While the rollback is likely to be interpreted as righting a wrong and as buckling under pressure of coalition partners, second thoughts indicate that there may have been no mistake at all. It would be naive to assume that the BJP had no inkling that the hike would finally not go through. Perhaps, having realised that any move to cut subsidies would have met with stiff opposition from both the opposition as well as its allies, the BJP had consciously taken an extreme stand so that at least some of its proposals would be accepted.

Whether or not this was the case, it must be, however, admitted that the Government has succeeded in pushing through most of its proposals. Having rolledback the hike in PDS prices for below-the-poverty-line consumers, it appears to have satisfied its allies. All parties concerned will be able to claim that they have effectively stifled an anti-poor policy, while at the same time the Government's objective of cutting the subsidy bill would be met as the hike in prices for those above the poverty line would stay.

The PDS is, however, unlikely to serve its purpose better after the proposed changes are effected. As it is, the system suffers from several anomalies. Not only does it fail to reach most of the needy, it also breeds corruption at various levels. The increasing disparities will only serve to multiply these anomalies. First, as the difference between the PDS prices for above-the-poverty-line consumers and the free-market prices will be reduced a great deal, the reasonably well-off will shift to the free market for convenience.

While this should ideally reduce pressure on the PDS, experience has shown that the excess grain from the PDS would insteadbe diverted to the free market, resulting in increased corruption. Second, a large number of people will claim that their incomes are below the poverty line, and the Government could be faced with the prospect of a social unrest. Perhaps the most logical solution is to do away with the PDS altogether. Alternatives like food-for-work programmes, which are self-targeting, should be encouraged.