Food Security

Deprivation by design

Print edition : February 03, 2017

Inside a ration shop in Kerala. Retail ration dealers, unsure of the viability of their business under the new system, are restive and wholesale dealers have approached the court against being pushed out of the PDS system altogether. Photo: S. Gopakumar

P. Thilothaman, Minister for Food and Civil Supplies, inspects the rice varieties after the inauguration of "Árikkada" (rice shop), one of the direct market interventions of Supplyco to ensure the availability of all categories of rice at a reasonable rates, in Kozhikode on December 22, 2016. Photo: K. Ragesh

The ruling Left Democratic Front has announced a series of agitations demanding restoration of the universal statutory rationing system in Kerala.

IN food-deficit Kerala, which has one of the most effective public distribution systems (PDS) in the country and where the production of rice, the staple food, is only about 15 per cent of its requirement, the much-delayed implementation of the National Food Security Act (NFSA) from November 1 under pressure from the Central government has generated a lot of concern and disquiet.

There were complaints galore all over the State regarding the draft list of eligible beneficiaries under the Act, which was released by the State government in October. The ruling Left Democratic Front (LDF) has announced a series of agitations demanding restoration of the universal statutory rationing system and a minimum entitlement of at least 5 kilograms of rice a month to all families in the State. The LDF, which came to power only in May 2016, is burdened with the task of implementing the NFSA immediately as it was delayed by the previous Congress-led government by three years. Retail ration dealers, unsure of the viability of their business under the new system, are restive; wholesale dealers have approached the court against being pushed out of the PDS altogether, and headload workers have just ended a strike that affected ration delivery for over a month.

Much of all this may only be teething troubles in a State moving into a new PDS. But there are genuine concerns about its food security in the long run under the NFSA regime. According to Chief Minister Pinarayi Vijayan, the agreement from the time of Independence was that the Centre would ensure Kerala’s requirement of rice in return for Kerala’s contribution to the national economy as a foreign exchange earner producing a variety of cash crops.

Addressing a public meeting in Kannur a few days before the LDF announced its decision to start the agitation, the Chief Minister said that the statutory rationing system that existed in Kerala was the result of united struggles by the people led by leaders such as A.K. Gopalan. “However, the Centre has now taken the position that, with the introduction of the NFSA, it cannot give an exception to Kerala alone from the Act’s provision which restricts the supply of subsidised rice only to those who have a place in the priority list. With this, a large number of needy families who were in the State’s BPL [below poverty line] list are not getting the foodgrains they require for everyday needs.”

The NFSA, which envisages various structural changes in the PDS in India, was introduced by the second United Progressive Alliance (UPA) government led by the Congress. The Congress-led United Democratic Front (UDF) government was in power in Kerala then. All States were required to implement the Act, identifying eligible households and changing respective distribution systems, among other things, within a year of the new Central law coming into effect on July 5, 2013. Although the UDF government issued an order accepting the law in principle, it did not implement it and deferred introducing any major change in the existing PDS. Kerala and Tamil Nadu, which too has a history of a strong universal PDS, thus became the only States reluctant to implement the NFSA.

After all the other States had reportedly implemented the Act and had made good use of the concessions offered by the Centre to establish new facilities and get foodgrains meant for distribution at concessional rates, the Union government, in July 2016, began to tighten the screws on the two “defaulting” States. Two months after the LDF government came to power in Kerala, the Centre stopped the additional supply of subsidised foodgrains to the State.

Kerala was thus forced to start the procedures for implementing the Act on a war footing from November 1, 2016, under threat that the Centre would stop supply of subsidised foodgrains meant for the APL, or above-poverty line, (State subsidy) sections too. The State would then be forced to pay Rs.22.54 a kg of rice for people in its APL (State subsidy) category instead of the Rs.8.30 a kg it was paying already. This would mean an additional expenditure of Rs.60 crore a month, State Civil Supplies Department officials said.

Thus, the statutory rationing system that had been in existence in Kerala from 1965 came to an end from November 1, 2016. The system in Kerala was established in the face of extreme food scarcity that existed in several parts of the State from the time of the Second World War and after hard struggles waged by the people since then. The State’s dependence on other regions for food was the reason for the scarcity. (See “A successful system under threat”, Frontline, October 31, 1997.)

