INDIAN INSTITUTE OF MANAGEMENT, BANGALORE

Food Security Bill : An Analysis Working Paper

Gurtegh Singh

This paper has been researched and worked by Gurtegh Singh under the guidance and supervision of Professor Charan Singh, RBI Chair Professor, IIM Bangalore.

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Contents

Sections Topic Page

Section 1 Introduction 3

Section 2 Features 4-6

Section 3 Review of literature 7-10

Section 4 Public Distribution System 11-13

Section 5 Cross Country Experience 14-16

Section 6 Challenges & Issues 17-27

Section 7 Summary & Conclusion 28-29

Annex 30-33

References 34

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List of Tables

Table Number Topic Page Number

1 Ration Card Holders In India 12

2 Population Below Poverty Line (2009-10)

17

3 Financial Performance Of Indra Awaas Yojana (IAY)

25

4 Financial And Physical Performance Of Swarnjayanti

Gram Swarozgar Yojana (SGSY)

27

5 Food Grain Requirement for Implementing the proposed

NFSB

30

6 Consumption of cereals in the period 2004-05 and 2009-10

(All India)

30

7 Off-take Compared to consumption of Rice and

Wheat (All India)

31

8 Undernourishment in the developing regions in the

period 1990-92 to 2010-12

31

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Section 1

Introduction

There are multiple definitions of food security and the concepts of food security have evolved in the

last 30 years to reflect changes in the official policy thinking. The term first originated in the mid-

1970s, when the World Food Conference defined food security at the international and national

level as a food supply that could ensure the availability and price stability of basic foodstuffs: “food

security exists when all people, at all times, have physical and economic access to sufficient, safe,

and nutritious food to meet their dietary needs and food preferences for an active and healthy life.”

The definition was later extended by the Food and Agriculture Organisation (FAO) of the U.N to

include individual and household level access. Working definition of food security given by FOA:

Food security exists when all people, at all times, have physical, social and economic access to

sufficient, safe and nutritious food which meets their dietary needs and food preferences for an

active and healthy life. In general food security is defined as economic access to food along with

food production and food availability. Food availability alone, therefore, does not ensure food

security; access to food is equally important.

THE NATIONAL FOOD SECURITY BILL 2013:

A Bill to provide for food and nutritional security in human life cycle approach, by ensuring access

to adequate quantity of quality food at affordable prices to people to live a life with dignity and

for matters connected therewith or incidental thereto.

The proposed legislation marks a paradigm shift in addressing the problem of food security from the

current welfare approach to a rights based approach. Besides expanding the coverage of Targeted

Public Distribution System (TPDS), the proposed legislation would confer legal rights on eligible

beneficiaries to receive entitled quantities of food grains at highly subsidised prices. It will also

confer legal rights to women and children and other Special Groups such as destitute, homeless,

disaster and emergency affected persons and persons living in starvation, to receive meals free of

charge or at affordable price.

In this paper we try and examine and expand each and every feature of the National Food Security

Bill forwarded to the Prime Minister on October 27, 2010 and which was first introduced in the

Parliament in December, 2011. The report is divided into 7 sections in which we explain the different

features of the proposed NFSB under the subheadings of Administration, pricing and distribution, we

further look into the reaction and response of the bill from eminent scholars and media persons

both in favour and without. Further the working and functioning of the existing Public Distribution

System will be discussed, we shall look into the past successes of other countries in the world that

faced or are facing the problem of poverty, undernourishment and food insecurity and will study

their welfare schemes and policies and their drawbacks. Lastly we would study the Issues and

Challenges of the proposed bill i.e., the operational as well as the financial challenges of the bill in

our country, and the past and present poverty alleviation programmes of the Government of India

and States Governments and their fallouts.

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Section 2

Features

The National Food Security Bill extends to whole of India, in this section we examine the

different features of the proposed Bill, and the features are studied and explained under the

headings of Administration, Distribution and Pricing.

Administration

Every person belonging to priority household and households covered under Antyodaya

Anna Yojana (AAY) shall be entitled to receive food grains at subsidised prices under the

Targeted Public Distribution System (TPDS).

Identification or percentage coverage under the TPDS in Rural and urban areas for each

State will be determined by the Central Government.

