Sunday, December 18, 2011

The Food Security Bill is a necessity…..but will be inadequate by itself

I fully support the Food Security Bill that the cabinet has cleared. In the conscience of a fast growing country (at least it was till recentlyL), there is no place for the guilt of hundreds of millions of unfed, hungry citizens. By making it a legal right, India is sending a strong message to the world – that it is serious about removing poverty from within its shores.

The proposed bill itself is ambitious. It plans to cover as much as 62% of the population. This is also thus an admission of the fact that after six decades of independence (most of it under hard core socialistic policies), there are so many people we have not be able to move out of the poverty trap. While it is true that it is the basic job of any government to make sure that none of its citizens die of hunger, it is also true that it needs to look at more long term solutions to the problem. Giving a hungry fish to eat will satiate him/her for a bit; but teaching him/her to fish will go a much longer way. It’s important therefore to look at what else needs to be done to remove poverty for good. There are at least a few important things that I can readily list, but I am sure there are many more.

The first thing that is required is to have an even more powerful economy. Within the economy, it is the industry segment that needs to be really strengthened. Economists agree that it is impossible for agriculture to keep employing so much of our population. Besides, as people become educated, they tend to move away from agriculture. For such person, the only recourse available really is manufacturing. Of course, there is also the services sector; but the job opportunities there are skewed towards the more educated urban folks; the more English-speaking amongst them. For the ordinary rural folks, who have barely managed some basic level of school education; or at best a bit of college education; it is manufacturing that offers hope.

The second thing we need to do is improve our education system. Too many of the so called educated people in our country are in reality unemployable. What industry wants are more people trained in specific vocations – rather than those who have mugged up entire courses without understanding even small bits of that. We need to focus on more vocational courses; we need to expand the college system in the country. No doubt, we need more privatization in this space for we know that the government deliverance of education has been pretty poor.

The third thing of course is the delivery mechanism. If the food grains promised to the poor are to be delivered through the existing Public Distribution System, then they might as well forget about this bill. Everyone knows the extent of corruption that exists there. Food grains given at cheap prices to the stores would be diverted to the open markets for profit, rather than be given to the eligible poor. I prefer the direct transfer of cash method for granting subsidies – but with the recent setback suffered Nandan Nilekani’s UID project – I don’t quite know where that program stands. Either which way, we need to ensure the intended food grains reach the poor.

We also need a far higher level of productivity in agriculture. If the government is going to take away 61 million tonnes of grains for this programme, that’s going to put stress on the availability of foodgrains in the open markets. Our agriculture has been growing at just 2-3% per annum; barely keeping pace with the population growth rate. If now many hundred millions citizens are going to become active participants in the food consumption cycle, surely we will need much more agricultural production. It’s time India took a determined stand on GM crops the way China has done so. We need more financial support to increase irrigation facilities; we need more incentives for consumption of pesticides (consumption has stagnated). And very importantly, we need far more storage facilities – those of the Food Corporation of India are totally inadequate. That is why the Food Security Bill must be followed through with FDI in multi-brand retail – that move will help build a stronger cold chain around the country.

One last point before I end this post. A few months back, Montek Singh Ahluwalia got into trouble for defining the poor as those earning less than Rs 26 a month in the rural areas. Many of us jumped at him for setting the limit so low. I had argued even then that the limit was not too low. Taken on a monthly basis, and for a family of five, the figure translates to Rs 3900 per month – which in itself is much higher than the reality of today. But more importantly, if one takes into account the various subsidies that the poor enjoy – for example, foodgrains cost less than 20% of market rates; electricity is highly subsidized; so is kerosene etc – then the real income we are talking about is more like two-three times of this figure. Something like Rs 10000 per month taken at normal market prices. That’s not such a bad figure after all. As usual, the subject was overtaken by politics – and no one ended up the wiser by that debate.

The real truth is that we simply cannot have anyone dying of hunger in our country. It’s a big shame for a fast growing country like ours – one which is expected to become the world’s number 1 economy in a few decades – to have hunger deaths. Many economists will argue against such subsidies. But at least for the short run, this subsidy is the minimum the country can do for its poor. Over the longer run however, we need more strategic and weightier reforms……those that help the poor help themselves.

1 comment:

  1. There is definitely a need for inclusiveness in the growth. Food Security Bill is definitely a step in that direction. While you rightly say that it does not teach a person "how to fish", at the same time, it takes care of the basic needs of a person so that a person can move higher up on Maslow's hierarchy of needs and focus on skill building.

    For this to be successful, a strong distribution system is needed, which does not exist in the present context.