This is a question that requires more than a HN post to answer.
In broad outlines though
1) On the one hand this is our social safety net, and the floor to ensure that farmers are guaranteed a floor price for their efforts
2) We HAVE boosted agricultural productivity, which is why we have stocks which are now rotting.
3) We are stuck (edit: Didn't finish this point) with the legacies of our past. Which include our own step backwards in the 1960s.
4) > We must avoid giving Freebies. Giving away things for free/subsidy is the root cause of the problem.
The food isn't free. Its at a nominal subsidized rate.
The poverty line is about 32 rs a day. This system acts as a social safety net, while also at the same time ensuring a floor price for agricultural produce.
NREGA, a right to work act; may well be digging holes to fill holes. Yet it also is working to support a minimum wage across the country.
Can they be scrapped? Yeah.
Will it be good for India? No, it will likely be a disaster.
The transition from an inefficient, old school system to a modern system will immediately close out entire generations from the economy. No amount of education and retraining will close that gap.
Expect a gradual transition, as alternatives to western systems are dreamt up which work in an Indian context. Some of them are redundant, but are what people will swallow and accept.
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Other fun stuff:
Heck forget freebies, you should check out the reverse taxation mechanism that recently got introduced and is applicable from mid year.
The larger firms now are responsible for collecting the taxes they pay for obtaining services! If you work for a large firm and rent a car, if the final bill contains service tax, you are now obligated to pay that service tax to the government separately.
Why? Because the govt knows it can't go after the unorganized sector directly. So they make it inimical for the un-organized sector to remain disorganized.
MNCs will transfer their work to companies like Hertz, or other rent-a-car companies and so on.
Smaller firms will have to register and become compliant to survive.
Widening the tax net, and increase compliance.
At the expense of the more established firms.
Bizarre? Yeah, its par for the course.
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Side note:
2 MBA students actually tried to live at 100 Rs/day and then Rs 32 a day. At the 32 mark, they said travel was out of the question because the calorific/time effort required to move that distance to get to a bus station would have curtailed other equally important activities. (http://rs100aday.com/about/)