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Updated: August 1, 2013 00:54 IST

From the granary to the plate

Jean Drèze
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Despite its many flaws, the food security bill is an opportunity to end the leakages from the PDS and prevent wastage of public resources

The National Food Security Bill, now an ordinance, has been a target of sustained attacks in the business media in recent weeks. There is nothing wrong, of course, in being critical of the bill, or even opposed to it. Indeed, the bill has many flaws. What is a little troubling, however, is the shrill and ill-informed nature of many of these attacks. Statistical hocus-pocus has been deployed with abandon to produce wildly exaggerated “estimates” of the financial costs of the bill, and no expression seems to be too strong to disparage it. The fact that the food bill could bring some relief in the lives of millions of people who live in conditions of terrifying insecurity seems to count for very little.

Findings

Meanwhile, recent studies shed some useful light on the state of India’s Public Distribution System (PDS) — one of the controversial foundations of the bill. As far as the “below poverty line” (BPL) quota is concerned, there is a clear trend of steady improvement in many States, including some that had a very poor PDS not so long ago. A recent study of the PDS in Koraput, one of Odisha’s poorest districts, found that almost all BPL households were receiving their full monthly quota of 25 kg of rice at the stipulated price. Similar findings emerged from a survey of the PDS in two districts of Uttar Pradesh (Lakhimpur Kheri and Chitrakoot), where most BPL households were getting their due — 35 kg of rice or wheat per month. The main problem was the restrictive nature of the BPL list, which left many households excluded. These surveys confirm earlier findings of a study by the Indian Institute of Technology in 2011 that BPL households in nine sample States received 84 per cent of their PDS entitlements.

It is in the “above poverty line” (APL) quota that embezzlement continues in many States. In Uttar Pradesh (U.P.), APL households are supposed to get 10 kg of wheat per month, but most of the APL quota goes straight to the black market. The gravy flows all the way to the top: the complicity of the then Food Minister, Raja Bhaiya, in this scam was exposed last year by Tehelka, but the “bhaiya” retained his post. Recent investigations suggest that leakages in the APL quota are also very high in Bihar, Jharkhand, and Madhya Pradesh, among other prime offenders.

The main reason for this vulnerability is that the APL quota is treated as a dumping ground for excess foodgrain stocks. In recent years, foodgrain procurement has increased by leaps and bounds, but distribution under the BPL and Antyodaya quotas has remained much the same, since allocations are fixed and lifting is close to 100 per cent. To moderate the accumulation of excess stocks, the Central government has been pushing larger and larger amounts of foodgrain into the APL quota, which is now almost as large as the BPL quota (close to 20 million tonnes of foodgrains in 2012-13). One consequence of this dumping is that the entitlements of APL households are, by nature, unclear and unstable; in fact, they are not entitlements but ad hoc handouts. This gives middlemen a field day, since APL households are often confused as to what they are supposed to get, or whether and when their quota has arrived. The current situation in U.P., where most of the APL quota goes straight to the black market without anyone raising the alarm, is just an extreme example of this situation.

Rectifies PDS defects

The food bill is an opportunity to clean up this mess, and to cure two basic defects of the PDS: large exclusion errors, and the leaky nature of the APL quota. In effect, the bill abolishes the APL quota and gives common entitlements to a majority of the population: 75 per cent in rural areas and 50 per cent in urban areas. These are national coverage ratios, to be adjusted State-wise so that the coverage is higher in the poorer States. In this new framework, people’s entitlements will be much clearer, and there will be greater pressure on the system to work. Indeed, wide coverage and clear entitlements are two pillars of the fairly effective PDS reforms that have been carried out in many States in recent years (other aspects of these reforms include de-privatisation of ration shops, computerisation of records and transparency measures). Seen in this light, the bill can be a good move not only for food security, but also from the point of view of ending a massive waste of public resources under the APL quota.

Cash transfers

The main goal of the PDS is to bring some security in people’s lives, starting with protection from hunger but going well beyond that. A well-functioning PDS liberates people from the constant fear that it might be difficult to make ends meet if crop fails, or if someone falls ill, or if there is no work. The value of this arrangement has been well demonstrated in many States — Tamil Nadu, Chhattisgarh, Odisha, Rajasthan, among others. Whether a system of cash transfers could serve the same purpose at lower cost, and how long it would take to put in place, are issues that need further scrutiny and debate. Meanwhile, the PDS is in place, there is a ration shop in every village, and huge food stocks keep piling up. It seems sensible to use these resources without delay. In any case, the food bill does not preclude a cautious transition to cash transfers if and when they prove more effective than the PDS.

