Food security in India-Recent discussions

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					Thursday, Jan 10, 2002

Food security in India

The focus on accelerated food grains production on a sustainable basis and free
trade in grains would help create massive employment and reduce the incidence
of poverty in rural areas.

      INDIA AT present [2002] finds itself in the midst of a paradoxical situation:
endemic mass-hunger coexisting with the mounting food grain stocks. The food
grain stocks available with the Food Corporation of India (FCI) stand at an all-time
high of 62 million tonnes against an annual requirement of around 20 million
tonnes for ensuring food security. Still, an estimated 200 million people are
underfed and 50 million on the brink of starvation, resulting in starvation deaths.
The paradox lies in the inherent flaws in the existing policy and implementation

Challenges ahead

India's food security policy has a laudable objective to ensure availability of food
grains to the common people at an affordable price and it has enabled the poor
to have access to food where none existed. The policy has focused essentially on
growth in agriculture production (once India used to import food grains) and on
support price for procurement and maintenance of rice and wheat stocks. The
responsibility for procuring and stocking of food grains lies with the FCI and for
distribution with the public distribution system (PDS).

Minimum support price: The FCI procures food grains from the farmers at the
government announced minimum support price (MSP). The MSP should ideally be
at a level where the procurement by FCI and the offtake from it are balanced.
However, under continuous pressure from the powerful farmers lobby, the
government has been raising the MSP and it has now become higher than what
the market offers to the farmers. Also, with quality norms in the procured grains
not strictly observed, farmers pressurise the FCI to procure grains beyond its
procurement target and carrying capacity. The MSP has now become more of a
procurement price rather than being a support price to ensure minimum
production. The rich farmers and traders have cornered most of the benefits
under the support price policy. The small farmers lack access to FCI and being
steeped in poverty resort to distress selling. Constricted warehousing facility has
further aggravated their miseries. At times, the same farmers later pay more to
buy it from PDS.

Input subsidies: Over the years, to keep food grain prices at affordable levels for
the poor, the government has been imposing restrictions on free trade in food
grains. This has suppressed food grain prices in the local market, where the
farmers sell a part of their produce and as compensation, they are provided
subsidies on agriculture inputs such as fertilizers, power and water. These
subsidies have now reached unsustainable levels and also led to large scale
inefficiencies in the use of these scarce inputs. Overuse of fertilizer and water has
led to waterlogging, salinity, depletion of vital micronutrients in the soil, and
reduced fertility. The high subsidies have come at the expense of public
investments in the critical agriculture infrastructure, thereby reducing agriculture
productivity. Besides the high MSP, input subsidies and committed FCI purchases
have distorted the cropping pattern with wheat and paddy crops being grown
more for the MSP they fetch, despite there being relatively less demand for them.
Punjab and Haryana are classic examples here. This has also led to a serious
imbalance in inter-crop parities despite no significant increase in the yield of
wheat and paddy.

Issue price: The people are divided into two categories: below poverty line (BPL)
and above poverty line (APL), with the issue price being different for each
category. However, this categorisation is imperfect and a number of deserving
poor have been excluded from the BPL fold. Moreover, some of the so called APL
slips back to BPL say with failure of even one crop and it is administratively
difficult to accommodate such shifts.

      To reduce the fiscal deficit, the government has sought to curtail the food
subsidy bill by raising the issue price of food grains and linking it to the economic
cost at which the FCI supplies food grains to the PDS. The economic cost
comprises the cost of procurement, that is, MSP, storage, transportation and
administration and is high mainly because of the artificially inflated MSP and also
due to the operational inefficiencies of the FCI. This has pushed the issue price to
APL category higher than the market rates and to BPL category beyond their
purchasing power, resulting in plummeting of offtake from the PDS.

      Also, the low quality of PDS grains and the poor service at PDS shops have
forced many people to switchover to market, which offers better quality grains,
allows purchase on credit and ensures flexibility to purchase in small quantities.

