The focus on accelerated foodgrains production on a sustainable basis and free trade in grains would help create massive employment and reduce the incidence of poverty in rural areas.
INDIA AT present finds itself in the midst of a paradoxical situation: endemic mass-hunger coexisting with the mounting foodgrain stocks. The foodgrain stocks available with the Food Corporation of India (FCI) stand at an all time high of 62 million tonnes against an annual requirement of around 20 million tonnes for ensuring food security. Still, an estimated 200 million people are underfed and 50 million on the brink of starvation, resulting in starvation deaths. The paradox lies in the inherent flaws in the existing policy and implementation bottlenecks.
India's food security policy has a laudable objective to ensure availability of foodgrains to the common people at an affordable price and it has enabled the poor to have access to food where none existed. The policy has focused essentially on growth in agriculture production (once India used to import foodgrains) and on support price for procurement and maintenance of rice and wheat stocks. The responsibility for procuring and stocking of foodgrains lies with the FCI and for distribution with the public distribution system (PDS).
Minimum support price: The FCI procures foodgrains from the farmers at the government announced minimum support price (MSP). The MSP should ideally be at a level where the procurement by FCI and the offtake from it are balanced. However, under continuous pressure from the powerful farmers lobby, the government has been raising the MSP and it has now become higher than what the market offers to the farmers. Also, with quality norms in the procured grains not strictly observed, farmers pressurise the FCI to procure grains beyond its procurement target and carrying capacity. The MSP has now become more of a procurement price rather than being a support price to ensure minimum production. The rich farmers and traders have cornered most of the benefits under the support price policy. The small farmers lack access to FCI and being steeped in poverty resort to distress selling. Constricted warehousing facility has further aggravated their miseries. At times, the same farmers later pay more to buy it from PDS.
Input subsidies: Over the years, to keep foodgrain prices at affordable levels for the poor, the government has been imposing restrictions on free trade in foodgrains. This has suppressed foodgrain prices in the local market, where the farmers sell a part of their produce and as compensation, they are provided subsidies on agriculture inputs such as fertilizers, power and water. These subsidies have now reached unsustainable levels and also led to large scale inefficiencies in the use of these scarce inputs. Overuse of fertilizer and water has led to waterlogging, salinity, depletion of vital micronutrients in the soil, and reduced fertility. The high subsidies have come at the expense of public investments in the critical agriculture infrastructure, thereby reducing agriculture productivity. Besides the high MSP, input subsidies and committed FCI purchases have distorted the cropping pattern with wheat and paddy crops being grown more for the MSP they fetch, despite therebeing relatively less demand for them. Punjab and Haryana are classic examples here. This has also led to a serious imbalance in inter-crop parities despite no significant increase in the yield of wheat and paddy.
Issue price: The people are divided into two categories: below poverty line (BPL) and above poverty line (APL), with the issue price being different for each category. However, this categorisation is imperfect and a number of deserving poor have been excluded from the BPL fold. Moreover, some of the so called APL slip back to BPL, say with failure of even one crop and it is administratively difficult to accommodate such shifts....