Separate the wheat from the chaff
The Minimum Support Price is a wasteful subsidy. Instead, give farmers direct cash subsidies, writes Pratik Kanjilal.india Updated: Sep 10, 2010 23:44 IST
The Supreme Court tells the government: "It's criminal to let food rot in a chronically hungry country. Give it away free to the poor." It could have added: "Have you no political sense? Have you not read Anandamath, or at least seen the movie?" And Manmohan Singh ticks it off for transgressing on policymaking — doesn't it know there's no such thing as a free lunch? He could have added: "Haven't you read my bestselling Food Security Bill? The critics went wild over it. And the movie will be bigger than Peepli Live." This is the government's contribution to the debate on hunger in a chronically hungry superpower.
The Supreme Court is not meddling. It is empowered to question wonky policy, and work by activists, public intellectuals, economists, media and the government itself shows that food security policy has gone to pot. Even the Food Security Bill is a cop-out, offering only foodgrains in insufficient quantities. Its menu sells small meals and no side orders, a recipe for perpetuating undernutrition. Besides, the court has been hearing public interest cases on this issue for a decade, and this order is only the latest of more than five dozen it has passed. So why did the prime minister think it was out of line, and impractical besides? Is it only the fear of change?
Food rots because the government lifts twice the tonnage it can stow safely. It does this out of a historical commitment to farmers to buy produce at minimum support prices (MSP). This protects them from adverse market conditions, builds food reserves and thus promotes the Directive Principles of the Constitution. But the very same principles should urge it to give away to the needy surpluses that it cannot store.
The government protests that it cannot do that on purely financial grounds, with no reference to the Constitution. It would inflate the subsidy bill. And if it did not lift produce at MSP even when it could not store it, farmers would lose the incentive to produce and agriculture would collapse. And so the virtuous circle must continue — the grain-farmer produces, fails to get a decent price, sells to the government at the MSP and earns a basic living while government lets the produce rot. Meanwhile, millions go hungry.
Can we not break the circle and separate the Gandhian need to support farmers from the equally Gandhian priority of feeding the poor? It is painlessly done if we recognise that the MSP is itself a wasteful and needlessly complicated subsidy. Neighbouring Bangladesh is experimenting with direct cash subsidies to farmers. It is cheaper to let farmers sell part of their produce on the open market and compensate them for lost profits than to stockpile and destroy food. Alternatively, it is cheaper to give away excess food immediately and locally after procurement than to hoard it until it rots.
Maybe a reluctance to give freebies is at work here. But there is such a thing as a free lunch. It's routinely given to the rich in the form of tax holidays and business incentives, with the legitimate aim of increasing India's competitiveness. We can give to the poor just as legitimately, to build a better manpower base. And, of course, a healthier society.
Pratik Kanjilal is publisher of The Little Magazine
The views expressed by the author are personal