Three problems

Having said this, there are many reasons for concern over the impact of the bill. Three related problems look increasingly serious. First, there is a danger of over-centralisation of the PDS under the bill, at a time when many State governments are making good progress with reforming the PDS on their own. To illustrate, the bill seeks to impose a system of “per-capita entitlements” (e.g. 5 kg of foodgrains per person per month) across the country, as opposed to household entitlements (e.g. 25 kg per household). Per capita entitlements are certainly more equitable and logical than household entitlements. But the transition from the latter to the former is not a simple matter, and could be very disruptive if it is imposed overnight from the top. Just think about how an old widow in Rajasthan, who lives alone and survives on her monthly quota of 25 kg of PDS rice, would feel on being told that her entitlement is being slashed to 5 kg per month.

Political tool

The second danger is excessive haste. As the country gears up for a string of elections, the Central government — and some State governments — are keen to fast track the roll-out of the bill for electoral purposes. A sense of urgency is certainly appropriate as far as food security is concerned, but undue haste could be very counterproductive. For instance, some State governments apparently propose to use the BPL Census of 2002 to identify eligible households, instead of the more recent and reliable Socio-Economic and Caste Census — just to speed things up. This is a disastrous idea. A better way of fast tracking the roll-out of the bill would be to universalise the PDS in the country’s poorest districts or blocks.

Last but not least, the promulgation of an ordinance has turned the bill into a political football. The Congress claims that the bill is a non-partisan initiative, but is also trying to use it as an electoral card. The Bharatiya Janata Party says in the same breath that it supports the bill and that it will not allow Parliament to function. The Samajwadi Party is shedding crocodile tears for farmers, but is unable to explain why the bill is “anti-farmer.” The All India Anna Dravida Munnetra Kazhagam claims that the bill is against Tamil Nadu’s interests, without mentioning that it will enable the Tamil Nadu government to save large amounts of money on rice purchases from the Centre. The real issues are getting lost in these squabbles.

It remains to be seen whether the monsoon session of Parliament will provide an opportunity to repair this damage, and also to consider the much-needed amendments to the bill. The silver lining is that food security has finally become a lively focus of democratic politics in India. Whatever happens to the bill, State governments are under great pressure to reform their PDS and make it work for people rather than for corrupt middlemen and their political masters. This was long overdue.

(Jean Drèze is visiting professor at the Department of Economics, University of Allahabad.)

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I agree with Jean Drese absolutely. The whole issue of FSB is cauterised by the petty poltics and ill-informed media. Corruption and bringing a policy are two different matters all together. They must not be clubbed together by opposition to fill their vote banks. Infact, this FSB will definitely curb corruption and leakages. Instead of everytime criticising, they should once atleast act in national interest leaveing aside their vested interests. As far as ordinance is concerned, its not hidden from anyone of us that they don't let the parliament work at right time through their melodramatic activities. The POVERTY is an iceberg issue. Though we are the world's largest democracy, that's as irony that one third of world's poor live in India. So, this step should have been taken much earlier infact.

from:  Kanikka Sersia
Posted on: Aug 2, 2013 at 00:49 IST

A very nice article highlighting the under carpet problems associated
with NFSA-2013 (if passed). The UPA government is creating a great
hype on this bill by adding cash transfer cherry on the top. Indians
are not that foolish to become prey to this illusion. In a nut shell,
NFSA is a bare secret without a logic that works by diluting the
existing quota at 1:5 ratio. UPA government by heart is not committed
to eradicate poverty, if so, what is the point of cooking the poverty
reduction figures. A show up Government, just trying to show this as a
support to NFSA.

from:  sandeep kumar
Posted on: Aug 1, 2013 at 15:22 IST

@ Amrit Patel 1) If anyone implemented a pro-people scheme and won election THAT MUST BE APPLAUDED - even if it is the corrupt Congress govt. Seeking people's votes and helping corporates is what Congress and BJP routinely do. That is treachery and need be punished. If BJP is going to stick with this line it must be wiped - and it will be. 2) Funding research, infrastructure, education of agriculturists are surely needed. But this will not alleviate desperate deprivation and hunger. Already food grain stocks in India far exceeds the levels needed to support the whole population for over a year comfortably. Why is the hunger and malnutrition so pre still? Waxing eloquent without minding the facts is the easiest thing and that is what corporate media and their supporters routinely do.