      Also, the high-priced, low-quality Indian rice and wheat find little place in
the international market. Recently, two Indian consignments were rejected even
by Iraq on quality considerations. The result is bulging stocks with FCI amidst
widespread starvation.
Market demand: The PDS entitlement meets only around 25 per cent of the total
foodgrain requirement of a BPL family and it has to depend more on the market
for meeting its needs. Also with the APL families essentially opting for market
purchases, the market demand has risen. However, the massive FCI procurement
has crowded out the market supplies, resulting in a relative rise in rates. The poor
are the most hurt in this bargain.

Food-for-work scheme: The government is running food-for-work scheme to give
purchasing power to the poor who get paid for their labour in cash and food
grains. The scheme is, however, not successful, since the Central Government is
required to meet only the foodgrain component and the cash strapped States are
expected to meet the cash component (almost 50 per cent of the total
expenditure). In many States the scheme has even failed to take off.

Suggested recommendations

There is a need to shift from the existing expensive, inefficient and corruption
ridden institutional arrangements to those that will ensure cheap delivery of
requisite quality grains in a transparent manner and are self-targeting.

Futures market and free trade: The present system marked by input subsidies and
high MSP should be phased out. To avoid wide fluctuations in prices and prevent
distress selling by small farmers, futures market can be encouraged. Improved
communication systems through the use of information technology may help
farmers get a better deal for their produce. Crop insurance schemes can be
promoted with government meeting a major part of the insurance premium to
protect the farmers against natural calamities.
      To start with, all restrictions on foodgrains regarding inter-State movement,
stocking, exports and institutional credit and trade financing should be
renounced. Free trade will help make-up the difference between production and
consumption needs, reduce supply variability, increase efficiency in resource-use
and permit production in regions more suited to it.

Food-for-education programme: To achieve cent per cent literacy, the food
security need can be productively linked to increased enrolment in schools. With
the phasing out of PDS, food coupons may be issued to poor people depending on
their entitlement.

Modified food-for-work scheme/ direct subsidies: With rationalisation of input
subsidies and MSP, the Central Government will be left with sufficient funds,
which may be given as grants to each State depending on the number of poor.

The State government will in turn distribute the grants to the village bodies,
which can decide on the list of essential infrastructure, work the village needs and
allow every needy villager to contribute through his labour and get paid in food
coupons and cash.

Community grain storage banks: The FCI can be gradually dismantled and
procurement decentralised through the creation of foodgrain banks in each
block/ village of the district, from which people may get subsidised food grains
against food coupons. The food coupons can be numbered serially to avoid
frauds. The grain storage facilities can be created within two years under the
existing rural development schemes and the initial lot of grains can come from
the existing FCI stocks. If culturally acceptable, the possibility of relatively cheap
coarse grains, like bajara and ragi and nutritional grains like millets and pulses
meeting the nutritional needs of the people can also be explored. This will not
only enlarge the food basket but also prevent such locally adapted grains from
becoming extinct. The community can be authorised to manage the food banks.
This decentralised management will improve the delivery of entitlements, reduce
handling and transport costs and eliminate corruption, thereby bringing down the
issue price substantially. To enforce efficiency in grain banks operation, people
can also be given an option to obtain food grains against food coupons from the
open market, if the rates in the grain banks are higher, quality is poor or services
are deficient. A fund can be set up to reimburse the food retailers for the
presented coupons. This competition will lead to constant improvement and
lower prices. It must also be mandatory to maintain a small buffer stock at the
State level, to deal with exigencies.

Enhancing agriculture productivity: The government, through investments in vital
agriculture infrastructure, credit linkages and encouraging the use of latest
techniques, motivate each district/ block to achieve local self-sufficiency in
foodgrain production. However, instead of concentrating only on rice or wheat,
the food crop with a potential in the area must be encouraged. Creation of
necessary infrastructure like irrigation facilities will also simulate private
investments in agriculture.

