Economic Highlights

New Delhi, 20 October 2010

NAC’s Noble Aim But….

FOOD SECURITY DISTANT DREAM

By Shivaji Sarkar

Food security has finally taken centre stage of the national policy debate. The National Advisory Council has recognised it as an important aspect and wants to ensure food to the urban and rural poor by reviving the public distribution system (PDS). It is a noble intention but faulted on its basic premise of ensuring food for all.

Importantly, it has not estimated how it would be able to sustain the real subsidy of Rs 15,000 crore a year. Particularly when Government coffers are shrinking in real terms. In the previous PDS, the subsidy was notional as whatever the Government paid to the Food Corporation of India was repaid through higher PDS prices.

Further, the policy decision has another fault line. It wants to utilise the issue for political purposes and is based on exclusion of a large section of the population. On the premise of them being well-off and having the capacity to take care of themselves. The State often falters on such theorisation.

There is little doubt on what the World Food Summit 1996 had declared. It defined food security as “existing when all people at all times have access to sufficient, safe, nutritious food to maintain a healthy and active life”. The NAC has overlooked this.

The issue is food security to all and not to selected few, howsoever large that could be. It was believed in the 1990s reform phase that left to the market, the matter would be taken care of in a profitable manner and the Government could withdraw and disband the PDS. It did so by 2000 throwing a large section of the people at the mercy of unscrupulous traders and their godfathers.

An unfettered market exploited the situation to its benefit depriving a large section of the populace basic food security and making the rest vulnerable, forcing them to consume less food grain. Today, once again it is not a supply side problem as officials want the nation to believe. Food grain production has been veering around 230 million tonnes and even in 2009-10 it marginally fell by less than a million tonne.

The NAC has apparently got into the trap of officialise and has come out with a prescription that wants to treat the disease without treating the symptoms. A flaw that has become inherent in Indian policies since 1960s, when the Government decided to become the sole trader and introduced a system of food control all over the country.

It was beyond the Government then to manage the unwieldy PDS through imports and under US PL 480. It had helped US farmers more and caused miseries to a generation who had to queue up at PDS shops for days together every month. The mistake was repeated in 1990s when the Government wanted to fully withdraw from the PDS under pressure from the food trading lobbies.

Clearly, the new policy is a bag full of promises to repeat those mistakes. It wants to revive the PDS without taking measures to rectify the problems that had beset it. It is certainly likely to falter as it would leave a large chunk of the PDS supplies to be pilfered away by those who are marginally or technically away from the below poverty line.

 The different pricing mechanism --- lower than the procurement rate --- for different people is likely to abate this trend. It seems little has been learnt from the past mistakes. Even Jean Dreze, a socio-economist, who gave a dissent note, has apparently faltered on this multi-tier system.

World-wide it has been seen that differential system leads to leakage. The NAC has mulled over leakage including introduction of the smart card but has not tried to eliminate the basic cause. In many cases, the beneficiaries themselves had been selling off their entitlements for some consideration, including in the food-for-work programmes. How would the smart card deal with smarter people?

This is where innovative policy interventions are required. Restricting benefits to sections of people --- even if it is 75 per cent of the population --- only opens up channels for leakage. Thus a pious aim would again be lost in the unpreventable liaison of officials, transporters, traders and sometimes the beneficiaries. The State would also be burdened with unwanted but legally compulsive prosecutions.

The NAC instead of rushing through a decision and drafting an unnecessary Food Security Act should have taken steps to universalise food security and give access to all in the PDS. It should function as market-interventionist agency and ensure affordable prices in the market.

Undoubtedly, the nation needs to learn from Europe. It too was in shambles till such differential system existed. Its progress was repeatedly hampered. It started going ahead when the benefits were universally granted and not restricted to the poverty syndrome. Many countries had food coupons but those too were misused. India needs to learn.

Needless to say, treating the poor differently always gives advantage to those who are not so poor. They exploit the poor with minor allurements be it milk powder in late 1950s or butter milk in 1980s.

The nation has been trying to treat poverty without taking care of the actual affordability of the poor. Even the present entitlement of 35 kg and 20 kg a month has not taken care of that. The poor with limited daily or weekly wages do not buy food grain, pulses or edible oil in such quantities. They buy small quantities on a day-to-day basis. How would the PDS address that? Little thought has been given to it.

This kind of forced liability on the State has other pitfalls. It requires a large buffer stock of around 58 million tonnes, as per official estimates, when the stock has depleted sharply requiring huge investments and logistics.

Clearly, the nation needs food security but need not shun the market. The PDS and market both should exist and vie for keeping the prices lower. That would take care of the distribution. The present crisis is because of rising prices and not shortage of food.

The poor needs income security more, to enable them of taking care of food as well. How long can the tottering finances of the State bear this burden? Let us re-look the concept of the Food Security Act. It must not be another piece of useless legislation. ---- INFA

(Copyright, India News and Feature Alliance)