Food and agriculture minister Sharad Pawar is being praised in some quarters for daring to take a politically incorrect position.
In a sharp disagreement with the Sonia Gandhi-led National Advisory Council's (NAC) proposal to supply subsidised food to 75% of the population, Pawar has pointed out two flaws in the proposal: first, that it is unaffordable and second that it is near impossible to procure and store the required food grain. On both these points, Pawar's position is problematic when viewed against the backdrop of his politics. The objections also indicate a superficial treatment of the subject.
The question of affordability is completely at odds with the UPA's rhetoric of inclusive growth. One wonders how often in his long political career Pawar has objected to subsidy measures, given that Maharashtra's sugar lobby, the backbone of his party, has survived on fat subsidies from the Central government. Pawar has obliged the sugar industry with assistance 'packages' every time the industry has hit a crisis. Clearly, objecting to the food subsidy bill is politically affordable as poor consumers, unlike the sugar lobby, are not organised to pose a political challenge.
The NAC's recommendation might appear populist, with the figure of 75% giving the impression of including the non-poor in the food subsidy ambit. Is this really so when 77% of India's population spend just about Rs 22 a day? A more exacting criterion of deciding poverty would leave out a significant number of people from that 77%. No matter where the poverty line is drawn, it would be ridiculous to claim that those who are marginally above it are not suffering the same hardship. Besides, people with low income levels hardly ever have steady incomes. Someone earning Rs 22 today could earn Rs 11 per day tomorrow.
The problem with the NAC's recommendations is not that they are too generous but that it does nothing to ensure that the food subsidy reaches the poor. Economists Bharat Ramswami and Shikha Jha have shown that more than 50% of grain meant for the Below Poverty Line (BPL) population leaks into the open market from the Public Distribution System (PDS). Leakage and poor targeting ensures 70% of the poor do not receive any subsidies from the PDS. Yet, the NAC believes the PDS will be a good enough conduit for transferring the subsidy. It is this assumption that deserves criticism.
One would have expected someone like Pawar to raise this problem endemic to the PDS. But then, what reforms in the food security system has he attempted during his six-year stint in the department? Except for a recent initiative involving food coupons, we have never heard Pawar voice the need for any reforms. In fact, the process of reform could have started in his home state which perhaps fares the worst when it comes to the PDS.
Pawar's apprehension about procurement and storage of additional grain is genuine but it has nothing to do with the NAC's recommendation. When market prices are high, the government has attempted to lower the cost of procurement by banning exports. Denying farmers international prices has been the hallmark of India's food policy. The NAC's proposal will only exacerbate this unfair taxation of food grain producers.
Understandably, the political inevitability of such measures stems from the absence of an effective food security cover to protect poor consumers from inflation. An alternative to food coupons that is indexed to food prices can get rid of this unfair taxation of food grain producers. But we haven't seen the agriculture minister endorse such reforms in the interest of farmers.
The NAC recommendations need to be criticised but it is important that the criticism be sound. The recommendations contain a genuine concern for the poor but it ignores the fact that the PDS is an ineffective way to achieve such a noble end.
Milind Murugkar is a food and agriculture policy analyst with Pragati Abhiyan. The views expressed by the author are personal.