CEREAL-CENTRIC POLICIES IN INDIA-WARNING SIGNALS THAT CANNOT BE IGNORED!

During the last 4 years citizens in India were being led on a diet of promises most of them remaining on paper with very little impact on their day to day lives. One of the most hotly debated policies of the present government is the recently promulgated ordinance under its food security proposal to make available rice and wheat to more than two thirds of the population at Rs 1-2 per kg. Whether all the beneficiaries scheduled to be covered under the scheme really deserve this dole out is some thing the planners of this gross misuse of public funds did not bother to think! While poorest of the poor must be provided social support through such poverty alleviation programs why even well to do citizens who can afford to buy foods at the market price are being included as beneficiaries is beyond comprehension! Of course this is a controversial issue with no consensus among the experts. But common sense tells that public funds must be carefully deployed for maximum impact and in a country like India subsidies must be provided only to those below poverty line. One of the major flaws of the rice-wheat scheme is the government assumption that quantity is more important than quality when it comes to providing food security to its citizens. This distorted assumption is brought out recently by some experts who feel that the scheme needs a revisit in the light of latest statistics regarding the change in food consumption habits of the population. Here is a take on this vexatious issue.

"Even as the government is gearing up to bring in the cereal-centric National Food Security Bill (NFSB), Indian households are fast changing their consumption preferences from cereals to higher value food items. The share of monthly expenditure on cereals by families in total consumption spending has fallen drastically, prompting economists to suggest food security should have a larger basket than just cereals and should be reviewed periodically. Rural households spent 12 per cent of their total consumption outlay on food in 2011-12 against 18 per cent in 2004-05, while the share fell to 7.3 per cent from 10.1 per cent in urban parts over the period. The expenditure on pulses as a percentage share in total expenditure has remained constant in both urban and rural areas at 3.1 per cent and 2.1 per cent, respectively. Talking of milk products, it has risen to 9.1 per cent in 2011-12 from 8.5 per cent in 2004-05 in rural areas and has remained more or less the same in urban centres where it has declined marginally by 0.1 percentage points to 7.8 per cent in 2011-12. When it comes to egg, fish and meat, the percentage share has increased in both rural and urban sectors. In the rural population, it rose to 3.6 per cent in 2011-12 from 3.3 per cent in 2004-05 and in urban, the share grew marginally to 2.8 per cent from 2.7 per cent in the same period. While most economists said this is a sign of prosperity in the economy, some of them maintained that this could come as a blow to the highly-debated NFSB. "Complexion of system is changing. There is a gradual change towards higher value agriculture food items. We must recognise that and our food policy should be in tune with this emerging demand pattern,"  Ashok Gulati, chairman of the Commission for Agricultural Costs and Prices (CACP) told Business Standard".

It is a paradox that calorie rich foods are becoming cheaper day by day while protective foods like fruits, vegetables, pulses, oil seeds, milk, egg, fish and meat are tending to be dearer! Even if government makes available cereals like rice and wheat at low cost, where will the poor go to get the much needed protective foods like milk and pulses, prices of which are in the stratosphere with government not able to do any thing about it?. What will be the consequences of such a policy of supplying the cereals only at controlled prices? Will this nation become a place for people with stunted growth ravaged by diseases caused by essential nutrients deficiency? Of course government's thinking that it has primary responsibility to prevent starvation deaths through such basic food supply schemes has some validity and employment generating opportunities through schemes like MGNREGA are there to empower the people to earn the needed money for spending on quality improvement of life. Unfortunately people fed on such doles became more and more dependent on the government with very little initiative for developing self sufficiency!  

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

FOOD SECURITY BILL-A POLITICAL HARAKIRI?

After the high decibel proclamations and declarations during the last two years, the much talked about Direct Cash Transfer Scheme of the Government of India is yet to take off with repeated postponements. Besides the Re 1 per kg rice scheme touted as one of the most progressive measure of the government is still in the limbo though a few state governments like that in Tamil Nadu have already started such a program on their own without waiting for Delhi to pass the ridiculously called food security bill! The political class seems to think that food security means only access to cereals and by providing them at throw away price, the nutrition security is also taken care of! The poor people in this country are being taken for a ride by such populist measures with short term impact. True by providing the cereals the people might not die definitely it is adequate to keep the skin and the bone together! To add to the confusion there is a stupid suggestion that those entitled for food grains from the PDS should be given cash equivalent with which they can buy their food requirements and the "pundits" who are promoting this line of thinking are baiting the government with the possibility in saving thousands of crore of rupees by preventing pilferage from the PDS. Here is a take on this muddled thinking and the country will have to wait with bated breath as to what is going to happen between now and the forthcoming election in the middle of next year.