The total number of eligible persons to be covered in the rural and urban areas of the State

will be calculated from Census population figures. The identification of Antyodaya

households is left to state governments, subject to the scheme’s guidelines for AAY, and the

remaining households as priority households to be covered under TPDS, in accordance with

such guidelines as the State Government.

The Central and State Government shall undertake necessary reforms and decentralization

of power in the TPDS to ensure transparency and better delivery of entitlement.

i. Doorstep delivery of food grains to the TPDS outlets.

ii. End-to-end computerisation of transactions to ensure transparency.

iii. Aadhar card will be used for better identification of the beneficiaries.

iv. Transparency and accountability of records.

v. Preference to public bodies and institutions, panchayats, self-help groups, co-operatives

in licensing and management of fair price shops by women and their collectives. Also

support to local public distribution models and grains banks.

vi. Diversification of commodities distributed under TPDS.

vii. Introducing schemes such as cash transfers, food coupons to the targeted beneficiaries

in lieu of their food grain entitlements in manner and area as specified by the Central

Government.

The bill seeks to empower women in the eligible households:

The eldest women who is not less than 18yrs of age be designated the head of the

household and will be responsible for the issue of Ration Card.

Every state government shall put in place an internal grievance redressal mechanism which

may include call centres help lines, designation of nodal officers, or such other mechanism as

may be prescribed.

The State Government are to constitute a State Food Commission for the purpose of

monitoring and review of implementation of the act.

All TPDS related records shall be placed in the public domain and kept open for inspection to

the public.

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For ensuring transparency and proper functioning of the TPDS and accountability of the

functionaries in such systems, the state governments will set up Vigilance Committees as

specified in the PDS order, 2001.

Distribution

Legal entitlement to subsidized food grains to be extended to at least 75% of the country’s

population i.e., eligible households, Priority and Antyodaya households constitute “eligible

households” and covers 75% in rural areas and 50% in urban areas.

The priority households are entitled to 5kgs of food grain per person per month whereas the

Antyodaya households are entitled to 35kgs of food grain per household per month at a

subsidized price of Rs1 per Kg for millets, Rs2 per Kg for wheat and Rs3 per Kg for rice.

The State Government may provide to the persons belonging to the eligible households,

wheat flour in lieu of the entitled quantity of food grains.

The bill proposes pregnant and lactating women be provided a nutritious meal at the local

anganwadi during pregnancy and six months after childbirth & maternity benefit of not less

than Rs6000 in instalments, the specifications to be prescribed by the central government.

The bill entitles every child within the age group of 6 months to 6 years to be provided age

appropriate meal free of charge, through the local anganwadi, to meet his nutritional

standards.

For the children between the age group of 6 to 14 years or up to class VIII, whichever is

applicable, one mid-day meal, free of charge, every day except on school holidays.

The state Government shall through the local anganwadi, identify and provide meals, free of

charge, to children who suffer from malnutrition, so as to meet the nutritional standard.

Special focus by the Central and State Government to the needs of the vulnerable groups

especially in remote areas and other areas which are difficult to access, hilly and tribal areas

for ensuring their food security.

Obligations of the Central Government:

i. To ensure regular supply of food grains to persons belonging to eligible households,

allocate from the central pool the required quantity of food grains to the State

Government under TPDS.

ii. To provide funds to the extent of short supply, in case of short supply of food grains from

the central pool to a State.

Obligations of the State Government:

i. Responsible for the implementation and monitoring of the schemes of various Ministries

and Departments of the Central Government.

ii. Duty and responsibility of the State Government to take delivery of food grains from the

designated depots of the Central Government in the State at before specified prices.

iii. In case of non-supply of entitled quantities of food grains or meals to the entitled

persons, the state is responsible for payment of food security allowance.

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Pricing

The food grains are to be distributed to the eligible houses through the existing PDS at Rs. 3,

2, 1 for rice, wheat, and millet respectively.

In case of non-supply of the entitled quantities of food grains or meals to entitled persons,

such persons shall be entitled to receive food security allowance from the concerned State

Government. The time, manner and amount of allowance will be prescribed by the Central

Government.

The cost of subsidy is to be shared by the central and state government. The specifications

are yet to be prescribed by the Central Government.

The various provisions and features of the proposed National Food Security Bill have been

discussed in detail in the above section. We saw the various administrative features for the

expansion of the TPDS and the local bodies and fair price shops, the various distributive

features for proper distribution, allocation and implementation of the NFSB and the prices

and cost associated with the bill.

