Left Parties Dharna on Food Security

R Ramakumar August 6, 2012

One of the most important events over the last week was a historic 5-day dharna demanding "universal food security" organised by the Left parties in New Delhi from July 30 to August 3, 2012. The five day sit-in protest at Jantar Mantar was attended by thousands of people from all over the country.

Photo Credit: Vasudevan, Deshabhimani

Malnourishment is an everyday reality of the underbelly of “shining” India. Dubbed by Utsa Patnaik as the “Republic of Hunger”, India today has a vast majority of population that suffers from poverty and lack of sufficient calorific intake. In 2005-06, almost half the children under age 5 were stunted and 43 per cent were underweight. Among children between 6 months and 59 months, 70 per cent were aneamic. According to Madhura Swaminathan, “no country in the world comes close to India, in the absolute number of people living in chronic hunger”.

These unacceptable levels of malnourishment are not just due to the limited access to, and reach of, health services. They are also, to a great extent, the reflection of extremely low levels of food grain consumption among the population in general, and specifically, women in poor households. Raising the levels of food consumption of the poor people of India is thus a matter of great urgency. The declared objective of the UPA’s proposed Food Security Bill is to address the acute problems of hunger and malnutrition in India. However, in effect, the proposed Food Security Bill strives for just the opposite.

One of the most important events over the last week was a historic 5-day dharna demanding "universal food security" organised by the Left parties in New Delhi from July 30 to August 3, 2012. The five day sit-in protest at Jantar Mantar was attended by thousands of people from all over the country. Representatives of different States presented their experiences and highlighted the adverse impact of relentless food inflation on the lives of common people. There was a unanimous rejection of the draft Food Security Bill presently before the Parliamentary Standing Committee. There was also one day dharna in every state capital during this period. The national media gave zero-attention to this dharna, while giving great importance to the lame Anna-drama next door.

How the Universal PDS became 'Targeted' in India

Universal PDS was established in India in 1965 as part of a national food policy. An important feature of this policy was the integration of food procurement and distribution. The government procured foodgrains from farmers at a procurement price and distributed the grain across the country through the PDS. The policy was formed on the basis of experience that showed the market to be a poor substitute for state action in moving foodgrains.

A widespread complaint from many parts of India after the introduction of Targeted PDS has been the existence of a major mismatch between households classified as BPL by the government and their actual standard of living.

In the period after 1965, the outcomes of state intervention in the food economy were mixed. On the one hand, the PDS acted as a check against exacerbation of regional disparities in foodgrain consumption (see “Food insecurities”, Frontline, July 17, 2010). On the other hand, the PDS was not serving a large section of India's population and its performance across States, judged by the off-take of grain, varied considerably. Thus, by the 1990s, the challenge was how to extend the PDS to more regions and sections. However, the official policy after 1991 took the PDS on a different trajectory.

In 1997, the government abolished universal PDS and replaced it with targeted PDS (TPDS). The population was classified into above poverty line (APL) and below poverty line (BPL) households. Only BPL households were eligible for subsidised grain. The experience after 1997 shows that TPDS led to the exclusion of a massive section of the poor from the PDS. A widespread complaint from many parts of India after the introduction of TPDS has been the existence of a major mismatch between households classified as BPL by the government and their actual standard of living. As noted in report of the “High Level Committee on Long Term Foodgrain Policy” (chaired by Abhijit Sen in 2002), “the narrow targeting of the PDS based on absolute income-poverty is likely to have excluded a large part of the nutritionally vulnerable population from the PDS.”

Thus, the poor “efficiency” of the PDS under the neoliberal regime was a policy-induced phenomenon. In fact, the critical problem with the PDS today is that it remains narrowly targeted.

The proposed National Food Security Bill

The draft National Food Security Bill, released in September 2011, does not seek a return to a universal PDS. Instead, it disingenuously renames BPL households as “Priority” households and splits APL households into two: (a) “General” households; and (b) the rest, who are totally excluded from the PDS. Five features of the Bill are notable.

