Context: As per the arguments of Jean Dreze, releasing food is all the more crucial as the emergency cash transfers proposed by the finance minister are likely to have severe limitations.
- Around twenty years ago, People’s Union for Civil Liberties (PUCL) filed a writ petition in the Supreme Court asking for the country’s gigantic food stocks to be used for public works and other social security schemes.
- It paved the way for food security initiatives such as mid-day meals, public distribution system (PDS) reforms, and later on, the National Food Security Act (NFSA).
- Record food stocks :PUCL petition was filed, in 2001, the foodgrain stocks of the Food Corporation of India (FCI) were approaching 50 million tonnes.
- The country has large food stocks, and some of this could be used to protect people from hunger during the coronavirus crisis.
- Food procurement growing: Food-based schemes involve the distribution of some 50-60 million tonnes of rice and wheat every year.Yet, food stocks have continued to grow because procurement levels have also increased.
- The paradox:
- Food stocks more than buffer norms : Foodgrain stocks crossed 80 million tonnes — more than three times the buffer-stock norms (21.04 million tonnes).This year, they have reached a staggering 77 million tonnes in March, before the rabi harvest, when food stocks typically rise by another 20 million tonnes or so.
- The shadow of hunger looms large as the lockdown devastates people’s livelihoods.
What should be done?
- Need of serious relief package: A serious relief package should include releasing excess stocks to the states in large quantities.
- Doubling PDS rations.
- Providing emergency ration cards: for instance, Jharkhand has a major problem of exclusion from the PDS — there are pending ration-card applications from seven lakh households, including many poor ones. The central government does not provide any food assistance to them under its relief package.
- Reduce exclusion errors in the PDS.
- The central government should release more food stocks to the states for free (or at a nominal price), over and above existing allocations.
Why is it difficult to do?
- In economic terms, releasing excess stocks is costless, and even saves money. But in accounting terms, it is expensive.
- Breaching Fiscal deficit target: The food subsidy essentially pays for the losses FCI makes when it buys at minimum support prices and sells at much lower PDS prices, and also the money spent on transportation and storage.
- As it happens, however, the food subsidy does not enter the central government’s accounts until stocks are released.
- Credit-rating agencies watch the fiscal deficit, not the food economy.
Releasing food is all the more crucial:
- Cash transfers proposed are likely to have severe limitations.
- Amounts are small : for example, Rs 500 per month for three months to Pradhan Mantri Jan Dhan Yojana accounts held by women, the flagship provision.
- Exclusion errors are likely to be substantial : many poor households have no operational PMJDY account (there is, alas, little data on this).
- There is the challenging issue of mass disbursement of cash in this crisis.
- Density of banks in rural areas are less and overcrowding at these rural branches will defeat the purpose of social distancing.
- Ordeal for many poor people: Expensive trips to distant banks and queue there for hours just to make enquiries.
Food transfers are bound to play a big role in keeping poor people alive in the next few months.The central government must unlock the godowns and give plenty of food to the states even if it takes the fiscal deficit a notch higher.
Public Distribution System
The Public distribution system (PDS) is an Indian food Security System for the poor people
established by the Government of India under the Ministry of Consumer Affairs, Food, and Public
- PDS aims to provide subsidised food and fuel to the poor through a network of Fair Price Shops
- Food grains such as rice and wheat that are provided under TPDS are procured from farmers, allocated to states and delivered to the ration shop where the beneficiary buys his entitlement.
Food Corporation of India
FCI was setup under the Food Corporations Act 1964, in order to fulfil following objectives of the Food
- Effective price support operations for safeguarding the interests of the farmers.
- Distribution of food grains throughout the country for the public distribution system.
- Maintaining satisfactory level of operational and buffer stocks of food grains to ensure National Food Security.
Image Source: duke today