'Ideally food subsidies should not be indefinite'

Former UN Secretary General Kofi Annan has warned India against too many populist subsidies. Speaking on the issue of the Food Security Bill and Delhi government's water and electricity promises, he said that subsidised water and power take away their value.

In conversation with CNN IBN's Deputy Editor Sagarika Ghose on Ideas 2014, Annan said that subsidies are a tough issue which once granted are difficult to be withdrawn. "I often say that there are two things in the world, once granted, it is extremely difficult to withdraw - subsidies and privileges." Excerpts:

India as you know has enacted the Food Security Act which is giving subsidised food grain to almost 70% of the population. The cost of this scheme is approximately 22 billion dollars per year. Is this a way to create food security for the govt to give this kind of subsidised foodgrain or is this kind of cost actually unsustainable?

Subsidies are a tough issue. I often say that there are two things in the world, once granted, it is extremely difficult to withdraw - subsidies and privileges. Ideally food subsidies of that kind should not be indefinite. One should be able to help poor people out of difficult conditions and poverty but eventually create condition that allows them to be able to manage on their own.

Just staying with the subsidies question, the Delhi govt just to come to specifics is also giving subsidised electricity, subsidised energy & subsidised water. what is your view about subsidised energy & subsidised water. Do these lead to conservation or do these lead to waste?

Well ideally one should have a sense of value…that water has value, electricity has value and one should not create a situation where people do not value it, infact some of the people who do so should social work may go into a village, and here I am talking about the other parts of the world where they may make water available and they would charge the villagers even if it is one cent to convey the sense of value and use that money back.

That is the problem with subsidies...they take away sense of value?

Ya...ya

Do you think India is ready to take its seat in UN Security Council? Is it something which you support as well?

I believe that the UNSC must be reformed. The current structure really reflects the geopolitical realities of 1945 immediately after the World War II. Today we cannot claim that the council as it is currently constituted is democratic and representative.

I think it is extremely difficult to explain why an India with the size of its population does not have a permanent seat, why Latin America does not have a single permanent seat? Why Africa with 54 nations does not have a single permanent seat and Europe has three.