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Food at stake

By Brinda Karat

Ten years after the dismantling of the universal public distribution system (PDS), the statistical jugglery of the targeted food distribution system actually excludes millions of poor in both the BPL and APL categories. Targeting is linked to neoliberal policies that seek to limit, if not eliminate, the government's welfare responsibilities

People may find it strange that the union finance minister could ask for votes in his home state of Tamil Nadu on the promise of providing rice at Rs 2 a kilo for the entire population, but should practise the opposite when formulating policies in New Delhi. Increasing food subsidies, stepping up allocations to the Public Distribution System (PDS), and raising the number of beneficiaries under the Antyodaya scheme are just some of the measures that should have been provided for in the Union Budget. But they were not.

Now the Department of Food and Public Distribution, under the leadership of Sharad Pawar, has taken this line of thinking forward with a set of proposals including reduction in wheat allocations to the states; allocation of coarse grains instead of wheat; removal of foodgrains from the Sampoorna Grameen Rozgar Yojana (SGRY) scheme as part of wage payments; decrease in allocations for drought-hit areas; increase in the prices of foodgrains for both Above Poverty Line (APL) and Below Poverty Line (BPL) cardholders in the PDS; reduction in quotas for both APL and BPL by 5 kg from the present 35 kg; and prevention of sale of wheat in the open market by State agencies, which is usually done to control prices. Taken together, these proposals constitute a frontal assault on the right to food.

The denial of the right to food for a large section of the Indian population reflected in increased malnourishment, stunted growth, ill-health and loss of energy and therefore productivity is an issue that deserves more national attention. If countries were to be graded in terms of provision of food security to their citizens, India would rank along with Ethiopia at the lower end. The United Nations Children's Fund (UNICEF) report that one out of every two children in India is malnourished confirms the lopsided priorities of successive governments at the centre that seek to narrow fiscal deficits by reducing food subsidies.

The previous National Democratic Alliance (NDA) regime was symbolised by 6 crore tonnes of foodgrains rotting in Food Corporation of India (FCI) godowns while people went hungry. The United Progressive Alliance (UPA) government's record over the last year has been one of gross food mismanagement symbolised by plummeting wheat stocks, spiralling prices and, finally, wheat imports. A slew of policies, followed by first the NDA and now the UPA, have resulted in the present state of food insecurity at a time of acute rural distress. These policies include (1) the nature of public distribution; (2) the gradual decline in the role of the government and state agencies with regard to procurement; (3) the lack of commitment to food self-sufficiency expressed in policies that encourage a switchover to export-oriented cash crop production from foodgrains; (4) encouragement of forward trading in foodgrains and pro-trader changes in the Agricultural Produce Marketing Act.

Targeted PDS

Until 1996, India had a universal PDS. The United Front government introduced the targeted system with the mistaken notion that the infirmities of the PDS would be curbed and that it would enable subsidised grain to reach those who actually needed it. Targeting entails an identification of the poor. Where these numbers are small, targeting may be a simple task. Where these numbers are large, and in countries such as India where the majority of the people are in the unorganised sector with fluctuating incomes, targeting could become an instrument to exclude sections of the poor from the right to food. Targeting is also a method linked to neoliberal policies that seek to limit, if not eliminate, the role of the government and State from its welfare responsibilities, which include the provision of accessible food to its people.

India now has 10 years of experience of the targeted (into APL and BPL households with access to foodgrains at different prices) and further targeted (into BPL and Antyodaya households) system. Last year, the Planning Commission did an evaluation of the PDS and found that 57% of the poor had been actually excluded from the BPL system. Earlier, the Abhijit Sen Committee had also come up with similar findings, pointing to the utter failure of the targeted system, and suggested a return to the universal PDS.

An associated problem with targeting is that of identification of the poor. If only those who are officially identified as ‘poor’ can have access to food, then clearly the method has to be one that ensures accuracy. The prevailing method of identification is entirely unsatisfactory. There are two sets of estimates. The estimate that is linked to allocations of foodgrain is made by the Planning Commission. According to a reply given in parliament, the present concept of the poverty line is based on the per capita consumption expenditure needed to attain a minimum amount of calorie intake out of food consumption along with a minimum amount of non-food expenditure in order to meet the requirements of clothing, shelter and transport, among other things. This is based on the methodology suggested by the Lakdawala Committee in 1993 and the population projections of the Registrar-General of India as of March 1, 2000. Shockingly, according to the current assessments, it works out to around Rs 11 an adult a day. Clearly, this is not a poverty line but a destitution line.