The focus on accelerated foodgrains production on a sustainable basis and free
trade in grains would help create massive employment and reduce the incidence
of poverty in rural areas. This will lead to faster economic growth and give
purchasing power to the people.
A five-year transitory period may be allowed while implementing these. Thus,
India can achieve food security in the real sense and in a realistic timeframe.

Prashant Goyal

Secretary to Government Chief Secretariat, Pondicherry

(The views expressed here are the author's personal)


National Food Security Act Biraj Patnaik, Jul 23, 2010

      The National Advisory Council, led by UPA chairperson Sonia Gandhi, has
come up with the much-awaited contours of the National Food Security Act. The
NFSA, it is hoped, will become India’s flagship programme for tackling hunger and
malnutrition, equal in scale and vision to the ambitious and highly successful
Fome Zero Programme launched by President Lula Da Silva in Brazil.

      The UPA government is also hoping that the NFSA will have the same
electoral impact in the next general elections that the NREGS, it believes, had
achieved in 2009. And it is perhaps not mistaken in this belief since almost every
single state where the anti-incumbency factor was overcome, cutting across party
lines, in the last round of state elections and the 2009 general elections, were
states that chose to consign the official poverty figures of the Planning
Commission to the trash bin (where they richly deserve to be in) and provide
cheaper food grain to a much larger section of their population and at prices
lower than what the Government of India was providing. Chhattisgarh, Andhra
Pradesh, Orissa and Tamil Nadu, four states with four different political parties in
power, led the way in covering larger numbers of poor and admittedly, better
provisioning of foodgrain.

      No sooner had this proposal emerged than the rumblings in the corridors of
power on the fiscal implications of such a proposal have reached an annoying
pitch, with the usual arguments on whether we can afford further "wasteful
subsidies" that threaten to increase the fiscal deficit and affect growth rates. We
can reasonably expect the pitch to get shriller by the day as the countdown for
the NFSA begins, with right-wing economists joining in the debate, along with
Planning Commission mandarins and an assortment of Indian babudom, which
wants to achieve food security with a fiscal neutral bill.

      It would be sobering for these economists and babus to look at the
expenditures that some of the most prosperous countries in the world are
incurring to stave hunger and protect children and adult populations from hunger,
before launching the mournful dirges on enhanced state subsidies. The United
States is a case in point. The nominal per capita income in the US, the world’s
largest economy, is close to 50 times that of India. Yet, 40 million Americans (one
in every eight) are on food stamps, with the US spending close to $60 billion
(seven times the NREGS budget) on this single programme that entitles recipients
to buy food from designated outlets.

      Similarly, the immensely popular WIC programme, which is the American
equivalent of the ICDS and was started around the same time, provides
nutritional support and health services to disadvantaged American mothers and
children. WIC today covers one in every two babies born in the US and the
budgetary support for this programme is close to $7 billion. The Obama
Administration is seeking an additional $10 billion from Congress to deal with
childhood hunger and ensure the US manages to overcome the crisis by 2015.

       The proposals of the NFSA include community kitchens for all urban areas
to provide subsidized, hot, cooked meals to the urban poor and a destitute
feeding programme that allows those on the verge of starvation to partake of the
mid-day meal or food at the ICDS centres. These could well draw inspiration from
the Restos du Coeur ("Restaurants of the Heart") run by a charitable organization
started by the French Comedian Calouche in 1985, with the intention of serving
2,000-3,000 free meals to the poor in France that serves 8.5 lakh meals every day.
It is one of a myriad number of organizations including the ubiquitous Salvation
Army, in the developed world, running soup kitchens.

       For those who are opposed to the idea of the NFSA, on the grounds of a
burgeoning food subsidy, the experience of the richest countries in the world
should be an instructive lesson.

(The author is principal adviser to the Supreme Court Commissioners on the Right
to Food)


16 Jul 2010, Nitin Sethi, TNN

Food for a billion

Topics: Planning commission - National Advisory Council -National Food Security
Bill - ICDS
      On Wednesday, the National Advisory Council turned UPA's election
promises into firm deliverables under the National Food Security Bill. That was a
tough one to resolve itself. But it's a job half done as yet. The Sonia Gandhi-led
NAC is now going to get into a much more difficult arena.

