Put food on the table
Subsidies cannot solve the problem of hunger, widening the circle of prosperity will.india Updated: Sep 20, 2011 22:24 IST
Poor states have found an energetic sympathiser in New Delhi in the person of Jairam Ramesh, the minister for rural development, who tends to agree that sample surveys do not fully capture the extent of poverty in the countryside. Mr Ramesh's ministry is conducting a headcount of the poor and he has promised to take up the issue with the Planning Commission, which uses samples of consumption behaviour to come up with estimates of poverty in the country and in individual states. Sampling, however, rigorously conducted, cannot provide as exact a figure as full numeration. Varying estimates of poverty muddy the picture for social welfare spending, principally food subsidies, as do the perverse fiscal incentive of claiming inflated incidence. Indian estimates of poverty range from 270 million to 450 million people. The World Bank reckons 300 million Indians live on less than $1 a day.
India has a long way to go before it can get food into every mouth that needs it. If the government can zero in on one number - and manage to issue all of them identity numbers within a reasonable time-frame - it still has to figure out how to get food to the hungry before it rots in granaries or is stolen. It costs nearly Rs7 to transfer one rupee worth of benefits to the poor through the public distribution system and just over half the total food subsidy reaches the consumer. The Centre is understandably apprehensive that universal food security may be prohibitively expensive. The country does not produce enough grain to be sold cheap to half a billion people. If we do manage to find the grain, we don't have the granaries to stock it, building new ones will add to costs. By itself the food subsidy will balloon to unmanageable levels because the government would be buying most of the grain coming into the market at prices higher than it pays now and selling it to more people cheaper than it does now.
Then there is the larger question of whether subsidised food is a sustainable way to keep hunger at bay. Much the same result can be achieved by widening the circle of prosperity but the process is slower. Enhanced farm productivity is vital for keeping food prices in check on the one hand and raising rural incomes on the other. The next Green Revolution is waiting to happen if India can stop 1% of its GDP from spoiling between the farm and the market. Food entitlements are an essential means but must eventually become irrelevant for the Indian state to claim any measure of success in fighting hunger.