This still doesn't mean that the direct cash transfer scheme should not be raised. The PDS as we know it have been a den of corruption and very inefficient as well. There are reports that recently with computerisation and RTI based social audits the PDS schemes have become more efficient but cash transfers is a scheme that can still be implemented for many other items in the long term other than just Food. It could apply to things like Petrol, Diesel e.t.c. all of which are currently subsidized by the Central govt. This way the market can dictate the prices and the poor get the cash difference based on surveys done on this account.
There are many other NAC proposals that have been modified and even shot down so if there is demand and debate on the this scheme, its possible to change the outlook here as well. The opposition should pick up this line of thought and talk about it. But it could be possible that they see PDS as a more viable form of where corruption can survive and not talk about PDS reform either.
ejazr: Sorry for the long delay in replying to you.
As far as Direct Cash Transfer goes, IMO in a small state like Delhi or Goa it should be tried out before being rejected out of hand.
Regarding PDS it is very well known the success that Chattisgarh has had with Digitizing records and most certainly it should also be tried in say a state like Kerela where the bureaucracy has been doing a fairly good job.
My main opposition is that we cannot just junk the old policies without trying to revamp them, and when there are small success stories. The food dole will also be full of corruption, if we believe otherwise than we shall be fooling ourselves.
The Govt. will have to dump one system. These two cannot survive together.
.....In 2012 – two years before the next election – NREGA is a bit under the weather, and the prospect of another farm loan waiver or huge increases in procurement prices will only stoke further inflation.
That leaves the Food Ministry, current held by KV Thomas of the Congress. Now consider how this may work best for Rahul Gandhi.
For 2014, Congress needs a vote winner. The Food Security Bill is the next big idea of the UPA, and the cabinet has just decided to cover 70 percent of the population under this Bill. It is UPA-2’s NREGA.
Giving food away for cheap in a drought or bad monsoon year is an angel’s job. Enter Rahul Gandhi. There is little downside to the ministry, provided it is given a carte blanche to spend money like water – which should not be a problem for Rahul Gandhi.
Add Rural Development and Tribal Affairs to this ministry and you would have a giant Social Welfare ministry of unprecedented proportions – with the biggest spending budgets in the country, bigger even than defence. It will truly be the largest welfare ministry in the world.
If this happens, and Rahul Gandhi becomes the Social Welfare Minister with cabinet rank and three junior ministers under him to handle food, rural development and tribal affairs, it will have the profile needed for a Crown Prince to make his mark. All he has to do is spend, reform, spend, and he can be projected as Messiah of the Poor.
These changes would mean cabinet reshuffles in three areas: Finance is already vacant – where the most likely choice could be P Chidambaram. His re-entry would both improve business confidence and ensure smart budget-making. But in case Sonia Gandhi wants a political hand, she could try Jairam Ramesh or Anand Sharma, both of whom covet this ministry.
Food, where KV Thomas is minister of state, need not see a change. But rural development would need a new minister of state to replace Jairam Ramesh, who is cabinet minister. If Chidambaram moves to finance, home would need a new incumbent.
The chances are either home or finance would go to a political heavyweight. If Chidambaram gets finance, home would go to a political loyalist – maybe someone like Digvijaya Singh. This means Anand Sharma could remain at commerce and industry.
The available big slots would be agriculture and external affairs, where SM Krishna hasn’t distinguished himself too much. Jairam Ramesh could be in line for one of these two. Pawar could either retain agriculture or opt for a third ministry – for his daughter Supriya Sule.
But we are assuming Rahul is going to get food and rural development. If he opts for only one of them, Ramesh could stay where he is.
But whatever Sonia and Rahul decide – Manmohan Singh will merely be told what they have in mind – one should expect an exciting merry-go-round in cabinet.
Will creaky PDS able to sustain Food Security Bill?
Entitlements for beneficiaries in Antodaya Anna Yojana under which 35 kg grains provided per family will be retained in the Bill
The union cabinet has cleared the much-awaited revised National Food Security Bill (NFSB) that seeks to provide legal entitlement of cheap grains to almost 67% of the India population or 82-84 crore people.
The Bill which has been billed as UPA-2’s most ambitious social security programme is now expected to tabled in Parliament by Friday or if not then surely in the second half of the Budget session.
The Bill will provide guaranteed 5 kilograms of rice, wheat or coarse cereals to all the identified beneficiaries at a flat rate of Rs 3 per kg for rice, Rs 2 for wheat and Rs 1 for coarse cereals.
There would not be any Above or Below Poverty Line demarcation but entitlements for beneficiaries under the Antodaya Anna Yojana (AAY) under which 35 kilograms of grains is provided per family will be retained in the Bill as well.
