6/11/2015

AflawedapproachtofoodsecurityTheHindu

TODAY'SPAPEROPINION

February17,2015

Aflawedapproachtofoodsecurity
DEEPANKARBASU
DEBARSHIDAS
WithIndiacontinuingtobeplaguedbymalnutrition,itisfoolhardytousethechangedfoodproductionsituationinthedomesticeconomy
asareasonfordismantlingtheFCI

WASTED:ThoughtheShantaKumarCommitteehaspointedoutthatFCIhasexcessstocksoffoodgrains,itisnotenoughreasontocurtail
theexistingfoodmanagementsystem.PictureshowsdamagedwheatsacksatanFCIopenstoragefacilityontheoutskirtsofKarnalin
Haryana.Photo:KamalNarang
Withinmonthsofassumingoffice,theBJPledNationalDemocraticAlliancegovernmentsetupaHighLevelCommittee(HLC)inAugust
2014torestructure,reorientandreformtheFoodCorporationofIndia(FCI).TheeightmemberHLCwaschairedbyseniorBJPleader,
ShantaKumar,andincludedprominenteconomistAshokGulati.OnJanuary22,2015,theHLCsubmitteditsreporttothegovernmentand
madeitsrecommendationspublic.
Intheshortrun,thecommitteerecommendsthattheNationalFoodSecurityAct(NFSA)2013becurtailed.Inparticular,theNFSAentails
providingsubsidisedfoodtoabout67percentofthepopulation,andthecommitteerecommendsthatthecoveragebebroughtdownto40
percent.Inthemediumrun,thecommitteerecommendsthatthecurrentpublicdistributionsystem(PDS)bereplacedbyacashtransfer
system.Thiswillmeanthatthestatewillnolongerhavetoberesponsiblefordistributingfoodtovulnerablesectionsofthepopulation.
Hence,thestatewillnolongerneedtoprocurefoodfromfarmers,andstoreit.Sincethecurrentsystemofprocurement,storageand
transportationisprimarilymanagedbytheFCI,themediumtermvisionoftheHLCimpliesthattheFCIcan,induecourse,befoldedup.
TheoverallthrustoftheHLCsrecommendations,ifimplemented,wouldwhittledowntheoperationoftheFCIintheshortrunand
completelydismantleitinthemediumrun.TheHLChasadvancedtwobroadsetofargumentsasjustificationsforitsrecommendations.
Criticalscrutinyshowsthatbotharefallacious.
Changedsituation
ThefirstsetofargumentsoftheHLCrelatestochangesinthesituationinthecountryasregardsfoodproductionandconsumptionsincethe
crisisperiodofthemid1960s.Today,Indiaproducesmorefoodgrainsthanitconsumes,evenexportingsubstantialamountstotheworld
market.Ithasalargepublicstockholdingoffoodgrainsandiscomfortablyplacedasregardsforeignexchangereserves.Allthisisinstark
contrasttothesituationinthemid1960s.Moreover,consumptionpatternsofhouseholdshavedisplayedashiftawayfromcereals.This
changedsituation,intheopinionoftheHLC,callsforachangeintheroleoftheFCI.
TheHLC,however,hasignoredthefactthatIndiacontinuestobeplaguedbylargescalehungerandmalnutrition.DatafromtheNational
SampleSurvey(NSS)showsthatin200910thevastmajorityofthepopulationwasconsuminglessthanthe2010IndianCouncilofMedical
Researchcalorienorms.Ifwelookattrendsovertime,thesamedataalsoshowsthataveragecalorieandproteinintakehavedeclinedover
thepastfewdecades.Evidenceonmoredirectmeasuresofundernutritionliketheproportionofunderweightandstuntedchildrenare
equallygrim.
Fulfillingitsobjectives
Giventhesewellknownfactsandtrendsonhungerandmalnutrition,itseemsfoolhardytousethefactofachangedproductionsituationin
thedomesticeconomytoargueforthedismantlingtheFCI.Amoresensibleroutewouldbetouseincreaseddomesticproductiontodirectly
addresstheproblemsofhungerandmalnutrition.Inthisstrategy,theFCIisboundtoplayamoreratherthanlessimportantrole.
ThesecondsetofargumentsgivenbytheHLCasjustificationrelatetotheclaimthattheFCIhasnotbeenfulfillingitsthreekeyobjectivesin
recentyears:providingpricesupporttofarmers,deliveringfoodthroughthePDS,andreducingvolatilityoffoodprices(andaddressingfood
security)throughpublicstockholding.AccordingtotheHLC,failuretomeettheobjectiveofprovidingpricesupportisshownbythefactthat
in201213onlysixpercentofagriculturalhouseholdssoldanyfoodgrainstoprocurementagencies.FailureonthePDSfrontisattestedby
massiveleakagesfromthesystem.FoodgrainsrottinginFCIwarehouseshighlightthefailureofthesystemofpublicstockholding.
http://www.thehindu.com/todayspaper/tpopinion/aflawedapproachtofoodsecurity/article6903192.ece

