A faulty food security plan

Updated: Mar 6 2014, 02:01am hrs
The Indian success story increasingly looks like a tale of naivety and optimistic complacency, with the fantasy of India Shining obfuscating the reality of widespread deprivation. Despite rapid economic growth during the past decade, millions continue to live in poverty and hunger.

The Indian government aims to address abject hunger and malnutrition with the National Food Security Act, which became law in September 2013. This greatly expands an existing programme that subsidises the price of basic foods for poorer citizens. The scheme, arguably one of the largest welfare programmes in history, is controversial. But criticism of its cost is misplaced. The bigger worries are whether and how it is implemented, and whether it will do enough to ensure food security.

The sick man of Asia

In the past decade, we have seen a continuous narrative on the rise of India juxtaposed with the economic miracle in China, as great economic powerhouses of the new century. Indias bottom up economic growth model, based on internal demand and consumption, seemed to rival Chinas export-driven and top down model in terms of sustainability. And Indias democratic indecision was championed over autocratic purpose as the right model of development. But with slowing growth and tricky politics, India now seems to be the sick man of Asia. As well as reviving growth, containing inflation and checking a fast-depreciating currency, Indian policymakers must also pursue inclusive growth.

This is because the most severe development challenge India faces is endemic hunger and malnutrition. World Bank figures show that the extent of malnourished and underweight children in India is one of the highest in the worldnearly double that of Sub-Saharan Africa in absolute numbers. UNICEF says one in every three malnourished children around the world is in India: 4 out of 10 children under the age of five go to bed hungry. This is in spite of the fact that India has enjoyed several years of bumper crops and has boasted of its food exports.

Apart from economic concerns, malnutrition costs human lives. Nearly 50% of all childhood deaths in India can be traced to malnutrition. Focusing only on economic growth will not be enough to pull people out of poverty and end hunger. On the other hand, failure to invest in food security and nutrition jeopardises Indias future growth as no nation can grow sustainably on the back of an impoverished labour force.

The law seeks to reach around 800 million people, or 67% of Indias population. It expands the scope of an existing welfare programme that targets around 218 million beneficiaries. Under this scheme, 5 kg of foodgrains will be offered at a subsidised price of R3, R2 and R1 to 75% of rural population and 50% urban. It also covers free meals to children, as well as cash transfers for pregnant and lactating women.

Politically, the law is highly controversial. With elections looming in 2014, some sections of the opposition have sardonically termed the food security bill the vote security bill. Then there is the cost. Expanding the scheme will increase Indias food subsidy spending by 45%, depleting the governments coffers by about $22-24 billion.

However, arguments based on fiscal considerations reek of a certain elitism. Policymakers must place a clear value on what is social good. Currently, India spends tens of billions of dollars in subsidising LPG, fuel, electricity and precious commodity imports that primarily benefit the rich and middle classes. Only with pro-poor policies, it seems, do fiscal considerations become of key importance. The real question is not whether India can afford the food security bill, but can it afford not to have one Key Indian figures such as Nobel Laureate Amartya Sen and development expert Jean Dreze support the scheme, which they believe has the potential to reduce hunger and malnutrition.

Implementation, the elephant in the room

The real elephant in the room with the new law is its effective implementation. The issue here is good governance and not just fiscal governance. Indian policymakers seem to have put the cart before the horse. The government has sought to finance the scheme by cutting subsidies for non-urea based fertilisers. But such measures will only amplify the problem. Cutting subsidies on input costs such as fertilisers will raise the cost of food procurement by the governmentthus increasing the cost of food subsidies. Removing fertiliser subsidies could affect agricultural productivity by making farming more expensive. The scheme will also make the state the farmers biggest buyer, reducing their bargaining power in setting minimum support prices. These are essential for farmers, as they guarantee the procurement of their excess harvest at a fixed cost.

The scheme also gives state governments too much power and discretion to identify beneficiaries and deliver foodgrains. Delivery will be implemented by the notorious state-run public distribution systems, which suffer acutely from nepotism, corruption, leakage, pilferage and wastage. Wastage and rotting of food in India is among the highest in the world, owing to its lack of adequate cold storage facilities and infrastructure, and corrupt distribution channels. Further exacerbating the problem is the poor grievance referral mechanism envisaged under the scheme.

The new law begs the question of whether 5 kg of cereals (high in calories but low in nutrients) will ensure food security and provide adequate nutrition. Essential oilseeds and pulses, vital for nutrition, are not included in the law. And nutrition does not only encompass adequate food, but also an array of health, water and sanitation services. It is cross-sectional and multidimensional. Changing dynamics of food habits have also been ignored. Nor does the new law provide any time bound targets to eliminate hunger and malnutrition.

India finds itself at the crossroads where it must strike the right balance between its quest for growth and inclusion. In this context, is it profligacy to spend on the poor to ensure food security The answer is probably no. However, what India needs above all is reform of its public institutions. Otherwise such ambitious legislation will become another knee-jerk, populist attempt to tackle a huge problem. The horse of public institution reform has to be put before the cart of legislation.

Jean-Pierre Lehmann is Emeritus Professor at IMD, Switzerland, and member of the World Economic Forum Global Agenda Council.

Suddha Chakravartti is a lecturer of international relations at the Geneva School of Diplomacy and International Relations