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LATEST NEWS UPDATES | Volte-face on Food Security

Volte-face on Food Security

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published Published on Feb 1, 2015   modified Modified on Feb 1, 2015
-Economic and Political Weekly

 

A "high-level" committee makes half-baked recommendations which will rollback the PDS.

A ccording to media reports, former Union Minister for Food Shanta Kumar recently disowned the National Food Security Act (NFSA) on behalf of the Bharatiya Janata Party (BJP). He explained, without blinking, that the BJP had just pretended to support the Act when it was being discussed in Parliament, for fear of the possible electoral consequences of opposing it. This startling admission of doublespeak did not prevent him from castigating the Congress Party for attempting to use the Act to win votes.

Shanta Kumar happens to be the chairperson of the High Level Committee on Reorienting the Role and Restructuring of the Food Corporation of India (FCI) (hereafter "HLC"), which submitted its report earlier this month. The HLC report, aside from calling for sweeping changes in the mode of operation of the FCI, makes strong recommendations aimed at downsizing the NFSA. These include reducing the coverage of the public distribution system (PDS) from 67% to 40% of the population, raising issue prices to half of the relevant minimum support price (instead of Rs 3/kg for rice and Rs 2/kg for wheat), and a gradual transition to cash transfers.

The crux of the committee's argument is that PDS leakages are unacceptably high, and that cash transfers would save money. The report disputes the view that the recent PDS reforms have led to reduced leakages and cites an alarming figure of 47% leakage in 2011-12. This estimate is higher than earlier ones, also based on matching National Sample Survey (NSS) data on PDS purchases with FCI data on foodgrain offtake. Recent data from the second India Human Development Survey, which is possibly a more reliable source of data on PDS purchases than the NSS, also suggest much lower leakages - 30% or so. This is still unacceptably high by a long margin, but, if correct, it confirms the possibility of effective PDS reforms. Indeed, the decline of PDS leakages over time is particularly clear in states that are known to have implemented bold PDS reforms in recent years, e g, Chhattisgarh, Odisha, and - more recently - Bihar.

Bihar's experience is particularly interesting because of the state's notorious record of large-scale embezzlement of PDS foodgrains. NSS data suggest leakages in the range of 80%-90% in Bihar throughout the 2000s. Signs of improvement emerged from 2011 onwards, notably with the introduction of a system of tracking coupons. Further progress was achieved in the past two years within the framework of the NFSA. Broad coverage (about 75% of the rural population), low issue prices (Rs 3/kg for rice and Rs 2/kg for wheat), clear entitlements (5 kg per person per month), and - last but not least - political competition in the run-up to this year's assembly elections, all contributed to stronger public pressure for a functional PDS. A recent survey of 1,000 randomly-selected rural households in four districts of Bihar, initiated by the planning and development unit at Allahabad University, found evidence of major improvement compared with a similar survey conducted three years earlier. For instance, households with a ration card (74% of the sample) were able to secure close to 80% of their PDS entitlements during the month preceding the survey. Major irregularities remain, and the battle is far from won, but, nevertheless, Bihar's recent experience suggests that effective PDS reform is possible even in the worst-governed states.

The HLC report pays little attention to the wealth of recent evidence on these matters. Instead, it pronounces a summary sentence on the PDS based on tentative leakage estimates from NSS data. The report is equally casual in its wholesale endorsement of cash transfers as an alternative to the PDS. Without providing significant operational details, it claims that a seamless system of cash transfers, complete with online biometric authentication, could be rolled out across the country within two or three years. This claim is unlikely to convince anyone who is familiar with the state of the banking infrastructure in the poorer parts of rural India.

This is not to deny that there are valid arguments for cash transfers as a possible alternative to the PDS, especially in urban areas and the richer states. The HLC report, however, does not shed much light on the appropriate timing and modalities of this transition.

Meanwhile, the implementation of the NFSA is being held up in many states due to prolonged delays in the release of Socio-Economic and Caste Census (SECC) data. State governments need SECC data to identify eligible households. SECC data for Bihar are available and the Government of Bihar was able to use it to generate a new list of ration cards, transparently linked with SECC data - a major improvement over the earlier BPL list. Many other states, however, are still waiting for SECC data - four years after the census was completed. The delay is scandalous considering that the central government spent about Rs 5,000 crore on this data collection project, much of it on contracts for private agencies.

Finally, it is important to remember that NFSA entitlements are not confined to subsidised foodgrains under the PDS. There are also important entitlements to nutritious food for young children, and to maternity benefits for pregnant women. Maternity benefits of Rs 6,000 per child have been a legal entitlement of Indian women since July 2013, but nothing has been done about it. The central government seems to think that it is above the law.

Economic and Political Weekly, Vol-L, No. 5, January 31, 2015, http://www.epw.in/editorials/volte-face-food-security.html


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