AGRICULTURAL PRODUCTION AND FOOD DISTRIBUTION TO VULNERABLE FAMILIES IN INDIA TODAY

Transcription

1 AGRICULTURAL PRODUCTION AND FOOD DISTRIBUTION TO VULNERABLE FAMILIES IN INDIA TODAY From a situation where India had to import food grains for feeding its population in 1960s, the country has achieved self-sufficiency in producing rice and wheat. Yet the world s second populous country has the dubious distinction of having largest chunk of families living under abject poverty. This paper is an attempt to explain the dichotomy of excess food grains production and large-scale subsidized food distribution on the one hand, and huge wastage and millions of hungry families on the other. By Sandip Das* From food grain deficiency to surplus Since independence (from British-rule) in 1947, India, having the second biggest population in the world, faced two key economic challenges: achieving food security and alleviating poverty. In a country which relies predominantly on agriculture, the focus was to promote growth in the agricultural sector to meet both of these challenges. Agricultural promotion was initiated to increase food production for feeding close to 30 crore people (300 million) in the 1950s. It was the time (1950s and 60 s) when India faced a huge food shortage and had to receive food under PL 480 agreement with the United States. Dependence on agricultural imports till the early 1960s convinced planners that India's growing population, as well as concerns about national independence, security, and political stability, required self-sufficiency in food production. This led to formulation of measures such as agricultural improvements called the Green Revolution, the public distribution system and price supports system for farmers From a net importer of food in 1950s, India has transformed itself in the production of food grains (mainly rice, wheat, coarse cereals and pulses) during the last few decades. From a mere 50 million tons (mt) of annual food grain production in 1950s, India this year ( ) has produced a record 252 mt of food grains, mainly attributed to the significant jump in rice and wheat output. The average growth rate of food grains production from 1950 to 2011 was 3.2% per annum. Overall, wheat was the best performer, with production increasing from mere 6.6 mt in to 90 mt during , a huge jump. Wheat was followed by rice, which had a production increase from 20 mt to 102 mt at present. India s food grain (rice, wheat, coarse grains and pulses) production trend

2 Year Food production (mt) mt mt mt mt mt mt mt Source: Ministry of Agriculture, India The Green Revolution and its problems The introduction of high-yielding varieties of seeds and the increased use of fertilizers and irrigation under the 'Green Revolution' initiative in late 1960s resulted in rapid expansion of agricultural land and boost in agricultural production. The Green Revolution continued with the policy of expanding cultivable land. The striking feature of green revolution was taking up of double-cropping which implies planting two crops per year on the same agricultural land. The earlier practice of one crop per year was dependent on monsoon rainfall. For the second crop huge irrigation facilities such as dams were created. Dams were built to arrest large volumes of natural monsoon water which were earlier being wasted as run-off. Simple irrigation techniques as the digging of tube- wells for extracting groundwater were also adopted on a massive scale. The Indian Council for Agricultural Research (ICAR) under the Ministry of Agriculture played a crucial role in the Green Revolution era of the late 1960s. ICAR developed new strains of high yield value seeds, mainly wheat and rice, millet and corn. The most noteworthy seed was the K68 variety for wheat which pushed up food grain production significantly during the subsequent decade. The Green Revolution resulted in a record grain output of 131 million tons during This established India as one of the world's biggest agricultural producers. No other country in the world which attempted the Green Revolution recorded such levels of success. India also became an exporter of food grains during the same time. Yield per unit of farmland jumped by more than 30% between when the Green Revolution was considered to have delivered its goods in the short term. However the thrust on policy approach to agriculture since the 1990s has been to secure increased production through subsidies on inputs such as power, water and fertiliser, and by increasing the minimum support price (MSP) rather than through building new capital assets in irrigation, power and rural infrastructure. This has shifted the production base from low-cost regions to high-cost ones, causing an increase in the cost of production, regional imbalances, and an increase in the burden of storage and transport of food grains. Besides, ground water particularly in northern Indian states of Haryana, Punjab and Western Uttar Pradesh is rapidly depleted.

