Sunday, January 08, 2012

A Question of Food Security

Amidst all the brouhaha of the Lokpal Bill, the UPA Govt has introduced arguably an ultra-ambitious food security programme that strives to put food into the thalis of lakhs of famished Indians. The Bill was introduced in the Parliament and referred to the Standing Committee immediately. It has far reaching implications but has not attracted sufficient national attention or media eye balls, like the Lokpal, maybe because it deals with hunger – a theme that has lesser TRPs.

So what does the National Food Security Bill provide for? The present draft of the Bill seeks to provide legal entitlement of food grain to 75% of the rural population and 50% of the urban population.  Eligible households will be divided into two categories – priority and general – wherein the priority group will consist of atleast 46 percent of the rural population and 28 percent of the urban population. BPL (priority) families will be entitled to a monthly provision of 7 kg food grain per person and APL (general) families will be eligible to 3 kg per person, at half the Minimum Support Price. The 7 kg will comprise rice for Rs 3 /kg, wheat for Rs 2/kg and coarse grains for Re 1/kg.

In addition to this, the bill envisages maternity benefit of 1000 Rs per month for 6 months for pregnant women and lactating mothers, free or affordable meals to destitute, homeless and disaster-affected persons and nutritional meals for children upto 14 years. In effect, this would translate subsidies worth almost Rs 1 lakh crore for close to 75% of our population (an additional cost of 40,000 crore over the existing food subsidy Bill of 60,000 crore, making it 1.25% of the GDP.

The Bill in its current form looks like a Utopian drug that doctors would like to administer to a dying patient so that he is up the next day.  The moral imperative behind such a law is agreed to by everyone; a country with 45% malnourished children and a lowly ranking of 66 among 88 countries on the World Hunger Index, below even sub-Saharan countries is a pretty damning statistic! The problem of hunger is a national shame and so while we must be careful of the fiscal implications of such a solution, a decision cannot be driven by economics alone – what is the price that we can pay for a human who dies of hunger?

To quote Sainath -
The corporate giveaway in the current Indian budget is 18-19 billion dollars in direct income tax and if you add other corporate concessions under excise and customs, it crosses over a hundred billion US dollars. According to UNDP, that’s the amount you require every year to solve all the basic problems of the human race. But the same Indian budget cuts 4,500 million rupees from food security. Last year the same amount, nearly 10,000 million rupees had disappeared in 24 months from food subsidies in a country which has the largest number of hungry people in the world.
The primary concern of the Bill deals with identification of the target groups to whom the scheme is to be directed at. Umpteen committees like the Tendulkar Committee, NC Saxena Committee, the Planning Commission (remember the 32 Rs starvation line) and other smaller groups have come up with figures which quote different definitions of what it means to be poor in this country. The Bill has left it to the wisdom of the Govt and the Parliament to sort this out but the experience of the Lokpal does not indicate that the Parliament has any Solomons to provide solutions. Until we really know the quantum of people to whom the scheme is targeted, the real cost and strategy required to handle this cannot be estimated.

Nandan Nilekani’s UID Project (which still has no Parliamentary law to back it) has run into rough weather and the Standing Committee on Finance has come down heavily on it for being a badly designed scheme with no clear objectives. The Home Minister is not comfortable with its working and the socio-economic and caste census to determine eligibility is well behind schedule.

One way out of this target based conundrum suggested by most experts is in looking at the success story of the Universal PDS popularized by Tamil Nadu. Here, population segregation for distribution of grains has been done away with and every family in the state, BPL or not, has a colour-coded card that entitles it to draw rice under PDS with a provision that those under the ‘needy’ category get a larger amount than the others. The task of minimizing diversion and reaching rice to about 2 crore cardholders across 31,439 outlets in 32 districts is being carried out using technological interventions, drawing up innovative fool-proof delivery mechanisms, proper policing, surprise checks and constant reviews, efficient supply chain management system including a GPS tracking of trucks carrying food grains to tackle pilferage and fixing responsibility at each.

The FSB requires large scale foodgrain procurement, storage planning and construction, creation of a distribution system from scratch and strengthening the existing PDS. Currently, the Government procures close to 52 million tonnes of food grains every year and the new entitlement would lead to an enhanced requirement of close to 25 million tonnes. Such a massive exercise of procurement and distribution will be handled by the Food Corporation of India but does it have the capacity and logistics to handle such large volumes? When food grains go rotting every year due to storage problems, where will this additional procurement go?This is assuming that every grain of food procured is actually distributed to the stakeholders - RBI data shows close to 50% leakage in the PDS and corruption estimates of around 20,000 crore every year! Reforming the existing leaking PDS structure is probably a better thing to do than rather than increasing its size beyond controllable limits.

Govt data about a decade back estimates the cost of procuring wheat at 134 Rs/quintal and transportation of the same at 289 Rs – a massive expenditure involved merely in the to and fro movement of food among states! Does the Centre have to be involved in such an activity? Each State must decide the best way to carry out such programmes locally and even here, a decentralized design where the Grama Panchayats can act as the agent to carry out these activities will ensure a lower cost and proper delivery to people. Schemes like free kitchens run by villagers and mid-day meal have done more than any Central driven scheme in handling the issue. States like Chhattisgarh and Gujarat have devised working mechanisms like door step delivery and computerised PDS which can be emulated in the rest of the country.

Alternate solutions in the form of food coupons or cash transfers directly to the needy have also been discussed. Bihar uses a system of food coupons which unfortunately has very little to show because of the corruption nexus between dealers and Govt officers while the cash transfer scheme is largely untested in India. Access to banks and markets is still pretty low in rural India and so the cash transfer is possibly too early an option but it makes sense to run pilots based on these schemes in various regions so that empirical data is present while making a final decision.

There is also a larger question of whether hunger and poverty can be eradicated by legally ensuring dole outs in this manner. The adage of ‘teaching a man to fish rather than giving him fish’ is equally relevant; state interventions which put grains or cash in the hands of struggling individuals can only ensure that they can survive but in the long run, they are  dependent on the State to bail them out. Dipali Rastogi, Commissioner – Food Supplies (M.P.) writing in the Indian Express refers to South Korea’s Saemaeul movement where the Govt strived to eliminate absolute poverty through harnessing the labour of the poor to carry out development and infrastructure projects – something on the lines of NREGS but in the form of incentive-based programmes to fund high capital concrete development of villages instead of beneficiary based entitlements that provide no incentive to tackle the real problem.

There is a danger that any discussion on this Bill will degenerate into a fight between the rich and the poor. It is imperative that we put aside the political background of the Bill and judge it purely what it is trying to implement – right or wrong can be debated even without judging the affiliations of the people who have drafted it. Most of us agree with the fact that it is a well-intentioned bill but then as they say ‘The road to hell is paved with good intentions’ and it needs all the debate it can to make it effective..

There is no readymade consensus strategy to combat this alarming situation – the Left talks about Govt subsidizing food similar to wages for labour in NREGS while the Right talks about growth being the only natural panacea to deal with the problem (actually, looking at the way FDI in Retail and the Pension Bill have gone, the current polity looks too confused to decide on whether they are on the right or left side of the debate). The solution has to lie somewhere in between, similar to all other solutions that India needs to tackle its gargantuan problems.

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