Opinion Read the signals

Most of those reforms,in pension and insurance sectors as well as in diesel and LPG prices,will raise the cost of goods and services delivered. However,as the passengers on the bus could have told Manmohan Singh and Pranab Mukherjee,that is not an issue.

Near the bus stop is a lane at the end of which is an LPG agency. A walk to the outlet,where young boys in grimy uniform lounge under the fan for some respite from the soaring heat,is instructive. Every 15 minutes,someone walks in to plead for a cylinder. The gas agency cannot supply one unless the customer has a licensed connection but most of the walk-ins are migrant families who have arrived in Delhi without any identification cards. A young boy takes orders from customers who have a connection,while another,standing at the door,books orders at a premium from those who don’t.

Areas like Khajuri Khas and other migrant-packed settlements in Delhi have always seen widespread protests against any effort to change the price of petroleum products.

Between the bus and the gas,what attracts people is the delivery of the product at the right price.

Many years ago,Manmohan Singh’s colleague at the Delhi School of Economics,professor Raj Krishna wrote a seminal paper based on several years of field study on price elasticity in Indian farms. His study showed that there is precious little difference in the way farmers in a subsistence economy,as India was then,and those in a market economy,like the US,reacted to price signals.

But in the zeal to create a dole economy,the Centre and parties like the Trinamool Congress have misread the signals.

For confirmation,just flip through the latest report from the Comptroller and Auditor General on the Union government’s spending pattern on its flagship programmes. Since 2008-09,when seven programmes,including the NREGA,the mid-day meal scheme and the Indira Awaas Yojana,got going,there has been one common thread running through them.

While the government has tried to load it up with funds,rural India’s appetite for them has consistently dropped. The two exceptions are the programmes for rural roads and education. One is a clear asset-creation plan that has changed the dynamics of agricultural marketing and the other is about elementary schooling. The rate of utilisation of funds in the Sarva Shiksha Abhiyan is 31 per cent over the budget estimate; it is even more in the Pradhan Mantri Gram Sadak Yojana: 87 per cent.

Compare these with house-building plans like the Indira Awaas Yojana that has just managed to meet the budget estimate. Bigger ones like the NREGA are nowhere near,as per the latest data.

India’s urbanising and mobile population has little use for static support such as doles. They want government to deliver on things they can use — like roads and education.

And that is where a clueless government gets hammered. The means to raise India to a strong investment-grade in the eyes of rating agencies are capital-building measures.

As the recent World Bank India Investment Update (March 2012) points out,Delhi is wasting time on pipe dreams about FDI in retail. Instead,it should work with the states to find out why,despite changing the Agricultural Produce Marketing Committee Acts,none of them have introduced the relevant rules to make the changes effective. Without these changes,no farmer can sell even to domestic retailers,bypassing mandis.

Again,as the government cringes about how people will invade the streets on LPG prices,there is a curious development it has not even noticed. Indraprastha Gas,the joint venture between Bharat Petroleum,Gail and the Delhi government,has raised the cost of piped gas in the very same areas of East Delhi,mentioned in the beginning of the article,by close to 50 per cent over the last three years.

None of the pipelines has been tampered with,people have not rushed to streets in protest and life goes on. The only difference is the zero irritation in getting a piped gas connection and the 100 per cent trouble in procuring an LPG cylinder.

But the members of Parliament will have us believe otherwise. Someone should tell them that the rush to use the Metro rail and Delhi’s DTC buses and the despair about LPG prices are part of the same phenomenon.

subhomoy.bhattacharjee@expressindia.com