Livelihood issues

The structural adjustment programme has seen the dismantling of the public distribution system resulting in a situation where massive poverty and hunger co-exist with "excess" foodgrain stock. Is there an alternative, asks K. NAGARAJ reviewing a monograph on the distribution of food.

CONSIDER the following facts: More than one third - close to 350 million - of India's population is poor, even by the abysmally low standards set by the Government for identifying the poor; and the number of poor in the country is on an increase over the last decade. The latest National Family Health Survey for 1998-99 points out that almost half the children under three years of age and more than one third of the women in the age-group 15-49 years are undernourished; half of the women and three-fourths of the children are anaemic.

In this situation of pervasive hunger and malnutrition, there is concern in the Government at the mounting food stocks: it has had to store and handle at least around 15 million tonnes of foodgrain in excess of the stocks considered adequate; nearly 10 million tonnes are left in the open for lack of storage space with the Food Corporation of India. The "concern" the State shows, it appears, is not so much because this "excess" stock is not reaching the poor, but that the carrying cost of this "excess" stock is adding to its food subsidy bill which is likely to touch Rs. 14,000 crores at the end of the fiscal year in March 2001 as against the budgeted figure of Rs. 8,100 crores. The Government has thought of ways out of this situation, an embarrassment of riches: part of this "excess" may be exported, even at the depressed international prices of foodgrains; and a part of the rolling stock left in the open may be dumped in the sea. But it will not reach our poor.

How does one explain such a patently absurd, shocking situation? What role do the state policies play in this? Has the policy of liberalisation made matters worse in this regard? Is there an alternative - an example - that can be pursued so that the poor in this country can be assured of a degree of livelihood security? These are some of the issues dealt with - in clear, lucid terms - in this excellent monograph on the public distribution system in India.

A major strength of the monograph is that in dealing with these issues, while the relevant technical aspects are given their due, the public distribution system is studied essentially as a part of the larger socio-economic, political context. This larger perspective allows the author to deal with alternate policy issues not just in technical terms - like say, improving the operational efficiency of Food Corporation of India; the largest issues pertaining to economics and politics of food are central to the alternative spelt out. The other element in the author's perspective - while massive poverty would be reason enough for the State to intervene effectively in the foodgrain sector, the issue of livelihood security should not be seen purely as a poverty alleviation measure, but as a basic entitlement - provides added force to the policy prescription in the study.

A number of myths and misconceptions regarding our food economy are effectively dealt with in the monograph. The first such myth is that we are surplus in foodgrain production today, and hence the State can withdraw from the food sector allowing the market greater play. As the author points out: "If all the hungry and undernourished consumed adequate amounts of foodgrain then present production would barely suffice to meet demand." (p. 114). It is precisely because the poor do not have access to adequate nutrition that we have a seeming "surplus".

Do we have a public distribution system which addresses this problem adequately by providing access to foodgrains to the poor? Marshalling a good deal of hard evidence, the author shows that the PDS as it exists today is hardly a success story. It has a very limited reach and leaves out large sections of the poor and the vulnerable; the quantity distributed is hardly adequate to cover the nutritional deficits of the poor; there are widespread leakages from the system, and there are wide variations, across States, in terms of the effectiveness of the system. In fact the system functions more effectively in States where deprivation is relatively low - Kerala being one striking case of success; on the other hand the system just does not seem to function at all in a backward State like Bihar (Chapter 4).

It is often claimed that even this inadequate public distribution system imposes a heavy - and burgeoning - financial burden on the State. As the author very persuasively demonstrates, this is hardly the case. The food subsidy bill in India comes to just about 0.4 per cent of our Gross Domestic Product, a much lower ratio compared to many developing countries like Sri Lanka, Mexico, Tunisia etc. And this ratio has not risen at all from the mid-1970s (Chapter 6).

It is this myth of a heavy, and increasing financial burden that is used as a justification for dismantling the public distribution system in India, particularly in the last decade under the structural adjustment programme. The issue price has been raised; the entitlements have been reduced; and in the name of reaching only the poor - and excluding the rest - a system of targetting has been introduced.

