The National Food Security Act (NFSA) enacted by the then UPA – government in 2013 guarantees availability of 5 kg of cereals per person per month at Rs 3 per kg rice, Rs 2 per kg wheat & Rs 1 per kg coarse cereals to 67% of India’s population (75% rural & 50% urban). This is an astounding admission that six-and-a-half decade after independence, nearly 800 million of country’s population are so poor that food has to be supplied at close to ‘zero’ price.
Subsidy is financial supports given by government to enable a person buy a commodity or service which he cannot afford with his limited income. As a matter of prudent policy, this should be given for a temporary period to avoid perennial burden on the state exchequer. This phase should be used to enable the person earn more so that he does not feel the prick when subsidy is withdrawn.
However, in the matter of food wherein subsidy has been in place for generations under different garbs – initially through public distribution system [PDS] then, targeted PDS [TPDS] from mid-90s and now NFSA – this prudence has been thrown to the winds. Successive governments proceeded on an unsaid premise that majority of the people will remain poor and hence, need subsidy eternally.
Prime minister, Modi whom people gave a resounding mandate on the promise of inclusive development and good governance, is working to create more jobs and increase income. Accordingly, government has implemented a number of schemes/initiatives such as Jan Dhan Yojna, Start-up India, Stand-up India, Make in India etc. It is also committed to double farmers income by 2022.
Now, if these efforts yield the desired results within a time frame of say 5 years from now, leading to augmentation in purchasing power of the impoverished, why would they need subsidy support? Why should government not think of a road-map for scaling down subsidy?
But, it has no such plans as reflected in ever increasing payment on food subsidy [Rs 140,000 crores during 2015-16 which will shoot up after NFSA is implemented in all the states]. Still worse, it has not taken any credible steps to exclude the better-off from purview of subsidy which is completely out of sync with Modi’s philosophy to restrict subsidy only to the poor.
Last year, Shanta Kumar committee had recommended a drastic reduction in coverage under NFSA from extant 67% of the population to 40%. It recognized that 27% of the population could afford to buy their food needs at market prices and therefore, need to be excluded from the purview of subsidy support.
Even within 40% to be covered under NFSA, the committee opined that only poorest of poor households included under Antyodaya Anna Yojna [AAY] should be entitled to supply of food @ Rs 3/2/1 per kg of rice, wheat & coarse cereals with the proviso that they get 7 kg of food grains per person per month. The rest will get access at 50% of MSP [minimum support price] paid to farmers.
Considering that as per census done by National Sample Survey Organization [NSSO], a poor person consumes on an average 10 kg per month, the provision for only 5 kg under extant NFSA is grossly inadequate. To that extent, committee’s recommendation for increasing this to 7 kg would give him relief by reducing dependence on market purchase at a much higher price.
The package offered by the committee struck a judicious blend between the overriding need to fully protect the most vulnerable sections of the society on one hand [read households under AAY] and reducing subsidy burden on the exchequer on the other. Yet, these recommendations have been put in cold storage.
The list of beneficiaries under extant TPDS suffers from flaws such as wrong categorization [e.g. those with higher income are included in below poverty line category] or a large number of ‘bogus’ households. All states were required to take a look at the list de novo, correct anomalies and upload verified/authenticated data on the website.
The exercise should have been completed 3 years ago when the NFSA was to take effect from July, 2013. Yet, according to an audit by Comptroller and Auditor General [CAG], only half of targeted beneficiaries have been identified by States and Union Territories [UTs] so far. Old data bases of beneficiaries are still in use in these regions.
In Bihar, for instance, Group D government employees have been identified as beneficiaries under the scheme. In Karnataka, 890,000 bogus and ineligible ration cards were found [June 2015] during the seeding of voter identity card details. Instead of cancelling these bogus cards, the State continued to issue food grains to them. In Maharashtra, the ration cards were re-validated by merely affixing stamps on the existing cards under different categories. In Himachal Pradesh, 690,000 old ration cards were stamped as priority households and AAY households and re-issued as NFSA compliant.
In short, even as 18 states and UTs continue to stick to TPDS regime [with all its attendant maladies], even those who have declared to be NFSA compliant have not got rid off ‘bogus’ beneficiaries or better-off camouflaging as AAY. Juxtapose this with continued mis-management of food procurement and distribution [e.g. disappearance of stocks worth Rs 12,000 crores in Punjab], it is business as usual.
The biggest worry under TPDS and now under NFSA [on a much bigger scale] is the stipulation for sale at ridiculously low price of Rs 1/2/3 per kg. The market price being many times more, this gives a strong incentive for pilferage and black marketing. Any degree of vigilance/monitoring cannot stop this.
In this regard, Shanta Kumar committee had recommended direct transfer of subsidy to beneficiaries in their bank account using bio-metric identification with Aadhaar. At one stroke, it can solve the problem of pilferage. That again is miles away as for now, the government is only talking of running the scheme on a pilot basis in 3 UTs.
Modi – government will complete 2 years in office shortly. If, it does not walk the talk on food subsidy reform in this year, then it is most unlikely, it would happen during its term. One can only wait and watch.