Tuesday, 6 August 2013

Beware of Greeks Bearing Gifts

Beware of Greeks Bearing Gifts

Written by Dr. Seshadri Kumar, 06 August, 2013

Copyright © Dr. Seshadri Kumar.  All Rights Reserved.

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Yesterday, Rahul Gandhi made a statement that “my one and only political aim is that I want to tune my ears to the voice of the poor and the marginalised.” Translation: I do not care about economic growth, creating wealth, or improving infrastructure, as long as I can loot the country in the name of the poor.

Rahul Gandhi has made statements like this before.  In fact, his now-infamous address to the Confederation of Indian Industry in March, which everyone (including meroundly and rightly ridiculed, carried the same message:

"But for me the biggest danger is excluding of people. Excluding the poor, excluding the middle-class, excluding the tribals, the dalits and I’m going to tell you why...we have to carry the poor and the weak with us. India will only move forward with inclusive growth that embraces everyone and is open and attainable to those inside this room and those very, very far outside."

While it is fashionable to ridicule Mr. Gandhi for his perceived lack of intelligence (e.g., Pappu) and his inability to grasp the seriousness or scope of the problems facing India, few people understand how dangerous his vision for India is.  He may be less stupid and far more sinister than he looks.

The leftist clique of the UPA, consisting of the National Advisory Council (chaired by Congress president Sonia Gandhi and formerly including well-known figures such as Aruna Roy, Jean Dreze and Harsh Mander), Nobel-prize-winning economist Amartya Sen and, of course, Rahul Gandhi, is determined to institute a rights-based paradigm in India, in which free food rations (Food Security Bill), free income (National Rural Employment Guarantee Scheme), free education (Right to Education), free mid-day meals (National Mid-day Meal Scheme), and other entitlement programs are the mainstay of the economic program. 

The UPA government is taking India fast down the road that Cuba and North Korea followed - to their ruin.  They are trying to reverse the reforms of 1992, and taking India back to the command-and-control, license-raj economy that created the “Hindu rate of growth.”  Today, the net result of their actions to date is that a country that was growing at almost 9% has been slowed down to 5%.  If they are allowed to continue on this dangerous course, India will be in straits worse than it was in 1991.

They have already implemented all of the above-mentioned programs except the Food Security Bill, which is another major offender, which they plan to pass in the current session of parliament.  This bill will cost the nation 3% of its GDP - that is about Rs. 3,14,000 crores (about $52 billion) a year.  We cannot afford this.  Yet the government moves with reckless speed to implement this bill at the earliest.  Why?

The reason is that bad economics is good politics.  Declarations of sympathy with the poor, offers of freebies to poor people help win votes but don't make economic sense. Rahul Gandhi's statements of solidarity with the poor at the CII and the UPA's concern for the nutritional well-being of poor people should be seen in this light. This is why the UPA government wants to perform “acts of charity” for the poor.

Charity may be a good thing, but it would behoove the Congress party leaders to do it with their own money.  If the Gandhi family had used its personal assets parked in various banks, whether in India, Switzerland or any other country, to perform charity, I would have no objection whatsoever – and they would appear more credible asking for the rest of us to be charitable.  

But they are proposing to perform an act of massive, forced charity with your money, my money, and the nation’s money – money that does not belong to them.  And, as they have already done a lot of “charity” with our money with all the other entitlement bills, it is time to put a stop to this.

Would you ever trust a person in your private life who wanted to do charitable acts – but with your money?  If not, then why would you trust a politician?  Anyone who talks of doing things for the poor with public money should be viewed with the greatest suspicion, as a possible crook.  And Mrs. Gandhi, Mr. Gandhi, Mr. Sen, and the rest of the UPA’s leftist clique, are no exception to this rule.

“Helping the poor” is a slogan that tugs at the heart strings but mostly doesn't work.  The current Food Security Bill is a perfect example.  India has had 66 years of post-independence experience with a failed and leaky public distribution system (PDS) scheme.  Statistics show that of the Rs. 75,000 crores ($13.6 billion) spent annually on the current PDS system, only 40% reaches the intended poor, and 21% remain undernourished. 

The rest goes into a vast network of middlemen, who indulge in all kinds of cheating such as substituting the government grain with substandard grain and selling the government grain at full price, printing fake ration cards and taking out the grain themselves to sell on the open market, hoarding supplies, and black-marketing, in order to enrich themselves at government and taxpayers’ expense.  And now the UPA government want to increase the expenditure on this leaky and corrupt scheme from $13.6 billion to $52 billion!!