      It has to figure out provisions for the act that hold administration and
bureaucracy accountable for delivery and also ensure that the foodgrain in the
government granary grows over the years to match the enhanced coverage it has
got the government committed to.

      The first of its tasks is a battle with bureaucracy that could be won with
some effort but the latter – increasing production and government procurement
to match the needs of increasing coverage of the act – is a long-drawn war.

      The members of NAC who were inclined towards a more expansive and
near-universal food distribution system have had to argue and bargain hard with
the Planning Commission and the food ministry to get to where they have so far.

      While the NAC backed down on the earlier demand of providing 35kg of
grain at Rs 3 to almost 70% of the country's population, they have rather
inconspicuously got away with a dramatic move. They have completely altered
the way the poor are identified in the country. The government will now move
away from the age-old technique of economic criteria-based assessment of
households – do you own a lavatory, do you have a kutcha or pucca house etc –
to a generic, umbrella approach.
      Now if a household belongs to certain disadvantaged groups and
communities — SCs/STs, homeless, destitute, single women households, HIV
patients etc — it will automatically be included.

      What it does with one stroke is take away the existing power of the
Planning Commission to draw an artificial 'statistical' cut-off percentage of BPL for
the food scheme. The NAC has decided to start a series of nutrition schemes for
the most vulnerable groups and enhance the mid-day meal and Integrated Child
Development Schemes (ICDS).

      All rural and urban destitutes (including those living by alms), the aged,
disabled and infirm adults, single women-headed households, the homeless,
families of released bonded workers, all households which do not have any male
able-bodied adult member, all rural SC ST households across the country will be
universally covered by special nutrition support schemes – again a group target
approach rather than an income level approach.

      But this also means that the grain requirement and subsidy bill will increase
substantially for the government. Especially, as the universal coverage of the bill
gets expanded to more and more blocks – and that is bound to happen as much
out of political demand (remember NREGA) as compulsions of the next general

      At present, the government supplies 27.4 million tonne of rice and wheat
for PDS, which costs it Rs 56,000 crore (in 2010-11). It estimates to have 50 million
tonne of grain in its godowns at the worst point of the year.
      Back of the envelope calculations show the first year of NFSA, when one-
fourth of the blocks or districts get almost universal coverage and special nutrition
schemes are launched, would require around 50 million tonne of grain. The
subsidy bill will go up by around Rs 20,000 crore.

      But even so, the increase of fiscal subsidy might require only a political
decision; supply of grain, on the other hand, is a governance issue that the NAC
will have to fight and push hard.

      The government has announced a 'second green revolution' through the
non-irrigated lands but the agricultural ministry's past record does not inspire
confidence. To assure itself that the NFSA does not come undone in future years,
the NAC will need to set the course for this second 'revolution' and push the
government to procure more. The latter is beset with macroeconomic concerns of
how increased government purchase will hit prices and inflation.

Enhancing production alongside will become mandatory.

This would be the toughest bit to ensure because these issues will lie beyond the
mandate of the NFSA. They would have to be embedded in an overall economic
policy shift that will require increased budgetary allocations to agriculture,
combined with the same intellectual vigour that India witnessed during the first
green revolution.

July 8, 2010

The task of making the PDS work

Jean Dreze

When I first visited Surguja district in Chhattisgarh nearly 10 years ago, it was one
of those areas where the Public Distribution System (PDS) was virtually non-
functional. I felt constrained to write, at that time, that “the whole system looks
like it has been designed to fail.” Ration shops were in the hands of corrupt
private dealers, who made money by selling PDS grain in the open market. People
were powerless to argue when a dealer told them that, for no fault of his, the
stocks were bare. Hunger haunted the land.

Ten years later, there has been a remarkable turnaround on the PDS front. One
hesitates to give good marks to the Government of Chhattisgarh these days, given
its monstrous actions in other domains – the sell-out to mining companies,
backing of Salwa Judum, and suppression of human rights, to mention a few. Still,
the revival of the PDS in Chhattisgarh is a major achievement, of interest to the
whole country.

