WHYTHE BILL IS NOT RIGHT

States can al­ways be blamed for the fail­ure of a leg­isla­tive at­tempt to end hunger

India Today - - NATION - BIBEK DE­BROY

In an odd co­in­ci­dence, Ar­ti­cle 123 of the Con­sti­tu­tion finds an echo in the 3- 2- 1 prices in the Food Se­cu­rity Bill. For the record, Ar­ti­cle 123 is for or­di­nances where “im­me­di­ate ac­tion” is nec­es­sary. Leg­is­la­tion ought to be through Par­lia­ment, but hav­ing failed to muster sup­port for the bill there, the Govern­ment re­port­edly wishes to push it through an or­di­nance. This vi­o­lates the spirit of the Con­sti­tu­tion. We have been told there’s a re­mark­able im­prove­ment in poverty num­bers. In 2009- 10, 33.8 per cent of ru­ral In­dia and 20.9 per cent of ur­ban In­dia were poor. We’ve also been told 2009- 10 was a bad year, which is why a fresh National Sam­ple Sur­vey ( NSS) was com­mis­sioned for 2011- 12, whose re­sults aren’t out. In other words, to­day’s poverty num­bers are lower. Even if there is a case for sub­si­dis­ing the poor, it can’t be 75 per cent of ru­ral and 50 per cent of ur­ban In­dia, as the bill wants. Pre­sum­ably, the Govern­ment will only bear sub­sidy costs up to what NSS de­ter­mines as head­count ra­tios via the Plan­ning Com­mis­sion, with the rest left to be borne by the states.

Ru­ral/ ur­ban is a con­ve­nient Cen­sus cat­e­gory. Do they ex­plain de­vel­op­ment/ de­pri­va­tion? Do ge­o­graph­i­cal lo­ca­tion and com­mu­nity char­ac­ter­is­tics ( eth­nic­ity, caste, re­li­gion, gen­der) help iden­tify poverty, a house­hold- level trait? They don’t. In­dia’s de­vel­op­ment tra­jec­tory since 1991 has been one of ur­ban­i­sa­tion. If “ru­ral” is poor, it’s be­cause phys­i­cal and so­cial in­fra­struc­ture doesn’t ex­ist in that area. Much of this falls un­der pub­lic ex­pen­di­ture. Thus, what­ever is spent as a re­sult of the bill rep­re­sents op­por­tu­nity cost of re­sources that won’t be spent on other things.

Di­rect costs of food sub­sidy will be Rs 125,000 crore a year. It’s also a di­rect cost of con­sump­tion sub­sidy. There are in­di­rect costs— bu­reau­cracy, griev­ance re­dres­sal, FCI and PDS ma­chin­ery and hikes in the min­i­mum sup­port prices ( MSP). Add in­clu­sion of those who don’t have BPL cards now. That’s Rs 100,000 crore more. We end up spend­ing 2 per cent of GDP on the bill. To put it in con­text, pub­lic ex­pen­di­ture on health is just over 1 per cent of GDP. Couldn’t we have made bet­ter use of that 2 per cent? There is a trade- off be­tween static and dy­namic ob­jec­tives of poverty al­le­vi­a­tion. No one is vol­un­tar­ily poor. There is a case for en­abling peo­ple to get out of poverty by pro­vid­ing pub­lic goods and ser­vices. There is no case for sub­si­dis­ing. But we won’t iden­tify the poor, thus alien­at­ing those who are no longer iden­ti­fied as poor.

The sole ex­cep­tion to the sub­sidy- elim­i­na­tion prin­ci­ple is for chil­dren, preg­nant and lac­tat­ing women, and the dis­abled and aged. For the first two, the bill men­tions an­gan­wadis and mid- day meal schemes. No one will ob­ject to those, as they are self- iden­ti­fied. Dis­abled and aged shouldn’t be dif­fi­cult to pin­point ei­ther. What, then, is spe­cial about “food”, de­ter­mined as rice, wheat and mil­lets for the pur­poses of the bill? NSS data shows even poor peo­ple are mov­ing away from food­grain to fruits, veg­eta­bles, milk and an­i­mal pro­teins. That’s fine. Why clut­ter con­sump­tion de­ci­sions by harp­ing on three grains? Let’s not for­get, this is leg­is­la­tion, not an ex­ec­u­tive de­ci­sion. One wis­dom of the day was to give peo­ple un­con­di­tional cash trans­fers. If one ac­cepts this logic, as one should, why is the same govern­ment mess­ing around with sub­sidised grain prices at Rs 3 for rice, Rs 2 for wheat and Re 1 for mil­let? No­tice that MSPS are no longer sup­port prices but pro­cure­ment prices, which will be hiked to as­suage farm­ers.

We drive a wedge be­tween ar­ti­fi­cially low con­sump­tion prices and ar­ti­fi­cially high pro­cure­ment costs, con­tribut­ing to a fis­cal bur­den. More im­por­tantly, we mess up price signals for agri­cul­ture, pro­vid­ing a dis­in­cen­tive to the de­sir­able com­mer­cial­i­sa­tion, di­ver­si­fi­ca­tion and move­ment away from food­grain. There are sev­eral stud­ies on PDS and FCI in­ef­fi­ciency. We don’t have enough godowns. Grains rot in the open or are eaten by rats. Grains dis­trib­uted through PDS at low prices are leaked back and pro­cured by FCI at higher prices or si­phoned off to Nepal and Bangladesh. There are bo­gus ra­tion cards. There are 500,000 ra­tion shops.

Ask your­self— how ac­ces­si­ble are they in far- flung parts? Read sur­veys on cor­rup­tion about pub­lic goods and ser­vices. PDS will be at the top. But such leg­is­la­tion is framed by peo­ple in Delhi, who nei­ther read nor know. Their mind­set be­longs to the days of the Ben­gal famine that led to ra­tioning. We are happy at pro­vid­ing a leg­isla­tive so­lu­tion to hunger. If things go wrong, states are to blame. The bill is just an or­di­nance, it is not meant to be ord­nance.

The author is a pro­fes­sor at the Cen­tre for Pol­icy Re­search, New Delhi

SHRIYA PATIL/ www. in­di­a­to­day­im­ages. com

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