By: Ramesh Kanitkar
What would the extension of the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) till November 2020 mean for the 81 crore beneficiaries of the National Food Security Act (NFSA) 2013, across the country? Prima facie, a prolonged access to free foodgrains at a time when the pandemic and the subsequent lockdown have axed or jeopardised the livelihoods of many. The riders implicit in this extension, however, could be several. For instance, notwithstanding whether the estimated expenditure of `90,000 crore to provide free foodgrains to all beneficiaries of the NFSA for five months is adequate, a more provoking question is: What is this expenditure being incurred as? Food subsidy? Or something else? This, of course, was never clarified in the Prime Minister’s address to the nation on 30 June 2020.
Given such lack of clarity, concerns stem out of various facts:
- over the past two years, the current government has grossly under-reported its incremental off-budget borrowings from public accounts, which have a bearing on the fiscal deficit estimates;
- about three-fourths of these borrowings are on account of the under recoveries in food subsidies of the Food Corporation of India (FCI); and
- To cover this up the government has been continually re-jigging the balance sheet of the FCI to convert food subsidies to credits/borrowings, thereby reversing the course of “obligation” between the state and the para-statal.
The corporation and, in tandem, the public distribution system (PDS) in India, are running into a debt trap situation, and that too for catering to a mere 4 per cent–5 per cent of the purchased food market in India. On the other hand, other studies on the rice markets in India find that the uncertainties created by government interventions—be it the uncertainties arising from competition between the traders in the free market and those in the government-controlled market, and/or the uncertainties caused by information asymmetry about the inventory position with the government—make the traders in the private markets adjust their price spreads such that the decline (rise) in the selling prices is never symmetric to the decline (rise) in the buying prices. In turn, 95 per cent–96 per cent of the purchased food market in India is subject to high price volatility, thereby defeating the very purpose of the PDS at large. Besides limited coverage, what makes the PDS less efficacious are the widespread leakages in the system. How far such a system can cater to the needs of the burgeoning mass of the livelihood-less and hungry people during the current times, does not require much imagination. While the media has been abuzz with the news of (potential) beneficiaries encountering problems in accessing PDS supplies, one cannot overlook that “free” grains is but a myth.
During the past three months, those accessing PDS supplies under the PMGKAY could lift the “free” 5 kilograms (kg) of grains only after buying their stipulated monthly quota of 7 kg at the subsidised rates from the ration shops. In the absence of any clarity as to whether the same conditions would apply during the extended phase of the scheme, there are no potential reasons to assume any deviation from this practice. The need for overhauling the PDS has been a matter of public discourse in India for a long time. Adopting more pragmatic approaches to both procurement and distribution of foodgrains is the most binding requirement at this hour than ever before. But that would essentially mean the government giving up “easy” populism, which it can exercise through the PDS, particularly when vertical leadership has been conspicuous in its absence in concerted actions.
At the same time, by using the PDS as a political plank the government can dismiss the role of civil society and hence the ability of horizontal leadership in filling up its vacuum in managing the ongoing food crises. For instance, a couple of weeks since the imposition of the nationwide lockdown, NITI Aayog had sent letters to around 92,000 non-governmental organisations (NGOs)/charitable organisations (COs) across the country, running relief camps and food kitchens, to buy rice and wheat from the FCI at its open market sales scheme rates. Less than 1per cent of the organisations could access this scheme, while for the most procedural complexities and delays, and logistical bottlenecks, such as arranging their own means of transportation amidst the lockdown, made the process difficult to navigate. Concurrently, while the outbreak of the pandemic and the lockdown at the beginning of their new financial cycle has exposed the NGOs/COs’ resource position, the PM-Cares Fund with a 100per cent tax exemption is perceived to have further disrupted their funding potentials. With the Covid-19 crisis, India is facing perhaps one of the most transformative moments in the past seven decades since independence, thereby placing demands of an extraordinary nature and scale on the government. In tiding over such a situation, the government could have shown some prudence by encouraging complementary actions from the civil society, rather than throttling or subverting these. Inaction of the government has evoked the ethical force of philanthropic emotions within the civil society, which in effect have culminated into relief activities. Such philanthropy, however, cannot be limitless, especially when livelihood losses are cutting across all classes of the society, equally. Given this, the civil society now must make conscious choices between various forms of abdication and concerted actions if it wants to hold the government accountable for its inaction. INAV