Five features of the Bill are notable. The first four of these keep the proposed system substantially close to the existing Targeted PDS. The fifth feature is intended to undermine the PDS and replace it with food coupons or cash transfers.
  1. The share of Priority and General households will continue to be based on the Tendulkar poverty lines, which were at the centre of the recent controversy over poverty lines.
  2. General households will be entitled to a smaller quantity of food grains than the Priority households, at higher prices.
  3. The strength of the entitlement right for General households will be weaker than for Priority households.
  4. No more than 75 per cent of the rural households, and 50 per cent of the urban households can come under the ambit of the PDS.
  5. Schemes such as cash transfers and food coupons are allowed to replace foodgrain entitlements, if the government so wishes.

Clearly, the first four features keep the proposed system substantially close to the existing TPDS. The fifth feature is intended to undermine the PDS and replace it with food coupons or cash transfers.

The misplaced passion with futures trading

The problem of massive exclusion of the population from the ambit of PDS has been exacerbated by recent policies of the Centre related to the encouragement of futures trading in food items. Futures trading has resulted in a phenomenal rise in speculative activity in food marketing, and has seriously threatened the maintenance of food price stability and the viability of state interventions. Right from 1952, futures trading in food items, particularly essential commodities, were banned in India. In 2002, the NDA government lifted all restrictions on futures trading on all primary commodities. It took the high rates of inflation experienced in 2006 for a review of the 2002 decision and the UPA government suspended the trading in rice, wheat, arhar and tur in 2007. The Expert Committee chaired by Dr Abhijit Sen, which was formed in 2007 to examine the desirability of allowing futures trading presented its report to the government in 2008. The conclusions of this Committee, and particularly the supplementary note that the Chairman had appended, clearly bring out the adverse implications of allowing futures trading in agriculture.

Futures trading is not just a case of simple market failure in maintaining food price stability. It is in fact a more direct attempt, involving corporate players as aggregators of marketed surplus, to undermine the procurement policy of the government and usurp huge profits from grain trade.

The Sen Committee was not able to arrive at a firm conclusion on the impact of futures trading on food prices after 2002 because of the short time period available for analysis. However, the Chairman’s note pointed out that in 14 out of the 23 food items examined, the post-futures prices were higher than the pre-futures prices. These 14 items included essential commodities like rice and wheat. In fact, the prices of rice and wheat fell after the ban on their futures trading in 2007. Abhijit Sen also argued that,

"…it is clearly necessary in the immediate inflationary situation that there be a clear statement of the government’s intent to maintain and expand the current system of public procurement and PDS in order to ensure remunerative prices to farmers and affordable prices to consumers. In this context, combining prudence with benefit of doubt, the best course of action would be to identify those commodities where there is possibility of futures trading affecting expectations that may influence inflation in essential commodities and insulate these from futures. Therefore, the suspension of futures trading in the four sensitive commodities should continue…"

Futures trading is not just a case of simple market failure in maintaining food price stability. It is in fact a more direct attempt, involving corporate players as aggregators of marketed surplus, to undermine the procurement policy of the government and usurp huge profits from grain trade. The encouragement to futures trading would lead to the weakening of the PDS and in some sense, the weakening of the PDS is necessary so that futures market can flourish. The resistance to futures trading, thus, also implies a resistance to protect the PDS as a strong social security net in India.

Proposed PDS reforms and Aadhaar

Scholarly opinion in India today is significantly in favour of a return to universal PDS. However, a powerful lobby of the ruling elite and a section of economists are resisting it. The Aadhaar scheme has become a tool in the hands of this lobby to ensure that universal PDS is never reinstated.

The official thinking on PDS reforms is already available in “Economic Survey 2009-10”. The official thinking on the use of Aadhaar in the PDS is available in a working paper of the Unique Identification Authority of India (UIDAI). Two major features of this new line of thinking are clear. (a) there are massive leakages in the PDS caused by the widespread circulation of “bogus ration cards”; the Aadhaar number can eliminate bogus ration cards. (b) systemic efficiency of PDS can be improved by substituting fair price shops with direct cash transfers. Direct cash transfers can be provided through Aadhaar numbers.

