Volte-face on food security

A ‘high-level’ committee makes half-baked recommendations which will rollback the PDS.

According to media reports, former Union Minister for Food Shanta Kumar recently disowned the National Food Security Act (NFSA) on behalf of the Bharatiya Janata Party (BJP). He explained, without blinking, that the BJP had just pretended to support the Act when it was being discussed in Parliament, for fear of the possible electoral consequences of opposing it. This startling admission of doublespeak did not prevent him from castigating the Congress Party for attempting to use the Act to win votes.

Shanta Kumar happens to be the chairperson of the High Level Committee on Reorienting the Role and Restructuring of the Food Corporation of India (FCI) (hereafter “HLC”), which submitted its report earlier this month. The HLC report, aside from calling for sweeping changes in the mode of operation of the FCI, makes strong recommendations aimed at downsizing the NFSA. These include reducing the coverage of the public distribution system (PDS) from 67% to 40% of the population, raising issue prices to half of the relevant minimum support price (instead of Rs 3/kg for rice and Rs 2/kg for wheat), and a gradual transition to cash transfers.

The crux of the committee’s argument is that PDS leakages are unacceptably high, and that cash transfers would save money. The report disputes the view that the recent PDS reforms have led to reduced leakages and cites an alarming figure of 47% leakage in 2011-12. This estimate is higher than earlier ones, also based on matching National Sample Survey (NSS) data on PDS purchases with FCI data on foodgrain offtake. Recent data from the second India Human Development Survey, which is possibly a more reliable source of data on PDS purchases than the NSS, also suggest much lower leakages – 30% or so. This is still unacceptably high by a long margin, but, if correct, it confirms the possibility of effective PDS reforms. Indeed, the decline of PDS leakages over time is particularly clear in states that are known to have implemented bold PDS reforms in recent years, e g, Chhattisgarh, Odisha, and – more recently – Bihar.

Major irregularities remain, and the battle is far from won, but, nevertheless, Bihar’s recent experience suggests that effective PDS reform is possible even in the worst-governed states.

The HLC report pays little attention to the wealth of recent evidence on these matters. Instead, it pronounces a summary sentence on the PDS based on tentative leakage estimates from NSS data. The report is equally casual in its wholesale endorsement of cash transfers as an alternative to the PDS. This is not to deny that there are valid arguments for cash transfers as a possible alternative to the PDS, especially in urban areas and the richer states. The HLC report, however, does not shed much light on the appropriate timing and modalities of this transition.

Meanwhile, the implementation of the NFSA is being held up in many states due to prolonged delays in the release of Socio-Economic and Caste Census (SECC) data. Finally, it is important to remember that NFSA entitlements are not confined to subsidised foodgrains under the PDS. There are also important entitlements to nutritious food for young children, and to maternity benefits for pregnant women. Maternity benefits of Rs 6,000 per child have been a legal entitlement of Indian women since July 2013, but nothing has been done about it. The central government seems to think that it is above the law.