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Change the policy diet
By J. George

The complicated policies and programmes implemented to reduce hunger will only increase food insecurity in the country


The debate with voting on Foreign Direct Investment (FDI) and Foreign Exchange Management Act (FEMA) has severe consequences on the food, health and nutritional status of the Indian citizens. Along with ‘Aadhar’, the three basic toxic elements in the Indian policy diets, has been in for the scrutiny of the Supreme Court.

Without ensuring food sovereignty the discriminating enthusiasm in the policy staple diets will merely increase food insecurity though tremendous opportunities are still knocking at the doors of the government to sequester the record foodgrains production level to benefit millions of marginal and small farmers.

The clarion call of PM has apparently made no dent whatsoever. On the contrary, a few ‘fat cats’ will indeed gain obese scope a la oligarchic conglomerate proportions. Nutritional issues embedded National Food Security Bill 2011 (NFSB) apparently has been buried due to still-birth. Such questions need to be taken gravely given the Food Minister’s penchant to practice what he preaches. The message about mounting woes to both producers and consumers is loud, clear and strong.

Private Entrepreneurs Guarantee Scheme (PEGS), Direct Cash Transfer (DCT) and Information Communication Technology (ICT), is the amazing trinity of a rainbow policy diets served at the recently concluded all-India conference of the food ministers in Delhi. The presence of stalwarts like troika of Sharad Pawar, Montek Ahluwalia and K. V. Thomas lend immense credibility to the policy diets since PM has already termed malnutrition a national shame amongst most vulnerable population segments. The critical and primary question though is whether or not PEGS, DCT and ICT diets will unshackle the nation from this national disgrace? If yes, then how it fits into the epicenter of market reforms currently under implementation. Will it address the basic critical question - livelihood security - faced by aam aadmi in his/her everyday business of life? Is it that these policy diets are in fact saying RIP to the National Food Security Bill 2011?

Since expectations of aam aadmi have soared post-2009 election promise for a national food security guarantee law, the suggested food policy rainbow is a big disappointment.

The proximate reasons are not far to seek since PEGS, DCT and ICT are neither palatable food commodities nor services to satisfy the immediate wants of the teeming billion. Moreover, this trinity forms a major charge on the food subsidy manifest. PEGS, in fact, is forcing agriculture marketing system to regress into the late 60s.

The troika between them highlighted four additional critical issues: (a) overflowing granaries alongside poor offtake and yet demanding to take on board coarse cereals and pulses (b) ensuring economic security to Fair Price Shop (FPS) owners (c) food wastage, misleading advertisement and (d) timely export of foodgrains.

Since expectations of aam aadmi have soared post-2009 election promise for a national food security guarantee law, the suggested food policy rainbow is a big disappointment. Food sovereignty on the other hand is a policy framework based on rainbow like seven principles: (1) food as a basic human right, (2) agrarian land reforms to ensure non-discriminatory access to till the land and other primary activities ensuring livelihood security, (3) protection to the natural resources to conserve and make it sustainable, (4) ending global hunger by stopping use of speculative templates in food business, (5) trade in food to be reorganized to ensure domestic self-sufficiency and price stability, (6) social peace such that food is not used as a weapon in aggravating myriad conflicts and (7) democratic control to ensure right to honest, transparent, open and self-governing decision-making.

Three of the seven domains, overflowing granaries, poor offtake and inadequate storage space have structural issues at the base that has defied engagement. Remaining four domains have internal inconsistencies, hence amenable to process interventions and corrections. Circumlocutions though can justify their presence in spirit as in sustainable and faster inclusive growth theme song of the 12th Plan.

The Rural Business Hub (RBH) concept being inclusive in thought and design offers a better policy diet than PEGS.

The way out of this imbroglio requires a paradigm shift in the denominator of all our food policy planning. The contemporary construct is based on Food Corporation of India (FCI) gaining monopoly using the 60s paradigm of surplus-deficit foodgrains production. Consequently, centre takes authoritative leadership role on PST - Procurement, Storage and Transportation - of foodgrains. One trait, therefore, of this paradigm shift is decentralisation of ownership and diffusion of concentration.

Rural population in fact is at the epicenter of both demand and supply of food. Given the concerted attention to agriculture since independence even a hard core conservative would not hesitate to admit that the surplus/deficit template has undergone tectonic changes since its inception.

For instance, at 1.95 per cent growth rate in the foodgrains production during 2001-11 has been indeed slower (2.19 per cent) than the preceding decade 1990-2000. The overflowing granary is one living case in point as well.

Since the real challenge for the Indian economy is to reduce the widening overall GDP growth volatility (nearly six times higher coefficient of variation estimated for agriculture) out of box innovative approach demands that constitutionally mandated self-governing institutions, particularly the gram panchayats are given a courageous and firmer footing in the food policy diet planning. The Rural Business Hub (RBH) concept being inclusive in thought and design offers a better policy diet than PEGS.