Earlier, foodgrain allocations were not linked to poverty line assessments but were open-ended depending on past utilisation by the states. The linkages came along with the targeted system. This creates another anomaly. The Rural Development Ministry has a set of programmes for BPL families. The states have to conduct a BPL survey on the basis of the criteria decided by this ministry. These are different from those of the Planning Commission. Thus the state BPL census on the basis of one set of calculations may be entirely at variance with that of the Planning Commission. The number of BPL cards issued by the states is reportedly over and above the Planning Commission ‘quotas’ by as much as 2 crore. However, the food allocation is made not on the poverty estimates of the states but by those arbitrarily decided by the Planning Commission.

According to current estimates, 6 crore households in India come under the BPL category. That such a large number of people are earning less than Rs 330 a month is shocking enough. But what is cruel is that anyone earning above this meagre monthly income is classified as APL and excluded from the right to subsidised foodgrains. The very words ‘Above Poverty Line’ is misleading because they include a vast section of the poor who have been denied their entitlements through statistical fraud and jugglery to serve a neoliberal agenda.

The need for subsidised foodgrains for a wider section of people is also reflected in increased offtake. While the offtake in the Antyodaya system is around 90%, showing the desperate need of people for cheap foodgrains, the offtake for BPL has doubled in the past few years, from 73.67 lakh tonnes to 228.45 lakh tonnes in 2005-06 out of an allocation of 273.20 lakh tonnes which constitutes 83% of the allocation. As far as APL is concerned, the offtake is much lower not because people do not need the grain but because for several years there was not much difference in the APL price and the market price. The central issue price for wheat is Rs 7.50 a kg. For rice the price range is from Rs 10 in Gujarat and Maharashtra for a kg to Rs 9 in Andhra Pradesh and West Bengal. As current market prices of foodgrains have shot up, the demand for APL foodgrains will definitely increase but the poor offtake of the grain in the past few years is being cited by the government to cut allocations, precisely when people require it more.

To illustrate, according to a memorandum by the Fair Price Dealers Association in West Bengal, whereas in 2004-05 the wheat allotment for both APL and BPL was 2.22 lakh tonnes, it has been slashed to 1.51 lakh tonnes in the current year. Godowns of the FCI in five major centres do not have wheat stocks at all. In April 2006, whereas the dispatch instructions were for 59 rakes, only 15 rakes actually arrived. Similarly, in the SGRY the earlier component of 5 kg of wheat as part payment of a daily wage has already been cut to 3 kg. States have complained that wheat allotments have virtually stopped for this programme.

Since rice procurement is reportedly up by around 28 lakh tonnes, it is possible for the central government to replace wheat allocations with rice at least for the time being in consultation with the states. Instead of taking such a step, the Centre is proposing a cut in allocations.

Poverty assessment

The demand for a revision of methodologies for poverty assessment has been raised by several eminent economists and also in parliament. This is an issue that requires the most urgent attention. In any case, linking food allocations with centrally pre-decided quotas regardless of the reality on the ground is a method to reduce the share of the poor in national resources. This should be stopped and states allowed to draw food allocations according to their needs.

Secondly, the neglect of foodgrain production consequent to the new agricultural policy's emphasis on export-oriented cash crops is a major reason for current shortfalls in wheat production. With stagnating wheat production, the danger level in weakening food self-sufficiency has already been crossed with the rate of growth of food production falling below the rate of growth of population. Last year, the production of wheat reached a low of around 68.5 million tonnes while this year it is estimated at around 71 million tonnes. Soil exhaustion in India's wheat-producing states of Punjab, Haryana and western Uttar Pradesh may require diversification but it will be disastrous if the government continues to encourage diversification without a policy of bringing alternative land under wheat production.

Procurement policy

The third issue is that of procurement of wheat. Wheat deficits to the extent of 20 lakh tonnes below the buffer stock norms leading to imports for the first time in decades are a result of the deliberate policy of the government to cut down procurement on the one hand and encourage private trade on the other. In 2001-02, with wheat production at 69.8 million tonnes, procurement by state agencies was 20.6 lakh tonnes. This year, with wheat production estimated at 71.5 million tonnes, procurement has plummeted to just 9.18 million tonnes. The minister's explanation is that since farmers benefited from higher prices this was not a matter for concern. In fact, state agencies were disabled by pro-trader changes made in the Agricultural Produce Act. They could now go straight to the farmer in the remotest village, while the FCI can only buy from registered markets; the private traders no longer need a licence or a recognised agent to buy foodgrains, thus escaping from market fees which the FCI has to pay, adding to its costs; while private traders can go into the market according to their own assessments, the FCI is hamstrung by bureaucratic procedures. Thus big companies such as Cargill, Reliance, ITC and even the Australian Wheat Board, which has turned out to be the company supplying the imported wheat, went into villages in Punjab and Haryana much before state agencies and offered small farmers a price slightly higher then the official minimum support price (MSP) of Rs 650. Only when a large part of the produce had been cornered by private trade, the government offered a bonus of Rs 50.

