The National Food Security Bill (NFSB), 2011, seems to be headed nowhere. Agriculture Minister Sharad Pawar, Minister of State for Agriculture K. V. Thomas and Deputy Chairman of the Planning Commission Montek Singh Ahluwalia have raised a set of governance issues in this regard, while advancing the case for FDI in multi-brand retail as a food solution that reconciles producer and consumer interests.
However, the chief issue of creating new mechanisms to ensure that food security becomes a reality for large sections of the population has not been given the attention it deserves.
By seeking solutions such as FDI in retail, the nutritional deficiencies of the population have not been given due importance. It is possible to make NFSB work by changing the existing delivery mechanism.
The NFSB has three distinct aspects. First and foremost is the entry barrier — the BPL card. In all States that have a near-universal system, the offtake increases.
Second is the food credit and accommodation system, with its accounting procedures. The RBI’s statements indicate that the outstanding food credit recorded a 45 per cent increase with the scheduled commercial banks during the year-ended October 2012. It was nearly 30 per cent in the case of the cooperative banks during the same period. The impact of the Bill on the credit mechanism needs to be looked at.
Third, a poor offtake enhances scope for increased open market sale (OMSS) allocation and keeps the animal feed industry happy. For instance, OMSS allocation of wheat for bulk institutional buyers and traders during October 2011-12 was 74 per cent while for retail trade it was a mere 26 per cent. Given the price differential between PDS and open market prices and ineffective deterrence, diversion and leakages become the norm, contributing to food inflation.
The Food Ministry and its agencies such as Food Corporation of India have not shown the necessary willingness to grapple with offtake dynamics. Though foodgrains are allocated under the targeted PDS and many welfare schemes such as midday meals, ICDS, and so on, the latter are either denied or deprived of a demand-driven larger allocation. A few States have, however, sought to tailor the PDS to suit their socio-economic situation.
Grain output and storage capacity has seen remarkable progress since Independence. However, the private entrepreneurs guarantee scheme (PEGS) is deficient and flawed for
being anchored to the centralised surplus/deficit procurement concept of the 60s and
excluding people’s self-governing institutions from partaking in the entrepreneurial activities and
being embroiled in land acquisition problems. The Warehousing (Development and Regulation) Act, 2007 does not work to the benefit of actual producers either.
The way out is three-fold. The first step is to link PEGS to the Panchayati Raj Institutions (PRIs) that number slightly over 500,000. The second is to anchor the storage capacity issue to grain production rather than myriad procurement data. Third, constructing rural godowns must be included as a critical component of the flagship rural infrastructure programme, ‘Bharat Nirman’.
During 2011-12, given the fourth advance estimates, average wheat and rice marketable surplus in each of these rural institutions works out to about 396 tonnes. Given this quantity and the procurement incidentals (Rs 296.25 per quintal) and distribution cost (Rs 305.20 per quintal), the economic logic of decentralised PDS, implemented through PRIs and Employment Guarantee Schemes, appears quite convincing. The storage facility needs to be created locally; PRI-EGS can address both storage and distribution issues.
The Budget 2012-13 promised broadband linkage to each development block in the country. By ignoring PRIs’ stake in PDS, both the Food Ministry and the Task Force on ICT strategy for PDS made a huge exclusion error.
Structural weaknesses and procedural inadequacies could have been better handled by enlisting the active participation of PRIs.
(The author is an economic consultant. The views are personal.)