Change to targeted PDS

Until 1997, Kerala’s PDS was universal, covering 97 per cent of the State’s population. However, from June that year, at the behest of the Central government, Kerala, along with other States, introduced the targeted Public Distribution System (TPDS) dividing beneficiaries into BPL and APL categories. Subsequently, there was a further division of the BPL category with the creation of the “poorest of the poor” among them under the “Antyodaya Anna Yojana” (AAY) households.

Under the TPDS, the Central government had been providing 16 lakh tonnes of foodgrains a year to the State. This included 12 lakh tonnes as yearly allotment (which the State used to draw on a monthly basis and often in advance as and when required during a year) and an additional ad hoc allotment of four lakh tonnes a year (that used to be drawn often on a quarterly basis). Under the scheme that existed until November 1, according to Civil Supplies Department officials, at least 2.85 crore people (of a total population of 3.34 crore) were entitled to PDS benefits in some form or the other—ranging from free rice to at least a nominal quantity of rice at Rs.5 a kg.

However, under the NFSA regime, the Centre has allotted only 10.25 lakh tonnes for the 1.54 crore people in the priority and Antyodaya households (known as “eligible households”) and a mere four lakh tonnes for the rest of the population numbering 1.8 crore. Thus, under the new system, there is a decrease of two lakh tonnes in the Central allotment for Kerala, State officials said.

It is now widely recognised that the universal PDS as it existed in Kerala from 1965 was not merely a concession to the poor but a system essential for food security in an acutely food-deficit State (see “A system in peril”, Frontline, September 29, 2000). Among the States, Kerala is considered perhaps the most vulnerable to even short-term foodgrain deficits in the country. This became evident once again in December, with the sudden increase in the open market price of rice in Kerala following the introduction of the NFSA and a simultaneous shortfall in supply of rice from Andhra Pradesh. Government officials said the State needed to brace itself for difficult days ahead, with a drought year being predicted.

Different numbers

With the Central government determining the number of BPL people on the basis of its own criteria, only 25 per cent of the people of the State were included in its list of BPL beneficiaries under the TPDS. However, the State government continued to treat 42 per cent of its population as being in the BPL category (as identified for the implementation of the Integrated Rural Development Programme schemes) and had continued to bear the subsidy burden for an additional 17 per cent of the population.

In a recent newspaper article, State Food Minister P. Thilothaman said that the changeover from a universal to targeted PDS in 1997 itself had led to a lot of complaints. Kerala’s once strong network of ration shops then became extremely vulnerable as they required a certain minimum offtake of ration articles by customers in order to remain viable. But under the TPDS, as the price gap between PDS articles meant for the BPL and APL categories increased sharply, and those in the latter category began to shift more and more to the open market where better quality articles were available at a slightly higher price, TPDS retail outlets began losing their charm.

As many ration shops with a large number of APL cardholders declared their task as unviable and the commission for shopowners went down dramatically, a large chunk of ration articles began to be diverted to the open market. Gradually, this led to large-scale corruption involving wholesale and retail ration dealers and government officials and, according to the Minister, eventually to the regular diversion of 40 per cent of subsidised ration articles to the open market.

Ration dealers’ lobby

According to an estimate of the department, the State spends nearly Rs.874 crore a year to provide subsidised ration articles to 81 lakh cardholders. Several studies commissioned by the government have reported that the diversion rate of PDS articles to the open market ranged between 30 per cent and 50 per cent.

There are widespread allegations today that it was a powerful lobby led by private wholesale ration dealers who stayed the hand of the previous UDF government and delayed the implementation of the NFSA in Kerala “as long as they could”. Under the new law, doorstep delivery of foodgrains to ration shops is to be handled only by the Civil Supplies Department, other government agencies or cooperative societies. The Act envisages no role for private middlemen wholesale dealers (a peculiar phenomenon in Kerala that grew with the statutory PDS system from its early days) who ruled the system until now.

