Thus, presumably, is explained the task force that the finance ministry has set up to streamline the subsidy system — and to work out methods to get the money straight to those we are trying to subsidise. The task force will be chaired by Nandan Nilekani, the head of the Unique Identification Authority of India, which implies that there will likely be some convergence with the UID project. A hoped-for byproduct of that project was, after all, the ability to better target government programmes. And if any of those programmes desperately need targeting so they reach the intended beneficiaries, it is the subsidies that are doled out for kerosene, for cooking gas and for fertiliser. The kerosene subsidies, for example, are massively diverted to adulterate diesel. Naturally: kerosene is available at Rs 12 a litre. The government subsidy per litre is Rs 20. Diesel, meanwhile, is priced near Rs 40 at the pump. The illicit adulteration industry is estimated to run into tens of thousands of crores — and, as the recent murder of Yeshwant Sonawane in Maharashtra showed, it has spawned a culture of intimidation and violence. Similar problems exist with cooking gas and fertiliser subsidies — of targeting, and of leakage from the supply chain.
Nilekani’s task is hopefully an indication that the government takes the problem seriously. The subsidy burden, as it stands today, is unsustainable. Nor is the structure even halfway rational. Conditional cash transfers have long been recommended as an alternative, including in last year’s Economic Survey. While the technical hurdles may be overcome, administrative coordination too would be crucial. It is welcome, therefore, that the taskforce is broad-based in terms of ministries. The intention is, reportedly, to roll out a pilot project before the end of this calendar year. Much rides on its results.