What stops the government from using good harvests to reduce,if not eliminate,hunger?
For ordinary folk,a 3 per cent increase in food grain production over that of last year,combined with strong procurement operations and good buffer stocks of rice and wheat would be a cause for some celebration. It would be seen as an opportunity to tackle the widespread food insecurity that exists in India today. Instead,we have the spectacle of plenty amidst hunger and malnutrition while ministers discuss how to avoid foodgrain rotting in the open,because of lack of storage space. It is reported that the prime minister will be meeting with the ministers of agriculture,finance and food,along with Planning Commission officials,to decide what to do.
It does not require such high-level meetings to know that the only solution in a country with the largest malnourished population in the world would be to ensure increased allocation of cheap foodgrain through the public distribution system. The food ministry is on record that it had suggested that the allocation for BPL and APL card holders should be doubled,and the price for APL reduced,which would eliminate old stocks and empty the godowns for the rabi season procurement. According to statements made by ministry officials to the parliamentary standing committee on food,they had asked for an allocation of Rs 1.06 lakh crore,around Rs 30,000 crore more than the 2012-13 budgetary allocation to implement this. But this was not accepted.
What is the alternative suggested? The agriculture minister has asked for a lifting of restrictions on exports,arguing that this will help farmers. A policy corollary would be lowered procurement targets. The large majority of farmers in India belong to the middle and small peasant category. They have no holding capacity and usually sell their produce at distress rates if government agencies delay procurement operations. This has,for example,happened in Bengal this year where 32 farmers have committed suicide because of the collapse of official procurement and the consequent burden of debt.
In 2006 and 2007 when,under Sharad Pawars charge,procurement by state agencies was restricted so as to leave the field open for private procurement,farmers did not get a significantly higher price. But the low procurement led to a slashing of the foodgrain available to the public distribution system. As a result,India had to import wheat at much higher prices than what was paid to the Indian farmer. The beneficiaries of this policy were not farmers,but agribusinesses like Cargill,Reliance,ITC and the Australian Wheat Board,which turned out to be the same company from whom the government had imported wheat. This was also the period of rampant hoarding of foodgrain and high prices. Farmers did not gain and consumers suffered. For the majority of farmers,deep in debt,the immediate relief would be not the lifting of export restrictions,but the implementation of the Swaminathan Commission recommendations to increase the minimum support price to a sum based on a calculation of production costs plus a 50 per cent profit margin.
Another suggestion is that NREGA workers should get part payment in foodgrain,as was done earlier in the food-for-work programme. The governments reasoning is contradictory. On the one hand,at ration shops it wants to promote cash transfers instead of foodgrain. But at the work site it wants people to accept grain instead of cash! The current dilemma of the government is shown in the figures. India has buffer stock norms for rice and wheat for each quarter of the year,decided by seasonal requirements. The norms are as shown above.
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In the last two years,stocks have been far above requirement. For example,in January 2010 it was 474.45 lakh tonnes,137 per cent more than the buffer norm and in April 2012 at 545 lakh tonnes,it is 236 per cent above buffer norms. With a good rabi crop,a record procurement is anticipated. The total stock of wheat and rice could go up to over 700 lakh tonnes. Because of a lull in global market prices of foodgrains,the big farmer lobbies and traders did not object to export restrictions earlier. However,with warnings from the Food and Agricultural Organisation of a rise in international prices,these lobbies have again become active. Once export restrictions are lifted,market manipulators will again dominate.
This is not to say,however,that there is no problem of storage capacity. It is scandalous that in spite of repeated assurances to Parliament,the government has failed to increase storage capacity by any significant degree. The parliamentary panels report states that the storage capacity of FCI godowns was enhanced by merely one lakh tonnes between June 2009 and February 2012.
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The reality of rotting foodgrains while millions starve is a moral outrage. But the question is,what is the most rational and socially desirable way to deal with the problem? By permitting exports and lowering procurement,as some are demanding,or by ensuring an immediate increase in PDS allocations as well as the numbers of families to be covered,that is,moving towards a universal PDS? Where is the money,the FM publicly asked. He need only look at the revenue foregone columns in the budget papers,Rs 5.28 lakh crore in tax concessions. Much more than that required for food security. Obsession with cutting subsidies when it comes to peoples interests prevents the government from using the opportunity of good harvests to reduce,if not eliminate,hunger.
The writer is a member of the CPM politburo