3 The situation in the northern Indian state of Punjab is alarming. It has exhausted its upper layer of groundwater and farmers are now using high-horsepower pumps to go deeper underground. Agricultural scientists have advised against growing water intensive paddy in Punjab and Haryana. Scientists agree that Indian agriculture must move to a more sustainable way as far as water usage-based ecosystems is concerned to meet the food and non-food needs of a growing population. As agriculture is the largest user of water in India (using more than 80 per cent of usable freshwater) and a large proportion of the population derives its livelihood directly or indirectly from it, we need to build efficient irrigation systems and water conservation strategies, especially in semi-arid regions, through conjunctive use of surface and groundwater. Public Distribution System and massive pilferage of food -grains The Public Distribution System (PDS) with its focus on distribution of food grain in urban scarcity areas had emanated from the critical food shortages of Till 1992, PDS was a general entitlement for all the consumers or citizens where a fixed amount of food grains, sugar and edible oil were distributed through dedicated government owned shops or outlets at a rate or price lower than the prevailing market rate. In a bid to ensure focus of PDS towards the poor or for the economically backward families and in an attempt to stop pilferage and diversion of food grains to the open market, a Revamped Public Distribution System (RPDS) was launched in June 1992 in 1775 blocks (mostly backward and remote areas) throughout the country. Subsequently, the Targeted Public Distribution System (TPDS) was introduced with effect from June, 1997 which envisaged subsidized distribution of food grains to poor families (classified in India as Below Poverty Line (BPL), Above Poverty Line (APL) and poorest of the poor families identified as Antyodaya Anna Yojana - AAY). TPDS was intended to benefit about 6 crore (60 million) poor families for whom a quantity of about 7.2 mt of food grains was earmarked annually. The identification of the poor under the scheme is done by the states (provinces) as per poverty estimates of the Planning Commission of India. In 2000, in view of the consensus on increasing the allocation of food grains to BPL families, and to better target the programme, the Indian government increased the allocation to BPL families from 10 kg to 20 kg of food grains per family per month at 50% of the economic cost and allocation to APL families. The number of BPL families has been increased on December, 2011 by shifting the base to the population projections of the Registrar General as on 1 st March 2000 instead of the earlier population projections of This increased the total number of BPL families to 65.2 million who are presently eligible for subsidized food grains. The allocation of food grains for the BPL families was further increased from 20 kg to 25 kg per family per month with effect from July, Initially, the AAY families were provided 25 kg of food grains per family per month at the time of launching of the scheme in December, The

4 scale of issue of food grains under APL, BPL and AAY has been revised to 35 kg per family per month with effect from with a view to enhancing the food security at the household level. At present more than 36 mt of food grains are provided under TPDS annually. Huge diversion of food grains The main flaws in the system that a large chunk of those who are eligible for subsidized food grains under BPL category have been left out leading to critically question the comprehensiveness of the TPDS. It has been found that the criteria for inclusion in the BPL list are solely economical which is often understated or under reported because lack of availability of national income data. There are complaints that persons having political patronage have found a place in the BPL list. A large number of the very poor are in the APL category and are thus denied their right for subsidized food grains from TPDS. Astonishingly India s Food Minister KV Thomas admitted in Parliament that around 20% of the food grains distributed through the TPDS were being siphoned off. Some estimate put the figure much higher at 40%. Thomas had pointed out that the government was incurring a subsidy of Rs.15 a kg on food grains. The minister also stated there were around 20 crore (200 million) beneficiaries of PDS system in the country out of which 3 crore (30 million) have been detected as "bogus" ration card holders. Recognizing that huge amounts of food grains are getting diverted to private market (mainly because of price difference) the Supreme Court, India s apex judicial body, asked the government to computerize the entire PDS operations in the country so as to track the movement of subsidised food grains from granaries to individual ration card holders. Gradually, ration cards (the card which entitles a poor family access to subsidized food grains) will be replaced by smart cards. Rotting food grains The Supreme Court recently suggested to the government to distribute food stock free to the needy instead of letting it rot in the public godowns (storage warehouses). The apex court, in a written letter to the government, said: 'Don't allow food grain to be wasted, give it away to the hungry population.' This is the most recent instance of the Supreme Court showing concern over governmental apathy. India is an iconic example when it comes to wastage of food grain. The public storage facility across the country is terrible. According to government s own estimate over 1.3 mt of food grain (mostly rice and wheat and maize) was wasted in the godowns of the Food Corporation of India (FCI) in a span of 10 years from 1997 to It was enough to feed 10 million people for one year. Besides, the Indian government had spent about Rs. 259 crore to clean away rotten food grain. India loses an estimated over Rs. 58,000 crore of food grain every year due to wastage. Role of the Food Corporation of India (FCI) and the jump in government s food subsidy bill