“The transfer from an existing system to a new one is bound to create some problems. Here, the vested interests tried very hard to prevent the replacement of a system immersed in corruption by a transparent and corruption-free arrangement,” the Minister said. Indeed, even after the new LDF government decided to implement the Act in Kerala from November 1, it encountered several hurdles: for example, a continuing agitation by retail ration dealers demanding a viable commission under the new Act; and, curiously, nearly a month-long strike by an independent Kolkata-based Food Corporation of India (FCI) workers union, which had the majority of FCI workers in the State under its control and disrupted ration delivery demanding the continuation of “atti kooli” from the government under the new NFSA system. (“Atti kooli” is an unofficial system of extra wages that private wholesale dealers paid these workers for their special skill of “precision loading” ration articles onto trucks at FCI godowns. This helped the dealers save transportation costs. Haphazard loading meant a truck would carry only eight tonnes of foodgrain instead of 10 tonnes or even 12 tonnes it could otherwise, a Civil Supplies Department official said.)

Cost of delay

The three-year delay in implementing the Act for whatever reasons is now reckoned to have cost Kerala much. Strangely, the UDF government failed to challenge even the norms adopted by the Centre to decide the maximum number of beneficiaries under the Act or to decide the quantum of benefits in such a food-deficit State. Since coming to power, the LDF government has been repeatedly pointing out that the Centre had declared at the time of enactment of the Act that the new law would benefit 75 per cent of the people in rural areas and 50 per cent of the people in urban areas—offering food security to about 67 per cent of the people in the country. However, it included only 46 per cent of Kerala’s population in the list of eligible beneficiary households under the Act.

Only 52 per cent of the rural population and 39 per cent of the urban population in Kerala is in the list of NFSA beneficiaries numbering a maximum of 1.54 crore people, a limit fixed as per the norms set by the Planning Commission. With the Centre thus deciding the maximum number of beneficiaries who could be included, with no challenge from the then UDF government, a large number of needy people who enjoyed TPDS benefits would be thrown out of the food security net, officials said.

The Central government had decided Kerala’s eligible allocation as 14.25 lakh tonnes, reportedly on the basis of the average annual offtake of foodgrains for the last three years under normal TPDS. The previous government had apparently even failed to inform the Centre that Kerala had been drawing four lakh tonnes every year as ad hoc allotment in addition to the normal offtake. This would have meant an average total annual offtake of 16.01 lakh tonnes instead of 14.25 lakh tonnes. Moreover, officials point out, the sanctioned allotment does not also consider the State’s requirement in providing nutritious meals for children and maternity entitlements.

At a disadvantage

Kerala is also at a disadvantage because it has failed to make use so far of the promised Central assistance to establish infrastructure facilities such as warehouses, transport facilities, biometric units, and facilities for end-to-end computerisation, doorstep delivery of foodgrains to retail ration outlets and strengthening of the State civil supplies corporation. Officials said that the State even failed to make use of the opportunity to obtain ration articles at low prices by providing a temporary list of beneficiaries, including people already in its Antyodaya, BPL and APL (State subsidy) categories as was done by other States. As a result, Kerala had to pay Rs.8.30 a kg and Rs.6.10 a kg respectively for rice and wheat it got all this while instead of the subsidised rate of Rs.3 and Rs.2 a kg which, they claimed, was availed of by many other States. Moreover, it also lost nearly Rs.231 crore as handling charges offered by the Centre for the implementation of the Act.

“There was a lack of alertness on the part of the previous UDF government in pointing out the reduction of over two lakh tonnes of foodgrains from the State’s share of yearly allotment or the harmful provisions in the Act when seen from the context of a food-deficit State. After the LDF government took over, even though many leaders, including the Chief Minister, approached the Centre pointing out these anomalies, the Centre has taken a position that fresh concessions cannot be given to one State alone. But the fact is that while the NFSA insisted on a number of conditions that were harmful to the interests of the State, it failed to take into account the fact that Kerala was a chronically food deficit State and the special circumstances that had led to the introduction of statutory rationing system in the State from the mid 1960s. Kerala, which is not self-sufficient in food production, is, therefore, now in a situation where it cannot do anything outside the provisions of the new law,” Food Minister Thilothaman said.

Neighbouring Tamil Nadu, which, like Kerala, was resisting the imposition of the Act by the Centre, has also agreed to implement the law but has announced that it will simultaneously continue with its existing universal PDS, protecting the entitlements of all existing beneficiaries through its own means. Kerala obviously cannot take such a position, given its chronic food deficit and financial woes.

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