from:  Janarddan
Posted on: Aug 1, 2013 at 12:45 IST

Meeting the basic need such as food for the poor sections of the
society is a essential duty of the welfare state. When requirement
arises, there should be effective delivery mechanisms to provide these
services, for eg: PDS in this case, to reach the right beneficiary.
Couple of things to be concerned with are, the effectiveness of the
delivery & tracking system to plug loopholes, leakages, feedback
mechanisms, etc.
Every welfare schemes aimed at the masses however has some political
motive behind it, to gain something more out of it the party or the
govt in power should strive to eliminate the flaws involved in it and
make it more transparent & accountable. How often have we not seen
recently, the losses/misappropriation of funds on these schemes shown
by CAG?. The govt should not merely discuss it in the parliament but
should make ways to resove this, then the confidence of the masses
will be restored with the govt in power be it central or state.

from:  Hareesh Kumar
Posted on: Aug 1, 2013 at 12:26 IST

it is a impractical idea,to get votes,fool people & make law abiding tax payers to pay more taxes direct & indirect.common man will be affected the most & how many of those 67% population will really get benefit?
A Kautilya who understands India's economy is the need of the hour to correct financial mess.

from:  B.K. Niteen
Posted on: Aug 1, 2013 at 12:22 IST

Food Security Ordinance is in tandem with the Directive Policy of
State. It is the duty of the Government to ensure people do not die of
hunger. The positive aspect of this bill is the target group which
includes more than two third of India people and do away with the
unpractical BPL numbers. Also India is self sufficient in food
production which makes the Food Security idea viable. This will also
improve PDS and will reduce rotting of foods in the open. Food
Security Ordinance may have flaws but no bill can be made which is
ideal for every individual. Thus it is good initiative and
improvements can be made in the future.

from:  Akshay Dhadda
Posted on: Aug 1, 2013 at 11:09 IST

UPA Government in its 2004 election manifesto promised enacting law to provide right to employment for 100 days in ayear @Rs.65/day and mobilized huge votes defeating BJP which had indeed done excellent job but could not think, leave alone implement such a useless and unproductive scheme being a drain on honest tax payers' hard earned money every year creating significant rise in wages of farm laboreres. In its 2009 election manifesto promised right to food security under which around 67% of population of the country would be provided at significantly subsidized rates food grains and won the election. Now till fag-end of its five year term UPA Government could not keep the promise wasting four years, just not to increase fiscal deficit and now awakening from a deep sleep wants the Food Security Bill passed in just few hours. How long such vote mobilizing techniques can work?. What is sincerely required is Government must prioritize agricultural development sincerely investing adequately in research, extension, education, irrigation, processing, markets, infrastructure, among others, and drastically revamping organizational structure of agricultural departments and agricultural universities thereby creating enabling environment that can motivate farmers to increase productivity of crops and net profit. Besides, create rural employment through productive and income generating assets which can increase purchasing power of people to help them purchase food grain, vegetables, pulses, fruits, milk, meat etc from open markets.

from:  Dr Amrit Patel
Posted on: Aug 1, 2013 at 10:01 IST

Present Indian scenario really needs a proper food security bill. A
bill that entitles the needy with the most and making it more wide
reaching. The new bill needs great reformation in the former PDS and
its schemes , with very stringent guiding laws. The ever restrictive
and leaky PDS, famous for its black marketing tricks with middleman and
politicians enjoying a comfortable and highly-respectable life. It will
obviously need a very strong coordination between the center and state
government which is already facing serious clashes in the early stages
of the bill. This new bill needs a proper population census before
getting catered otherwise it will simply be an another PDS with much
bigger and fraudulent practices. Parties seriously need collective,
logical and selfless deliberation over the matter before passing the
bill, which seems like a very impossible job presently and there logics
will get more illogical with the election coming closer.Hope they come
up with a proper bill

from:  Ankan Sikdar
Posted on: Aug 1, 2013 at 02:17 IST
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