Central Pool maintained by

Central Government

Trasported to designated depots

in Each State as per allocations

Intra-State allocation and

delivery to FPS by State

Government

Local Authorities responsible for implementation and monitering

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Section 3

Review of Literature

The National Food Security Bill after its introduction in the parliament in 2011 has been a

topic for discussions and debates. Many eminent economists, academicians, politicians and

media persons have criticised the bill, many have voted for it and said it as an achievement

for the present government in power. In this section we look into the comments,

statements by different personnel’s, the section has been divided into positive and

negative reviews.

Positive Reviews

Ashok Kotwal, professor of economics, University of British Columbia, in an article

in the Economic Times said that...

..In a nutshell, we think the Bill is neither populist nor unaffordable. Some of the anxiety

over the cost, corruption and the government's ever-increasing role in the grain market

stems from the assumption that PDS will remain forever the main vehicle of delivering the

food subsidy. But if the government develops the necessary infrastructure — e.g., UID-

linked bank accounts — states will be encouraged to switch to cash transfers. The extra

costs of government storage and distribution will then be saved and the problems caused

by the distortion of the grain trade will be mitigated. Many worries that arise from the

identification of the food Bill with the PDS will disappear.

The Right to Food campaign is right to stress the need for a food subsidy with near-

universal coverage but is wrong in its visceral opposition to cash transfers. The result is a

food Bill written wholly in terms of an expansion of the PDS. Suggestions for reforms such

as cash transfers and the use of biometric ID have been shunted to an obscure chapter

despite the fact that the Delhi government has already opted for delivering the food

subsidy through cash transfers.

Anyone who has had a cursory look at the food Bill tends to assume it is just expanding the

present PDS and, thus, worsening existing problems of leakage, corruption and high costs

of storage and distribution. This makes people antagonistic toward the idea of the food Bill.

The opposition of the Right to Food campaign to even experiment with cash transfers has

harmed the poor by making people sympathetic to the critics of the food Bill.

…..but if "the poor" are only the bottom third or so, why offer food subsidy to the bottom

two-thirds of India? We often talk about the poor as if it is a well-defined group, but that is

hardly the case. The official poverty threshold is low. Many people above the threshold are

also poor and look just like the people below the threshold. As a result, there is no reliable

way in which subsidies can be targeted only to the people below the official threshold.

Finally, there is the issue of costs. Official projections are that it would cost close to 1.5 per

cent of GDP. But even in the most pessimistic scenario, our GDP is expected to grow at 5

per cent per annum in the near future. If we think of the fact that the Bill will cost less than

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one-third of the growth in the national income next year, it does not seem that

unaffordable, especially given its value to the millions who will receive it.

Eminent economist Amartya Sen observes that...

“It is a moderate Bill and whether it goes far enough is another question but the case for

passing it is strong.” Favouring the passage of the Food Bill, he said it would lead to a

substantial enhancement of entitlements of the poor through the PDS.

Negative Reviews

Venkatesh Ramachandran, a Chennai based Chartered Accountant says that...

….the Food Security Act is implementable only when we produce food grains in excess of

350 MT. And in such a scenario with massive stocks of food we do not require state

intervention. And should we produce less than 350 MT and seek an intervention of the

state, it will be a futile exercise.

Crucially, the PM and his economists within the Government assume that this outlandish

legislation will settle our production, distribution and storage deficiencies in our farm

sector.

But assuming that it can be done what is the cost? Crucially where is the money? The

document prepared by the Ministry of Agriculture states that the total financial

expenditure entailed will be around Rs 682,163 crores over a three year period.

This works out to in excess of Rs 225,000 crore every year. Given this massive sums of

money required to administer this flight of fancy – the Finance Minister of India has

allotted a paltry sum of Rs 85,000 crore in the Budget of 2013-14. And should the FM

provide money for this food subsidy, his promise to assiduously restructure the finance of

the country goes for a toss.

Ashok Gulati chairman of the commission on agricultural costs and prices in an

interview on CNBC-TV18 observes that...

…. the financial implication of this in the very first year of operation as per government’s

calculation is about Rs 1.3 lakh crore. However what it does not take into account is the

other peripheral costs that would be needed to set up the thing in a manner which is more

sustainable and reliable.

For example 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. Where will you go to buy that food?

