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Opinion | Universalize food entitlements to avert hunger and aid growth
India’s high foodgrain stocks make this possible and New Delhi should use them to ease the crisis
It is difficult to predict the precise impact of the lockdown on the Indian economy. However, data released last week suggests that the lives and livelihoods of people are likely to be much more severely hurt than hitherto believed. Much of this data is based on a partial collection of statistics. Still, it is sufficient to show a sharp contraction in industrial activity during the lockdown. Considering that the economy was already on a downtrend before the covid crisis, with quarterly growth rates slowing down sharply, a recovery will be slow and painful.
This necessitates interim measures to protect the lives and livelihoods of the millions who have been rendered jobless and have returned home. The least that is needed is the provision of food and supplementary income to help them sustain themselves until the Indian economy recovers.
India’s enhanced budgetary allocation for the Mahatma Gandhi National Rural Employment Guarantee Act will help some of them get work and earn some money. However, it is hardly sufficient to boost demand and effect an economic revival. The second challenge is to make food available at subsidized prices until the next harvest, which is at least five months away. While the Union government had increased allocations under the Public Distribution System (PDS) for those entitled under the National Food Security Act (NFSA), for three months until June, this needs to be extended for another six months.
Also, the scheme leaves out millions of families. These are not necessarily households that aren’t poor, even though they may have been excluded from the priority criteria of the NFSA. Since the identification of who is eligible has been done on the basis of data that is almost a decade old, it might exclude many who have either been rendered jobless in the course of the economic slowdown or later during the lockdown. Unfortunately, at a time when even elementary data collection is difficult, there is no way to identify those not on the NFSA list who may need a food subsidy because of their changed circumstances. There are also several others who have failed to get their entitled food supplies due to technical and administrative hurdles. With the “one nation, one ration card” plan unlikely to be fully implemented before next year, the risk of a large chunk of beneficiaries losing out on their official entitlements is high. The only way out is to make the PDS universal at least for the next six months.
This is not only the best strategy to help protect Indians from hunger, but also to deal with mounting food stocks. As on 31 May, government stocks of foodgrains stood at 97 million tonnes, including unmilled paddy. This is not only far more than the required stock holding, but also what would be needed if the PDS is universalized for six months. The average offtake of rice and wheat from the PDS is 4.1 million tonnes per month (2.3 million tonnes rice and 1.8 million tonnes wheat). With an additional allocation that doubles the PDS entitlement, this rises to 8.2 million tonnes. While most state governments have taken the regular PDS quota, the offtake from the additional foodgrain entitlement under the Prime Minister Garib Kalyan Yojana was only 6 million tonnes by the end of May 2020, half of what has been allocated for the three-month scheme duration . Even if universalization is done, the total offtake is unlikely to go beyond 12 million tonnes per month, with some from the richer strata opting out of the subsidized food scheme. The government would still be left with 37 million tonnes, which is higher than the buffer requirement of 30 million tonnes as on 1 October.
Our highest-ever foodgrain stocks are a result of record procurement of both wheat and rice, at almost one-third of the country’s total production. But it also implies that the available stock with the public is lower than what is actually available. This stockpiling is likely to create an artificial scarcity of foodgrains in the market. At a time when there are signals of rising food inflation at the retail level, adding to stocks is only going to put more upward pressure on prices. Releasing foodgrains by universalizing the PDS for six months will not only reduce these stocks, but also boost demand in the economy by increasing the disposal income of households that are struggling.
It is rarely the case that misdeeds of the past appear as a boon. This is one such rare occasion. Food stocks accumulated over the years can now be used to provide relief to millions of Indians suffering from the twin shocks of the slowdown and lockdown.
Himanshu is associate professor at Jawaharlal Nehru University and visiting fellow at the Centre de Sciences Humaines, New Delhi
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First Published:18 Jun 2020, 09:58 PM IST
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