Jean Drèze


Despite its many flaws, the food security bill is an opportunity to end the leakages from the PDS and prevent wastage of public resources.


The National Food Security Bill, now an ordinance, has been a target of sustained attacks in the business media in recent weeks. There is nothing wrong, of course, in being critical of the bill, or even opposed to it. Indeed, the bill has many flaws. What is a little troubling, however, is the shrill and ill-informed nature of many of these attacks. Statistical hocus-pocus has been deployed with abandon to produce wildly exaggerated “estimates” of the financial costs of the bill, and no expression seems to be too strong to disparage it. The fact that the food bill could bring some relief in the lives of millions of people who live in conditions of terrifying insecurity seems to count for very little.




Meanwhile, recent studies shed some useful light on the state of India’s Public Distribution System (PDS) — one of the controversial foundations of the bill. As far as the “below poverty line” (BPL) quota is concerned, there is a clear trend of steady improvement in many States, including some that had a very poor PDS not so long ago. A recent study of the PDS in Koraput, one of Odisha’s poorest districts, found that almost all BPL households were receiving their full monthly quota of 25 kg of rice at the stipulated price. Similar findings emerged from a survey of the PDS in two districts of Uttar Pradesh (Lakhimpur Kheri and Chitrakoot), where most BPL households were getting their due — 35 kg of rice or wheat per month. The main problem was the restrictive nature of the BPL list, which left many households excluded. These surveys confirm earlier findings of a study by the Indian Institute of Technology in 2011 that BPL households in nine sample States received 84 per cent of their PDS entitlements.


It is in the “above poverty line” (APL) quota that embezzlement continues in many States. In Uttar Pradesh (U.P.), APL households are supposed to get 10 kg of wheat per month, but most of the APL quota goes straight to the black market. The gravy flows all the way to the top: the complicity of the then Food Minister, Raja Bhaiya, in this scam was exposed last year by Tehelka, but the “bhaiya” retained his post. Recent investigations suggest that leakages in the APL quota are also very high in Bihar, Jharkhand, and Madhya Pradesh, among other prime offenders.


The main reason for this vulnerability is that the APL quota is treated as a dumping ground for excess foodgrain stocks. In recent years, foodgrain procurement has increased by leaps and bounds, but distribution under the BPL and Antyodaya quotas has remained much the same, since allocations are fixed and lifting is close to 100 per cent. To moderate the accumulation of excess stocks, the Central government has been pushing larger and larger amounts of foodgrain into the APL quota, which is now almost as large as the BPL quota (close to 20 million tonnes of foodgrains in 2012-13). One consequence of this dumping is that the entitlements of APL households are, by nature, unclear and unstable; in fact, they are not entitlements but ad hoc handouts. This gives middlemen a field day, since APL households are often confused as to what they are supposed to get, or whether and when their quota has arrived. The current situation in U.P., where most of the APL quota goes straight to the black market without anyone raising the alarm, is just an extreme example of this situation.


Rectifies PDS Defects


The food bill is an opportunity to clean up this mess, and to cure two basic defects of the PDS: large exclusion errors, and the leaky nature of the APL quota. In effect, the bill abolishes the APL quota and gives common entitlements to a majority of the population: 75 per cent in rural areas and 50 per cent in urban areas. These are national coverage ratios, to be adjusted State-wise so that the coverage is higher in the poorer States. In this new framework, people’s entitlements will be much clearer, and there will be greater pressure on the system to work. Indeed, wide coverage and clear entitlements are two pillars of the fairly effective PDS reforms that have been carried out in many States in recent years (other aspects of these reforms include de-privatization of ration shops, computerization of records and transparency measures). Seen in this light, the bill can be a good move not only for food security, but also from the point of view of ending a massive waste of public resources under the APL quota.


Cash transfers


The main goal of the PDS is to bring some security in people’s lives, starting with protection from hunger but going well beyond that. A well-functioning PDS liberates people from the constant fear that it might be difficult to make ends meet if crop fails, or if someone falls ill, or if there is no work. The value of this arrangement has been well demonstrated in many States — Tamil Nadu, Chhattisgarh, Odisha, Rajasthan, among others. Whether a system of cash transfers could serve the same purpose at lower cost, and how long it would take to put in place, are issues that need further scrutiny and debate. Meanwhile, the PDS is in place, there is a ration shop in every village, and huge food stocks keep piling up. It seems sensible to use these resources without delay. In any case, the food bill does not preclude a cautious transition to cash transfers if and when they prove more effective than the PDS.


Three Problems


Having said this, there are many reasons for concern over the impact of the bill. Three related problems look increasingly serious. First, there is a danger of over-centralisation of the PDS under the bill, at a time when many State governments are making good progress with reforming the PDS on their own. To illustrate, the bill seeks to impose a system of “per-capita entitlements” (e.g. 5 kg of food grains per person per month) across the country, as opposed to household entitlements (e.g. 25 kg per household). Per capita entitlements are certainly more equitable and logical than household entitlements. But the transition from the latter to the former is not a simple matter, and could be very disruptive if it is imposed overnight from the top. Just think about how an old widow in Rajasthan, who lives alone and survives on her monthly quota of 25 kg of PDS rice, would feel on being told that her entitlement is being slashed to 5 kg per month.


Political tool


The second danger is excessive haste. As the country gears up for a string of elections, the Central government — and some State governments — are keen to fast track the roll-out of the bill for electoral purposes. A sense of urgency is certainly appropriate as far as food security is concerned, but undue haste could be very counterproductive. For instance, some State governments apparently propose to use the BPL Census of 2002 to identify eligible households, instead of the more recent and reliable Socio-Economic and Caste Census — just to speed things up. This is a disastrous idea. A better way of fast tracking the roll-out of the bill would be to universalize the PDS in the country’s poorest districts or blocks.


Last but not least, the promulgation of an ordinance has turned the bill into a political football. The Congress claims that the bill is a non-partisan initiative, but is also trying to use it as an electoral card. The Bharatiya Janata Party says in the same breath that it supports the bill and that it will not allow Parliament to function. The Samajwadi Party is shedding crocodile tears for farmers, but is unable to explain why the bill is “anti-farmer.” The All India Anna Dravida Munnetra Kazhagam claims that the bill is against Tamil Nadu’s interests, without mentioning that it will enable the Tamil Nadu government to save large amounts of money on rice purchases from the Centre. The real issues are getting lost in these squabbles.


It remains to be seen whether the monsoon session of Parliament will provide an opportunity to repair this damage, and also to consider the much-needed amendments to the bill. The silver lining is that food security has finally become a lively focus of democratic politics in India. Whatever happens to the bill, State governments are under great pressure to reform their PDS and make it work for people rather than for corrupt middlemen and their political masters. This was long overdue.


(Jean Drèze is visiting professor at the Department of Economics, University of Allahabad.)


(The Hindu, August 1, 2013: Source SACW)

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