So, you need to invest in that. If you take into account these types of costs, our estimate is

that it will cost you more than Rs 2 lakh crore per year.

….. The system as it is today the PDS is run through about 5 lakh-odd private fair price

shops mostly. Leakages have been estimated of the order of 50 per cent in 2004-2005.

Probably things have improved a bit and now there is talk of about 40 per cent leakage -

even that is an unacceptable level of leakage.

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The second issue is, it is a centrally administered, centrally sponsored kind of a programme,

which means that the responsibility of procurement of such huge quantities of grains will

rest with the central government, primarily the Food Corporation of India (FCI).

Wheat procurement is confined largely to the four states of Punjab, Haryana, Madhya

Pradesh and Uttar Pradesh and rice from about four or five states which include Andhra

Pradesh, Orissa and Chhattisgarh.

Given this logistics problem, distribution of food grains and reaching them to places where

they need it most will be a major challenge.

The third issue is what does it do to the open market? Given the fact that our production of

rice is about 100 million tonne and wheat is about 85-90 million tonnes and the marketable

surpluses are only about 55-60 per cent, if the government is going to procure most of it

then the private sector will be starved of supplies and that could lead to a certain set of

inflationary pressures on the open market.

An article by the name of “Food security a political weapon” published in the

“Mint” writes that...

….Over the past few months, farmer bodies across India, ranging from the Shetkari

Sanghatana in Maharashtra to the Bharatiya Kisan Union in Punjab have emerged as the

most vocal critics of NFSB. Farmers realize that the Bill will only worsen the mess Indian

agriculture has become. They rightly fear that it will distort price signals in commodity

markets and crimp farm margins by virtually nationalizing the food sector. Further, the

exclusive focus of the Bill on cereals will be at the expense of fruits, vegetables and

livestock, worsening soil degradation and reversing the recent strides towards high-value

farming. Contrary to the myths propounded by proponents of NFSB, small farmers will be

hurt more than others.

Indian food policy has been pursuing the conflicting goals of keeping retail food grain prices

low to protect consumers and of keeping procurement prices high to incentivize farmers.

Apart from a leaky distribution system, such a policy is self-defeating since the massive

subsidy bill it entails stokes inflation. India’s fiscal trilemma of keeping farm prices high,

retail prices low and overall inflation under control can only be solved if the food sector is

radically reformed and public spending is directed towards investments rather than

subsidies. This will boost farm growth, raising farm productivity and incomes without

raising inflation.

… Food security will raise real incomes of farmhands and likely cause labour shortages,

driving up labour costs for farmers. To compensate farmers adequately, procurement

prices have to be raised generously, adding another burden on the fiscal. Whether the

government will be in a position to keep raising procurement prices is an open question,

and farmers are canny enough to realize that the axe of fiscal discipline could finally fall on

them. Even without taking into account the progressive increases in procurement prices,

the food Bill will cost roughly Rs2 trillion annually, according to estimates by the chairman

of the committee for agricultural costs and prices, Ashok Gulati.

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P. K. Joshi, South Asia director of the International Food Policy Research Institute

observes that...

..The cost of it will go up from 0.8% of Gross Domestic Product to around 1.1% of GDP. This

is a serious increase in a situation where the government does not have enough resources

as it is. The government says it will provide 62 million tonnes of food a year under the bill

and the size of the subsidy is estimated around $24 billion.

Even if the quantity of food remains the same each year, the food subsidy bill will increase

annually. As the cost of food goes up (because of wage increases and oil price rises,) the

amount that the government sells the subsidized food for will remain the same.

.. The other issue bothering people: What are we going to do in a drought or a flood? The

production of rice and wheat might come down dramatically. If we are entering the global

market then the global price would shoot up along with the subsidy bill.

There are mixed reviews about the food security bill from scholars, politicians and media

persons. On one hand the bill is being criticised for the over pressure on the existing PDS

system, the huge cost of the subsidy over the already mounting fiscal deficit and the

burden of price rise of food grains, encouraging inflationary pressure in the market & the

problem of it being centrally administered. On the other hand scholars and economists

assure that the bill would actually help the needy and help eradicate food insecurity in the

country, moreover with improvement in technology and introduction of UID cards, the

process of distribution will become more efficient and productive over the years.

