The political economy of crisis management

By Prem Shankar Jha

Two years into its second term in office, the NDA Government is getting an unenviable reputation for not being able to get things done. The loss of confidence in its capacity to govern that has resulted is making governance more difficult by the day.

Growing disquiet over the slide in the NDA's popularity has made the BJP's allies increasingly restive, and right wing factions within the Sangh Parivar more assertive. What is more serious, it has whetted the Congress' appetite for power. This has made the party withdraw its earlier tacit consent to support necessary economic reforms. Without that support, the NDA finds its path blocked by a perennial veto in the Rajya Sabha.

But nothing has highlighted the NDA's ineffectiveness more than the fact that tribals in Orissa are eating roots, berries and mango kernels, and poisoning themselves to death (to give the government's version), when the Centre is sitting on a food mountain of 60 million tonnes.

Mr. Vajpayee and other spokesmen have pointed out repeatedly that the blame for the sharp decline in the offtake of foodgrains from the public distribution system, which is responsible for both the hunger and the food mountain rests with the bankrupt State governments that do not want to incur even the minimal cost of picking it up, dispatching it to the ration shops and in the case of food for work programmes, paying the cash component of the daily wage.

But the personalisation of politics that has resulted from the media explosion has focussed the blame squarely on the Central Government and on Mr. Vajpayee in particular. This has left the NDA with only two choices - take whatever action is necessary to get food to the people of chronically underdeveloped and droughts afflicted areas, or face the mounting anger of the public.

As the Centre has been driven to point out the causes of the food mountain and the prevalence of hunger are the indiscriminate offer of higher and higher support prices by the food surplus States, and the unwillingness of the food deficit States to pick up the grain that is procured on their behalf by the Centre. A close examination of the data on procurement and distribution of foodgrains for the last 12 years shows that both have been about equally responsible.

Had the public distribution system in the deficit States not atrophied by degrees, and the offtake remained at 83 per cent of procurement during the Nineties - the level of the last three years before the crisis of 1991 - the Central Government's buffer stocks would have risen from 14.9 million tonnes on August 1, 1992 to 41 million tonnes on the same date this year. Most of the fall in offtake by the State governments and the even steeper fall in actual distribution has taken place in and after 1998-99. This is a clear indication that it is a product of the financial crisis brought on by the Centre's acceptance of the Fifth Pay commission' awards.

The balance of the increase has resulted from an appropriation of more and more of the marketed surplus of wheat and rice by the surplus States. Thus while the output of rice rose by 11 per cent between 1992-93 and 1999-2000, the procurement of rice increased by 32 per cent from 13.05 to 17.27 million tonnes.

The practice of pre-empting supplies and preventing them from getting to the market, took on a life of its own. In 2000-01, although the output of foodgrains fell by 6.3 per cent procurement out of the kharif and rabi crops of wheat and rice rose to a record 35.6 million tonnes (15.1 million tonnes of rice and 20.5 million tonnes of wheat). In the latter, Punjab and Haryana bought 96 per cent of all the wheat brought to the market and crowded out private traders altogether.

Thus, if the Vajpayee government wants to dispel the impression of ineffectiveness it will have to combine immediate measures to get food to public works programmes in the chronically depressed districts, with a longer term policy whose ultimate goal is the replacement of the present expensive and corruption ridden public distribution system with one that relies on the issue of food stamps to the needy. Since this cannot be done overnight, it also needs a medium term strategy to induce a greater sense of responsibility in both the food surplus and food deficit States during the period of transition.

Mr. Vajpayee and his Cabinet colleagues would do well to remember that to regain the confidence of the people they need not only to do the right things but be seen doing them. After the media attention that starvation deaths have received the one thing that they cannot afford to is nothing.

In the most chronically neglected districts of the country there is an obvious need for emergency assistance to people who have already been gravely weakened by hunger, particularly vulnerable groups like pregnant and nursing mothers and children.

In addition, these areas need food-for-work and other such schemes. One way to reach the people of these areas rapidly would be to involve the army in the administration of such schemes. While this cannot be a long term solution, it will give the State administration time to gear itself up to face the task. Operation Sadbhavana in Ladakh has shown that this is entirely feasible.

The first step in the transition to a food stamp subsidy regime is to phase out the present open-ended commitment to buy all the grain that the farmers offer to the Government and buy only as much as the Centre needs to meet its buffer stock requirements. This was what Mr. Sinha had wanted to do this year but the scheme came a cropper at least partly because he did not build a transition timetable into it. The way to do this is to announce a schedule for the reduction of foodgrain purchases over the next three years from the present average of 30 million tonnes to the long term buffer stock requirement of 15 to 20 million tonnes.

This will still leave Delhi with the task of disposing of the existing food stocks and the quantum it will purchase in the three-year transition period. As around 18 million tonnes of grain has rotted, there is, at present, 22 million tonnes of foodgrain stocks to be disposed of. To this must be added the 25 million tonnes that the government will procure in the coming 12 months and the 20 and 15 million tonnes it will procure in the next two years if it announces a schedule on the lines suggested above. It can only do this either by getting the State governments to increase their offtake and sale of foodgrains from the present 16 million to 27 million tonnes a year.

The atrophy of the PDS in the past four years will make this far from easy. But since its root cause is the bankruptcy of the State governments, the Centre would do well to consider setting up a special fund to meet the their foodgrain transport and distribution costs during the three-year transition period. To ensure an increased offtake from the PDS it could link disbursement to the amount of grain actually sold by the States through their ration shops.

While bribing the State governments to do their duty can never be a good idea, there is some moral justification for doing so in this case because the States were finally tipped over the edge into bankruptcy by the inordinate generosity of the Central Government's salary hikes for its employees in 1997.

Three years from now the Government should wind up the public distribution system and issue food stamps to below poverty line and other disadvantaged groups. These should be usable in all shops, or failing that in designated shops all over the country.

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