Dr Bharat Jhunjhunwala
The Food Security Act proposes to provide subsidized food grains to nearly 70 percent of our population. The Government will have to procure and distribute about 70 percent of the food grain produced in the country for this purpose. This would be a violation of WTO rules which provide that any member country will not make a subsidized distribution of more than 10 percent of its domestic production.
The Government has found a creative solution to this problem. Developed countries have been demanding simpler rules and better facilities at the ports in the developing countries. They say that their exporters are facing problems in exporting goods to India. The WTO is set to discuss these problems under the banner of ‘Trade Facilitation’ at the Ministerial Meeting scheduled for December at Bali. Technically trade facilitation applies equally to imports by the developed- and developing countries. However, practically this is more beneficial for the developed countries who are major exporters of goods. Goods exports from India are less and imports are more because we export large amounts of services such as software that are supplied via the internet and do not pass through the ports. Secondly, we receive large amounts of remittances which are used to import goods. Thus, effectively, trade facilitation is more beneficial for the developed countries. Thus our representative at the WTO remarked “Trade facilitation is nothing but import facilitation.”
The developed countries have indicated that they would be willing to give a waiver of 2 or 3 years to allow distribution of food in excess of permissible 10 percent under programs such as the Food Security Act. In return they expect India to move forward in trade facilitation, that is, to make imports easier. India has conceptually agreed to the proposal but it is demanding a waiver for 9 years. Settlement is likely to take place somewhere in between 3 and 9 years. In other words, the Food Security programme is a temporary paying guest. It will have to be dismantled within a few years after this waiver comes to an end.
The program does not solve the basic problems of malnutrition anyways. Former Member of the Planning Commission Arvind Virmani writes that access to better sanitation and improved water sources, not availability of food grains, explains the high level of malnutrition in India. Improvements in environmental sanitation are the clearest and most effective policy-program tool to reduce if not eliminate the excessively high levels of malnutrition in India, he says. Therefore, the strategy should be to first focus on public health and then take up food distribution.
Second problem is of administration. Distribution of food grains to meet the obligations of Food Security Act will be done through the same decrepit Public Distribution System that was distributing food till now. My earlier studies show that most money spent by the Government on food subsidy actually goes to cover up the inefficiency and corruption in the Food Corporation of India. The large number of genuine poor that are left out of the PDS; and equally large number of well-off persons are covered. Implementing the Food Security Act through the same system will get enmeshed in these same inefficiencies. The Central Government should have taken a leaf out of the experience of Chhattisgarh. In an interview to the Wall Street Journal, Chief Minister Raman Singh said, “We de-privatized the ration shops by shifting the management of the public distribution system outlets from private licensees to community-based organizations such as gram panchayats, female self-help groups and co-operative societies. We organize a Rice Festival at each ration shop during the first week of every month, which helped ensure that all food items are adequately stocked in each shop by the last day of the previous month. Food items are delivered direct to the doorstep of ration shops by yellow government and private trucks to help curtail diversion and ensure timely stoking of food items in shops.” It was necessary for the Central Government to adopt these best practices.
Third problem with the Food Security Act is that nutritional balance will get disturbed. A healthy diet consists of not only carbohydrates but also other nutrients-especially protein. Only food grains will be provided to the BPL families under the present program. Availability of cheap grains will lead families to consume excessive quantities of grains and cut consumption of pulses and vegetables. Health of the people is likely to, therefore, deteriorate. This is the lesson to be learnt from the shift of gears in fertilizer subsidy. The Government was providing subsidy on nitrogenous fertilizers only. This led farmers to use excessive quantities of Nitrogen to the exclusion of phosphates and potash. The nutrient balance of the soil got disturbed such that crop yields became immune to the use of nitrogen. The Government was forced to abandon that policy and to provide subsidies on all three major nutrients. A similar reversal of the policy of providing food grains alone will have to be made. But much loss of health would have taken place by then.
The fourth, and main, problem is that of poverty. There is strong evidence that better income spontaneously leads to better nutrition. The Ministry of Finance publishes data on per capita income of our states. Ministry of Health and Family Welfare publishes data on under 5 years mortality which is taken as an indicator of malnutrition. Both statistics are available for 11 states. The six richer states are Karnataka, Andhra, Punjab, Kerala, Tamil Nadu and Haryana. The under 5 mortality in these states was 45.7 per thousand births. The five poorer states were Bihar, UP, Assam, Odisha and West Bengal. The under 5 mortality of these states was nearly double at 83.4. This indicates that higher income is the best way to secure good health. People buy balanced food and get connection of piped water if they have income.
I wholly welcome the basic intention of providing food to all the people. It is simply not acceptable that our brothers and sisters go hungry. But we should not come out of the frying pan only to fall into the fire. We must remove hunger in a way that maintains nutritional balance. The best way is to increase incomes and let the people manage their nutrition themselves. Ideally this should be done by making economic policies that lead to employment generation. As a second best, cash may be distributed to the poor households instead of food grains. Such a distribution of cash will not be a violation of the provisions of WTO. Therefore, we must move towards cash distribution instead of seeking a waiver of few years for food distribution.
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