"India's hard won gains in achieving food security are in danger of being undermined by a clause in the National Food Security Bill that encourages States to adopt cash transfers in lieu of food entitlements under the Public Distribution System (PDS). Supporting this view, a recent report by the Commission for Agricultural Costs and Prices (CACP) concluded that the provision of food subsidies in the form of cash would save the government crores of rupees. Additionally, cash transfers will supposedly eliminate middlemen such as dealers and transporters, ensuring that the subsidy reaches intended beneficiaries. Cash transfers are a solution only if we view the PDS in isolation, rather than as part of a larger food policy. India's food policy begins with the procurement of rice and wheat and price support operations by the Food Corporation of India (FCI) and the CACP. Each State is entitled to purchase a certain amount of food grains from the FCI at subsidised prices for distribution through its Fair Price (Ration) Shops. It is this distribution end that constitutes the PDS, and what the cash transfers would replace. Besides not taking into account the devaluing effect of inflation or the role of intrahousehold dynamics when it comes to cash transfers, its supporters do not specify what would happen to the agricultural commodities that are procured by the FCI. As the policy exists today, the government holds millions of tons of rice and wheat, well above the buffer norms required by law. To reduce its stocks, the government has preferred open market operations (to bulk consumers) and export to distribution through the PDS".

No one in the government including the economists and sociologists has given any thought to the adverse consequences of putting money in the hands of the beneficiaries in lieu of grains. There is no guarantee that this money will be spent on food only and it is more likely that there would be vast growth of liquor industry which will have to cater to the increased demand for its products from this section of population with food subsidy money in their hands! Another disaster which is inevitable is the transformation of this segment of population into a morbid mass with no motivation for working. One of the reasons for shortage of labor in the country is this distribution of "alms" in the name of poverty while there is this continuous claim that the unemployment rate is high in the country. Unemployment may be high but those who want to work can always get work. Combined with the NREGA assuring a daily wage of Rs 150 per person for at least 150 days, the "freebie" scheme under the food security bill can bebilitate this country beyond recognition!   

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

THE FOOD MINISTER FULMINATES-ANY TAKERS?

It is not for nothing that junior politicians are chosen as Ministers for portfolios connected with food. Right from its inception the Minister of Food Processing Industry has always been light weight politicians, largely for ornamental purpose. It was only recently the position was elevated to the cabinet level and this symbolism does not seem to have made any difference if the ministry's "activities and achievements" are critically audited. In the Ministry of Food and Agriculture, a heavy weight personality has been put in charge as a cabinet minister but he has very little time or inclination to manage the portfolio and do justice to this important area. Here again a junior minister has been allotted the food portfolio and this minister with his present stature even finds it difficult to meet a chief minister, that too from the alliance! He has been given the responsibility to canvas for the "illogical" food security bill now under consideration of the Parliament. Hear what he has to say about the "importance" and logic of this bill.

"We procure 30 per cent of the food grains we produce. In 2009-10, our total food grain production was 169 million tonnes and we procured 54.8 million tonnes, that is, we procured 32 per cent. The new poverty line will be determined on the basis of 2011 census, which is currently on. We need about 61 million tonnes as per the present PDS system. If the (food security) bill is enacted, we need 1 million tonnes more to provide 7 kg per person per month for priority sector and 3 kg per person per month for general category. At present, the subsidy bill is Rs 63,000 crore. The PDS provides ration on the basis of the 2000 census. If the new bill comes into effect, the subsidy bill will go up to Rs 1.11 lakh crore. If ration is provided on the basis of the present PDS system, it will be Rs 1.09 lakh crore. The difference is only Rs 2,000 crore on account of the food security bill as ration will have to be provided as per the existing PDS system. To afford an additional burden of Rs 2,000 crore is not an issue. Yes, it is important to plug in the leakages. We've started modernising PDS in the states. Out of 20 crore ration cards, we have weeded out duplicate cards and reduced them to 18 crore. That is 10 per cent. It will further come down as we believe that 20 to 30 per cent of the cards are bogus. It has to come down. Moreover, there is also loss of food grains due to damages in storage and transportation. But, that loss has come down from 2.5 per cent in 2008 to 0.5 per cent. Modernisation of PDS and introduction of Aadhar (UID) cards can virtually eliminate bogus cards, which means savings of 20-30 per cent in subsidy".

