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It simply can't fail

The Food Security Bill must be amended, write Abhijit V Banerjee, Pranab Bardhan, Ashok Kotwal, Milind Murugkar and Bharat Ramaswami.

india Updated: Feb 28, 2012 21:56 IST

The National Food Security Bill has the potential to make a significant difference to the lives of the poor if properly implemented. However, the Bill in its present form has some easily correctible flaws that could cause huge problems in the future. A couple of simple amendments would greatly simplify the implementation and also allow innovation in the delivery of food subsidy.

First, the proposed framework based on three categories of households — priority, general and excluded — is doomed to create the same sort of problems as BPL targeting. If there is one thing that the experience of the BPL list tells us, it is that the identification of the really poor — priority is what it will be called now — is fraught with problems. Even with the best intentions it’s very hard to determine who is really very poor, and who is merely poor, especially since incomes fluctuate and someone who looks less poor today may become derelict tomorrow.

Doing it even moderately well is both difficult and costly. Moreover, as we know well, the best of intentions are not always available — the political system has its own way of favouring some and excluding others, and it is often the poorest and the politically weakest who get marginalised. Finally, it is often said, "programmes for the poor tend to be poor programmes".

Having the political heft of the less poor fully behind the entire programme (and not just behind the piece that applies to them) makes the programme much more likely to have durable political and administrative support.

It's much easier to imagine being able to identify the one, significantly wealthier, excluded category. Why not, therefore, just have two categories: the included and the excluded, and treat all included groups equally? Simple arithmetic shows that in terms of grain the per capita subsidy will go from 7 kg per capita to 5 kg per capita for those who get classified in the 'priority sector' and from 3 kg per capita to 5 kg per capita in the 'general sector' and there will be money left over for providing some support for those in the Antodyaya programmes. It's possible that the government will hesitate for fear that it may be accused of going back on its word for those in the 'priority sector'. However, we believe that the political costs of a return to a poorly functioning and corrupt system after introducing a much heralded new legislation could be much higher. The hopes raised by the tabling of the Bill will turn into disillusionment and resentment.

Second, we believe that the Bill should allow greater flexibility to state governments as long as they stay within the resource limits specified by the central government. Each state must be left free to carry out the public distribution system (PDS) reform as it sees fit. Some states may want to change to cash transfers; others may opt to continue with transfers in kind, or go to something intermediate, such as food stamps. In the present form, it's not clear if a state wishes to try, say, cash transfers, it would be able to do so. As it stands, different sections of the Bill are not compatible with each other. For example, Section 7 on 'PDS Reforms' seems to allow for cash transfers. Yet, the rest of the Bill is written strictly in terms of grain transfers. Most significantly, the obligations of the central government are written only in terms of the amount of grain they must supply to the states. If they then switch to cash transfers, could there not be legal challenges? The obligations of the central government should, therefore, be specified not just in terms of the quantity of food grains but also their 'monetary equivalent'.

This will also ensure that the monetary value of resource transfers doesn't erode with inflation.

The UPA government can take credit for enacting some progressive legislation over the last few years. Their claim to being a pro-poor party is partly based on this record. However, how some of these progressive policies have actually worked in practice has left this claim in tatters. If the UPA wants to be identified as pro-poor in the minds of the multitudes, it can't bank on tokenism alone. The voters will base their judgement on what they experience in their day-to-day lives and not on what is written in a piece of legislation. Even from the perspective of what is political advantageous, it would be a mistake to ignore the suggestions that would make the Bill more implementable.

The party bosses as well as the Cabinet should take their time to ponder the obvious flaws in the language of the Bill that could potentially create disasters when it is implemented. They should realise that in the minds of the poor, a continuance of implementation failures would loom as a far greater betrayal than the equalisation of subsidies across two impossible to separate categories.

This Bill will unveil the largest poverty alleviation programme in India. It's the most progressive piece of legislations ever contemplated in India. We simply cannot let it fail.

Abhijit V Banerjee is Professor, Massachussetts Institute of Technology; Pranab Bardhan is Professor, University of California, Berkeley; Ashok Kotwal is Professor, University of British Columbia; Milind Murugkar is Policy Analyst, Pragati Abhiyan, Nasik; Bharat Ramaswami is Professor, Indian Statistical Institute, New Delhi. The views expressed by the authors are personal.

First Published: Feb 28, 2012 21:53 IST