The Bill though an ambitious programme based its social security idea on the creaky Public Distribution Platform. The PDS is carried out nationwide with the help of over 5,00,000 ration shops.
However, the biggest drawback for the National Food Security Bill is that it relies heavily on the creaky Public Distribution System that has been blamed time and again for failing to deliver the goods because of massive pilferage, ration cards being made in the name of ineligible people and no actual benefit to the beneficiaries.
Infact, a study done by the Planning Commission in 2005 showed that 58% of the subsidized foodgrains issued from the central pool do not reach the Below Poverty Line (BPL) families because of identification errors, non-transparent operation and unethical practices in the implementation of TPDS.
In such a situation, pushing the National Food Security Bill could be disastrous. Experts like Chairman of Commission for Agriculture Costs and Prices (CACP) have strongly advocated shifting towards a system of direct transfer of subsidies in cash as against distributing cheap foodgrains to get more benefits.
However, food ministry said that the pilferage has come down and now is just around 10-15 percent of the total foodgrains allocated through PDS. It will come down further as digitization of database and issuance of biometric ration cards has been completed in Andaman and Nicobar Islands, Andhra Pradesh, Chhattisgarh, Daman and Diu, Delhi, Gujarat, Karnataka, Kerala, Pondicherry, Tamil Nadu and Uttar Pradesh till December 2012
It is in progress in Bihar, Chandigarh, Dadra and Nagar Haveli, Haryana, Jammu and Kashmir, Jharkhand, Lakshadweep, Madhya Pradesh, Maharashtra, Nagaland, Odisha, Punjab, Rajasthan, Sikkim and Tripura. “The number of bogus ration cards has also been significantly reduced and pilferage will further come down as number of bogus ration cards is fully eliminated,” a senior food ministry official said.
He said moreover, the states will implement the provisions of the food bill only if their entire ration card database is digitized. The real picture will be cleared once actual implementation starts in select few states.
The Food Security Bill, sorry emergency Ordinance, if implemented honestly, will cost 3% of GDP in its very first year
We have an emergency of the rarest order. The BJP stops Parliament and therefore the government passes an emergency privilege provided by the Constitution to pass the Food Security Ordinance.
The Bill, sorry Ordinance, wants to provide food to the poor in order to eliminate poverty. This, according to the Congress, was Sonia’s dream and indeed was part of the Congress manifesto in 2009. Again, if the Congress spokespersons are to be believed, this is a path-breaking attempt to eliminate poverty. It will give the poor a legal right to claim their 5 kg of rice, wheat or coarse cereals a month at the subsidised rates of R3, 2 and 1 per kg, respectively.
This Act-to-be follows the same pattern and motivation as the Employment Guarantee Act passed in 2005. At that time, the Congress had claimed that this would provide much needed employment to the poor, that it was something “new” being offered. They never once mentioned that government-guaranteed employment was first provided by the state government of Maharashtra, and since the early 1980s, it has been part of central government schemes. The Food Security Bill (FSB) is merely an extension of the public distribution system (PDS) of foodgrains which has been in operation by all central governments since the late 1970s!
The import of this is to partly nail the blatant spin (lie!) that the Congress government is adding to its list of scams. But they can be forgiven, because this is an election year and by all accounts the Congress is desperate. From a policy point of view, the relevance is that Indian governments and polity have considerable experience with employment guarantee schemes as well as food distribution schemes. What does this experience tell us?
Another claim by the Congress is that the FSB will provide a legal right to the poor for the food, just as the MGNREGA has provided a legal right to the poor for employment. And the poor can sue the government for lack of food or jobs—surely, the most advanced welfare system in the world, and something India, and especially the Congress, should be justly proud of.
The Employment Act scheme has been in the works since 2005-06, and for all India since 2008-09. So there is five years of concentrated experience with employment provision to the poor. Fortunately, to date, no rich and especially no poor person has sued the government for lack of employment, so it must be the case that the poor are fully satisfied and employed for at least the 100 days provided by the Act. Then why is it the case that over two-thirds of the beneficiaries of the employment guarantee scheme were not only not poor in 2009-10, but their average consumption was 50% higher than the average expenditure of the poor beneficiaries! And these non-poor doing back-breaking MGNREGA work were in the top third of the distribution! Only two conclusions are possible—the middle class rich are not doing back-breaking work or there is a lot of corruption in the MGNREGA scheme (the dictionary defines a scheme as “to make plans, especially in a devious way or with intent to do something illegal or wrong”.) So that is why there have been no legal suits even though there is lack of jobs for the poor (even the government admits to that fact) and the fact that the MGNREGA has not been able to spend the money allocated to it in any of the last five years.
There is little doubt that the MGNREGA is plagued with corruption—what maybe news to the “governance by ordinance” wallahs is that the PDS of foodgrains, whose operations the government will only multiply, is, on proven evidence, many times more corrupt than even the MGNREGA.