It is a tragedy of highest denomination that public money is squandered under some or the other populist schemes primarily to "catch" votes for the ruling parties and nothing exemplifies this madness more than the present food security bill. While the PDS system as it exists to day is in shambles, more food is sought to be pushed through this "pipe" with "gaping holes" obviously for leakage! Also being suggested is to give cash in the hands of families for buying food grains, in stead of depending on the PDS and there cannot be a better criminal scheme than this to siphon of public money "cleanly and neatly"! The misuse of the words food security is all the more evident when government is focusing only on grains with no consideration for really protective foods like legumes, fruits and vegetables which are beyond the reach of millions of poor and middle class families. The incoherent ramblings by this minister do not make sense to any one with a reasonable I.Q!

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

THE FOOD SECURITY BILL-A BUREAUCRATIC MUDDLE IN THE OFFING?

Lot has been said and written about the pet socialistic project being taken up by the Government of India under the fanciful name of Food Security Bill though many honest, law abiding and average citizens in India are still in the dark regarding the implications of this project. It is all the more appalling that such an attempt is being made with hardly any "repair" to the existing chaotic and debilitating PDS infrastructure with most food grains being pilfered and looted, never reaching the intended beneficiaries! As some one had asked if food grains are going to be distributed practically free to 75% of the population, where is the need for these recipients to work at all! But logic and reality are never strong points with the present ruling dispensation at Delhi. Here is a perspective on the food security bill through the eyes of a foreign country which appears to be insightful and realistic.

"That is before you figure out what it will cost and who will do the legwork. The government says if the bill is legislated, the food subsidy burden will rise by Rs270 billion to Rs950 billion. Private but more reliable expert estimates put the cost at Rs6,000 billion in the first three years, or Rs2,000 billion a year. In spite of its noble intentions, the bill is more likely to aggravate and accentuate all the distortions introduced by government intervention in agriculture. As of October 1, the government had food grains stocks of 51.78 million tonnes, more than double the buffer and strategic reserve requirement on the same date. By cornering such huge volumes of grain, the government reduces supply in the open market, putting upward pressure on prices. At the same time, tonnes upon tonnes of grains just rot away in the absence of proper storage facilities. The same exercise is now proposed to be carried out on a much bigger scale. Procurement and distribution could get really messy and costly if central agencies take upon themselves to collect grain from villages, stock it in central warehouses and wheel them back to villages again. A scheme of this nature can be implemented only if there is a flawless and seamless system of storage, transportation and distribution. Since it does not exist, implementation is bound to suffer. That will lead to the familiar blame game between the centre and the states with heavy political overtones. The bill if implemented will distort cropping pattern further. Cultivation of wheat and rice, which would enjoy a wider ready market with guaranteed price, will get preference over pulses and cash crops. Private trade in food grains has reason to be seriously worried. Once the government offers grain at a price that's at least half (in many cases, a sixth) the market price to two-thirds of the population, why would anyone want to buy from a private trader? What is bad economics is often good politics. In the name of food security, a highly corrupt, bloated and wasteful system is sought to be imposed on the country. Yet no political party will have the gumption to oppose it. Which political leader would want to be seen as an 'enemy' of the poor who opposed provision of cheap food to the starving millions? The hope for the country lies in the inefficiency of its bureaucratic system. The food security bill exemplifies the self-defeating obduracy of bureaucratic modes of thinking. The administrative imagination (or lack of it) that has gone into the bill will ensure that the outcomes are deeply disappointing. That Indians have to count on the weakness of the state apparatus to mitigate impact of wrong policies is a devastating comment on the nature of things." 

It is truly said that the Bill as it stands to day is a bureaucratic creation with hardly any inputs from those knowledgeable about the dynamics of food procurement, storage, distribution and human nutrition. In the history of India bureaucratic schemes never worked and this is not going to be an exception. There cannot be a more wasteful national endeavor than this grandiose scheme. For an average middle class family, paying various taxes to the government and its countless agencies, this project is nothing but heart breaking viewed from the grandiosity and mind-boggling expenditure involved! Posterity will never forgive the politicians who are behind this scheme for the squandering of national wealth mindlessly and recklessly!

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com