Striking against hunger
Even if the right to food is restricted to just foodgrains alone, the delivery mechanism will pose one of the biggest challenge to the government, says Bhaskar Dutta
AVERY common reaction to the budget is that it is completely devoid any big-ticket reforms. However, this ignores the governments determination to continue with PDS. Any legislation which seeks to enshrine the right to food as a legal entitlement is as big a reform measure as one can think of. It will be wonderful complement to the right to employment, which was perhaps the most important piece of legislation of the last government.
What should be the contours of a right to food Act? Who should be the beneficiaries? How should such a law be implemented? These are crucial questions which require much thought and discussion before any right to food Act is brought before the Lok Sabha.
We first heard of the governments intention to enact such a law during President Patils speech to Parliament a couple of months ago. The specific promise at that time (and repeated in the finance ministers budget speech) was that the government would provide 25 kg of foodgrains per month at Rs 3 per kg to families below the poverty line (BPL). However, several social activists have expressed a strong preference for a significantly wider definition of the right to adequate nutrition, arguing that access to cheap food grains is just one component of the bundle constituting good nutrition. They believe that an acceptable right to food Act must entitle the poor to a balanced basket of nutritious food (and not just grain), clean water, child care and many other essentials.
At an abstract level, there is much to be said for a comprehensive Act which promises the beneficiaries the legal right to a wide range of basic goods and services that are deemed necessary for a minimum acceptable standard of living. However, policies and perhaps more importantly, legislation have to take into account ground realities. In particular, what sort of institutional mechanisms can one think of which will immediately that is, as soon as the Bill is passed deliver the goods and services to the intended recipients? And is there much point in framing a piece of legislation which has no chance of being implemented properly? That is why a simpler Act which identifies the right to food with the provision of foodgrains alone may be desirable, at least as a first step. As I mention below, even this will pose tremendous challenges in implementation.
The government would like to extend the right to food to the BPL families. But, who are the BPL families and how many BPL families are there in the country? As some readers of the Economic Times surely know, there is a fair amount of controversy about the number of people below the poverty line. Indeed, there is a large variation in the estimates of the incidence of poverty in the country. The official figure, used for instance in the allocation of foodgrains to different states for the public distribution system is roughly 6.5 crore BPL families. But, this is based on somewhat ancient poverty estimates those pertaining to 1993-94, combined with population estimates for 2000.
While poverty levels must have gone down, population has increased, so that the actual number of BPL families may have moved in either direction. Clearly, there is a need to update the number of BPL families, and also to undertake periodic surveys to obtain reasonably accurate estimates of the target group. Another complication is the alarmingly large discrepancy in the numbers of BPL ration cards issued by the state governments totalling 10.68 crore versus the central governments own estimate of 6.5 crore. Of course, as I have mentioned earlier, the latter figure too is outdated!
EVEN if the right to food is restricted to just foodgrains alone, the delivery mechanism will pose one of the biggest challenge to the government. The public distribution system (PDS) has become something of a sacred cow, and many people will assert that the PDS is the natural if not the only option. However, this view completely ignores the shortcomings of the PDS.
Consider, for instance, some characteristics of the PDS. Contrary to popular perception, large sections of poor households do not purchase any foodgrains from the PDS. This could be either because of limited geographical coverage as in the northern states or institutional barriers such as the need to prove residence and buy ration entitlements only once a fortnight. Migrant households do not satisfy the first requirement while the poorest households do not have enough savings to buy in bulk. Apart from inadequate access to the PDS is the huge cost of providing subsidies to the poor through the PDS. Indeed, several researchers have shown that it costs much more than one rupee to transfer a rupee of subsidy to the target families!
An alternative to the PDS is the system of food stamps. Under this scheme, the government issues coupons to the target families. These coupons can then be redeemed at any shop private or public for specified quantities of foodgrains at stipulated prices. Obviously, the government will then have to pay private retailers the difference between the stipulated price and the market price.
The PDS and the system of food stamps must both have the same level of leakages due to targeting costs the identification of BPL families must precede both systems. So, the effectiveness of food stamps obviously depends on how efficient it is in delivering foodgrains to the consumers relative to the PDS. By its very nature, food stamps do not have some of the costs associated with the PDS. For instance, there cannot be any chance of illegally diverting grains to the open market. Procurement and storage costs are also substantially higher in the PDS.
On the other hand, private retailers may demand excessive profit margins in order to enter remote areas. So, the superiority of one system versus another is an empirical issue. This suggests that the sensible option is to allow both systems to co-exist so as to enable researchers to evaluate the costs associated with the two systems.
(The author is professor of economics, Warwick University)