Both these arguments are wrong.

First, while fake ration cards exist in most States, the proportion of fake ration cards across the States is small, ranging from 2 to 13 per cent. Many States have already identified fake ration cards and eliminated them even before the introduction of Aadhaar. The annual report for 2010-11 of the Department of Food and Civil Supplies notes that 208.57 lakh fake ration cards were eliminated across 26 States, as of December 2010. In many of these States, the issue of new ration cards and PDS operations are at advanced levels of computerisation. Some States have successfully introduced hologram-enabled technologies to eliminate duplicate ration cards.

Further, in the operation of the PDS, there are two major sources of leakage. First, there are leakages after foodgrains leave the godown and before they reach the fair price shop. Secondly, there are leakages between the FPS and the customers. Any observer of the PDS knows that the major proportion of leakages belong to the former category, and the latter accounts for only a small proportion.

Secondly, according to the government's plan, the long-term solution is to end the fair price shop model of PDS and shift to direct cash transfers. There is much scholarly consensus on the infeasibility of a direct cash transfer in India (for a set of points, see "PDS in Peril", Frontline, December 2, 2011). However, for the purpose of this note, I shall only quote at length from a very important note adopted by the Central Committee of the CPI (M) in June 2011 (emphasis added).

The Union Budget 2011 has announced a direct cash transfer programme to be implemented from next year. It has been argued in the Economic Survey that such direct cash transfer is a more efficient way of subsidizing the poor, since subsidization of food, fertiliser and fuel involves massive “leakages”. This is nothing but a smokescreen to cut down on subsidies and squeeze the entitlements of the poor.

The Eleventh Plan document of the Planning Commission had shown that leakages from PDS have doubled with targeting. The PDS was universal in 1993-94 but targeted in 2004-05, and NSS data for these years show that in 1993-94, leakage in case of rice was 19% which increased to 40% in 2004-05; in case of wheat, it went up from 41% to 73% and for rice and wheat together, it increased from 28% in 1993-94 to 54% in 2004-05. Per capita monthly consumption of PDS rice and wheat remained unchanged (0.99 kg in 1993-94 and 1.01 kg in 2004-05), although PDS offtake doubled and subsidy increased even more. Therefore, the best way to deal with leakages is to revert from the targeted to universal entitlements and use modern technology like online monitoring etc. Tamil Nadu, Andhra Pradesh and Kerala, which have near universal or larger coverage than the targeted PDS, also display very low leakages from the PDS. Chhattisgarh, which moved to near universal entitlements in PDS from the targeted PDS, could reduce leakages to almost nil by 2007-2008.

One day the poor will have nothing left to eat but the rich Image Credit: Occupy May 1st

The cash transfer scheme proposed by the Government has several problems. First, since the cash will be transferred to BPL families only, the errors of identification and exclusion will remain. Analysis based on 2004-05 NSS data showed that two-thirds of poor families did not have BPL/AAY cards, while only 65% of those with BPL/AAY cards actually made purchases from the PDS. Cash transfers will also have the same problem, since the current BPL lists exclude large sections of the poor. Secondly, once the cash transfer scheme will be initiated, the prices of fuel, fertiliser and food will be deregulated and left entirely to the market forces. Going by recent trends in domestic and international markets, the prices of fuel, fertiliser and food will rise over time, at times rising very fast. The amount of cash transferred to identified households will never rise commensurately.

Thirdly, the cash transfer for fertilizer if given to BPL families will mean excluding almost all the farmers who are landholders as they do not fall in the BPL category. So how will the farmers eligible for subsidy be identified.

Fourthly, the cash transfer scheme seeks to link the UID/‘Aadhar’ number scheme with subsidies and other welfare benefits. The biometric technology which the UID seeks to utilise is unproven and its cost unknown. It may turn out that the cost of implementing and maintaining the UID database far exceeds the current level of subsidies. Linking of any welfare benefit with the UID cannot be done without rigorous cost-benefit analysis. The life and livelihoods of millions of poor people in India depend upon the entitlements to subsidised fuel, fertiliser, and food. These entitlements cannot be used for experimentation with the UID scheme.