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Section 4

PUBLIC DISTRIBUTION SYSTEM

Public Distribution System (PDS) is an Indian food security system. Established by the Government of

India under Ministry of Consumer Affairs, Food, and Public Distribution and managed jointly

with state governments in India, it distributes subsidized food and non-food items to India's poor. In

this section we will study the existing public distribution system, its objectives, its evolution and

major drawbacks of the system.

The Public Distribution System (PDS) in India is more than half-a-century old as rationing was first

introduced in 1939 in Bombay by the British Government as a measure to ensure equitable

distribution of food grains to the urban consumers in the face of rising prices.

Among the number of Price Control Conferences held during 1940-42, the sixth, held in September,

1942 laid down the basic principles of a Public Distribution System for India. The Food Department,

set up in December, 1942, formulated an All India Basic Plan that dealt with issues such as

procurement, contracts for purchasing agents, public distribution, inspection and storage. The basic

objective of the then emerging policy was stabilization of food prices.

Major commodities distributed include staple food grains, such as wheat, rice, sugar, and kerosene,

through a network of Public distribution shops, also known as Ration shops established in several

states across the country. Food Corporation of India, a Government-owned corporation, procures

and maintains the Public Distribution System. Fair Price Shop (FPS), part of India's Public Distribution

System established by Government of India, is a kind of shop in India which is used to distribute

rations at a subsidized price to the poor. As of date there are about 4.99 lakh Fair Price Shops (FPS)

across India.

Since 1951 public distribution of food grains has been retained as deliberate social policy by India

with the objectives of:

(i) Providing food grains and other essential items to vulnerable sections of the society at

reasonable (subsidized) prices

(ii) To put an indirect check on the open market prices of various items and

(iii) To attempt socialization in the matter of distribution of essential commodities.

With a view to improving its efficiency, the PDS was redesigned as TPDS with effect from June 1997.

The TPDS envisages identifying the poor households and giving them a fixed entitlement of food

grains at subsidized prices. Presently the government under Targeted Public Distribution System

(TPDS) allocates food grains to States/Union Territories @35kg per family per month for 6.52 crore

BPL families, including 2.43 crore Antyodaya Anna Yojana families. Allocations of food grains for

Above Poverty Line families are made depending upon availability of food grains stocks in the

Central Pool and past off take by the States/UTs. Presently, these allocations range between 15 and

35 kg per family per month in different States/UTs.

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Table 1: Ration Card Holders in India

RURAL URBAN

All India

Percentage of households Percentage of households

AAY BPL Other Card

No Card

AAY BPL Other Card

No Card

2.9 26.5 51.8 18.7 0.8 10.5 55.6 33.1 Source: NSSO, Ministry of Statistics and programme implementation 2007.

Ration cards were held by 81% of rural households and 67% of urban households. Below Poverty

Line (BPL) cards were held by 26.5% of rural households and 10.5% of urban households. Antyodaya

card holders were less than 3% of rural households and less than 1% of urban households. About

18.7% of the households in the rural area and about 33.1% of the households in the urban area did

not possess any card.

There are a number of drawbacks and deficiencies of the Public Distribution

System:

High Exclusion and inclusion errors

The Programme Evaluation Organisation establishes large scale exclusion and inclusion errors in

most States. It identifies 2 problems; One is the criterion used for allocation of food grains by the

Central Government to States. The Central Government Allocates food grains to States based on a

narrow official poverty line. Going by the official poverty line, only 28% of the population is eligible

under PDS at all-India level in 2004-05. However food insecure households may be much higher than

the official poverty ratios. Second is the use of BPL method for identifying households by the states.

This identification differs from State to State. In Andhra Pradesh, more than 70% of the households

have ration cards. This is one of the reasons for high inclusion errors in Andhra Pradesh.

Viability of FPS’s

An important institutional concern is that of the economic viability of Fair Price Shops, which

appears to have been badly affected by the exclusion of APL population from the PDS. The exclusion

has led to a big decline in the off take. With fewer ration Cards to serve, lower turnover and upper

bounds on the margins that can be charged to BPL consumers, the net profits of FPS owners and

dealers are lower under the TPDS than before. Due to the operation of economies of scale, for

instance, with respect to transport, the distribution of smaller quantities is likely to make many

shops unviable.