5 Set up in 1964, the FCI procures food-grain from farmers and many State Government owned agencies also purchase food grains on behalf of the FCI. The food-grain is stored in various warehouses throughout the country and then distributed to the state governments which subsequently sell it in fair price shops to poor families under TPDS. The FCI, under instructions from the Government also periodically sells food-grains (wheat and rice) at pre-determined prices in the open market. The idea here is to ensure food-grain supply during poor seasons; to moderate the influence on open market prices; to sell off excess stock; to reduce transportation cost of food-grain; to free storage space for the next season and to save food-grain from deterioration in quality. Another key role of the FCI is to ensure that farmers get the Minimum Support Price (MSP) which is announced by the government every year for wheat and rice. The quantity to be distributed under TPDS and for other welfare programmes is also decided by the central government. The price difference between actual cost of purchase by the FCI (MSP), distribution cost and the fixed price at which it is sold to states is reimbursed by the central government and is reflected under food subsidy. The government data indicated that during , the minimum support price (MSP) of wheat and paddy has been increased by approximately 75%, resulting in wheat production of 80.7 million tons in from 69.4 million tons during The wheat procurement by FCI and state government owned agencies during the same period increased from 9.2 million tons to 22.5 million tons. The trend is more or less same for paddy. Since inception, the FCI has been mandated to procure 25% of the country's total production. But at present, the grains procurement rate has increased to 35%. During the current year, India has produced a record 90 mt of wheat. The FCI has already procured in excess of 37 million tons of wheat from farmers. The target for wheat procurement was 32 mt. The country is poised for an all time record harvest of rice and wheat at million tons and million tons respectively this year. Because of the remunerative MSP system, farmers are ploughing back the returns into farming and are producing more and more food-grains. The rise in procurement of food grains has resulted in comfortable stocks of key food grains. Thus, the government has been meeting TPDS targets easily and ensured the fulfilment of strategic reserve and buffer stock norms. Subsidised food-grains: impact on poverty Experts say that India has managed to deal with chronic poverty during the last two decades or so. The reports of death due to lack of access to food have come down significantly. However according to the report of the expert group on the estimation of poverty (Tendulkar Committee Report) in , 41.8% in rural India and 25.7% in urban India was expected to be poor. It implies that TPDS although providing access to basic food grains such as white and rice, it has failed providing nutritional security to the large mass of economically backward people.

6 The Planning Commission of India, the key policy advisory body has admitted that even though self sufficiency in food production has been achieved, the population still lacks access to balanced food. It is a matter of concern that even though cereal production has kept pace with the increasing requirements and average per-capita intakes of cereal have remained satisfactory, there has been a fall in the per-capita consumption of pulses. It is important not only to improve pulse production but also make them available at affordable cost, the Planning Commission has recently stated in a report. The production and consumption of vegetables and fruits continue to remain low. Specific efforts have to be made to improve production and to improve access to vegetables especially green-leafy vegetables at affordable cost both in rural and in urban areas, the report notes. India s progress towards achieving the quantitative bench mark set by United Nations Millennium Development Goal (UNMDG) on eradication of extreme poverty, hunger, illiteracy and diseases apart from achieving gender quality, empowerment of women, environmental sustainability etc by the deadline set namely at 2015 appears to be problematic. Tracking India s performance with respect to UNMDGs, shows progress in respect of certain goals which pertain to universal primary education and global partnership for development respectively. However with respect to the target of halve between 1990 and 2015 the proportion of people who suffer from hunger (lack of access to nutritional food) pertaining to MDG- goal of eradicating extreme poverty and hunger, India s performance is clearly off track and inadequate. MS Swaminathan, widely regarded as the architect of India s green revolution says India s inability to achieve even the very modest goal set by United Nations, pertaining to reducing the number of hungry people, reiterates the importance of trying out new approaches in addressing food and nutrition security concerns. India ranks a low 134 among 187 countries in terms of the United Nations Human Development Index (HDI) 2011, which assesses long-term progress in health, education and income indicators. Although placed in the medium category, India's standing is way behind economically less developed countries, such as Iraq and Philippines. India's ranking in 2010 was 119 out of 169 countries. The UN Human Development Report 2011: Sustainability and Inequality says India's HDI is 0.5 compared to 0.3 in The UN report said that India had the world's largest number of multi-dimensionally poor, more than half of the population, at 612 million. The proposed food security law The government has brought in a proposed legislation known as National Food Security Bill, 2011 under which 75% of the rural households will get subsidized grain under the epochal law. Of these, 46% households would be considered as 'priority' category, and each person in these households will get the 7 kg of grain a month at heavily subsidised prices Rs 2 per kg for rice, Rs 3 for wheat and Rs 1 for coarse grains. In case of urban centres, out of the 50% of the total households to be covered under the scheme, 28% would get 'priority' status. This will expand

