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Columns - Vision 2020
Do away with fair price shops

P. V. INDIRESAN

Open market competition has a power and efficiency that no administrative authority can emulate. Hence, replacing fair-price shops with competitive marketing will be advantageous, says P. V. INDIRESAN.


This is 208th in the Vision 2020 series. The previous article was published on August 20.



Some months ago, Mr Bandyopadhyay, a retired official, wrote in The Statesman of how West Bengal has the largest percentage of sufferers from chronic hunger among all the States in the country.

Provoked by his article, Mrs Sandhu, a senior and serving official of the Panchayati Raj Ministry, has floated a general query whether the panchayat system could be used to deliver food better.

This episode raises three fundamental questions: How is it that the ideologically committed Leftist Government (with the advantage of continuous rule for three decades) has allowed destitution to the extent of chronic hunger to persist? Why is it that, when in service, a sensitive senior official such as Mr Bandhyopadhyay could do nothing to rectify the problem? More usefully, how far can Mrs Sandhu be helped to succeed in her endeavour?

Citing the experience of the notorious Bengal famine of the 1940s, Mr Bandyopadhyay caustically remarks: “The British might have left India but their hallowed tradition of administrative insensitivity and indifference are kept intact with greater embellishment.” Apparently, the present day democratic government has no more compelling reason than the Imperial Government of the past had to care for the poor.

The second question why sensitive officials are rendered impotent is easily answered. A bonsai culture pervades the Indian administrative system: No official is allowed to take deep enough roots to grow big. For instance, what guarantee is there that in a short time Mrs Sandhu is not transferred to an entirely unrelated assignment in, say, the Ministry of Civil Aviation? How persistent, therefore, can be her efforts to help the poor to be freed of hunger?

Complex equations

In matters concerning famine, Professor Amartya Sen is the acknowledged world authority. He has explained how most famines occur not due to insufficient food but due to maldistribution of the available food. However, being only an economist and not a management expert, he does not explain how food can be distributed better. Professor Parkinson explains the limitations under which scholars function. He remarks: “It is not the business of the botanist to eradicate the weeds. Enough for him if he can tell us just how fast they grow.” Likewise, economists can explain how famines spread but not how to eradicate hunger.

Human nature being what it is, the rich will overeat; they will also have priority in accessing food. Conversely, if the rich do not get enough to waste food, the poor will not get even the bare minimum. Hence, the poor will go hungry unless there are large numbers of obese people waddling around. Even when the food production is substantial, the rich will almost definitely change their diet; they will start eating chicken in preference to chapathi.

The extra food will, therefore, go to feed chicken to gratify (and fatten) the rich than to feed the needy poor. Therefore, there has to be substantial excess of food production before the poor can meet their minimum needs.

Unfortunately, India has no such surplus. Neither is there any immediate prospect for large enough surpluses to emerge. In recent years, due to mistaken overconfidence that grain production will take care of itself, the government has reduced investment in agriculture. Sincere but not well-informed environmentalists have prevented expansion of irrigation systems. Greedy and ignorant farmers overuse water and other inputs to cultivate inefficiently and prevent efficient spread of agricultural inputs.

Apart from these structural limitations, a new theory has been floated that food security does not mean producing enough food; it means having export surpluses to buy whatever food we need. Such “experts” look only at the IT boom but forget that even with that boom we suffer from large trade deficits. They also forget that we are one-sixth of the world population; our population is so large that even a minor shortfall in India will overload the world market. We have no option but be self-sufficient in food; we must produce enough food not merely to feed all of the poor but enough and more for the rich to overeat.

Learning from history

In the aftermath of the last World War, food shortage was so acute that the then Government of Travancore cut down rice ration to 4 oz per head per day. Madras Presidency was not in a much better situation. In that extreme situation, Rajaji, then Chief Minister of Madras Presidency, took an unusual decision: he abolished controls on food. Immediately thereafter, contrary to what most people feared, plenty of rice came into the open market. Our administrators should revisit what Rajaji did. They should seriously consider whether it is worth abolishing altogether “Fair Price” shops. Open market competition has a power and efficiency that no administrative authority can emulate, however sincere and efficient it may be.

In particular, replacing fair-price shops with competitive marketing will be advantageous for three reasons: One, it will cut down corruption and consequent diversion of grain. Two, it will check bogus ration cards. Three, it will put to a halt the rotting of millions of tonnes of grain that are being lost every year in government godowns. Further, in States such as West Bengal, it will minimise smuggling to neighbouring countries.

Don’t make it storable

Most of these corrupt practices will be minimised if food is delivered in not easily storable form. A commodity can be diverted or smuggled profitably only when it can be easily stored and transported, not otherwise. For instance, cooked rice is far more difficult to transport or smuggle than raw rice is. That is why the Midday Meal Scheme does reach poor children however infirm the system may be.

Although poor children seem to accept midday meals, policy makers fear their families will not agree to go to a rice kitchen to eat. That goes against the experience of Western nations who operated soup kitchens in large numbers during the Depression Years. Hence, where acute and chronic hunger has persisted for decades, as in the K-B-K districts of Orissa, it might be worth distributing cooked food rather than grain to poor families. That way, malnutrition due to lack of essential supplements to grain will also be minimised.

For decades we have tried rationing and subsidised distribution of grain. Unfortunately, corruption goes hand in hand with artificial redistribution of scarce goods. So long as ration shops provide subsidised food, there will be opportunities for diversion; middlemen will take food away from the mouths of the poor.

This suggestion for abolishing Fair Price shops will not be easily accepted as it is counter-intuitive. We should remember that although we have intricate and elaborate rules, food distribution remains a blot on our governance. The problem has become chronic. That is why it would be worth giving competition a chance. At the minimum, the poor can be given the option to choose any one out of several Fair Price shops (or kitchens). Such competition will force the shops to be really “Fair”.

Transparency is another powerful force. Biometric sensors can be used to check who buys what and thereby minimise diversion of subsidised food. Then, just as computerisation of railway tickets cut down corruption, biometric monitoring will improve food distribution.

However, just as railway computerisation does not provide a seat for every intending passenger, this system will not fill every one’s stomach; it will only minimise waste, inefficiency and corruption. Ultimately, we have no option but to produce surplus food, but that is a different story.

(This is 208th in the Vision 2020 series. The previous article was published on August 20.)

(The author is a former Director, IIT, Madras. Response may be sent to indiresan@gmail.com)

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