Before proceeding further, I want to set up some ground rules for discussion of the FSB, and the poor. In a recent panel discussion on CNN-IBN, noted food security expert and Principal Adviser to the Commissioners of the Supreme Court, Biraj Patnaik, alleged that I “molested” poverty data. For long I have held the belief that policy discussion should be centred on evidence, not ideology, and especially not “You have to believe me because I am arguing for the benefit of the poor”. Hence the title of my column “No Proof Required”. So when you look at the evidence presented in this article (above, below and in the table) please inform me which data, or estimate, or conclusion, is incorrect, and whose evidence is proof of molestation.
The estimates contained in the table are from the recently released NSS consumer expenditure data for 2011-12. It presents calculations for the subsidy involved if governance by ordinance becomes law. Two columns are presented, one a factual based assessment of what happened in 2011-12, and the other if the FSB was implemented faithfully, as I am sure the Congress, and Manmohan and Sonia (hereafter Manmonia) would want to do. After all, they are all honourable persons.
The simplest possible summary of the subsidy is as follows (tell me where I am wrong or mad or molesting). Assume the subsidy in year BFSB (before the Bill) is 100.
According to NSS data, only 45% of the population was accessing the PDS system in 2011-12. With the Bill, it will be 67%. So based on greater coverage alone (the better for elections, my dear), the subsidy will increase to (100*67/44.5) or 150.
The NSS data states that in 2011-12, average PDS consumption was 2.1 kg per person per month. So with greater consumption, the subsidy bill increases to (150*5/2.1) or 357.
But because India is growing so fast and so can afford largesse, and it is Sonia’s explicit dream to introduce the FSB (and Congress’s manifesto promise), the subsidy per kg will increase from R13.5 per kg to R16.5 (with weighted market price staying constant at R19, the subsidised price declines from R5.5 to R2.5 per kg). This increases the subsidy to (357*16.5/13.5) or 436.
In 2011-12, total food subsidy (government figures) was R72,000 crore. So AFSB (after the Bill), food subsidy expenditures will be R72,000*4.36 or R3,14,000 crore or 3% of GDP.
This is an open challenge to Ms Sonia, and Dr Manmohan Singh and Mr P Chidambaram. Your minions are stating that the ordinance induced FSB will only increase by about 25% and will amount to 1% of GDP. I get a conservative increase of 336%, or a total subsidy level of 3% of GDP with an honest implementation of the Bill, sorry ordinance. One of us is massively wrong. I believe it is not me. But prove it otherwise.
Surjit S Bhalla is chairman of Oxus Investments, an emerging market advisory firm, and a senior advisor to Blufin, a leading financial information company.
I wonder if it succeeds or not because we don't have proper storage system & also delivery system. Recently Gujarat government made barcode card mandatory and suddenly distributers asked for more commission, the reason behind such demand was actually obvious, they were able to do Gapla in delivery, but now everything has been centralized so they can't. I don't know if this barcoded card is initiative of central government but this needs to be done 1st.
And now that we have this Food Security Ordinance and the Congress ruled States are to implement it forthwith, where will the money come from?
Would other sectors not have to be cut like defence, education, infrastrastructure and so on?
There are varying estimates of what this bill will cost the exchequer and one of the figure from the government is Rs 1.3 lakh crore per year. But that's the cost of procuring the grain.this doesn’t include the cost of more people, more transportation, more storage.
The storage facilities have to be created, railways don’t have enough capacity to carry the food grains and then the volatility in the grain production needs to be stabilised otherwise there could be years like in 2002-2003 when in a single year the food grain production dropped by 38 million tonnes In such a case, grains will have to be supplemented by imports or cash given as has been stated. Now, this cash, in such a situation, will not pay for the grains entitled!
There is no guarantee that those who get the grain will not sell it to traders, who will then operate a flourishing blackmarket!
I might add grains may satiate Hunger, but will not ameliorate poverty or malnutrition, which is the real issue.
A nutrient is a source of nourishment, an ingredient in a food, e.g. protein, carbohydrate, fat, vitamin, mineral, fiber and water. Macronutrients are nutrients we need in relatively large quantities. Micronutrients are nutrients we need in relatively small quantities. Therefore, a balanced diet is necessary.
Grains alone may fill the stomach, but in no way, will rid India of the main problem - malnutrition.
And, importantly, there is NO money or infrastructure with the Govt to ensure that the Policy succeeds.
It will go the PDS way - corruption, pilferage, black marketing et al.
It is just a cosmetically attired PDS system with the greater reach in theory.
Ideally, it would have been better to revamp the PDS with a strict check on pilferage, corruption and total maladministration.
Therefore, there is no doubt that it is a political move before Elections.