In formulating the Food Security Bill, the NAC has ended up recognising the supply constraints that could hinder guaranteed universal access to food.
The promise made by the United Progressive Alliance-II government that it will ensure food security for Indians through legislation that guarantees the right to food seems, in its view, to have been an error. In a multistage process that reflects the pulls and pressures within the policymaking elite, the Food Security Bill has been diluted so much that it marks a reversal rather than an advance compared with the status quo.
Let us recall where the country stands in terms of provision of access to food. In principle, even after the implementation of the Targeted Public Distribution System (TPDS), all sections of the population had access to the PDS. They were, of course, split into Below Poverty Line (BPL) and Above Poverty Line (APL) households. But targeting essentially meant that access to food of these two sections was at different prices, both of which incorporated an element of subsidy.
Though the original intention was to provide food to BPL households at a subsidised price, while APL households were expected to pay the full economic cost, in practice the Central issue prices were not raised on a regular basis. For example, the prices, having been set at Rs.415 and Rs.610 a quintal for wheat and Rs.565 and Rs.830 a quintal for rice for BPL and APL households respectively in July 2002, remained at that level even when the minimum support price (MSP) at which grain was procured rose. Everybody was eligible for some subsidy relative to the economic cost incurred by the Food Corporation of India (FCI) to procure, stock and deliver the grain.
It is, of course, another matter that the inadequate spread of the public distribution system and inadequate allocations and other factors have ensured that not everybody who is eligible has necessarily had access to supplies at these prices. But, as noted, in principle, access to food was assured for all, even if at differential prices for BPL and APL families.
Given this background, improved management of the food economy requires four initiatives. The first is the setting of the minimum support prices at levels where the viability of cultivation is ensured and food production made remunerative so that investments in expanding supply in keeping with demands that would emerge from a food-secure society can be met domestically.
The second would be to ensure that the stocks procured are reached to all those who want to buy them at prices that are affordable. The subsidy provided should reach the consumer and not be diverted to the FCI to cover the costs of procurement and the carrying costs of stocks that remain unsold, as has been occurring in recent times.
The third is to universalise access to subsidised foodgrain since targeting tends to exclude rather than include many needy consumers and is costly to implement. And, finally, there is need to enhance substantially public investment in rural infrastructure and expenditure on extension services so as to improve agricultural productivity.
These ideas are not new. Ever since India adopted the Green Revolution strategy, the objectives have been to raise productivity and production, ensure a remunerative price to farmers, and provide access at subsidised prices to consumers. And, each of these objectives was seen as a requisite for the realisation of the other two.
Rather than follow this track, the UPA-II government decided to approach the issue anew, for which it handed over the task of formulating the Food Security Bill to the reconstituted National Advisory Council (NAC). However, despite expectations created by the NAC's track record with respect to the Right to Information Act and the National Rural Employment Guarantee Act, the NAC seems to have turned cautious. Rather than blaze a new trail, it has ended up recognising the supply constraints that could hinder the implementation of a Bill guaranteeing universal access to food through a public distribution system.
Hence, to start with, while admitting the need for a universal public distribution system, the NAC considered recommending the staggered implementation of the proposal. Some of its members reportedly argued that since there is not enough food to distribute, attempting to offer every household 35 kg of food at Rs.3 a kg would take demands to levels where supply would be short of demand. Hence, they argued, the shift out of the system of targeted distribution to a universal one should be initially restricted to 150 most disadvantaged districts.
Given the problems that were bound to accompany the implementation of such a scheme of geographic targeting, this proposal had to be dropped. Instead, the NAC decided to set a minimum to the degree and spread of food access that should be provided, on the grounds that, supply and financial resources permitting, the government could exceed this minimum and even opt for universalisation. There was no pressure, of course, to rise above the floor.
The minimalist proposal, which was openly criticised by NAC member Jean Dreze, not only went back on universal provision but also avoided the simplicity (of the kind that universal provision implies) that is a prerequisite for successful implementation.
The NAC's proposals restrict guaranteed access to 75 per cent of the population, consisting of 90 per cent of the rural population and 50 per cent of the urban population. This segment of the population is to be divided further into a set of priority households amounting to 46 per cent of the rural population and 28 per cent of the urban population, and a set of general households consisting of 44 per cent and 22 per cent of the identified rural and urban populations.
Priority consumers will be eligible for 35 kg of foodgrain at the rate of Re.1 a kg for millets, Rs.2 a kg for wheat and Rs.3 a kg for rice. General consumers are to be eligible for 20 kg per household at half the minimum support price for the grains. Moreover, the NAC has not given up on phased implementation; the UPA-II is expected to reach in the current phase only 85 per cent of the rural population and 40 per cent of the urban population.
It should be obvious that this complicated scheme, which would suffer from all the weaknesses of a system of targeting, will if implemented successfully, help achieve one goal. It would allow the government to manage with less supply since earlier both BPL and APL populations were eligible for 35 kg. It would also limit the subsidy relative to a situation where the government guarantees universal access at a uniform price.
Interestingly, when a confused policy of targeting is being proposed on the grounds that stocks adequate to support a universal PDS do not exist, the actual picture on the supply side seems to be one of excess stockholding by the government. Not only does the government have a foodgrain stock that is sizably higher than the buffer stocking norm, it has also had to contend with a judiciary, Parliament and media that seem to be obsessed with the problem of inadequate storage leading to the rotting of food when the poor go hungry. With covered storage limited, a substantial part of these stocks has to be stored in the open, leading to losses. Unless the NAC believes that its minimalist proposals are actually going to increase demand for food substantially, this problem of foodgrain rot in a country with hunger is likely to persist. Moreover, the subsidy bill could turn out to be much larger than anticipated, since the FCI's costs would have to be covered.
Dissenting member Jean Dreze was clear. His dissenting note stated that an opportunity [had] been missed to initiate a radical departure in this field. In his view: The NAC proposals [are] a great victory for the government they allow it to appear to be doing something radical for food security, but it is actually more of the same. But this is not the end of the story. Once the NAC succumbed to the limited supplies argument, its proposals could be easily attacked on the basis of its own premises. In a surprising development, the ostensibly all-powerful NAC's proposals were referred to another committee, headed by Dr C. Rangarajan, whose conservatism on matters fiscal are well known. As was to be expected, the Rangarajan committee has reportedly declared even the NAC's diluted proposals unfeasible.
According to newspaper reports, the committee has recommended that a legal entitlement to a given quantity of food at a fixed and subsidised price should be granted only to priority households. The reasoning, as expected, was that that the government does not have guaranteed access to foodgrain stocks to guarantee even the NAC's minimalist food security principles for the general households.
In a country where malnourishment is rampant, when a government chooses to guarantee food security, and that too through legislation that binds, it is adopting a proactive position. It is in essence declaring that given the scale of a particular problem (in this case inadequate access to food), the government plans to adopt a range of measures that can help it deliver on issues that matter.
Having set itself on that trajectory and having made it an issue in the elections, if the government chooses to dilute the programme on the grounds that prevailing circumstances limit its ability to deliver on its promise, it is clearly being duplicitous. But this should not surprise us. It has been an abiding characteristic of the Congress that it does not implement in practice what it preaches in its rhetoric. Unfortunately that ideology has served it a bit too well.