India is the second largest, fast growing, large economy in the world.
It is also has the second largest population in the world. India is home to 1.2
billion (and counting) people. For the sake of comparison we can say that India
hosts a bit more than the total population of Africa on little less than one
tenth of its size. Catering to such a huge population is a daunting task,
especially when it comes to feeding it. Fortunately India is blessed with large
and fertile plains fed by perennial rivers and an annual cycle of monsoon.
The land of surplus
In the year 2011-12, India produced a total of 246.2 million tons of
food grain (rice, wheat and coarse grains). The census of India carried out in
2011 is yet to throw up details regarding household numbers and the average
household size. But according to the census carried out in 2001 India had a
total of 191.96 million households and the average household size was 5.3. The
2011 census tells us that India got an additional 181.96 million people in the
decade since last census. Assuming an average household size of five the
additional households would number 36.4 million, bringing the current number of
households to approximately 228.5 million. A simple math will tell us that 246.2
million tons of food grain and 228.5 million households will leave a little
more than a ton of food grain per household per year. The national sample
survey organization reports that per capita food grain consumption in 2009-10
was roughly 11 Kg per month. The average household will hence consume 660 Kg a
year, significantly less than the available and hence leaving a surplus for
storage/exports.
Who moved my grains?
The interesting fact however is that 42% of India’s children are
malnourished and 58% are stunted. These are alarming numbers, especially when
India is a food surplus country. One might ask where all the food is going.
Well, much of it just rots in the extreme weather. India made huge progress in
food production but failed to create enough storage facilities. A Reuters
report from July 2012 quotes that as much as 6 – 19 million tons of food might
perish due to lack of proper storage.
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| Did you work out the freebies? |
But that’s just half of the story. India for many decades has a system
of “Public Distribution System” (PDS). A system under which heavily subsidies
food grains is sold through licensed shops. Eligible families get 35 Kg of food
grains a month, rice at Rs. 5.6 (USD 0.093) per Kg and wheat at Rs. 4.1 (USD 0.068)
per Kg. Unfortunately the PDS is one of the most corrupt institutions in India.
In certain states less than a quarter of the eligible families get their fair
share of food. The rest is siphoned off and sold in open market at a premium.
An ugly nexus of bureaucrats and private shop owners play the game with
impunity.
The ruling UPA government has recently introduced an ordinance (pending
a vote when the parliament meets later in July 2103) providing food security to
almost two thirds of India’s population. The food security bill will provide additional
five kilograms of food grain at prices lower than the PDS price. The scheme
will cost the exchequer INR 125,000 crore (USD 20 billion) a year. This is all
good, especially since India is gearing up for the national elections early
next year. But the irony is that the government plans to implement food
security through the same corrupt and inefficient PDS network. There won’t be
any surprises if the additional food grain ends up in open market to be sold at
a higher price like the rest of the PDS grains.
One step forward three steps back
The government recently introduced a futuristic programme. Households
will get the subsidy on cooking gas directly into their bank account once they
pay the market price at the time of purchase. This was termed direct cash
transfer. It was supposed to be extended to all kinds of subsidies. The next
step for the government should have been to extend the subsidy to food grains
and eliminate the corrupt nexus of PDS. Supply of more food grains in the open
market would have reduced the prices and the poor could have afforded a better
choice in the open market. But the government decided to load the PDS with more
grains. It is anybody’s guess what will happen to the extra 62 million tons of
grains which will be pumped into the PDS.
Successive governments at both centre and the states have created a
society, which lives off the freebies. Free food, free electricity, free
television sets, free laptops, etc. have won many elections for the
politicians. None of the governments think of long term investments for the
overall development of the society. Investments in public infrastructure,
education and health care are hardly seen.
The poor will get the benefits of food security bill only if the PDS is
eliminated and new infrastructure for proper storage of food grains is created.
Pouring more into a corrupt system will not help address the needs of the poor,
nor will it send a positive signal to the voters.