I had an enlightening view of this revival in Surguja a few weeks ago. Today,
almost every household in this area is entitled to 35 kg of grain each month, at Re.
1 or Rs. 2 a kg (depending on the type of ration card). What is more, the system is
working – everywhere we went, we found that people were getting 35 kg of grain
on time, every month. For people who live on the margins of subsistence, this is a
The planned National Food Security Act represents a unique opportunity to
achieve similar gains across the country. However, the current draft, prepared by
an Empowered Group of Ministers, is a non-starter in this respect. Indeed, the
food guarantee is restricted to 25 kg of grain (at an unspecified price) for BPL
households. This is less than their existing entitlements. In response to recent
agitations, the government seems willing to raise the poverty line by a few
notches, so that more households are included. Even then, a targeted PDS is not
the way to guarantee the right to food.

The main problem with targeting is that it is both unreliable and divisive. The first
point is evident from many investigations into the distribution of BPL cards. The
“exclusion errors” are enormous. For instance, among all rural households falling
below the “poverty line” according to National Sample Survey data, almost half
did not have a BPL card in 2004-05. Similar findings emerge from National Family
Health Survey data.

Perhaps exclusion errors can be reduced with better BPL identification methods.
The N.C. Saxena Committee has made valuable suggestions in this respect. But
the fact remains that there is no reliable way to identify poor households based
on proxy indicators – it is bound to be a hit-or-miss exercise. A landless
household, for instance, may or may not be poor, and similarly with a Scheduled
Caste or female-headed household. The fact that a household may be well-off
today, but poor tomorrow (due, say, to illness, displacement or unemployment)
does not help matters. Last but not least, the power equations in the rural areas
are such that any BPL survey is liable to be manipulated. There is no reason to
expect the next BPL survey to be more reliable than the last one.
Targeting is also divisive: it prevents the emergence of a cohesive public demand
for a functional PDS. And vocal demand is very important for the success of the
PDS. This is one reason why the PDS works much better in Tamil Nadu than
elsewhere: everyone has a stake in it. Chhattisgarh's recent success builds on the
same principle – about 80 per cent of the rural population is covered.

In short, targeting is an ugly business, and it would be particularly dangerous to
“freeze” the BPL-APL distinction into law. That will amount to converting a purely
statistical benchmark, the “poverty line,” into a permanent social division. Surely,
the purpose of the Food Security Act is not to manufacture class conflict?

For all these reasons, serious consideration must be given to the obvious
alternative – a universal Public Distribution System, at least in the rural areas and
urban slums. Consider the potential benefits first: every family will have food
assured in the house, month after month. Gone will be the days of cold hearths
and empty stomachs. For those at risk of hunger, the PDS will be a lifeline. For
others, it will be a form of income support and social security – valuable things to
have, even when you are not hungry. The case for universalisation builds on this
“dual purpose” of the PDS – food security and income support.

The nutrition impact of the PDS, one may argue, is likely to be limited even in the
“universal” version. This may well be true. One reason is that the PDS may not do
much for young children – the crucial age group as far as nutrition is concerned.
What most children need is not more food grains but more nutritious food
(including animal protein), better breastfeeding practices, health care and related
support. They need to be fatter at birth, which requires further interventions
(important in their own right) related to women's health and maternal
entitlements. Special programmes are needed for marginalised groups such as the
urban homeless. Thus, a universal PDS is only one part of an effective system of
food and nutrition security.

