Filed under: Business Development, Healthcare General, Public Health
Contributed to HCIF By: Deepa Pohankar (Right to Food Activist based in M.P)
Long promised by the UPA government, the food security bill will be tabled in parliament in December this year. However, the National Advisory Council (NAC), which drafted the proposal, is tussling with the government over the “dilution and misdirection” of the Bill. The final Bill diverges from the original NAC draft on key issues: adoption of alternatives to the PDS such as cash transfers, the risk of inflation due to cash subsidies, the omission of legal guarantees and punishments for non-compliance, and the continued misidentification of the poor.
Providing food too expensive
It has been estimated by the ministry of food and public distribution that the total food subsidy bill will balloon to Rs1,10,600 crore if entitlements recommended by the NAC are incorporated into it. This amount, according to Union food minister KV Thomas, is for investments towards increasing productivity, PDS reforms, and improving storage capacity and transportation.
R Ramakumar, agronomist and professor at the Tata Institute of Social Sciences, believes that faulty identification and procedural missteps are increasing the cost. Vandana Shiva, environmental activist calls the Bill “economic disenfranchisement for political gain”. She adds, “The costs are being raised due to the wasteful allocation on the identification of the poor: pink and yellow cards [pink cardholders are entitled to rice; yellow cardholders draw rations other than rice] is bureaucratic nonsense.”
Cash transfers a weak substitute
While overdependence on a leaky PDS has failed to holistically address the problem of food security, it safeguards farmers’ interests. “This change is one of the most anti-farmer steps the government could have taken. This is being done primarily so that the rural sector is opened up to MNCs which want to buy directly,” says agrarian lobbyist Jagdish Manekar.
Another problem cited is that there is no guarantee that the cash transfer, as envisaged in the government draft, will be an antidote to the problems of the PDS. Food is controlled by women, and there is a strong possibility that it will reach the stomach of the child. In most families, however, cash tends to be controlled by men.
When pressed as to why the government wants to shift to cash transfers, Manekar admits that alternatives to the PDS do help. “Models of subsidy delivery other than the PDS, such as food stamps and cash transfers, should be looked into. Research has shown that the PDS provides low quality of grain and their availability is unpredictable,” he explains.
“The argument in favour of cash transfers is that they increase the resources available to households without ruining the market balance or even individual choice. A subsidy will result in both of these. Subsidies will reduce the market price, and cannot allow everyone to benefit.”
Who will watch the watchmen?
What of legal redressals, checks and balances, and supervision at the micro level? They have been wiped away. “In the NAC draft, there was a provision for a food commissioner who had the powers to impose penalties, much like a lokayukta. This has been removed,” says Ramakumar. “The minimalist perspective of the NFSA on food security has no space for legal guarantees to enforce the law’s provisions among groups that aren’t automatically included in the priority list.”
The Bill only provides for a system of commissions which are weak due to their inability to make binding recommendations. “The NFSA needs to link redressals to the criminal justice system, outlining penalties and punishments for non-compliance and neglect of duties,” he advises.
Who’s really poor?
Jean Dreze, the developmental economist who conceptualised the first draft of the NREGA, quit his membership of the NAC in June over the food security issue. A vocal critic of the UPA leadership’s views on the proposed Food Security Bill, Dreze is one of the key architects of the social security programme that has led to a public battle between the council on one side and the PMO and the Planning Commission on the other.
The biggest problem, seen by Dreze as a “continuation of the worst of the pre-existing policies”, is that of identification. The poverty line, already set at an abysmally low level of Rs20 daily for the urban poor, has been reshaped into Priority, General and Excluded Classes. “Beyond this renaming, there is no change in the approach to classification,” says Ramakumar. “The present system’s ideology of exclusion is continued here.”
Staging a legislative intervention
How can the Bill be saved? “The PDS needs to be made universal, barring from it only those that meet the simple and transparent exclusion criteria of owning property worth more than 10 lakh, motor vehicles, and working in the government,” says Dreze. “The excluded category should be expanded and in turn, the priority category should also be increased.” The universal system of PDS is one that enables a time-based and differential system of allocation to people both above and below the poverty line.
