SUNS  4367 Thursday 4 February 1999

India: Government eats humble pie over food subsidies



New Delhi, Feb 2 (IPS/Dev Raj) -- Regional partners showed the right-wing Bharatiya Janata Party (BJP) who was boss, Tuesday, by forcing it to restore food subsidies for impoverished Indians.

The allies convened here to discuss the cut in subsidies on food-grains, chemical fertilisers, sugar and cooking gas announced by Finance Minister Yashwant Sinha, last week, as a prelude to the annual budget.

Sinha is faced with a spiralling deficit estimated to hit $25 billion by the time he presents the budget to Parliament on Feb 27 with the grain subsidies alone costing $2.2 billion.

But Sinha also has to content with the BJP's 19 regional allies who have to pay the price of poor financial management by the central government through loss in popularity.

The BJP itself was badly trounced in provincial elections held November in western Rajasthan, central Madhya Pradesh and in Delhi after failing to control the price of vegetables.

Subsidies on wheat and rice benefit 40% of India's billion-odd people reckoned as living below the poverty line by the previous left-wing United Front government, two years ago.

The cut in subsidies would have meant that the price of wheat would have gone up from six cents per kilo to eight cents a kilo and that of rice from eight cents a kilo to ten cents a kilo.

But Ashok Desai, who is economic advisor the government said the subsidies were not reaching the people they were intended for because of a badly administered public distribution system (PDS).

Separate ration cards are yet to be issued in most states for those reckoned as living below the poverty line with the result that PDS grain, sold at half the market price, gets regularly siphoned into the black market by unscrupulous traders.

Protests were heard loudest from southern Andhra Pradesh state, which has a history of providing subsidised grain to impoverished people, and which is to elect a new state assembly later this year.

The Telugu Desam Party (TDP), which rules Andhra Pradesh and is an ally of the BJP-led coalition government, earlier gave an ultimatum that unless the subsidies were restored it would withdraw critical support.

Two other regional allies, the Trinamul Congress from West Bengal state and the AIADMK from southern Tamil Nadu had also threatened to withdraw support, forcing the government to restore the grain subsidies.

The allies who complained that they were not consulted had initially demanded a complete roll-back finally agreed to let the cut in subsidies on sugar, fertiliser and cooking gas stay.

Defence Minister, George Fernandes, who spoke to the press, immediately after a four-hour meeting of the allies concluded, denied that there were serious dissension within the fragile coalition.

But the restoration on food subsidies is being seen as a serious loss of face for the government which had announced categorically on Sunday that there would be no roll-back.

The allies are being wooed by the Congress party, the communists and other opposition groups to withdraw support for the BJP and form an alternate coalition.