A successful system under threat

The concern now in Kerala is whether current Central policies will lead to the dismantling of India's most successful public distribution system and its replacement by one that threatens the food security of its people.

FOOD production is inadequate in Kerala, where the trend has been dwindling paddy cultivation and the extension of cultivated area under cash crops. The State has, however, learned to cope with the fact that it is not self-sufficient in foodgrain production by maintaining the most effective public distribution system (PDS) in the country, which ensures access to foodgrains to almost the entire population using imports from other States. The concern now in food-deficit Kerala is whether current Central policies will lead to the dismantling of an efficient system of near-universal rationing and its replacement by an inferior one, insufficient even for the poor for whom it is meant.

According to the Central Government, the need for Targeted Public Distribution System (TPDS) was felt because the system as it existed in most parts of India failed to serve the population below the poverty line, had an urban bias, had negligible coverage in States with the highest concentration of the rural poor and lacked transparency and accountability.

Kerala is an exception to such criticism. It has near-universal coverage, 58,83,474 cardholders, covering 97 per cent of the population. The monthly entitlement of foodgrains per adult is 13.8 kg; among the States, this is the only ration scale which satisfies the minimum requirement of 370 gm of cereals per person a day. The benefits of the system are equitably spread across income groups in both rural and urban areas. There are 14,234 fair price shops through which rice and wheat procured by the Food Corporation of India, sugar and kerosene are distributed by the State Civil Supplies Department. Significantly, 12,203 of these shops are in the rural areas. Each retail outlet serves about 400 households and, according to the State Government, no individual need walk more than 2 km to fetch his ration. The system requires a certain minimum offtake in all these shops if they are to be viable.

According to Government figures, Kerala's total foodgrain requirement is 48 lakh tonnes a year and internal production accounts for only 10 lakh tonnes. Twenty four lakh tonnes used to be provided under the PDS, the rest of the requirement being met from the open market.

A second tier of the PDS in the State is run by the Kerala State Civil Supplies Corporation (Supplyco), a statutory body established in 1974. It procures rice, wheat products, sugar, pulses, vegetables and a range of consumer goods independently from the open market and distributes them through a network of 663 retail outlets called Maveli Stores, 11 supermarkets in district headquarters and 21 mobile Maveli vans operating on designated routes.

The Government decides the price of articles sold by Supplyco through these shops, and has used it as a highly effective mechanism, cutting out middlemen and controlling prices in the open market. Its effects on the market are most evident during the festival seasons.

KERALA'S public distribution system has behind it a unique history of people's struggle, which began during the Second World War (E.M.S. Namboodiripad, 1994, The Communist Party in Kerala: Six Decades of Struggle and Advance, National Book Centre, New Delhi). During the War, following the imposition of Japanese rule in the countries from which India was then importing rice, a crisis situation arose in all parts of Kerala leading to mass action by peasant organisations, trade unions and other people's movements. In British Malabar, during the famine of 1942 (almost one per cent of the population died from hunger and epidemic disease), the struggle, in which a large number of women also participated, was for compulsory procurement of foodgrains from landlords and for their distribution through fair price shops. People's Food Committees were set up for spearheading the struggle. Ration shops were first established in Malabar as a result of such public pressure.

Similar struggles in the princely states of Travancore and Cochin led to those governments also bringing the distribution of foodgrains under their control in 1943. In Cochin, the food crisis led to the establishment of rural rationing in February 1943, possibly the first of its kind in India. Significantly, after the War and in the early years of Independence, while the public distribution system was dismantled in most of the Madras presidency, continuing mass action ensured that the system was not abolished in Kerala.

After Independence, following the establishment of the first Communist Government in Kerala, the Central Government constituted a single southern food zone of the four States of Kerala, Madras, Andhra and Mysore as part of its efforts to streamline food supplies. Andhra had surplus production, and this was expected to cater to the needs of Kerala, where deficit was extreme, and Tamil Nadu and Mysore. Free trade was allowed within the zone, exports from it were banned and the Centre fixed ceilings on the rates at which the stocks could be sold.

But without an arrangement to ensure adequate supplies at ceiling rates, the system was doomed to fail. Stock-holders in surplus Andhra would refuse to sell at rates fixed by the Centre. Buyers had to pay a higher price. Thus, while private traders in Kerala found it a bargain to buy rice from Andhra and sell it at even higher prices, the State Government found itself in a fix, for it was illegal to pay the high prices demanded by the traders in Andhra. So, despite setting up a system of about 6,000 fair price shops to distribute rice to people below a particular level of income and locality-based committees to monitor the system, the State Government could not ensure uninterrupted supply. With profits rising, private trade flourished and the State Government's distribution system struggled for supplies. The Congress Government at the Centre found it a good weapon to use against the first Communist Government in Kerala.

In 1964, during an extended period of President's rule, when food stopped coming to the State and food prices shot up, the Congress party found itself at the receiving end of a State-wide people's protest movement. The southern food zone was abolished by then and a Chief Ministers' meeting in New Delhi on October 26, 1964 decided to introduce a system of "informal rationing" in Kerala from November 1, 1964. This was to "ensure an equitable distribution of the available supplies at a specified price." The Centre undertook to supply grain to the PDS in Kerala, and it was agreed that "it would not be generally necessary for the State Government to procure any quota directly from other States."

