The Parliamentary Standing Committee on Food, which examined the draft
food security bill, has recommended one more version in terms of the
coverage and support that the Act should guarantee. It has reportedly
argued for mandatory coverage of 67 per cent of the population based on
multiple criteria that would separate the population into groups either
“included” or “excluded”. However, it has scaled down the monthly
entitlement of subsidised grain to a uniform 5 kg per month for every
person covered under the act. Assuming five persons per household that
amounts to an entitlement of 25 kg per household per month. In the view
of the committee, identified beneficiaries should be provided the
stipulated quantity at Rs. 3, 2 and 1 per kg respectively for rice wheat
and millets.
There is no unanimity here. One member of the committee, T.N. Seema,
submitted a note of dissent objecting to, among other recommendations,
the reduced entitlement and the cap on coverage. This is not surprising
since the Left in and outside Parliament, civil society groups like the
Right to Food Campaign and many analysts and academics have been arguing
for universal coverage on the grounds that targeting would in many ways
defeat the purpose of the bill. The recommendations of the Standing
Committee not only fall short of this but put out a scheme which is one
among the many involving less-than-universal coverage.
The government’s draft bill, for example, seeks to cover 63.5 per cent
of the population, consisting of 75 per cent of the population in rural
India and 60 per cent in urban India. These proportions have been broken
down into “priority” and “general” groups with the former eligible for 7
kg of subsidized grain at the low prices mentioned above, whereas the
general category will be eligible for 3 kg each at half the economic
cost of grain distributed through the public distribution system. The
National Advisory Council (NAC), on the other hand, had made a case for
providing food grains using the Rs. 3-2-1 pricing formula to 75 per cent
of the population (90 per cent in rural areas and 50 per cent in urban
areas) divided into “priority” (46% rural; 28% urban) and “general” (39%
rural; 12% urban) categories. Priority households were to be entitled
to 35 kg of subsidized food grain per month and general households to 20
kg, at a price not exceeding 50 per cent of the minimum support price
(MSP).
Finally, the Expert Committee set up by the Prime Minister and chaired
by C. Rangarajan, which took on the task of pruning the NAC’s
recommendations, elected for a substantial reduction in the population
that is to be guaranteed access. It favoured a scheme that would
“restrict the assured delivery of foodgrains at Rs 2 per kg for wheat
and Rs 3 per kg for rice, to the really needy households and cover the
rest through an executive order with a varying quantum depending on the
availability of foodgrains.” This would in effect give the government
the option of dropping those not “really needy” from the scheme. The
“really needy” households were defined as the set of those falling in
income terms below the revised official Tendulkar poverty line plus an
additional 10 per cent above that line. This was a clumsy concession to
keeping coverage equal to at least the “priority” section identified by
the NAC.
Given this potpourri in terms of schemes defined by coverage, quantum of
access and price, the debate is being shifted from one between those
demanding universal coverage and those wanting to restrict the right to
food to the so-called needy, to one about how much of India’s current
population should be seen as needy. However, there can be no agreement
on what being “needy” means, as the scorn widely poured on the
government’s earlier poverty line made clear. And having a
multi-dimensional perspective on deprivation, while appropriate, creates
significant difficulties in identifying beneficiaries leading to errors
of exclusion.
The real reason why such targeting is still favoured by sections in
government is that they see it as a way of reducing the cost of the
programme. This effort to reduce cost has been backed by arguments to
suggest that a food security programme with universal or even extensive
coverage would either be infeasible because of inadequate food supplies
or would be impossible to sustain because of the burden it would place
on the government’s budget.
In the elaboration of the first of these arguments the emphasis is on
the inadequacy of the domestically available surplus of foodgrains and
the fact that if India places a significant demand in global markets to
support its food security programme it would result in a spike in prices
that would be damaging for all. That such arguments, advanced by both
the Rangarajan Committee and the Parliamentary Standing Committee, could
even be made is shocking. It amounts to stating that production in
India is not in current circumstances and can never be adequate to
support an effort to ensure minimum access to food at affordable prices
for that segment of the population that would choose to avail of grains
supplied through the PDS. Besides the fact that this judgement is based
on questionable assumptions on availability and offtake, it also ignores
the fact that India’s current plight is the result of long years of
neglect of agriculture and food grain production
that has resulted in a long-term decline in the per capita availability
of food grain in the country. This neglect is now being made the reason
to prune the food security programme by a government that celebrates
the high growth rates of recent years and makes tall claims about
India’s current position in the global order.
The other argument, which has been the focus of the case against an
extensive or universal food security programme, is that the cost
involved is too high for a government already burdened by a high fiscal
deficit. It may be useful to reiterate once more that a fiscal deficit
can also be pruned by mobilising more resources through increased
taxation, reduced tax concessions and better implementation. The
controversy surrounding the capital gains demand made on Vodafone makes
clear that this government is committed more to incentivising investors,
including foreign investors, than to mobilising resources to finance
crucial expenditures.
To conceal the failure to mobilise required resources official
discussions on the food security programme quote absolute numbers of the
subsidies entailed in even the current programme and the way they have
risen over time in nominal or current price terms. This, to start with,
exaggerates the real increase in food provided. Thus while the central
food subsidy bill rose in nominal terms from Rs.23,280 crore to Rs.
60,573 crore between 2004-05 and 2011-12, the figure in 2011-12 after
adjusting for inflation in the wholesale prices of food articles between
those dates was Rs. 30,239 crore. One reason why food prices rise is
the adjustment that the government has to make to the Minimum Support
Price for food grains to compensate for cost of production increase. To
use that to declare food subsidy as the burden is clearly disingenuous.
But without making this clear nominal figures are quoted and taken as
being irrefutably indicative of how burdensome it is. The Rangarajan
Committee estimated that the subsidy required to support the NAC’s
scheme could go up to Rs. 92,000 crore and the Parliamentary Standing
Committee estimates the subsidy required to support its recommendations
at Rs. 1.12 crore. These figures are controversial and involve strong
assumptions.
Further, besides the inflation factor, there is another reason why
absolute figures convey little. Take for example the numbers reported in
Chart 1 giving the ratio of actual food subsidies over the last decade
relative to GDP. In most years subsidies have amounted to between 0.6
and 0.8 per cent of GDP, and touched 1 per cent in only a single year.
Raising this figure to more than one per cent is a reasonable demand
given the fact that the World Food Programme estimates that, despite
high growth over two decades and more, a quarter of the world’s hungry
population resides in India and around 43 per cent of children under the
age of five years are malnourished.
Moreover, Chart 2 shows that during the 2000s, when corporate profits
were soaring, tax concessions in different forms provided to the
corporate sector amounted to well above one per cent of GDP. Thus the
sum estimated by the Parliamentary Standing Committee as needed to
support its recommendation was at 1.35 per cent of GDP in 2011-12, less
than the 1.36 per cent of GDP transferred to the corporate sector
through these concessions in 2007-08. And corporate tax rebates are only
one form in which the corporate sector is favoured, as the
controversies over spectrum sale, coal blocks and even gas pricing
suggest. Anyone with a sense of social priorities should, in the
circumstances, recognise that the argument that the money is not
available is without much basis. What is lacking is the will to mobilise
the surplus and allocate it to where it is needed most.