Indian food regulator’s Rs 1000 crore media blitzkrieg to improve ‘food safety’ !!!

The meek justification being offered for this disproportionate funding for publicity is that people have to be made aware about various provisions of the Food Safety Act, 2006.

It appears India’s food regulator has got all its priorities horribly wrong. The regulatory body plans to spend a whopping sum of over Rs1,000 crore just on publicity during the 12th plan period.

The amount the Food Safety and Standards Authority of India (FSSAI) has sought from the government for publicity related activities is much more than what it plans to spend on its core activities – developing food safety standards, setting up testing labs, surveillance and so on.

Out of Rs6,548 crore for various projects and initiatives planned during the 12th plan period, as much as Rs1,019 has been earmarked just for publicity.

The meek justification being offered for this disproportionate funding for publicity is that people have to be made aware about various provisions of the Food Safety Act, 2006. While detailed rollout schedule and clear deliverables have been shown for various activities, the authority remains vague when it comes to its gigantic media spending plan.

All that the proposal says is ‘awareness generation/ IEC programme would be as per well-thought-out media plan to be undertaken regularly using all forms/formats of publicity having wide reach’.

The Rs1,000 crore media blitzkrieg is expected to result in ‘overall general awareness about food safety rules/ regulations and sensitisation of various stakeholders about food safety issues’.  Rs350 crore under the so-called media plan will be spent for undertaking a ‘comprehensive campaign utilising audio and video and print media for dissemination of messages’. An amount of Rs319 crore has been proposed for publicity utilising ‘non-media vehicles’ such as multi-coloured pamphlets on food safety, hygiene, prevention of food spoilage, use of potable water in cooking etc. Such material will be distributed to schools, vendors and will be displayed at bus and railway stations. Another Rs350 crore would be disbursed to states at the rate of Rs2 crore for every state every year for publicity in local language. (courtesy: Dinesh C. Sharma & MailOnlineIndia)

Did he deliver? “no.”

This morning, I asked whether Finance Minister Pranab Mukherjee would step up to the plate and deliver a budget statement which would do anything to try to boost India’s anemic growth performance.

Did he deliver?

The answer seems to be a resounding “no.”

In a speech that lasted almost two hours, Mr. Mukherjee didn’t once mention, as far as I could hear, the phrase “economic reform.” There was a passing reference to opening up multi-brand retail to FDI, a plan that was shelved after opposition from the government’s own allies. But all he said was that the government would consult with the stakeholders and try to build a “consensus” around the policy proposal. That’s a tactful way of saying that nothing is likely to happen.

The central portion of the speech consisted of a long series of spending plans laid out by the finance minister. There’s no two ways about it: this was old-fashioned red-blooded populism, a budget laying out the goodies in advance of what is likely to be a difficult run-up to the elections due in 2014. Normally, governments in Westminster-style parliamentary democracies reserve the pre-election goodies for the year before an election. But given the battering the Congress Party has taken in the recent state assembly elections, still reeling from a string of corruption scandals last year, it’s evident that Mr. Mukherjee has decided to pull out the stops and deliver a pre-election budget this year, fully two years ahead of the expected election date.

Other than new spending, the crux of the budget involves a partial shift away from direct toward indirect taxes. Putative losses on the direct tax ledger, by rolling back personal tax increases, are to be made up by raising excise taxes on the service sector from 10% to 12%. Certain sectors will be exempted, but the entertainment and hospitality sectors are not, and are likely to take a hit. As a matter of economics, indirect taxes are more distorting of the economy, as they create what in jargon are called greater “deadweight costs,” which roughly measure the loss to producers and consumers when any activity is taxed. Direct taxes, such as income taxes, are also distorting of course – by changing the labor-leisure trade-off in favor of working less and taking more time off – but less so than their indirect cousins. So this is not good economics from Mr. Mukherjee, but it may be good politics.

Finally, the finance minister threw in the old chestnut of “sin taxes,” raising taxes on cigarettes and other tobacco products. These are used by governments, despite protests to the contrary, not to promote health, but rather because they’re cash cows. Tobacco and alcohol are “inelastic,” in economic jargon, that is, they don’t respond much to price: so you can raise a lot of money by taxing these commodities.

The political pundits and assorted analysts have been assiduously dissecting the budget on Indian cable news channels, and you’ll no doubt see a slew of editorials and op-eds in tomorrow’s papers.

But you can get the bottom line here first: This budget has nothing at all to push forward the stalled economic reform agenda. Rather, it’s the traditional stew of a lot more public spending and a reshuffling of taxes, none of which will either stanch the flow of red ink or revitalize the stalled engines of growth. On a pass/fail scale, this budget is a gigantic failure. It may, or may not, bring the Congress Party short-term electoral gain (although that’s debatable), but it represents a huge missed opportunity to get the job started. Reforms 2.0 will have to wait for another day, or, maybe, another government.