Saturday, June 1, 2013


After the high decibel proclamations and declarations during the last two years, the much talked about Direct Cash Transfer Scheme of the Government of India is yet to take off with repeated postponements. Besides the Re 1 per kg rice scheme touted as one of the most progressive measure of the government is still in the limbo though a few state governments like that in Tamil Nadu have already started such a program on their own without waiting for Delhi to pass the ridiculously called food security bill! The political class seems to think that food security means only access to cereals and by providing them at throw away price, the nutrition security is also taken care of! The poor people in this country are being taken for a ride by such populist measures with short term impact. True by providing the cereals the people might not die definitely it is adequate to keep the skin and the bone together! To add to the confusion there is a stupid suggestion that those entitled for food grains from the PDS should be given cash equivalent with which they can buy their food requirements and the "pundits" who are promoting this line of thinking are baiting the government with the possibility in saving thousands of crore of rupees by preventing pilferage from the PDS. Here is a take on this muddled thinking and the country will have to wait with bated breath as to what is going to happen between now and the forthcoming election in the middle of next year.

"India's hard won gains in achieving food security are in danger of being undermined by a clause in the National Food Security Bill that encourages States to adopt cash transfers in lieu of food entitlements under the Public Distribution System (PDS). Supporting this view, a recent report by the Commission for Agricultural Costs and Prices (CACP) concluded that the provision of food subsidies in the form of cash would save the government crores of rupees. Additionally, cash transfers will supposedly eliminate middlemen such as dealers and transporters, ensuring that the subsidy reaches intended beneficiaries. Cash transfers are a solution only if we view the PDS in isolation, rather than as part of a larger food policy. India's food policy begins with the procurement of rice and wheat and price support operations by the Food Corporation of India (FCI) and the CACP. Each State is entitled to purchase a certain amount of food grains from the FCI at subsidised prices for distribution through its Fair Price (Ration) Shops. It is this distribution end that constitutes the PDS, and what the cash transfers would replace. Besides not taking into account the devaluing effect of inflation or the role of intrahousehold dynamics when it comes to cash transfers, its supporters do not specify what would happen to the agricultural commodities that are procured by the FCI. As the policy exists today, the government holds millions of tons of rice and wheat, well above the buffer norms required by law. To reduce its stocks, the government has preferred open market operations (to bulk consumers) and export to distribution through the PDS".

No one in the government including the economists and sociologists has given any thought to the adverse consequences of putting money in the hands of the beneficiaries in lieu of grains. There is no guarantee that this money will be spent on food only and it is more likely that there would be vast growth of liquor industry which will have to cater to the increased demand for its products from this section of population with food subsidy money in their hands! Another disaster which is inevitable is the transformation of this segment of population into a morbid mass with no motivation for working. One of the reasons for shortage of labor in the country is this distribution of "alms" in the name of poverty while there is this continuous claim that the unemployment rate is high in the country. Unemployment may be high but those who want to work can always get work. Combined with the NREGA assuring a daily wage of Rs 150 per person for at least 150 days, the "freebie" scheme under the food security bill can bebilitate this country beyond recognition!   


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