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AflawedapproachtofoodsecurityTheHindu

Thefactthatonlysixpercentofagriculturalhouseholdssoldpaddyorricetoanyprocurementagencyin201213isreallystriking.The
SituationAssessmentSurveyofAgriculturalHouseholdsconductedbytheNationalSampleSurveyOrganisationduringthe70thRound
(2013)oftheNSSthedatasourcethatallowedtheHLCtocomputethefigureofsixpercentshowswhy.TheNSSdatarevealsthatthe
vastmajorityofagriculturalhouseholdswerenotawareoftheexistenceofminimumsupportprice(MSP),andanevenlargerproportion
werenotawareofprocurementagencies(about80percentforpaddyand70percentforwheat).OfthehouseholdsthatwereawareofMSP
butdidnotselltoprocurementagencies,alargeproportiondidsoforlackofprocurementinfrastructureatthelocallevel.Moreover,ifwego
back10yearsandlookatdatafromtheprevious(andfirst)SituationAssessmentSurveyofFarmersin2003,weseealargevariationacross
StatesinawarenessofMSP,withHaryana,Kerala,PunjabandTamilNadushowinghighawareness.
Onecanseethatthereasonforlowuseofprocurementislackofinformation.Theotherreasonislackofenablinginfrastructureatthelocal
level.Stateswhichhavemanagedtoputsuchinfrastructureinplaceanddisseminateinformationaboutprocurementsawgreater
participation.Thus,theHLCsconclusionthattheprocurementsystemisnotworkingismisleading.
ThesecondclaimoftheHLCisthatthePDSisafailurebecauseofmassiveleakage.But,whatdoweknowabouttheextentofleakage,its
spatialandtemporalpatterns?
TheexistingliteratureonPDSinIndiahashighlightedthreeimportantpatterns.First,thereisaseculardeclineinleakageoverthepast
decade.Second,thereisalargevariationintheextentofleakageacrossstateswithsomeStateslikeAndhraPradesh,HimachalPradesh,
Karnataka,KeralaandTamilNaduconsistentlyreportinglowleakage.Third,andmoreinterestingly,manyStateslikeBihar,Assam,
Chhattisgarh,JharkhandandUttarakhand,haveimprovedconsiderablyovertimewithrespecttoleakagefromthePDS.Theconclusionthat
wouldbeconsistentwiththefindingsofthisliteratureisnotthatthesystemneedstobedismantledbutthatthestrategiesadoptedby
successfulstatesarereplicatedintheotherStates.
ThethirdclaimoftheHLCisthattheFCIhasendedupwithexcessstocksoffoodgrains.Sincestorageoffoodgrainsiscostly,itrepresentsa
wasteofresourcesthatcouldhavebeenusedelsewhereandinmoreproductiveways.Weagreewiththisandwouldgofurthertoarguethat
excessivestocksoffoodgrainsontheonehand,andprevalenceofwidespreadhungerandmalnutritionontheotherimmediatelycallforan
expansionofthePDSoperations.
Tosumup,neitherthechangedsituationwithrespecttodomesticfoodproductionnorthefunctioningoftheFCIwithrespecttomeetingits
keyobjectiveslendscredencetotheargumentthattheFCI,andwithitthewholefoodmanagementsystem,needstobecurtailed.
(DeepankarBasuisassistantprofessorintheDepartmentofEconomics,UniversityofMassachusettsAmherst,U.S.,andDebarshiDasis
associateprofessorintheDepartmentofHumanities&SocialSciences,IndianInstituteofTechnology,Guwahati.)
Excessivestocksoffoodgrainsontheonehand,andprevalenceofwidespreadhungerandmalnutritionontheother,
callforanexpansionofthePDSoperations
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