On the same day as the central cabinet approved the food security bill two weeks ago, Sheila Dixit stood up courageously to defend the rising price of electric power in Delhi. By not raising the power subsidy, Delhi’s chief minister was able to increase investment in roads, public transport, education and health care. The contrast between the two actions could not have been more dramatic.

Sheila Dixit’s actions will lead to productive jobs, better skills and long term prosperity of the people. The food security bill, on the other hand, will condemn India’s poor to perpetual poverty. The bill plans to distribute grain to two thirds of India’s population at a 90% subsidy costing over Rs 100,000 crores. The food security bill gives people something for nothing and thus weakens the work ethic.  Giving people virtually free food will keep them dependent on a ‘mai baap party’, trapping them into a permanent vote bank. It is a brilliant strategy of the Congress Party at the centre—both the voters and the party will thus have a vested interest in keeping people poor and dependent.

If the same Rs 100,000 crores were to be spent in providing public goods--roads, schools, power, and law and order--it would encourage entrepreneurs to start businesses, which would create sustainable jobs and raise the state’s tax revenues. These taxes, in turn, would make it possible to invest in more public goods. Thus, a virtuous circle would be created and lift the society’s standard of living. But the Congress would lose out for people would move out of poverty and out of its vote bank.  

There are other serious risks associated with the food security bill. The fact is India just cannot afford this colossal spending. The latest budget shows how vulnerable are the nation’s finances, and this new spending could well lead to a downgrade of the country’s sovereign rating to junk status. Moreover, past experience shows that less than half the food in such programs reaches the intended beneficiaries. Hence, this bill might produce another scam when half of the 50 million tonnes of grain are diverted to the black market—a scandal that this scam tainted government cannot afford.

Worse, this bill will tempt people to lie about their financial status and weaken public morality even further. For example, 83% of Karnataka’s people call themselves poor based on BPL cards when less than a quarter of the state is, in fact, poor. West Bengal discovered last year that forty percent of its BPL cards were fake. A law that turns people into liars would have horrified our founding fathers. They had a profoundly moral vision of the Indian republic--so much so that they placed the wheel of dharma, the Ashok Chakra, in the nation’s flag. When a government forces people to become dishonest, it wounds public dharma and undermines the trust between the rulers and the ruled.

The reforms of 1991 were based on an unwritten social contract which created a new basis of trust. Government would stop running businesses and focus instead on governance and public goods. Entrepreneurs and markets would do a more efficient job and lift the economy’s growth rate. This has, indeed, has been happening. Almost two hundred million have risen out of poverty and another two hundred million have joined the middle class. Markets have also helped to accelerate social change and re-shaped public character. A new class of citizens has risen who are now demanding a corruption-free state based on the new social contract.

Giving away virtually free food and power, waiving loans to farmers, creating ‘make work’ jobs, as the UPA government has been doing, undermines this social contract. It reinforces the present malaise over poor governance and corruption, and widens the gap between people’s aspirations and government’s performance. The UPA’s campaign managers may think that India’s vast majority is untouched by the new dharma, but the recent protests against corruption and violence against women have shown otherwise. This cynical bill, instead of winning votes, may thus only add to the woes of the UPA, which will discover to its peril in 2014 that voters will think of the food security bill as amounting to corruption by a different name.