This is not likely to come cheap. Tentative calculations suggest that a
comprehensive Food Security Act may cost something like one lakh crore rupees a
year. This may sound like a mind-boggling price tag, but it is not. For one thing, in
a country where half the children are undernourished, there is no quick fix — any
serious attempt to deal with mass undernourishment is bound to be expensive.
For another, one lakh crore rupees is just about 1.5 per cent of India's Gross
Domestic Product. Is that an excessive price to pay to protect everyone from

Incidentally, India already spends more than that sum on things that are rather
trivial compared with the right to food. I am not just thinking of military
expenditure, which could do with some pruning, especially when it is being used
also for internal repression. The fertilizer subsidy is in the range of one lakh crore
rupees a year, with doubtful social benefits, not to speak of the environmental
damage. And the annual “revenue foregone” on account of tax exemptions is
more than five lakh crore rupees, according to the Finance Minister's own
“Foregone Revenue Statement.” This includes about Rs. 80,000 crore of corporate
income tax foregone (some of it “on account of contributions to political parties”)
and nearly Rs. 40,000 crore of foregone customs duties on “vegetables, fruits,
cereals and edible oils.”

The “food subsidy” itself is already around Rs. 70,000 crore. The problem is not so
much that this subsidy level is too low, but that it is badly used. A telling symptom
of this today is the mindless accumulation of nearly 60 million tonnes of grain in
government warehouses. Instead of whining about food inflation, and blaming
“hoarders” for it, the government would do well to release some of the gigantic
food stocks.

This is not to dismiss the resource constraints. One way ahead will be to introduce
universal PDS, say, in the poorest 200 districts, and extend it gradually to the
whole country – much as in the case of the National Rural Employment Guarantee
Act. Today's excess stocks will be of great help in the initial phase of this
transition. Five years from now, the cost of a comprehensive food security system
will be closer to 1 per cent than 1.5 per cent of GDP, if the current rates of growth
continue. Meanwhile there will be enough time to enhance food procurement
and mobilise extra funds. The roadmap is clear: promote local procurement and
tax the rich.

None of this, of course, will be of much use unless the PDS can be made to work.
Universalisation itself will help in that respect, as argued earlier. But systemic
reforms of the PDS are required, building on the wealth of insights that have been
gained from recent initiatives to restore transparency and accountability in
various domains. If Chhattisgarh can turn the PDS around, why not other States?

The National Food Security Act is not going to eliminate malnutrition in one go.
But it could be the end of hunger, and the beginning of a new movement for the
realisation of everyone's right to good nutrition. Let all this be clear before the
idea is dismissed as unaffordable.

(The author is Honorary Professor at the Delhi School of Economics.)
Keywords:      Public Distribution System, Food Security Act, BPL identification

Senior FCI officials suspended

Gargi Parsai

With the proposed National Food Security Bill on the anvil, the Food Ministry has
cracked the whip to eliminate damage to food grains stocks stored in the open,
under monsoon conditions.

Based on the findings of the Ministry's inspection team, the Food Corporation of
India (FCI) on Wednesday suspended senior officials and sought explanation from
top executives for improper handling of and damage to wheat stocks worth Rs. 50
lakh at three sites in Uttar Pradesh.

The Corporation has sought explanation from the Executive Director (North) and
General Manager (U.P.), holding them responsible for the damaged wheat that
was procured for the Public Distribution System (PDS).

It has suspended the Area Managers, Depot Managers and the Managers (Quality
Control) in charge at Hapur, Orai and Harduaganj in Uttar Pradesh with immediate

Taking cognisance of media reports, Food Minister Sharad Pawar had sent a team
to inspect the depots and the conditions at three sites in U.P. After touring the
sites between July 14-17, the team reported damage of wheat stocks at these
depots and found “serious dereliction of duty” by concerned FCI Officers. The
quantity of grain damaged is estimated at 30 tonnes at Hapur, 15 tonnes at Orai
and over 300 tonnes at Harduaganj.

The Minister has asked FCI to take corrective measures as well as to undertake
construction of sidings at small stations at its own cost to safeguard food grains
under Cap and Plinth storage during monsoon.

Lack of storage area is a major problem being faced by the FCI in protecting
foodgrains from the vagaries of monsoon.

Mr. Pawar has ordered regular and continuous random checks at various FCI
depot godowns to fix accountability.

Keywords: Food Security Bill, Food Ministry