Regional Allocation & Price Stabilisation Objective

One of the objectives of the PDS is to ensure price stabilization in the country by transferring grain

from cereal-surplus to cereal-deficit regions. Under TPDS, the demand for cereals is no longer

determined by State Government (based on their requirements and in practical terms on past

utilization) but on the allocations decided by the Central Government (based on poverty estimates

prepared by the Planning Commission). The new system of allocation has led to imbalances between

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actual allocations and allocations necessary to meet the difference between cereal production and

requirement. (Refer annex Table-6)

Leakages &Diversion

The current system of delivery has weaknesses resulting in leakages at different stages. The Share of

leakages is abnormally in States of Bihar and Punjab (75% leakage) while in Haryana and U.P it is

between 50-75%. Leakage and diversion imply a low share of the distribution of the subsidized

grains to the genuine BPL households, it also raises the cost of delivery.

In this section we examined and studied the Public Distribution System, it started with an objective

of feeding the hungry and making them food secure but got diverted mostly and was shared by the

agencies involved in the supply chain. We went through the history and got to know various

agencies involved in this welfare scheme. Lastly we saw the numerous fallouts of the said system

and its need to be revived and strengthened so as to increase efficiency and equitable distribution,

the Food Security Bill is a huge step in this direction.

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Section 5

Cross-Country Experience

The State of Food Insecurity in the World 2012 presents new estimates of the number and

proportion of undernourished people going back to 1990, denied in terms of the distribution of

dietary energy supply. With almost 870 million people chronically undernourished in 2010–12, the

number of hungry people in the world remains unacceptably high. The vast majority live in

developing countries, where about 850 million people, or slightly fewer than 15 per cent of the

population, are estimated to be undernourished. In this section, we look at the global picture of the

food insecurity in the various countries of the world, we examine and study the different poverty

alleviation and food security policies in these developing and food insecure countries.

The pioneering food security system of Belo Horizonte, Brazil

Belo Horizonte is the third-largest city in Brazil, with a population of about 2.5 million. In the early

1990s, about 38percent of its inhabitants lived below the poverty line and close to 20percent of

children under the age of three suffered from malnutrition. The magnitude of this problem

prompted the development of a multifaceted structural response by the government that

successfully transformed the human right to foods that are adequate in both quantity and quality

into reality. The overall system consists of more than 20 highly interconnected programmes that

foster and complement one another. The key elements are:

Central project management by means of a specially created department within the municipality.

i. Supporting urban agriculture with community gardens in poor districts and with training

workshops to promote successful cultivation.

ii. Provision of special sales outlets to commercial greengrocers in the most popular markets if

they offer at least 25 healthy products at a fixed low price.

iii. Provision of market stalls to small-scale farmers from the surrounding area, so that they

have a chance to sell directly to consumers.

iv. A nutrition information programme targeted to poorer areas of the city, including free

cooking lessons. The programme is coordinated by a team consisting of employees from the

departments for health, education, sports, social work and food security.

v. Free school meals that supply fresh products with high nutritional value.

vi. Supply of affordable, healthy and nourishing meals for low-income citizens in so-called

Public Restaurants, subsidized by the municipality. Belo Horizonte has five of these,

providing 4 million meals a year. As people with average incomes can also eat there, the

poor don’t have the feeling of being stigmatized.

The programme reduced child mortality by 60 per cent and substantially influenced Brazil’s national

Zero Hunger Policy, using only around 2 per cent of the city’s annual budget.

Oportunidades (English: Opportunities) is a government social assistance program

in Mexico founded in 2002, based on a previous program called Progresa, created in 1997. It is

designed to target poverty by providing cash payments to families in exchange for regular

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school attendance, health clinic visits, and nutritional support. It found that it led to increased

land use, livestock ownership, crop production and agricultural expenditures and a greater

likelihood of operating a microenterprise. Oportunidades is credited with decreasing poverty

and improving health and educational attainment in regions in which it has been deployed. A

study found that agricultural households benefiting from PROGRESA were less likely to comply

with conditionality due to time conflicts with their livelihood activities.

In sub-Saharan Africa, the Malawi SCT(Social Cash Transfer) programme was found to lead to

increased investment in agricultural assets, including crop implements and livestock, increased

satisfaction of household consumption by own production, decreased agricultural wage labour

and child work off farm, and increased labour allocation to on farm activities by both adults and

children.

