissing it. In cross-country reviews of developing-country transitions to cash transfers, one lesson stands out. The replacement of classic subsidies with cash transfers works best when the government comes clean and uses the media to communicate the reasons for doing what is intended.

It’s not very obvious we want open government and transparency. Food stamps (on a pilot basis in select districts) were promised in the first UPA-I budget. What happened to that idea is not public domain information. In August 2006, the finance ministry prepared a cabinet note

on coupons/ vouchers, to be implemented by March 2009 and an expert committee was to be appointed to prepare road-maps. What happened to that is not public domain information. So far, there is evidence UPA-II will increase social sector expenditure. But there is no evidence it will try to improve efficiency of public expenditure. Cash transfers were promised by the TDP in Andhra Pradesh and the TDP lost. The JD(U) has proposed cash transfers in Bihar. The JD(U) may have delivered, but UPA-II doesn’t need JD(U). Rather oddly, cash transfers have become identified with non-UPA parties. If UPA-II desires, implementation of cash transfers (conditional or unconditional) should be easier now, with NREGA, SSA (Sarva Shiksha Abhiyan), BPL and AAY (Antyodaya Anna Yojana) databases, spliced with multi-purpose national identity cards (MNICs).

... contd.