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'India's shallow rhetoric of inclusive growth'

Jun 30, 2009

The proposed Food Security Act in India is flawed, says Brinda Karat, Polit Bureau member of the Communist Party of India (Marxist)). She argues the public distribution system should be made universal, as it existed prior to the targeted system introduced in the 1990s as part of the neo-liberal agenda.

The President’s address to both Houses of Parliament included the promise of a National Food Security Act. Every family below the poverty line, in the rural and urban areas, will be legally entitled to 25 kg of rice or wheat a month at Rs 3 a kg.

In the context of increasing hunger, with India listed at a low 66 in the Food and Agriculture Organisation’s World Hunger Index of 88 countries, the need for a legally mandated food security framework is imperative. But will the proposal benefit the food insecure?

According to current definitions of poverty, an estimated 6.5 crore families are below the poverty line. Among them are 2.5 crore Antyodaya families, considered the poorest among the poor and therefore eligible for additional subsidies.

"An estimated 6.5 crore families are below the poverty line. Among them are 2.5 crore Antyodaya families, considered the poorest among the poor and therefore eligible for additional subsidies"

Today an Antyodaya family is entitled to 35 kg of wheat at Rs 2 a kg, paying Rs 70 a month. If the Food Security Act is implemented, this sum will rise to Rs 75 and the family will get 10 kg less of subsidised foodgrain.

To make up, it will have to buy 10 kg from the market. At the current market rate of at least Rs 12 a kg of wheat, this will mean Rs 120.

A BPL family’s ration bill for the 35 kg of wheat it is entitled to is today around Rs 157.50 at the average rate of Rs 4.50 a kg. This includes the cost the States add to the Central issue price of Rs 4.15 a kg.

Since the Act proposes cutting the BPL quota by 10 kg, the benefits of lower prices will be negative and families will end up spending Rs 195 for the same quantity of cereals.

Shallow rhetoric

If the National Food Security Act is implemented as conceptualised by the Congress, it will be a cruel example of how the shallow rhetoric of inclusive growth conceals the cutting back of even the inadequate food entitlements the BPL and Antyodaya families get today.

It has been assessed that cutting the quotas will lead to a saving of approximately Rs 4,000 crore in the food subsidy bill.

Clearly, the current official thinking on the Act is flawed. First, the allotment of 35 kg should not be cut to 25 kg.

Secondly, Antyodaya families that are receiving wheat at Rs 2 a kg should continue to do so.

Thirdly, and this is the most crucial aspect. Why should the government limit the benefits of a mandated food security framework to those who have a BPL card?
It is well known and recognised, including in official reports, that the targeted system of public distribution system has excluded large sections of the poor from its purview.

National Statistical Survey data from the 61st Round shows that more than half of rural manual labourers, the section most in need of subsidised food, do not have BPL cards.

In Bihar and Uttar Pradesh, such exclusion was 71% and 73% respectively.

One reason is the incorrect identification of the poor, with corruption playing its role in the wrong distribution of BPL cards. The other, more substantive, reason is the methodology used by the Planning Commission to estimate poverty and the linking of subsidised food allocations to States based on these estimates.

Absurd estimates

The monetary equivalent of the poverty line in India is just Rs 11.80 a day per adult in rural India and Rs 17.80 a day for urban areas. All others are considered “above poverty line.” Such an absurd definition of poverty will obviously lead to massive exclusion.

For any food security framework to be beneficial, the current poverty estimates have to be thrown out and a new framework accepted. It is reported that the Tendulkar Committee set up for this purpose has finalised its recommendations, which include an upward revision of rural poverty estimates.

"For any food security framework to be beneficial, the current poverty estimates have to be thrown out and a new framework accepted"

This may result in a larger number of families in rural India having access to subsidised foodgrains. That would be welcome.

However, since the vast majority of people find work in the unorganised sector with wildly fluctuating incomes, accurate assessments of their food insecurity are unlikely.

The Arjun Sengupta Commission on the unorganised sector assessed that 77% of India’s adult population spent less than Rs 20 a day. How can food requirements be met with such a low spending capacity? Can an Act for food security ignore this reality?

The answer lies in delinking food allocations to the broad poverty estimates done by the Planning Commission.

For the last decade or so, the estimates of poverty are translated into exact numbers of the poor and then divided into units for food allocations.

While broad strokes of poverty estimation are certainly required to guide government policy, to link such estimates to concrete numbers to decide food allocations is unjust and unfair.

Need for detailed surveys

The assessments of State governments such as Bihar and Bengal that have done detailed house-to-house surveys put the number of those who require subsidised foodgrains at 10.5 crore families.

This is 40% more than the Planning Commission estimate. The proposed Food Security law ignores these assessments and bases itself on the linkage of Planning Commission estimates of poverty to legally recognised food rights.

The Central government must be sensitive to the fact that even as it delayed such a legally required food security system in spite of the relentless increase in the prices of foodgrains in the last five years, at least 10 State governments moved ahead to provide food security programmes, most of them superior to the proposed law.

Almost all the 10 States have increased the numbers of those eligible for subsidised foodgrains by using their own criteria, which are more inclusive than the criteria used by the Centre.

Chhattisgarh has included all tribal families and families headed by women. Kerala has included all tribal and Dalit families and all families of fisherpersons, apart from those chosen under nine core criteria.

Chhattisgarh provides 35 kg of foodgrains to 70% of the population, at Re 1 kg for Antyodaya families and Rs 2 for the rest.

Kerala provides 35 kg of rice per family at Rs 2 a kg. Though the Central allocations of subsidised foodgrains are for only 11% of the population, Kerala has used different criteria that ensure subsidised grain to 30%.

Andhra Pradesh provides 80 per cent of the population rice at Rs 2 a kg, six kg per head depending on family size. Tamil Nadu has adopted a universal PDS providing 16 to 20 kg of foodgrains at Re  1 a kg to all families.

One of the main reasons for the growing food insecurity is that in the last five years the Central government virtually excluded the entire “above poverty line” families from the PDS. It also adopted new norms to justify cuts in allocations to the States for Above Poverty Line (APL) quotas.

"One of the main reasons for the growing food insecurity is that in the last five years the Central government virtually excluded the entire 'above poverty line' families from the PDS"

Between 2006 and 2008 the wheat quotas to APL were cut by over 73%. Thus, those States which started their food schemes after 2006 have had to spend huge amounts from their budgets to help eliminate hunger.

The Centre, which has control over foodgrain allocations, shifted a big part of the burden on to States, which are themselves facing a resource crunch. As an immediate measure towards food security and to ensure the sustainability of State schemes, the Centre should restore cuts in allocations to the States at subsidised prices. The government has stocks well above the buffer stock norms.

Key to inclusive growth

The key to an inclusive approach to food security is to make the system universal as it was prior to the targeted system introduced in the 1990s as part of the neo-liberal agenda. The advantages of a universal system are well documented in India.

There is little doubt that the errors of exclusion of the deserving far outnumber the errors of inclusion of the undeserving. If a universal system at BPL prices including an expanded Antyodaya segment is adopted, it will, according to estimates made by eminent economists, amount to around 1.6% of GDP.

Considering that in the last five years the annual revenue foregone in tax concessions to corporates was much higher than what it would cost for a universal PDS guaranteed by law, surely the country can afford to take such a step to eliminate food insecurity and hunger.

Source : The Hindu
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