The important thing for even the poor to know is that the “free” rations they are getting are not really free.  There is NO SUCH THING AS A FREE LUNCH, as the well-known American saying goes.  They will pay for it – as will all of us – in the form of increased taxes.  Not direct taxes, of course, since the poor earn below the taxable limit.  It will hit us all, the poor included, in the form of indirect taxes - excise and VAT taxes on every little thing you consume - be it books, clothes, soap, bicycles, pens, medicines  - everything.  So, in order to get this “free” food, the cost of everything else, including even the matches used to light the fire and the firewood or gas needed for the stove, will go up because of the COST of the subsidy to the nation.

Furthermore, since there is only so much money to go around, the FSB will mean that there is less money for building roads, power plants, water supply systems, telecommunications, electrical grid systems, dams, parks, sewage, public transport, and the like.  The money that might have been spent on such infrastructural needs will end up in the hands of middlemen and politicians, creating a new class of billionaires.

For the Congress party, the benefits are clear.  Implementing a bill like this allows them to curry favour with the poor.  What they are really doing is using taxpayer money to bribe the voters into giving them their vote in the next elections.  

Friends, this is the REAL cash-for-votes scandal.  And it’s not party funds – it’s YOUR money that is being used to bribe you with a fake promise that they cannot deliver on.

The Greek epic, the Aeneid, of the poet Virgil, talks about the destruction of the city of Troy by the Greeks following their long war.  Unable to defeat the Trojans by normal war because the Trojans are secure inside their fortress, the Greeks win the war by strategem. They pretend to leave the shores of Troy and leave only a huge wooden horse as a gift of peace to the Trojans.  The Trojans, happy that the war has ended, bring the wooden horse inside the city fortress to celebrate.  Unknown to them, inside the large wooden horse, Greek warriors are hiding.  Once the celebrations are over, the Greeks climb out of the horse in the dead of night, massacre the Trojans, and win the war.

The current FSB of the UPA is a Trojan Horse.  It pretends to give free food while in reality stealing from the very people it is supposed to feed through huge indirect taxes for an unsustainable expense.  The fate of the FSB is bound to be the same as or even worse than that of the present PDS system.

What really provides security - employment security, food security, and the like - is not free handouts but a strong state that is built on a sound infrastructure and a free market so people can create wealth.  The only politician who seems to understand this reality is Narendra Modi; even the party he belongs to, the main opposition party, the BJP, doesn’t seem to understand this.

Consequently, the BJP, instead of opposing this misuse of public money, is willing to support it, provided it is made similar to the food security system that it implemented in the state of Chattisgarh, where it is in power.  The Chhatisgarh model is claimed to be much less leaky than the current PDS; that may well be, and if true, it would be a good thing; but the fundamental problem with it is that there is no way to pay for it, as chief minister Raman Singh admitted in an interview.

Even if the system is leak-proof, there is still no way to ensure that governments will have any way to sustainably pay for a free-food scheme that benefits either 67% (the current FSB) or 90% (the Chattisgarh model) of the entire population.  India should learn from Cuba, which had food subsidies for the entire population from 1962 onwards.  During the cold war years, they could pay for it, thanks to subsidies from the Soviet Union.  But after the fall of the USSR, it became much harder to maintain these subsidies and, after the 2008 economic crisis, Cuba decided to gradually end food subsidies and move to a market economy.  Ironically, India seems to be moving in the opposite direction, and seems unwilling to learn from one of the longest failed experiments in subsidies in the world, not to mention its own failed PDS experiment for 66 years.

None are as blind as those who will not see.  But we, the people of India, should open our eyes and not have to pay for the blindness of our governments and leaders.  66 years of failed socialist policies is enough.  It is time to end this madness.


  1. Simply wonderful. You hit the nail on the head deep in the wall. Very well articulated. easy language but piercing.

  2. Depressing! I think the country has to reach a level of maturity where public discourse naturally refers to "taxpayers' money" whenever such schemes are discussed. That's the case in Australia anyway.

    1. Thanks, Ganesh. I fear it is going to be a long long time before India reaches that level of maturity. To take a recent incident, last Thursday was "Govinda time" in Mumbai, when people recreate the mythical exploits of the lord Krishna and break a pot tied at a height. Of course, nowadays, this is an athletics contest, with people trying to build human pyramids of 9 or 10 levels. As you can imagine, they often fail, and when people fall from such heights, they get injured. Some even die. And who pays when that happens? The good Maharashtra govt. And where do they get the money? Not from their pockets - they take it from my tax money, which they happily distribute - Rs. 15,000 towards each injured person, Rs. 150,000 for each death. Why?

      I didn't ask these people to do what is clearly a high-risk adventure sport. If I were to go para-dropping and broke my bones, could I expect the govt. to pay for it? No. So why the hell should I pay for a bunch of people who knowingly take risks like this? Problem is that this is accepted in India without question.


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