In Ethiopia, households with access to both the Productive Safety Net Programme (PSNP) as

well as complementary packages of agricultural support showed no indication of disincentive

effects on labour supply and were more likely to be food-secure, to borrow for productive

purposes, use improved agricultural technologies and operate their own non-farm business

activities. A follow up study found that the PSNP has led to a significant improvement in food

security status for those who had participated in the programme for five years versus those

who had received only one year of benefits. Moreover, households that participated in PNSP as

well as the complementary programmes achieved significantly higher grain production and

made greater use of fertilizer.

In Brazil, the Bolsa Familia programme increased the labour participation of women by 16 per

cent between beneficiary and non-beneficiary households. Cash transfers that put money

directly in the hands of women have also increased women’s status within the household

(Brazil’s Bolsa Familia) and promoted their self-esteem and economic empowerment (Mexico’s

Progresa/Oportunidades programme). The Social Cash Transfer Scheme in Malawi also reduced

women and children’s risk-coping activities such as engaging in transactional sex or in

hazardous child labour. Programmes conditional on child school attendance have also been

shown to increase girls’ school attendance in Nicaragua.

Most evidence on the impacts of social protection programmes in poor and middle income countries

comes from conditional cash transfer programmes in Latin America, many of which have been

rigorously evaluated. While many of these programmes achieved short-term outcomes in terms of

increased household food consumption, the impacts on nutrition, as measured by anthropometric

outcomes or reduced prevalence of micronutrient deficiencies, are mixed. Programmes in Mexico

and Nicaragua showed improvements in child height, but in Brazil and Honduras hardly any effects

on pre-school nutritional status were found. Improvements in iron status were observed in Mexico,

but not in the other countries (Honduras and Nicaragua) where this outcome was studied.

Furthermore, the pathways through which these results occurred, and the role of different

programming components, are unclear. An open question in this regard is whether it was the

transfer itself or the conditionality’s that drove the impact. (Refer annex Table-8)

Developing countries need to exploit their potential to increase agricultural production and

productivity to achieve food security in both the short and long run through a more conducive policy

framework and increased investment in agricultural and rural development. For instance, if soil and

temperature conditions are suitable for crop production but rainfall is erratic and volatile in a

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country, investment in irrigation and water-conservation related technologies would be more

effective in improving crop production and productivity. By taking climate and soil conditions into

account, policies to exploit potential for increasing agriculture supply can be developed accordingly.

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Section 6

Challenges and Issues

In the section below we examine the major drawbacks and challenges of the food security bill under

the subheadings of Operation and Financial Challenges. We shall first look into the most recent

poverty estimates, the headcount ratio for different states. We then study the major operational

and financial issues & challenges faced under the NFSB. Further we study the various poverty

alleviation and rural development programmes followed by the Government of India in the past and

their success and failures in fulfilling their respective objectives.

Table 2: Population below poverty line [2009-10]

Number of people (in lakhs)

Percentage of population (%)

Rural 2782.1 33.8

Urban 764.7 20.9 All India(Total) 3546.8 29.8

Source: Planning Commission, Government of India

o The all-India Head Count Ratio has declined by 7.3 percentage points from 37.2% in 2004-05

to 29.8% in 2009-10, with rural poverty declining by 8.0 percentage points from 41.8% to

33.8% and urban poverty declining by 4.8 percentage points from 25.7% to 20.9%.

o According to National Family Health Survey (NFHS-3) conducted in 2005-06, 20 per cent of

Indian children less than five years old were wasted (acutely malnourished) and 48 per cent

were stunted (chronically malnourished).

o India is the frontrunner with 246 million food-‘in’secure people and accounts for close to

30% of the total food insecure people in developing countries.

o Despite buoyant economic growth in recent years, around one-third of India’s population,

i.e. 400 million people, still lives below the poverty line (in 2010) as per World Bank’s

definition of USD 1.25/day.

o Using the multi-dimensional poverty index (MPI) of UNDP, India ranks at 75 among 109

countries in 2011, much worse than the other BRIC* countries-indicating extent of

deprivation in terms of living standards, health, and education.