7 the base of TPDS to around 600 million people which is expected to put enormous pressure on the government's existing and inefficient food grains delivery system to economically weaker sections of the population. Experts have criticized the government move of empowering already inefficient PDS with more food grains. Rising food subsidy and over flowing stocks Due to price at which food grains are offered to BPL families had been fixed at the 2000 price, the cost of purchase of food-grains have gone up considerably. This has pushed up the food subsidy bill of the government considerably particularly during last five years or so. Price as food grains are sold to poor families in India (Rupees) Commodity APL BPL AAY Rice Wheat (Source: Ministry of Food and Consumer Affairs / Price Rs/per kg. The prices offered are far less than the market price of rice and wheat) The government had budgeted Rs 74,551 crore in food subsidy for Last fiscal year, the government had to incur a food subsidy bill in excess of Rs 72,000 crore. The government s expenditure on food subsidy for the current fiscal year could touch R1 lakh crore, an all-time high, due to significant rise in procurement of grains and huge stocks, food minister KV Thomas had recently said. Year Food Subsidy offered by government Rs 74, 551 crore (budgeted) Rs 72,370 crore Rs 62,929 crore Rs 58, 242 crore Source: food ministry / one crore = 10 million, the food subsidy is the difference between purchase price from farmers and the price at which it sold to poor families The government roughly needs mt of food grains to meet the demand of public distribution system (PDS) and other schemes. "This is three times higher than the buffer norm," Thomas said. At the start of July 2012 the food grains stocks with the government procuring agencies reached an unprecedented level of 80 mt, food minister KV Thomas said while asking for an immediate evacuation of the grain stored at temporary godowns as they could get destroyed by monsoon rains. Thomas even asked the states (provinces) to lift the food grains meant for PDS six months in advance besides giving extra allocation to states. However inability of the states to handle extra food grains has resulted in piling up of stocks.

8 According to Food Ministry, more than 6.6 mt of wheat is stored unscientifically at make-shift cover and plinth (CAP) facilities. FCI and state government-owned agencies have grain stocks in excess of 82 mt, out of which, more than 50 mt is wheat. This is close to three times the grain required for buffer and strategic reserves. For creating modern food grains storage facilities, the government has approved creation of silos in 10 states with the capacities of up to 50,000 tons. The state-level committees on silos are identifying suitable locations, which would be built via the private-public-partnership mode. But critiques have referred to this move as too little too late. Way forward It is clear from the issues discussed that Indian government has not given adequate attention to the storage and transportation of food grains during last three decades or so. At this point, the government is caught between huge food grain stocks and the states inability to absorb them. India s agricultural sector is surprisingly fragmented when compared with other countries. The average farmer works with just a couple of acres. Mostly farmers don t have the scale or capital to make necessary technology and infrastructure investments that could bring about these efficiencies. This fragmentation occurs further down the supply chain as well with transportation companies, traders and wholesalers. With these constraints government has its task cut out for creating huge modern infrastructure for storing and transporting food grains. Creation of food-grain storage facilities should be given infrastructure status for attracting private investments. More than 15 million ton of food grain storage capacity would have to be added during next three years. For saving food grains from vagaries of weather, the government needs to take up food grain storage creation in a mission mode so that access to the food grains could be improved. Better stocks management would also lead to keeping prices under control. Besides, the role of private sector assumes key particularly in transportation and distribution of food grains. *ABOUT THE AUTHOR: Sandip Das works with The Financial Express, a leading financial daily. He is based in Delhi, travels extensively and writes on issues concerning food and agriculture. He has worked with leading media organizations such as the Press Trust of India (PTI), Business Standard and for the environment magazine Down to Earth. He holds a Master Degree in political science from Jawaharlal Nehru University, New Delhi. Sandip could be contacted at sandipdas2005@gmail.com