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| Is the food security programme workable? |
| Business Standard / New Delhi Nov 03, 2010, 00:14 IST |
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Yes, if it creates a universal PDS and includes nutritional security, but massive subsidies could skew the market for foodgrain and add to inflation
 Biraj Patnaik
Principal Adviser to the Commissioners of the Supreme Court, Right to Food case
The NAC’s food security proposals should be seen in the context of India being home to 40% of the world’s malnourished children and close to a third of world’s hungry people
There is, by now, a discernible pattern to the babble of voices that raise a cacophony whenever a pro-poor legislation is being enacted in India. These voices, mostly from neo-liberal economists or columnists, chorus around the issue of burgeoning fiscal deficits or “wasteful subsidies”. This chorus reached a crescendo when the National Rural Employment Guarantee Act was being enacted in 2004 and has been reactivated with the debate on the National Food Security Bill.
One greying eminence, for instance, concluded in his piece (unimpeded by his lack of knowledge) that there was no such thing as a “right to food” and, in a single stroke, demolished decades of established international covenants, national jurisprudence and constitutional guarantees. The fundamental premise of the Bill is that the least that the world’s second-fastest growing economy can do is to ensure a right to food for all its citizens. India is not the first nation to think of such a law. More than two dozen countries have either amended their Constitutions or enacted legislation that guarantees this right, with Brazil taking the lead among developing nations with its visionary Fome Zero (zero hunger) programme.
The recent recommendations of the National Advisory Council (NAC) have to be seen in the context of India being home to 40 per cent of the world’s malnourished children and close to a third of the people living worldwide with hunger. It is a country that aspires to be taken seriously as an economic superpower and yet manages to rank 64 out of 88 countries in the Global Hunger Index. On the credit side, the NAC proposals include a legal guarantee — well, sort of — for cereals for 75 per cent of India’s population. It includes legal guarantees for mid-day meals in schools, supplementary feeding in ICDS (Integrated Child Development Service) centres, destitute feeding for people on the edge of starvation and an ambitious programme of community kitchens in urban areas for subsidised meals for the urban poor. It also has a maternity entitlement programme that would give direct, unconditional cash support to all pregnant and lactating mothers in the country. Legislating this would hopefully make these programmes more accountable and bring in greater transparency. More importantly, it promises a slew of reforms in the the Public Distribution System (PDS) and a fundamental restructuring of the ICDS programme, which is the only institutional mechanism of the government to reach the 160 million children under the age of six with supplementary nutrition and five other essential services.
On the other side of the ledger, the NAC proposals are disappointing because they squander an opportunity to create a universal PDS, do not deal with nutritional security and exclude the direct cash transfer programmes for the aged, disabled and single women, who form the most vulnerable section of our population. A food security programme without a universal PDS in like staging Hamlet without the Prince of Denmark. Food security that, by definition, excludes nutritional security is a delusion that will not take us very far in the battle against malnutrition. The most damaging aspect of the NAC proposal is that it casts into legislative stone the artificial distinction between the Above Poverty Line (APL) and Below Poverty Line (BPL) and the deeply flawed poverty estimates of the Planning Commission that have been the bane of poverty alleviation programmes in the last two decades.
Even these proposals are unlikely to pass muster with the government easily. First, because of the fiscal implications and, second, because the legislation in its current framework will not translate into political gains for the UPA II. The PDS proposal, for instance, seeks to exclude 50 per cent of the urban population, a section that switched electoral loyalties to the UPA in 2004. If anything, these proposals will only help Opposition-run states that have expanded their PDS over the past few years, since these governments are most likely to seize this opportunity of additional Central subsidies to expand their PDS and make them universal. The bureaucracy is also likely to strike back by diluting the provisions for accountability, like it did when the Right to Information Act was being enacted.
The NAC proposals on the Bill are, therefore, just the beginning of an interesting battle in the months to come as India takes its first, hesitant steps on the path to food security.
The views expressed here are personal
 A Seshan
Economic Consultant
The scheme has serious fiscal implications for the country. In many other nations, either the producer is subsidised or the consumer; in India both the inputs and outputs of selected crops get the benefit
The government seems to have realised at last that, besides the people living Below Poverty Line (BPL), there is a vast population of near-poor and neo-poor who need the state’s attention in food security. The National Advisory Council (NAC) has expanded the concept of BPL beneficiaries, virtually doubling their number to 75 per cent of the population, designating them “priority households” and making them eligible to receive 35 kg of subsidised foodgrain (Rs 1 per kg for millet, Rs 2 for wheat and Rs 3 for rice) every month. The remaining 25 per cent – described as “general households” – will be entitled to 20 kg of foodgrain per household at a price pegged at 50 per cent of the Minimum Support Price (MSP). The scheme is imaginative and, if implemented well, should help in ensuring food security. This, however, is not a new idea. This writer has been arguing for quite some time that the current inflation is inertial and is stuck at an equilibrium of high food prices. It could be moved down if the government administers a shock to the system by selling its vast stocks of foodgrain at prices substantially lower than those in the markets after working out the cost-benefit, keeping in view the grains rotting in the godowns and the maintenance charges.
But the government scheme is an exaggerated version of what this writer recommended. It has some serious implications for the country’s fiscal health. The MSP goes up year after year. In many other countries, either the producer is subsidised or the consumer. In our country, both the inputs and outputs of selected crops get the benefit. The fertiliser subsidy may also be expected to go up given the power of the farm lobby. If the government sells foodgrain at very low prices to a massive population, the market will crash. The farmer would prefer to sell all his stocks to the Food Corporation of India (FCI). Will the FCI have enough warehousing facilities considering that large amounts of rice and wheat are rotting in open storage today? Food credit will balloon and reduce the amount of non-food credit available unless the Reserve Bank of India compromises on its monetary policy. The release of purchasing power will augment the demand for vegetables and pulses the prices of which are already high contributing to the rising inflation. Think of a capsicum being sold at Rs 15 or a sitaphal at Rs 30 in Mumbai now. Would they reach Rs 30 and Rs 60 respectively? Although the production of pulses is expected to increase in the current season, it is not clear whether it would make a difference to their prices if the demand goes up further.
Before the next general election, it is likely that the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), which is now in operation in the entire country and has contributed to demand inflation, will see further liberalisation. Now the guarantee is for work for 100 days in a year. The parties in power are likely to promise an extension of the benefit throughout the year. In the West, one has seen the trend of rising incomes and output without a corresponding growth in employment. We have the Indian version of rising incomes and employment without output growth! There is enough official and other evidence to show how millions of rupees are wasted in the MGNREGS, thus benefiting the intermediaries and the rural people who do not work to get the daily wages if there is collusion with the contractors or the local officials. There are instances of labour scarcity in rural areas in a country teeming with surplus labour. One may expect the minimum wages for labour to be raised before the next election. The bureaucracy cannot be expected to operate massive schemes like the MGNREGS or a universal public distribution system efficiently. The Unique Identity Card is no solution since it will used by the same officialdom that has not acquitted itself well so far.
What is needed for food security is a massive effort to raise agricultural production, in general, accompanied by a strategic sale of buffer stocks at a discounted price without disrupting the market mechanism. The sale price of buffer stocks should be at a discount to the market price and not the MSP.
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