Unravelling the food mess

Author(s): Latha Jishnu, Ravleen Kaur, Aparna Pallavi,  Ashutosh Mishra, Kumar Sambhav

Down to earth, Issue: Oct 15, 2010

Reaching food to people who need it the most has remained one of the most stubborn problems in India. The public distribution system (PDS) is in a shambles in most parts of the country with the poor unable to get their quota of foodgrains despite the biggest build-up of government stocks in recent times. A chunk of the grain mountain is rotting for want of storage space and effective mechanism for releasing adequate stocks in times of high food inflation.

Is it time we dismantled the largely corrupt and inefficient PDS and switched to food coupons or cash transfers as some economists suggest? Some states have introduced food coupons but there is no certainty these will work any better. On the other hand, the Food Security Bill envisages an expanded PDS to cover a larger population. Can the system be streamlined?

Latha Jishnu and Ravleen Kaur analyse the different facets of managing the food economy and find that the PDS could become highly efficient if innovation and technology are harnessed to political will, as Chhattisgarh and Tamil Nadu did. These states offer valuable lessons in resolving the problems of procurement, storage and allocation of basic food items.

Aparna Pallavi, Ashutosh Mishra and Kumar Sambhav Shrivastava, who travelled across large parts of the tribal belt, report on the extent of the problem that most destitute people face in getting their meagre rations, month after month. They highlight the urgent need to get food across to the large swathe of malnourished and chronically hungry people in the hinterland

Across Navargaon village in Korchi tehsil of Maharashtra’s Gadchiroli district one can see wheat spread out to sun on cots outside every home. The wheat is worm infested and Bhimabai Katenge, one of the residents, holds up a handful to show that the grains are nearly hollow. “This is the grain we have received after two months. When we asked the ration shop dealer about the last two months’ supply, he said it has lapsed.”

Katenge is not complaining; she is just grateful that some foodgrains have arrived finally. In neighbouring villages the situation is dire. In Saleh, a few residents have collected their first supplies of subsidised grain in three months and, again, the wheat given to them is rotten. The fair price shop (FPS) opened only for a few hours in the morning but even if the shop opens again, Lakshman Lengure said he is not in a position to buy any grains. “For three months we have been eating expensive shop grain. Who has money for ration wheat now?”

This is haduk season in impoverished Gadchiroli, where Maoists have established base and violence erupts sporadically. Haduk is the traditional term for the lean period from June to September when the leftover grain from last year’s crop has been sown and the new crop is still to be harvested. It is the hardest time of the year for the Gond, Kawar and other tribe people who subsist on basta (bamboo shoots) and satye (mushrooms) gathered from the forest. Excessive intake of this leads to stomach problem so many households have piled up heavy debts to buy grains in the open market. “The same rice that we get in the ration shops for Rs 2 or 3 is sold to us for Rs 14-16 per kg,” laments Dodke resident Rensingh Gawde. Now people are going hungry.
buffer stocks

Between the empty stomachs of millions of India’s poor and the bursting granaries of the government is a seemingly intractable problem—a broken public distribution system (PDS) that defies attempts to fix it. It is a story of corruption and entrenched interests at one end and callousness and apathy at the other, a scandalous mess in which political short-sightedness has combined with administrative apathy to deprive people of their right to food at subsided rates. The result: several million tonnes of grain rotting away, grain that the government has spent substantial sums to procure in order to provide food security to a country which is high on the world’s hunger index.

imageThe ration shop in Lavchali in Gujarat’s Dang district assigns two days in a month to each commodityThe mess in the management of the food economy is replete with perverse ironies: the food subsidy has gone up with procurement of food grains by the Food Corporation of India (FCI), the designated agency, touching record highs in the past two years. Grain stocks are now touching a record 60 million tonnes, more than double the buffer norms of around 22-25 million tonnes set by the government, but instead of reaching the poor, the food is rotting— for want of storage space among other reasons. And at a time when food inflation was skyrocketing—the consumer price index for agricultural labourer had touched 15.6 per cent at one time—the government was doing nothing to offload adequate supplies to the market.

The paradox of plenty is not the only characteristic of PDS. The rot runs deep in the management of India’s food economy but it is an issue the political leadership and the bureaucracy have preferred to ignore over the decades. The only reason PDS is in the news today is because of the sustained media coverage of the rotting grains. The focus on the vast quantities of grain stored in the open and vulnerable to the monsoon has fuelled public indignation and forced the Supreme Court of India, which is hearing the right to food petition filed by the People’s Union for Civil Liberties, to order that the grains be supplied free to the poor.

Here’s how serious the problem of grain wastage is: close to 18 million tonnes with FCI are lying in the open, kept on an elevated plinth and covered with tarpaulin sheets because the corporation’s storage capacity has been stagnant at about 12.9 million tonnes since March 2005. This is a systemic problem made worse by FCI’s decision three years ago, on the advice of global consultants McKinsey & Co and India’s Comptroller and Auditor General, to de-hire some of its leased storage space (See: To store and to have not). As a consequence, around 150,000 tonnes kept in the open in Punjab have been exposed to three monsoons and are not really fit for human consumption. It is this kind of wheat which appears to be finding its way to the tribal belt of central India.

imageHowever, the focus on storage in this debate is a red herring, insisted well-known economist and food rights activist Jean Dreze. “The real issue is not storage capacity: there is enough of it if grain stocks are kept within reasonable limits. The real issue is why the government is hoarding 60 million tonnes of grain, that too when food prices are shooting up and large parts of the country are drought-affected for the second year in a row,” said Dreze, a member of Congress chief Sonia Gandhi’s National Advisory Council  (NAC).