Another aspect which has to be kept in mind is that there is no guarantee that the Direct Cash Transfers will actually result buying the commodity for which the cash is given. In a situation where patriarchy dominates, it is quite possible that the money will be used for individual priorities.

Direct cash transfers, wherever they have succeeded to an extent (like the Bolsa Familia in Brazil), have been complementary to the public provision of welfare measures and not as a replacement for existing welfare schemes. What the UPA-II Government wants is to dismantle the existing subsidy regime in fuel, fertiliser and food and put in its place, the cash transfer scheme. This anti-poor move needs to be resolutely opposed and rolled back.

Jana Natya Manch Play " Jana Natya Manch performing a play highlighting the impact of price rise on the common people"
Image Credit: Deshabhimani Gallery

It is in this context that the 5-day dharna by the Left parties becomes an important milestone in the struggle for universal food security in India.

The 5-day dharna by Left parties

The major slogans of the 5-day dharna were: "food security for all", "do away with APL-BPL categorisation", "strengthen and universalise the PDS", "end speculative activities on food grains and other essential commodities" and "take immediate steps to address agrarian distress". At the end of the dharna, it was decided to hold September 12th 2012 as the "Food Security Day".

Please see reports on each day:

Second day:

The central leadership of the four Left parties – CPI (M), CPI, AIFB and RSP – were joined by many prominent personalities working in the field of food security. Eminent economist Jean Dreeze, Civil rights activist Binayak Sen and other Right to Food activists extended their support to the protest and addressed the people.

Third day:

Thousands of people from Punjab, Himachal Pradesh and Madhya Pradesh participated on the third day of the Left parties dharna on 1st August. (..) Leaders of various mass organisations: AIDWA, AISF, DYFI and SFI too addressed the dharna. Jana Natya Manch performed a play highlighting the impact of price rise on the common people.

Fourth day:

Today being Rakshabandhan, many women participants tied the Rakhi to the Red Flag stating that this is the best `brother’ today to protect them and their interests.

Fifth day:

The dharna concluded with the call that September 12, 2012 will be observed as the 'Food Security Day' throughout the country. On that day, demonstrations will be organised in all the states and FCI godowns will be picketed. (..) The dharna ended with the slogan, 'food security for all', 'do away with APL, BPL categorisation', 'strengthen and universalise the PDS', 'end speculative activities on foodgrains and other essential commodities' and 'take immediate steps to address agrarian distress'.

At the end of the dharna, a memorandum was submitted to the Prime Minister listing the major demands. The memorandum categorically states that the National Food Security Bill in its present form will legalise food insecurity and must be radically changed so as to include:

  1. Minimum allocation of 35 kg of foodgrains of reasonable quality per family at the maximum price of two rupees a kilo.
  2. This should be a legally enforceable universal right, scrapping APL/BPL divisions.
  3. Conditions such as cash transfers should be eliminated.
  4. The Food Security Bill should be suitably amended and presented in the forthcoming session of Parliament.

The complete memorandum can be accessed here.

Evidently, the struggle for universal PDS enters a crucial phase by September 2012. One hopes that all progressive groups will join the Left parties in this historic struggle to ensure that the neo-liberal objective of phasing out PDS is defeated and the democratic objective of re-establishing universal PDS becomes a reality.

Agriculture, cpim, dharna, food security bill, PDS, India, Neo-liberalism, Note, Poverty, Economics Share this Creative Commons Attribution-ShareAlike 3.0 Unported


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Ignore this..

The ruling classes of india would do good to sit up and take note. They are busy exporting foodgrains to global markets to turn into bio-fuels when millions are starving. Next time there wont be any dharna or memorandum, you should expect the masses to storm the FCI godowns. On the bonfire of your republic of hunger, we shall build a true People's Democracy.