FNB News - Food Security: Govt still counting BPL heads

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Food Security: Govt still counting BPL heads

Saturday, 01 May, 2010, 08 : 00 AM [IST]

Our Bureau, Mumbai

The Empowered Group of Ministers (eGoM) on the Food Security Bill has decided to meet on May 4 before releasing the much-awaited Bill for public feedback. The eGoM is yet to synchronise issues like the poverty estimate with the states, apart from taking a final call on the inclusion of the Above Poverty Line (APL) population in the proposed legislation.

At its earlier meeting, the eGoM had asked the Planning Commission to prepare comprehensive data on families living below the poverty line (BPL) to enable it to finalise the Food Security Bill. "The Planning Commission has been asked to give a detailed presentation on the BPL families," a member of the empowered group of ministers (eGoM) said. The group is headed by finance minister Pranab Mukherjee. Home minister Chidambaram, defence minister A K Antony, commerce minister Anand Sharma and rural development minister C P Joshi are members of the group.

Meanwhile, the Planning Commission is believed to have reluctantly accepted the Suresh Tendulkar Committee report, putting the size of the below the poverty line (BPL) population at 37.2%. Planning Commission has so far been keen on going with its own estimate that pegged the BPL population at 27.7%. The switch to the new benchmark boosts the number of potential beneficiaries of the food security by 1.1 crore families -- from 6.3 crore to 7.4 crore families. But the states are demanding implementation of the Saxena Committee report which finds almost 50% of the population living below the poverty line.

The revised numbers will mean the cost of the implementation of the proposed food security law going up, more so if the government wants the entitlement of food grains for the BPL families to be raised from the proposed 25 kg to 35 kg. The current projected cost, computed on the basis of the proposal to provide 25 kg to every BPL family at Rs 3 a kg, works out to Rs 28,860 crore. It will touch Rs 40,400 crore if the government raises the entitlement to 35 kg per family.

Even in the case of the second scenario, the burden on the exchequer would be lower than the existing Rs 56,000 crore annual food subsidy, as under the PDS system the Centre also provides some subsidised grains to those above the poverty line (APL). The last draft of the Act has suggested that the subsidy to APL beneficiaries would be done away with under the new law.

How do we identify the real poor who need food security? The World Bank's definition of the poverty line for countries like India is $1 per day or $365 per year. As per this definition, more than 75% of all Indians are, probably, below the poverty line. As per the government of India, poverty line for the urban areas is Rs 296 per month and Rs 276 for the rural areas, i.e. people who earn less than Rs 10 per day. This translates to Rs 3650 per year or $75 per year. According to another report those who are earning up to Rs 500 a month in the rural areas and Rs 700 in the urban areas (on an average Rs 20 per day) are eligible for the BPL statue. Is there anyone who is earning less than Rs 10-20 per day? The government must totally revise the definition of the poor and set a new norm to identify the BPL families.

The Centre has been spending more than Rs one lakh crore towards Mahatma Gandhi National Rural Employment Guarantee Scheme, Antyodaya Anna Yojana, and several other welfare schemes for the poor every year. Then how come, the number of poor people is increasing every year? That means either the money is not reaching the targeted people or the government spending is a waste. Probably, the population explosion neutralises the benefits of such welfare measures. Has the government got a genuine plan to control rise in population?

Food coupons, better than the corrupt PDS

The Public Distribution System (PDS) is mired in several irregularities and corruption. While lakhs of eligible BPL families are not included in the list, those who are not eligible are included. There are millions of ghost ration cards in the name of fictitious or non-existent families. Substandard/poor quality of grains not fit for human consumption, leakage of food grains by transporters and shop-keepers are some other major scandals connected with the PDS. The government spends Rs 56,000 crore per year to supply subsidized food to both the BPL and APL categories, though the grains are not reaching the poor.

The government is considering the introduction of food coupons to replace the discredited PDS. Will the proposed system of food coupons address the deficiencies in the PDS?

Under the scheme, food coupons will be issued every month to the deserving families to the extent of their entitlement. These coupon-holders will be given a choice to buy their food grains from any of the designated shops and the shop-keepers will be permitted to encash these coupons from designated bank branches in the same locality. The coupon-holders have also the option to buy other essential commodities like pulses, sugar, edible oils and better quality grains amounting to the same value. This is like buying coupons at fast food joints that can be used for any product of the same value.

The first casualty of the new system is the closure of all existing fair price shops, though they have the option to convert their shops into a designated grocery shop in the area. Since there is a possibility of the male members of the family to misuse the coupons and exchange them for money to buy their drinks, the coupons would be issued in the name of the female member of the family.

The coupon system can check the problem of fake ration cards as only genuine families will be issued the coupons by the local authorities empowered to issue such coupons. But there is no way to eliminate the problem of non-inclusion of deserving families and inclusion of undeserving families. This must be taken care of at the time of identifying the BPL families. While leakage will be plugged, some poor quality food grains will get into the system. But the coupon-holders have the option to buy superior quality grains and pay the difference in price. Food coupons is better than the present system by any reckoning.

What will happen to the FCI and its procurement operations? In the new system, the market will determine the actual price, though the government can fix MSP without looking at procurement targets. FCI can continue its MSP operations and also keep the buffer and strategic reserves for the government. The FCI, hopefully, will become a lean and efficient agency. The excess stocks, if any, can be offloaded into the market at suitable intervals to keep a lid on prices.