As the author points out, such dismantling of the PDS is not unique to India. Almost every poor, developing country had to do this, as part of the structural adjustment programme, under pressure from the IMF and the World Bank. And the consequences have been disastrous for the poor in these countries (chapter 5). It is idle to expect that India will be an exception.

While it is obvious why raising issue prices and reducing entitlements in PDS hurt the poor, it is the seemingly unexceptionable move towards targetting ostensibly to the poor and to the backward areas that is as insidious. Once again by marshalling evidence from other countries as well as from different States in the country, the author convincingly demonstrates that such targetting, while being superficially appealing, is fundamentally flawed in a context like in India with massive poverty and malnutrition. There is enough evidence to show that with a shift from the universal PDS to a targetted system, while the chances of not-so-poor benefitting from the system may decline, larger and larger proportion of the needy and the poor, in fact, get excluded from the PDS. For example in Kerala, which has a near universal system of public distribution, the poor utilised PDS much more than the rich; in Bihar on the other hand neither the rich, and more importantly, nor the poor had any access to PDS. Quite apart from the intrinsic, ethical issues involved here, is it fair to deny livelihood security to more and more poor in order to exclude the rest from enjoying such welfare benefits? Even from a purely instrumental view such a sitaution is hardly desirable. The negative, long-term consequences of poverty and malnutrition would more than offset the gains, if any, of expenditure cuts by the State (Appendix 6A).

How does one explain all this? Why does the State dismantle - rather than strengthen - a PDS which results in an absurd situation where massive, increasing poverty and hunger coexist with increasing "excess" foodgrain stocks with the Government which finds it difficult to store and handle? Why doesn't the State utilise this "surplus" in some food-for-work programme which will help in bringing down unemployment and poverty? Whose interest does it all serve? A couple of facts perhaps should clarify this.

As part of the structural adjustment programme, tax rates - particularly the income tax rates and customs duties - have been cut very sharply over the last decade. As a result, the total tax revenues of the Central and State Government, as a per cent of our Gross Domestic Product declined from 16.4 in 1990-91 to 14.1 in 1999-2000; a decline of 2.3 per cent points. On a conservative reckoning, this would work out to an annual revenue loss to the State of the tune of Rs.45,000 crores - more than four times the current food subsidy! A largesse of this magnitude to the rich who gain from such tax cuts is not considered a populist subsidy in the current dispensation. It is also pertinent to note here that while the State has given into the demands of landlords and rich peasants to procure sub-standard grains at remunerative prices in State after State - Punjab, Haryana, Andhra Pradesh - any suggestion to the effect that the "surplus" foodstock with the FCI should be utilised for ensuring livelihood security for the poor has been stoutly resisted in the name of fiscal prudence. The Prime Minister's "gift" to the poor on his birthday - "Antyodaya Anna Yojana" - would just add one more layer to the already complex multi-layered food programme, and is more than likely to end up as all such "gifts" do: as an ineffectual tokenism.

Is there an alterantive? A major strength of the study is that it clearly demarcates the elements in a system for livelihood security for the poor. Such a system would modernise and strengthen the agricultural production system. This would entail basic institutional changes - land reforms in particular - along with support for requisite technological advances. Second, a comprehensive public distribution system with near-universal access would have to be instituted: benefits accruing to the better-off sections by such a PDS may be clawed back as taxes. Third, the purchasing power of the poor has to be improved by appropriate employment generation strategies and programmes. Last, the administration of PDS may be decentralised with active involvement of elected panchayats to improve efficiency, plug leakages etc. (Chapter seven).

The author makes it abundantly clear that such an alternative also entails an alternative politics. The experience of Kerala - admittedly the most successful public distribution system in the country - is a case in point. Mass actions, by peasant and workers' organisation in particular, a high level of political awareness among the public; a political commitment on the part of Left Governments in the State. They have all played a very central role in this alternative success story (chapter four).

In a context where loud, orchestrated support for the structural adjustment programme is a rule and any criticism of it is considered anathema - whether in policy circles, academia or media - it is refreshing to come across a study which exposes, in clear, lucid terms, the underpinnings and consequences of this programme - and provides an alternative. A required reading.

Weakening Welfare: The Public Distribution of Food in India,

Madhura Swaminathan, Leftword Books, New Delhi 2000; p. 140; Price Rs. 95.

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