Rotting grains is just the most visible crisis in the PDS which suffers from a gamut of problems. It starts with the fundamental issue of who is eligible for the subsidised grain: the more indigent categorised as below the poverty line (BPL) and others classified as above the poverty line or APL. The rub is that states and the Central government do not see eye to eye on the number of the poor which are based on surveys conducted by the Planning Commission. Three have been carried out so far but each time on widely varying parameters that make it difficult to estimate the correct figures.


Former Chhattisgarh food secretary Alok Shukla said the criteria used are pretty absurd and exclude far too many of the poor. That’s why states which deal with ground realities issue more BPL cards—as Chhattisgarh did while dramatically transforming its dysfunctional PDS to an exemplar for the country (See: A question of political will). Hence, the huge gap: while the Centre estimates the BPL families at 62.5 million, state governments put the figure closer to 107 million. A comprehensive survey of the poor which is scheduled to kick off next April may resolve this discrepancy.

The much maligned PDS has gone through many reform efforts in recent decades. A general entitlement scheme for all consumers without any specific target since the 1940s, it was in 1992 changed to the revamped PDS to cater to 1,775 blocks that were identified as economically and socially backward—primarily, far-flung, hilly and inaccessible areas. But following criticism of its negligible coverage in states with the highest concentration of poor people, it was recast as the targeted PDS in 1997.

Under the targeted system, each BPL family was initially entitled to 10 kg of foodgrain which was increased to 25 kg and later to 35 kg at special subsidised prices. But few of the ills have been sorted out. Former Planning Commission secretary N C Saxena, who is perhaps the best authority on the functioning of the PDS, said: “The fundamental issue here is poverty—people are too poor, they don’t have purchasing power. There is no problem with procurement; the problem is with offtake.”

Saxena, who is with the NAC, said the malfunctioning of PDS should be a matter of utmost concern for the Centre which should undertake an immediate evaluation to strengthen it. It should also “name and shame the states which are failing on the PDS”.

Although illegal diversion of supplies is generally seen as the main problem, Saxena pointed out that a complex set of problems plague the PDS. Top among these:

  • The poor don’t have the means to buy 35 kg at a time and are not allowed to buy in instalments
  • Low quality of foodgrains
  • Weak monitoring, no transparency and no accountability of the officials concerned
  • Price charged by the FPS exceeds the official price by 10% to 14%
  • The shop does not open for more than two-three days in a month, and card holders are not allowed to lift their quota of previous months

imageWheat distributed in tribal areas is often worm infested and hollow (Photo: Aparna Pallavi)As a result, a Planning Commission study of 2003 found that PDS was helping only private trade and corrupt officials, with 58 per cent of the foodgrains not reaching the poor. Given this situation does it make sense to continue with an inherently flawed system? And given the Centre’s knee-jerk reaction to release another 2.5 million tonnes of food over the next six months as a reaction to Supreme Court strictures is it logical that more grains are pumped into a leaky pipeline? Should the PDS be shut down in favour of a cash transfer scheme or food coupon system as some opinion-makers insist (See: Pushing the food coupon)?

Saxena pointed out that most critics of the PDS, economists included, gloss over the fact that it is linked to agricultural security in the country through the minimum support price or MSP offered to farmers so that the millions of small farmers across the country are assured of some returns instead of being exploited by private trade. “What else is the government to do with the grains it procures from the farmers? PDS is the only answer to MSP,” Saxena said.

imageIn Dahod people said they got half the amount of kerosene entered in their cardsEven then logic would dictate that FCI procures only what is required for the PDS over and above the fixed buffer limit so as to avoid an excessive buildup of stocks and huge carrying costs as is happening now. “You can never get that balance right,” said former agriculture secretary T Nanda Kumar. “Procurement is open-ended and has a twin objective: protecting our farmers and meeting the uncertainty of demand.”
The problem, according to Planning Commission member Abhijit Sen, lies in the way FCI operates. “FCI was set up with just one remit: to buy stocks from the farmers and move it across the country to wherever it was needed.

Remember only five states have a food production surplus; the other 24 are deficit and some hugely so.”

But very like the corporate sector, a high level of efficiency is required to keep the PDS operating smoothly. This is the trick that Chhattisgarh has mastered. “No food rots in Chhattisgarh,” said Shukla, “although the state’s procurement has shot up from 400,000 tonnes a decade ago to 4.4 million tonnes today.” Of this 2.4 million tonnes is given to the Central pool.

imageThis is no mean achievement. In just four years, the tiny state which is more notorious for its disastrous handling of the Maoist problem, has shown that a well-run PDS can work wonders with its agriculture and the wellbeing of its people. Around one million farmers are paid on the spot for their paddy (through computer generated cheques); 3.7 million ration card holders or close to 74 per cent of the population, get 35 kg of grain (on the whole) at the lowest prices in the country (Rs 1 and Rs 2) and there are no longer any reports of starvation deaths in Chhattisgarh.

Source: http://www.downtoearth.org.in/node/1996

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