Thus Kerala's PDS evolved in response to hard struggles waged by the people during times of extreme scarcity created by its dependence on other States for food. Today, the Kerala Rationing Order of 1966, which specifies procedures for running the system, confers the statutory right on every individual to possess a ration card and draw rations on it.

KERALA is today rated among the best performers in raising rural household consumption and reducing rural poverty, thanks among other things (such as remittances from the Gulf) to its effective system of public distribution. Significantly, the poor use the PDS more than the rich. A survey found about 85 per cent of consumers met all or part of their rice requirements from fair price shops.

Commodities distributed through the PDS form a major part of the consumption basket of all households in Kerala. Food purchases from the system are large compared to other States. For example, according to one study in 1989, the quantity of foodgrains per person per year distributed through the PDS was 5 kg in Haryana, 6 kg in Uttar Pradesh, 8 kg in Bihar, 9 kg in Madhya Pradesh, 23 kg in West Bengal and 52 kg in Kerala. By 1991, according to one calculation, the average amount of rice and wheat bought per consumer from the ration system in Kerala was 69.6 kg.

Households with ration cards are entitled to the following items now (for families of three adults and two children): rice - 8 kg a week; wheat - 8 kg a week; levy sugar - 400 gm per person per month; kerosene - two litres a month per card for electrified households and five litres a month per card for non-electrified households.

Since cereals account for a substantial proportion of the calorie intake of a population, cereal consumption is considered an important measure of poverty, and food security in particular. On this count, however, NNMB and NSS surveys show that per capita cereal consumption in both rural and urban Kerala have increased over the years but is still one of the lowest in the country (and falls far short of the Indian Council of Medical Research (ICMR)-recommended norm of 370 gm per capita per day). Researchers say that this is because of the under-utilisation of the PDS and not non-availability, as the scale of ration entitlement per adult in Kerala exceeds the ICMR norm by more than 200 gm.

Several reasons have been pointed out for the under-utilisation of the PDS, among them poor economic access, changing consumer preferences, better health facilities (and hence more efficient utilisation of the limited food consumption) and, most importantly, poor quality of rice supplied through the PDS. But recent studies have also suggested that the surveys on consumption may have underestimated calorie and cereal intake in Kerala, for a variety of reasons.

In recent years, the flow of rice into the State through private trade has improved availability significantly. The price of articles supplied through the PDS has also gone up. During the five years of United Democratic Front (UDF) rule in the State, for example, the price of ration rice was increased four times, of wheat three times, and of sugar five times. The result has been the narrowing down of the difference between open market and PDS prices.

This apart, the quality of PDS rice in general is inferior compared to that in the open market. One study indicates many people prefer shifting their purchases from the PDS to the open market because of this. Civil Supplies officials said this was the reason why the offtake of ration rice from PDS had shown a significant fall.

A consequence of this is that retail outlets have to hold more stocks, adversely affecting their viability. According to officials a retail outlet dealer in Kerala would be able to procure a margin of only Rs.1500 a month, by serving about 400 cardholders. This is where questions about leakages to the open market is raised. A senior official told Frontline that it is now more or less "accepted" that 20 per cent of the articles in retail outlets found their way out of the system. Leakage from the system is most pronounced in the case of kerosene, and only to much less extent in the case of rice and wheat.

Thus the PDS in Kerala is today characterised by low levels of offtake from the ration shops, narrowing of price differences, increasing private trade and declining viability of the distribution network. But neutralising all such negative trends is the fact that the system contributes very significantly to the food security, especially of the poor, and helps control prices. It is in this context that the Centre introduced the TPDS scheme.

WITH regard to the Targeted PDS, as per Government of India's estimates, based on the Lakhdawala Committee recommendations, about 15 lakh families (constituting 25 per cent of the population) in Kerala are below the poverty line. This was considered inadequate by the grama panchayats and grama sabhas entrusted with the job of identifying the families below the poverty line, according to the Central guidelines. The State Government therefore decided to extend the subsidy benefit to an additional 10 lakh families, thereby bringing up the total percentage of beneficiaries to 40 per cent.

The State has decided to bear the additional burden of Rs.48 crores on account of subsidising the 10 lakh families also under the TPDS. Each family below the poverty line having three adults and two children in Kerala are thus eligible for a benefit of Rs.35 a month. On August 19, 1996, soon after it came to power, the Left Democratic Front (LDF) Government announced another scheme, to provide 4 kg of rice to every cardholder every week with a subsidy of one rupee. This subsidy is now available only to families that are not below the poverty line.

Concern over the impact of the Targeted PDS - which threatens to stop altogether Central food supplies to families not below the poverty line and promises only a meagre, almost worthless relief to the poor - is widespread in the State. Planning Board Member Thomas Isaac puts it succinctly: "The TPDS will ultimately undermine the effective and functioning network of public distribution in Kerala. The imposition of this policy will have many long-term implications. PDS in the State is not a concession to the poor alone but a system essential for food security in an acute food-deficit State. This system involves some level of subsidy, of course. But if that incentive is removed, it will certainly lead to the undermining of the PDS, in India as a whole."