The Hindu Business Line : Food for thought

AT FIRST GLANCE, the Cabinet Committee on Economic Affairs' decision to hike the issue price of foodgrains and reduce the quantity available for the poor above the poverty line would appear to be a welcome example of rational governance; after all, the move will reduce the subsidy bill by Rs 4,524 crore — no mean amount by any standard. Also, the fact that the CCEA has retained the price level and issue quantities for those below the poverty line would seem to suggest an exercise in focused social spending. Given the tendency of governments to spend profligately and with an eye on vote, focussing food security to the most needy is a perspective that should be readily endorsed.

But read between the lines and a different picture emerges — one of thoughtless and uncaring short-sightedness for the poor and a desire to serve narrow interests. By claiming to reduce the subsidy on food for the poor, the government is not redressing inefficiency in food distribution as much as helping an agency cut costs; after all, the subsidy for the targeted groups goes to the Food Corporation of India for the cost of buying grain at a certain procurement rate (which has not been reduced) and selling it to the target groups at the issue price. By reducing the quantity of grain and increasing the price at which it will be sold to those above the poverty line (APL), the Government only helps the FCI and brings about no great savings because the subsidy has, over the years, been declining. And in any case, it represents a fraction of GDP, even less than what Sri Lanka spends on its food security.

But the more pertinent point about the CCEA's move is its narrow definition of poverty and the means of addressing it. The official poverty line is nothing more than a perverse delineation of the starving — that is, those with a daily intake of less than 2,400 calories and an annual income of Rs 425 in the rural areas, and 2,100 calories and Rs 589 in the urban areas — from the simply poor. Thus, the definition of poverty that has inspired the CCEA's decision requires a simple solution; those who are starving need food through the PDS concession more than the other poor. It is also an erroneous one.

India has been self-sufficient for more than three decades, so food availability is not so much the problem as "non-entitlement" — the ability to command food, as Prof Amartya Sen has repeatedly pointed out. Poverty is also the absence of basic amenities, widespread malnutrition and ill health. The official poverty line is facile because a far larger number than just the "starving", perhaps 500-700 million require the means, that is, the purchasing power to buy food and the amenities that can raise the quality of their lives. Lack of purchasing power, entitlements, and the absence of the most elementary services, not food availability for the vast majority of the people, have done and will continue to do more damage to India's reputation as a dynamic economy that its IT industry will do it good. A redefinition of poverty and an agenda to address it urgently should set the tone for 2006, not tinkering with the PDS.