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The PDS and eroding food security

Brinda Karat

The proposal to further cut down on quotas and to hike the issue prices of foodgrains in the public distribution system will spell disaster.

THE RECENT note from the Department of Food and Public Distribution to the Cabinet Committee on Economic Affairs is an all out assault on food security and is contrary to the commitment of the National Common Minimum Programme. The recommendations are for "prudent food management with special reference to the management of wheat stocks." India has already imported 5 lakh tonnes with tenders floated for another 350 lakh tonnes. It is claimed that if accepted the wheat deficit of 59 lakh tonnes anticipated in April 2007 will be wiped out. There are eight major proposals: reduction of wheat allocations to the States; allocation of coarse grains instead of wheat; removal of foodgrains in the Sampoorna Grameen Rozgar Yojana (SGRY) scheme as part of wage payments; decrease in allocations for drought hit areas; increase in prices of foodgrains for both APL (above the poverty line) and BPL (below the poverty line) cardholders in the public distribution system (PDS); reduction in quotas for both APL and BPL cardholders by 5 kg from the present 35 kg; no sale of wheat in the open market, which is usually done to control prices.

Given that rice procurement has increased by 28 lakh tonnes to 234 lakh tonnes, if it was a question of replacing to a certain extent wheat with rice or even coarse foodgrains in the PDS, in consultations with State Governments while keeping the allocation amount intact, it would be a different matter. But, in effect, what the Ministry is saying is that if you do not like wheat imports the only alternative is to stop the supply of wheat altogether, and in the process you can further "reform" the PDS by doing away with it! Clandestinely, the Central Government has already arbitrarily cut down on wheat supplies to States. According to a memorandum by the Fair Price Dealers Association in West Bengal, whereas in 2004-2005 the wheat allotment for both APL and BPL cardholders was 2.22 lakh tonnes, it was slashed to 1.51 lakh tonnes in the current year. Food Corporation of India godowns in five major centres do not have wheat stocks at all. In April 2006 whereas the dispatch instructions were for 59 rakes, only 15 rakes actually arrived. Similarly, in the SGRY the earlier component of 5 kg of wheat as part payment of a daily wage has already been cut to 3 kg. States have complained that wheat allotments have virtually stopped for this programme.

There are essentially four components of the gross mismanagement of the food system intrinsic to the neo-liberal policy framework that has resulted in the present dismal situation of India having to import part of its wheat needs.

(1) The neglect of foodgrain production consequent to the new agricultural policy emphasis on export-oriented cash crops is a major reason for current shortfalls of wheat production. With stagnating wheat production, the danger level in weakening food self sufficiency has already been crossed. The rate of growth of food production has fallen below the rate of growth of population. Last year, the production of wheat reached a low of around 68.5 million tonnes while this year it is estimated at around 71 million tonnes. Soil exhaustion in India's wheat producing regions of Punjab, Haryana, and West Uttar Pradesh may require diversification. But it will be disastrous if Government continues to encourage diversification without a policy of bringing alternative land under wheat production.

(2) Wheat procurement is being deliberately reduced every year and that is the second component of the current crisis. From 206 lakh tonnes procurement of wheat in 2001-2002, it has plummeted down to just around 92 lakh tonnes this year. The Government has purposefully allowed big private traders into the wheat market in the name of helping farmers get a better price for their produce. The pro-trader changes in the Agricultural Produce Act permitted traders in the three major wheat producing States to go into remote villages to buy wheat not having to wait like the FCI for wheat to come into the market. Secondly, in an open invitation to hoarding, anybody was permitted to buy wheat, not just arthiyas or licencees. Further unlike State agencies, private traders thus escaped paying any market fee.

In early April big companies like Cargill, Reliance, ITC, and even the Australian Wheat Board, from whom the Government is now importing wheat, went into villages and bought wheat at prices slightly higher than the procurement price of Rs.650. Three weeks later, when the bulk of the wheat had already been cornered by private companies, the Government woke up and offered a "bonus" of Rs.50. If State agencies had the same leeway as private traders, then both farmers and State procurement agencies would have benefited. Consumers would have been saved the high prices they are having to pay for wheat because of hoarding by private traders who are making a killing. Instead of a serious review of the utter failure of Government, the Agriculture Minister has boasted in Parliament of how farmers have got best prices ever, making a dangerous assumption that farmers interests are diametrically opposed to consumers served by the PDS through procurement of grain.

The Government ended up paying the Indian farmer almost Rs.100 less than what it paid foreign traders for the imported wheat that, according to Government, was Rs.789.20 a quintal. With this approach, the situation on the rice front could also follow a similar disastrous pattern in the future.

(3) The FCI is being systematically weakened. Huge amounts are owed to the FCI on account of foodgrains it supplied to different Government programmes like SGRY or the food-for-work programme. But these accounts do not appear either in the budget or in the account of the Rural Development Ministry. In answer to a pointed question in Parliament, the Finance Minister replied that there was no need to show it in the budget as "there is a separate accounting system with the FCI." The arrears run into thousands of crore rupees.

Precisely because the FCI role in procurement and distribution of foodgrains is being curbed, the ability of the Government to intervene in the market to control prices is also reduced. In a country where there is an uneven pattern of foodgrain production, with a large number of States being food deficit, weakening the FCI means weakening food security.

Linked to the issue of weakened distribution and the cutting down of allocations is the fate of the 4.83 lakh fair price shops. To use the illustration made by Madhura Swaminathan, there is evidence from Kerala, the State with the most effective system of rationing, of ration shops becoming unviable and closing down. In the early 1990s, the average monthly sale of cereals was 7,500 kg of rice and 2,000 kg of wheat per ration shop. By 2001, these figures had fallen to 1,400 kg of rice and 200 kg of wheat. Many fair price shops are now estimated to be making losses. According to an official estimate by the Government of Kerala, the gross monthly earnings per fair price shop fell from Rs.3,711 before March 2000 to Rs.1,493 in August 2001. The situation has worsened since then.

(4) The targeted public distribution system has miserably failed. According to the Planning Commission, 57 per cent of the poor are outside the BPL category. The systems of identification of the poor are dubious, faulty, and deliberately keep the numbers low. India has the highest number of malnourished people in the world. At 47 per cent, the number of India's malnourished children compare with that of Ethiopia. And if the percentage of only rural children is taken, it would be even higher.

Women have an unacceptably high degree of anaemia. Acute agrarian distress has led to larger numbers falling below the poverty line. But the Government refuses to go back to a universal system of public distribution. This is not only morally indefensible but does not make economic sense because of the high cost wastages associated with targeting.

The shocking and totally unacceptable proposal to further cut down on quotas and to hike the issue prices of foodgrains in the PDS will spell disaster for an already malnourished population.

The employment schemes of the Government with a part payment in foodgrains have been an important part of the provision of food security, though inadequate. The move to cut back on this component is also to cut down on the real wages of the worker. With current high prices of wheat and other essential commodities, what the worker gains in cash is less than what she has to pay for her foodgrain needs in the market.

What needs to be done is to improve the systems, whether of the procurement agencies, the fair price shops or the methods of distribution — but not to destroy them. But the latter it seems is what the Food and Public Distribution Department is proposing. There must be a widespread protest to prevent Cabinet accepting these proposals and to reform the current food policies in favour of the people.

(The writer is a member of the Polit Bureau of the Communist Party of India-Marxist.)

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