The Food Security Bill places a heavy burden on India’s fiscal deficit, but the real problem is the distortion it causes to India’s food supply chain.
The alliance of convenience between the National Advisory Council (NAC) and the political establishment headed by Sonia Gandhi has given rise to many bad ideas and their implementation. All their ideas follow a similar pattern. The NAC wants to purge India of the neo-liberal heresies that it has adopted over the past 20 years, reverse the process of dismantling of the various entitlement schemes that the older Mrs Gandhi established, and correct them of imperfections that impeded their proper working then. The current Mrs Gandhi sees the NAC’s schemes as means by which she can distribute the largesse among the populace who will then vote for her party, and an opportunity for her political establishment to perpetuate and expand the system of patronage that will enable them to extract rents, and ultimately, grant them political control.
The Food Security Bill that our dysfunctional political system mercifully failed to pass, is a very good illustration of this dynamic. It proposes to provide subsidised food to nearly two-thirds of India’s population through the Public Distribution System (PDS). The PDS happens to have a leakage rate of 40 percent, but never mind that – experiments in Chattisgarh apparently show that if we try really hard, the PDS can be fixed. When it comes to expanding the scope of government, the faintest glimmer of hope is sufficient to base public policy on.
When it comes to evaluating the success of neo-liberal policies, on the other hand, no amount of evidence is sufficient to prove them a success. The steady decline in poverty that NSS surveys show, the evidence that everyone, (including the poorest) is spending less on food even when they have the money to spend, the evidence that they are shifting from foodgrains to richer food, ought to be treated as good news by an unbiased observer. For the NAC, however, it is a reason to discount the validity of these surveys and simultaneously pick on one aspect of the evidence – the decline in foodgrain consumption – to claim that the poor have less access to food, and to write into the Food Security Bill the proviso that 5 kg of foodgrains be provided to eligible families.
Why expand eligibility so much? Why not focus on the poorest and the hungriest Indians? Because, for the NAC, the objective of providing food security is less important than the moral imperative of expanding the PDS. The point is to prove that if the PDS were better designed, it can be made to work. This is why it is important to push the Food Security Bill in the face of opposition from every advocate of financial prudence, both from within the government and outside of it. The C Rangarajan committee has advised this government to confine the benefits to the poorest. Ashok Gulati, Chairman of the Commission on Agricultural Costs and Prices, has calculated that the best approach to achieve food security is through reduction of the fiscal deficit, which is the opposite of what the Food Security Bill sets out to do.
For the political establishment, it is about extending what has been the longest running scam in India’s history. India’s agriculture is subject to a regime of central planning and administered pricing that would be considered repressive if it were proposed for India’s industry today. Farmers are forced by law to sell their produce at designated district markets under the supervision of Agricultural Produce Marketing Committees (APMC). These APMCs are usually controlled by local politicians and are tools of dispensing political patronage.
Prices paid to farmers are determined by central and state governments through the minimum support price mechanisms. Foodgrains are procured and dispensed to the PDS through the notoriously corrupt Food Corporation of India that maintains granaries in such poor conditions that enormous quantities of grains rot every year. It maintains buffer stocks far in excess of what is prudent, the quantity being determined more by the political exigencies of having to procure from farmers than from any rational calculation of how much India needs to last out a drought. It does a terrible task of supplying to the PDS, with a vast proportion believed to be diverted to the open market.
All of this places a heavy burden on India’s fiscal deficit, but the real problem is what it does to India’s food supply chain. India is an agricultural country. It cannot afford to remain one for much longer. It cannot afford to have 60 percent of its workforce engaged in food production, give those agricultural workers a decent standard of living, and yet provide cheap food to its population.
It needs to have fewer people working on farms and more people in factories. It needs the fewer people that do work on farms to produce more food using mechanised means, and it needs to transport this food efficiently and with minimum wastage to a rapidly urbanising populace. This requires corporate investment in cold chains, and for this to happen, India needs to dismantle the various choke points and political controls on food supply.
Instead, we are likely to get the Food Security Act (FSA) that, like many other actions of this government, will achieve the opposite of what its title declares that it shall. We no longer notice the newspaper headlines that the government is threatening schools with closure under the Right to Education Act. When we will see similar headlines under the FSA, our reaction will be no different. The NAC will fret about the difficulties of implementing a well-intentioned policy in India, while the political establishment will display a secret smirk on its face. And the people shall await the next such act of (mis)deliverance.