Three compelling and reinforcing evidence based arguments are available. The common thread in all three, however, happens to be the opportunity to extend ownership of the food commodity between the time of harvest and the moment it reaches kitchen or mouth of the consumers. Minimum Support Price (MSP) driven template in the case of foodgrains entices millions of smallholder producers to give up their ownership rights immediately after harvest. In this milieu and transaction producers lose out on the value added streams accruing on account of time, space and form. The food ministry allegedly steps in promising producers as well as consumers a remunerative price and affordable price respectively. PST thus gets the public goods cloak without performing any public services.

First evidence emerges on a critical examination of PEGS. The private entrepreneur guarantee scheme is a rural infrastructure, namely foodgrains godowns building policy prescription wherein FCI assures to patronize such entities for 10 years. The approved PEGS storage facilities (15.121 million tonnes) across Indian states can be viewed as falling into four distinct groups. The Favoured threesome: Punjab, Haryana and UP; Neglected East: Bihar, Jharkhand, Odisha and West Bengal; DCP Quad: Chhattisgarh, Madhya Pradesh, Odisha and West Bengal; Rest of the ten states. The eight north eastern states, though enjoying an independent package, can be integrated as well.

The Favoured Threesome accounted for nearly 3/4th of the approved PEGS storage capacities (10.865 million tonnes) while the remaining 1/4th is distributed amongst the 16 major states. For example, the Neglected East and DCP Quad together account for about 6 per cent each of the approved capacity. Thus PEGS favoritism is 12 times between these three groups.  THE North Eastern states lag behind by a factor of 20 in as much as storage infrastructure facility creation is concerned. The flawed decision criterion for PEGS approval being three years foodgrains procurement figures underscores that agriculture production figures have stagnated at their 60s level thereby deepening the surplus-deficit divide. And therefore it follows that all agricultural investments have been unproductive.

The private entrepreneur guarantee scheme is a rural infrastructure, namely foodgrains godowns building policy prescription wherein FCI assures to patronize such entities for 10 years.

The second evidence follows the first when foodgrains production statistics is brought into the above analytical reckoning. The approved storage capacity in the favoured threesome appears grossly arbitrary even to justify the surplus dictum. The data indicate that at 2009-10 foodgrains production levels while favoured threesome production was higher by a factor of nearly 1.7 the approved storage facility was higher by 5.5 times in the neglected east and DCP states put together. The capricious nature of PEGS approval is further highlighted by juxtaposing local self governing institution like gram panchayats production figures. The inter-group deprivation/deviation with the favoured threesome, for instance, widens by a factor of 3.70 and 6.25 for neglected east and DCO Quad respectively.

The Economic Census 2005 (EC2005) brings out the third set of substantiation to our argument. EC2005 has identified 1.513 million non-agricultural entrepreneurs exclusively reporting to be engaged in the economic activity of transport and storage. Nearly 3/5th (60%) entrepreneurs have chosen rural space for this specific economic activity. It needs to be noted here that business of wholesale trade has nearly 3/5th urban concentration whereas retail trade had slightly more than 1/2 rural orientations. It should not come as a surprise that within these location specificities 3/4th are own activity establishments while remaining hire in workers.

The entrepreneurial abilities by business establishment type and activity, against this backdrop, clearly show the inappropriateness of PEGS. The crowding out of entrepreneurial traits amongst own account establishments wherever government intervention is designed under the public private partnership format.

The entrepreneurial skills of these self governing institutions have been honed in the one-way street called rural business hubs (RBHs). For illustration, we know for certainty that during 2011-12 given the 4th advance estimates, average Wheat and Rice marketable surplus/production in each of such rural institution works out to about 396 tonnes. At the rate of 2011-12 procurement incidentals (Rs.296.25 per quintal) and distribution cost (Rs.305.20 per quintal) the economic logic of encouraging PRI-EGS becomes eminently apparent. The storage facility needs to be created with them having a development perspective. PRI-EGS is an easy plug-in to compliment not only the storage issues but also for grain distribution.

The union budget 2012-13 promised broadband linkage to each development block in the country.  By ignoring PRIs stake in PDS-ICT both the food minister and the task force on ICT strategy for PDS practiced the worst exclusion error ever. The closed minds and missed opportunities in matters concerning food management needs immediate engagement anchored on PRI-EGS to correct all three structural weaknesses and four procedural inadequacies.

The views expressed above are personal and do not necessarily reflect the views of d-sector editorial team.

J. George

Prof. J. George is on sabbatical in Firenze-Italy. He was ICSSR Senior Fellow at IEG, Delhi University

Write to d-sector  |  Editor's Note

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