Economists weighing in during the preparation of the draft have opined that the idea of universal PDS in the poorest 200 districts needs to be reinstated. The Bill was then referred to an empowered group of ministers, which in turn asked the Planning Commission to rework the contours of the legislation.
However, NAC, at its last meeting on July 1, insisted that the entitlement should be universal. The Plan panel subsequently reworked the draft Bill accepting in principle the concept of universalisation but insisted on differential pricing — one for BPL and another for above the poverty line — through PDS. “We should look at the system of identification in Kerala for an example of an alternative. They use nine parameters such as no house, no regularly employed family member, no access to water, and so on, and if the family doesn’t match up to four or more, they are identified as poor,” explains Manekar. “Failing this, the government should look at decentralised solutions which can be implemented at a micro-level, such as entrusting gram panchayats with funds.”
This article is authored by Apoorva Dutt for DNA, September 4, 2011 and can be accessed here.
- Madhya Pradesh’s high-tech solution for PDS (Latha Jishnu and Jyotika Sood, Down to Earth, 15 September 2011)
- The PDS is not failing or ailing (Ria Singh Sawhney, The Tribune)
- A case for uniform and universal system (Swathi Meenakshi, The Tribune)
- No substitute for PDS (Kuber Nag, The Hindu: Life & Style, 3 September 2011)
- The case against cash transfers (Sachin Kumar Jain, Infochange, September 2011)
- The PDS in Rural Orissa: Against the Grain? (Ankita Aggarwal, Economic and Political Weekly, Volume 46, No. 36, 3-9 September 2011)
- The middle path on the food security bill? (Harsh Mander, Infochange, August 2011)
“The Government provides subsidies, notably on fuel and food grains, to enable the common man to have access to these basic necessities at affordable prices. A significant proportion of subsidised fuel does not reach the targeted beneficiaries…We have deliberated for long the modalities of implementing such subsidies…To ensure greater efficiency, cost effectiveness and better delivery for both kerosene and fertilisers, the Government will move towards direct transfer of cash subsidy to people living below poverty line in a phased manner.” ( The Finance Minister’s budget speech )
This clearly indicates that the government is moving towards a system of cash transfers that will replace the Public Distribution System (PDS) for food grains, as has already been done for kerosene and fertilizers. The scheme is already being piloted in some parts of Delhi and has received negative criticisms from many concerned groups in the country, including the Right to Food Campaign. The much awaited National Food Security Bill is feared to be moving in a counterproductive direction if this is implemented. The PDS is one of the most important measures currently available to provide not only food security to people, but also income support by freeing some wages to buy other essentials.
The Arjun Sengupta committee identified 77% of the country’s population as being vulnerable since they live on less than Rs. 20 per day. It is well known that almost half the children in the country are malnourished, 70% of women are anaemic and one-third of all adults have a low body mass index. In this scenario, the need of the hour is to ensure food security through tested measures and schemes and not to hob-nobble with fancy programs that might have delivered results in a better off context.
The following are some of the issues with cash transfers. Some continue from the PDS and some are specific to the system of cash transfers, which basically proposes transferring of a certain fixed amount of cash into the accounts of the beneficiaries from the government, in lieu of their food-grain entitlements:
- Problems of identification will remain; governments own surveys have shown identification remains the biggest issue in any targeted system. the NSS data reveals that about 50% of BPL households (the demarcation of which is also doubtful and undermines the actual numbers) do not have ration cards in India and this number rises to almost a shocking 80% in states like Bihar. These issues are likely to magnify in a cash transfer system.
- Leakages will remain; there are no guarantees or plugs to ensure that the fallacies of the previous system will be tackled here, in a more liquid form of transferring entitlements.
- Banking infrastructure is limited, especially in the targeted beneficiary group
- Cash does not guarantee food security
- No protection from inflation and fluctuation of market prices of food, since a fixed amount will be given to the beneficiary
- Adverse impact on agriculture, as the government will stop procuring grain
- Lack of transparency and accountability of privately owned shops; this has already been evidenced in the pilot schemes.
We at the Health Care Intelligence Forum stand in solidarity with the Right to Food Campaign and demand that the Government reverse its cash transfer policy and ensure universal coverage of the PDS.
Compiled from: A Note on Replacing PDS with Cash Transfers, by the Right to Food Secratariat