Neglecting the key issue

Neither side in the face-off between Sen-Dreze and Bhagwati-Panagariya addresses the key issue of supply-side constraints in food production


Indira Rajaraman
The provocation for the latest face-off between Amartya Sen and Jagdish Bhagwati was the book by Professor Sen and Jean Dreze published in June 2013, titled An Uncertain Glory: India and its Contradictions. Books take production time of six months or so, and a minimum of a year for manuscript writing and editing. This book therefore would have been conceived no later than the end of calendar year 2011, at a time when India seemed confidently set on high growth. After a brief downward blip with the global crash to a (still respectable) growth rate of 6.7 per cent in 2008-09, the economy sprang back to a nine per cent growth average over the two years 2009-11. In that context, the book's message was that high growth carries no glory when commensurate benefits do not flow to the population, in the most basic terms of eliminating food deprivation.

Two years down the line, we have tottered off that high growth path. What seemed a low point in 2008-09 was way above average growth achieved in the last two years, or what we can possibly reach this year. Indians who can access a book costing 20 pounds sterling in the (depreciating) rupee equivalent are not feeling the glory of anything, least of all high growth.

Professors Dreze and Sen in their public pronouncements heavily support the food security Bill, whose major focus in terms of expansion - as distinct from mere incorporation of pre-existing schemes - is an increase in the number of targeted households under the public distribution system (PDS). The Integrated Child Development Scheme (ICDS), which targets pregnant women and pre-school children directly, and the mid-day meal scheme, which operates through schools, are included within the ambit of the food security Bill as they stand, but the expansionary coverage of the Bill is focused on the PDS.

The malnutrition situation among women and children in India today is catastrophic. Household targeting is in general a risky way by which to reach these most vulnerable and deserving demographic groups. Within-household disparities in the distribution of food are hard-wired into the culture, and will not change just because the ration card is issued in the name of the senior-most female in the household. Since the ICDS already has an infrastructure in place covering 90 per cent of all villages, if the data from the National Family Health Survey of 2005 are to be believed, this was the scheme which should have been clearly prioritised and deepened, with two meals a day in place of one. With this, the PDS could have been gradually phased out except for the Antyodaya scheme for the very poorest households.

The food security Bill also carries an additional cash component for pregnant women. If this is effected through the household entitlement, women as individuals cannot carry it with them when they move, in accordance with widespread (if not universal) custom, away from their marital to their natal home for the period before and after the birth. With the ICDS, they can. The ICDS does however suffer from high leakage. Professors Dreze and Sen could have examined why existing outcomes of these schemes are so pitiable, instead of admonishing the country for indifference to poor outcomes.

The food security Bill will undoubtedly expand the ambit of subsidised grain through the fractured and fractional pathways of the PDS, but the income equivalent to the recipients cannot possibly counter the continuing rise in the prices of non-grain protein foodstuffs. As any Indian mother can verify, a child does not consume a lot of grain, but it does need milk and other protein supplements. Any rise in milk consumption by the young who need it will only drive up prices even further unless something is done on the supply side, and soon. At present, one dollar per day in purchasing power parity terms buys half a litre of milk.

Structural moves to raise dairy productivity will be too slow to yield immediate dividends, but there are immediate actions possible - like subsidising farm equipment that helps preserve crop residue for use as livestock fodder. Mechanical harvesters, whose use is spreading rapidly, leave standing crop residue in the field. This residue is actually being burned today in the grain-bowl states of Punjab and Haryana. Fodder has shot up in price also because it is being exported to West Asia, and has been a major driver of milk inflation. Clearly the fodder price rise has not been sufficient to provide a market-led incentive for preserving crop residue; but by then milk would have been driven out of reach for most of the Indian population.

Removing supply-side constraints in food production will call for messy and multiple interventions, in consultation with the nationwide network of agricultural universities. Three among the four protagonists in the big debate are non-resident Indians looking for elegant single-point solutions from afar. We have within the country whole institutes, with resident experts in agricultural and food technology, including post-harvest preservation, equipped to advise us on what needs doing on the supply side. The best feature of the food security Bill is actually section 39, in conjunction with Schedule III, which does mention supply-side bottlenecks in the production of food, but with a limited focus on foodgrain.

Jagdish Bhagwati and Arvind Panagariya also have a recent book with a self-explanatory title: Why Growth Matters. They argue for public investment in infrastructure, but with a little too much reliance on market cues for comfort. They do however highlight the need for reform of labour laws, a key and continuing deficiency in the policy configuration.

Because factories cannot fire labour on the formal payroll, they get flexibility under the radar through labour contractors. The service tax payable on the contract is deducted from the wage payable, several times over if there is a sub-contractor chain. A more regressive tax system can scarcely be imagined. Formal hiring flexibility, with factory labour getting pay parity and all benefits due for the duration of their hire, would surely be far better.

The writer is retired professor of economics
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of or the Business Standard newspaper

First Published: Aug 19 2013 | 9:50 PM IST

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