Food security: The Supreme Court steps in

Last fortnight, the Supreme Court finally stepped in to suggest policy changes relating to food security, primarily because India’s legislators chose to abdicate their responsibility. 

It recognised the fact that funds were being squandered.  It wanted to redress a situation reeking of utter disregard for citizens (who eventually end up paying for the negligence of the elected representatives).

That explains why the Supreme Court asked the government why it has not formulated rules that subsidised grain be provided only to those families which are identified as ‘below the poverty line’ (BPL) by the government’s own unique identity (UID) programme.

The court also asked the legislators to come up with a policy that excluded those living above the poverty line (APL) from getting grain at subsidised prices.

By linking the UID with the public distribution system, the court hopes that the government will create a policy that ensures that the subsidised grain actually reaches the targeted poor.

Currently there are several studies which show that much of the grain actually gets diverted by some unscrupulous traders, in connivance with government officials, and make illegitimate profits by selling this subsidised grain in the open markets.  

The court’s intervention was sorely needed.  This is because India is likely to face a food shortage of a massive magnitude in less than three years’ time.  And unless steps are taken to grow more food, and ensure that food-destruction does not take place, India could be ripe for food riots. But more of that later.

In fact, just a couple of days earlier (on 28 July, 2010), the Supreme Court also directed the government to ensure that grain should never be allowed to rot but should instead be distributed among the hungry. It also directed its commissioner to submit a report on the rotting of foodgrain in six states.

Already there is talk about the destruction being wanton, in order to erase evidence which would show that substandard grain was procured at very high prices.  Whether such reports are true or not is certainly a matter for further investigation.

It may be recalled that the NDA government in 2002, in order to prevent such destruction of value in agriculture, announced its decision to set up modern (top-loading-bottom-evacuation grain storage facilities.  A pilot project, funded by the World Bank, was also awarded to private players on the basis of international competitive bids.

The pilot project involved setting up storage facilities at multiple locations for storing a total of 600,000 tonnes of grain. The plan was to follow up this project with many more such storage units on a public-private-partnership basis.  But the current government clearly did not see the protection of grain as its priority, and the project has been almost forgotten.

What is equally worrying is that the government’s proposed Food Security Bill (FSB) is rapidly becoming a Food Supply Bill, in much the same way as the Right to Education Act is likely to become a Right to Enrolment Act.  Emphasis is being paid to how much grain should be distributed, and not on how much should be produced, properly stored, and accounted for. 

The policymakers who are still giving finishing touches to the Proposed FSB have spent  a lot of time debating whether BPL members should get 25 kg of grain or 35 kg.  As of now the view of the Congress Party is that it will ensure that each BPL family gets 35 kg of wheat or rice per month at a subsidized rate of Rs.3 per kg.

This is against the prevailing market prices of around Rs.15 a kg.  In case a BPL family does not get the grain, the government wants to set up a Central Food Security Fund to monetarily compensate the BPL families in a manner to enable the family to purchase the grain from the open market.  No clear details are as yet available about how this Targeted Public Distribution System (TPDS) is to function. 

Critics of the government’s policy point out how, in programme after programme, the government has chosen to announce distribution packages, rather than focus on augmenting supply and collection.

“This is what happened when the government waived loans,” says a banker who prefers to remain anonymous.  “This is what happened with food security as well.”

Critics of the loan-waiver scheme include authorities like Nobel Muhammed Yunus, the Nobel Prize for Peace winner in 2006.  He is on record stating that if a government wants to help farmers with money, a better way out is to give the farmers cash, and then ask them to repay the loans to banks.

Teaching people not to repay loans is a dangerous game, with long-term deleterious effects for the economy and its banking sector.

But with a food shortage just round the corner, the government may have no option but to take a serious re-look at all these leakages.  If it does not address the food shortage, and the causes that build up inflationary pressures, it might even.