Big farmers who could hold on to their stocks would have benefited from the higher prices offered later, but the bulk of the peasantry sold their produce to traders at prices below the Rs 700 offered three weeks too late by the government. If the FCI had been given the same leeway as private trade, then the present dismal record of low procurement could have been avoided. Shockingly, the government offered the Indian farmer almost Rs 100 less than what it paid foreign traders for wheat it has imported at Rs 789.20 a quintal. The cornering of the stock by private trade has permitted wheat hoarding, which has pushed market prices up by Rs 5-6 a kg. Thus private trade made a killing both ways, by buying the bulk of wheat at prices only slightly higher than the MSP and by manipulating market prices to two-thirds more than what they spent on buying the grain from farmers.

A dangerous argument advanced by the minister is that the import of wheat directly to the southern ports actually saved the exchequer Rs 399 crore. According to him, the cost of distribution of wheat procured in Punjab or Haryana to the last centre in southern India works out to Rs 1,120 a quintal compared to the Rs 997 it costs for the transport of imported wheat. Decades of building a food security system can be wiped out by such neoliberal ideologies that undermine the principle of self-reliance. Besides, it reflects a naive belief that international prices will remain static whereas clearly international traders are waiting to maximise profits through wheat imports at higher prices to India. Further, a dangerous concession by way of lowering of phytosanitary standards in the quality of wheat is also being planned. This must be opposed strongly. India can spend thousands of crores to protect itself through nuclear might but can render itself completely vulnerable by losing its greatest achievement, the backbone of sovereignty -- food self-sufficiency.

With this approach, the situation on the rice front could follow a similar disastrous pattern in the future. It also raises the question of whether it is appropriate to combine the Agriculture Ministry with the Food and Public Distribution Ministry, which has been done for the first time in the UPA Cabinet with Sharad Pawar holding both portfolios. Fourthly, the FCI is being weakened systematically. Huge amounts, running into thousands of crores of rupees, are owed to the FCI on account of foodgrains supplied by it to different government programmes such as the SGRY and the food-for-work programme. But these amounts do not appear either in the Budget or in the accounts of the Rural Development Ministry.

In answer to a pointed question in parliament, the finance minister replied that there was no need to show it in the Budget as "there is a separate accounting system with the FCI". Precisely because the FCI's role in procurement and distribution of foodgrains is being curbed, the ability of the government to intervene in the market to control prices is also reduced. In a country where there is an uneven pattern of foodgrain production with a large number of states facing food deficit, weakening the FCI means weakening food security.

Other programmes

The employment schemes of the government, which offer part of the payment in foodgrains, play an important part in the provision of food security, though inadequate. The move to cut back on this component will also cut down on the real wages of the worker. With the current high prices of wheat and other essential commodities, what the worker gains in cash is less than what he/she has to pay for his/her foodgrain needs in the market.

Linked to the issue of weakened distribution and the cutting down of allocations is the fate of the 4.83 lakh fair price shops. To use the illustration made by Madhura Swaminathan, there is evidence from Kerala, the state with the most effective system of rationing, of ration shops becoming unviable. In the early-1990s, the average monthly sale of cereals was 7,500 kg of rice and 2,000 kg of wheat per ration shop. By 2001, these figures had fallen to 1,400 kg of rice and 200 kg of wheat. Many fair price shops are now estimated to be making losses. According to an official estimate by the Government of Kerala, the gross earnings per fair price shop fell from Rs.3,711 before March 2000 to Rs.1,493 in August 2001. The situation has worsened since then.

What needs to be done is to improve the systems -- whether of the procurement agencies, the fair price shops or the methods of distribution -- but not to destroy them. But that is what the Food and Public Distribution Department seems to be proposing. People-centred reform requires a return to the universal PDS.

(Brinda Karat is a member of the CPI(M) Politbureau. This article originally appeared in Frontline, June 17-30, 2006)

InfoChange News & Features, October 2006