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A bread and butter solution

A bread and butter solution
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First Published: Tue, Jun 22 2010. 08 17 PM IST
Updated: Wed, Jun 23 2010. 09 09 AM IST
One of the first issues the reconstituted National Advisory Council (NAC) will have to deal with is the proposed National Food Security Act (NFSA). Given the inability of the government to control food prices that remain unacceptably high and the scant regard the ruling United Progressive Alliance has shown for food security, it should be taken up on an urgent basis if the government is to preserve its credibility among common people.
By now, some of the broad contours of the Act have become clear. At the least, the confusion about poverty estimates has been cleared after the Planning Commission accepted the Suresh Tendulkar committee report. However, this is only partial because the committee as well as the commission, in line with the existing practice, do not give estimates of poor households, but only the number of poor people. Nonetheless, for the purpose of NFSA, various pronouncements by the Planning Commission agree on an estimate of 80.7 million poor households.
However, there does not seem to be any consensus on the amount of foodgrains that will be made available to eligible households. While the Congress manifesto as well as President Pratibha Patil’s speech in Parliament last year did mention 25kg of foodgrains as the entitlement, it is more likely that the existing entitlement of 35kg will not be lowered. On the other hand, an individual entitlement (12kg for an adult and 6kg for a child) would be better not only in terms of dealing with the issue of poor households versus poor people, but will also be the best option in terms of equity. It will be so simply because poorer people are known to have a higher household size compared with non-poor households. It does not make sense to give a richer household with fewer members the same entitlement as that given to a poorer household with more members.
While the broad agreement on these two crucial issues is a positive step towards NFSA, the real issue NAC would be expected to deal with is the universalization versus targeted entitlement debate. While in principle, the idea of a universal food entitlement is acceptable to many, including some members of NAC (going by their public pronouncements), it is yet to gain acceptability in policy circles. The principal reason is the fear that it is simply not feasible and affordable although desirable for a right-based food security.
But such fears are unfounded. Assuming 35kg per household and foodgrain prices at Rs3 per kg, the actual foodgrain requirement for 80.7 million poor households is 34 million tonnes (mt). This is only 6.5 mt higher than the existing requirement of 27 mt for 65 million poor households using the old poverty estimate. Among these, 24 million Antyodaya households are already getting 35kg of foodgrain at Rs3 per kg.
Given the fact that average procurement of foodgrains in the last three years has been in excess of 50 mt (last year it was 59 mt), this is not only feasible on the foodgrain front, but also in terms of financial requirements. However, given the average procurement figures, it will leave only 16 mt for the above-poverty-line (APL) households. As against this, a universal entitlement will imply total foodgrain requirement of 48 mt for the remaining 115 million households. The only way it is feasible is if the procurement goes up by another 20 mt.
Clearly, although feasible and affordable, it may not be the right way of universalizing food security. However, this assumption of 48 mt is not realistic on the basis of existing empirical evidence. Moreover, such an assumption is based on the flawed and unrealistic understanding that there will be no self-selection.
There are two sets of empirical evidence. The first is the comparison of the pre-targeted public distribution system (TPDS, universal) off-take from the 1993-94 consumption survey and the post-TPDS (targeted) off-take figures from the 1999-00 and 2004-05 surveys. In both cases, the evidence is overwhelming that the actual off-take from PDS will not be greater than 70% in any year. And this percentage does not increase even if the price differential widens. In other words, even if NFSA is made universal, the actual off-take of foodgrains will be around 56 mt for APL and BPL (below poverty line) households taken together. In terms of the financial burden, this will imply an additional spending of Rs15,000-20,000 crore a year (at the current economic cost), which is certainly affordable in a country growing at 8% a year.
Clearly, universalization is not only feasible, but also desirable. It will not only do away with the exclusion errors associated with BPL targeting, it will also imply greater accountability and transparency in PDS. But can NAC take the bold political step of adopting a universal framework for NFSA? Only time will tell, but for the record, it did so in the case of the Mahatma National Rural Employment Guarantee Act (MNREGA), which is universal. A possible way of doing it would be to follow the MNREGA model of implementing universal entitlement in the poorest 200 districts before expanding it to the rest of the country.
Himanshu is an assistant professor at Jawaharlal Nehru University and a visiting fellow at Centre de Sciences Humaines, New Delhi
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First Published: Tue, Jun 22 2010. 08 17 PM IST