*BRICS: Brazil, Russia, India, China & South Africa

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Major operational and financial challenges which need to be resolved

to realize the goals of the proposed National Food Security Bill:

The operation challenges and issues of procurement and distribution by the

Centre and the States in the NFSB:

o The current issue price for BPL and APL household is higher than the food grain price

proposed in the NFSB for priority and general households respectively and in all likelihood at

these prices the off take is likely to be 100 per cent. Thus the food grain requirement for the

two phases works out to 58.76 million tonnes and 63.98 million tonnes. Also adding 8 million

tonnes required for the other welfare programmes of the government like Mid-Day Meal

Scheme, ICDS (Integrated Child Developmental Services), Social Welfare Hostels and

maintaining a buffer stock which is an important tool for food security especially in times of

droughts, natural and other calamities. The procurement peaked at 59.07 million tonnes for

the production year 2008-09 reaching almost 33 per cent of the production in that year. In

the subsequent year, the absolute procurement fell sharply, decreasing to 54 million tonnes.

In the period 2000-01 to 2009-10 the average procurement as a percentage of production

was at 26.6 per cent. Accordingly, we have assumed that it will be possible to procure 30 per

cent of the total production which translates to 56.35 million tonnes in 2011-12 and 57.61

million tonnes in 2013-14.The expected procurement of 53.22 million tonnes in 2010-11

works out to about 50 per cent of the marketable surplus.

o The Public Distribution System (PDS) with its network of about half a million Fair Price Shops

(FPS) is the most obvious choice for the distribution of the entitled food grain under the

proposed NFSB. However in its current form it is plagued by a number of deficiencies like

poor identification and targeting of beneficiaries, massive leakage of grain especially from

APL allocations, low margins of FPS creating perverse incentives for diversion of PDS food

grains and general lack of accountability.

NFSB gives the existing PDS and procurement system a new lease of life in an “as is where is”

condition despite its established ineffectiveness and leakages. For fulfilling its goal of food

security, it heavily relies on the current institutions which already have had a chequered history

of failure. The estimated leakages from the TPDS go as high as 40 per cent (refer Annex). There

are several studies which have pointed out that a significant amount of the food grain under the

TPDS misses the targeted poor. Since the basic objective of the NFSB, is to eliminate hunger and

malnutrition, the distribution system must be able to efficiently and effectively deliver to the

correctly identified beneficiary. This implies major systemic reforms in the public distribution

system. The existing system of TPDS needs to be reformed for efficient delivery of food grains

but the norms and types of reforms are to be decided by the Central Government.

Currently, FCI is facing an acute storage crisis with covered capacity estimated at around 45.0

million tons and Covered & Plinth (CAP) storage of 17.2 million tonnes against the stocks

crossing 80 million tonnes. Periodic overstocking by the public sector has huge implications on

costs, apart from distorting the food grain market. The additional procurement as a result of the

proposed NFSB will put enormous pressure on the existing infrastructure which is inadequate to

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handle the current procurement norms. Even though modern silo storage and bulk handling is

required for preservation of quality and efficiencies there are several impediments to the same

such as non-availability of rail heads at all FCI storages, limited locations with FCI for the same,

non-availability of bulk wagons with Indian railways.

o The Bill provides for a Force Majeure clause (Clause 52) that “the Central Government, or

the State Governments, shall not be liable for any claim by persons belonging to the priority

households or general households or other groups entitled under this Act for

loss/damage/compensation, arising out of failure of supply of food grains or meals when

such failure of supply is due to conditions such as, war, flood, drought, fire, cyclone,

earthquake or any act of God.”

This is an exemption for both Central and State Government for failure to supply food grains

when such failure is either "directly or indirectly" on account of force majeure. It provides

immunity to both the Centre and the States against any claim by beneficiaries entitled under this

Act for loss, damage, or compensation arising out of failure of supply of food grains or meals in

force majeure conditions which have been defined widely, including droughts and floods, which

are likely to increase in intensity and frequency due to climate change effects. It is worthwhile to

note that precisely in these conditions a failure of market forces, volatility in prices and resultant

distress is expected and at times like this the poor and vulnerable would depend on government

to ensure their food security. While there may be exceptional circumstances warranting such an

exception, such exceptions should be restricted to situations where all efforts fail…like in a

situation where transportation neither by road nor by helicopter is possible. Drought does not

qualify under this criterion and needs to be removed from the list. This clause needs redrafting.

o Imposition of highly centralized model which discourages customized state level initiatives

and which will also be unsustainable in the future.

The draft bill in the current shape gives a legal sanction to a highly centralized procurement and

distribution model. All guidelines, rules etc. will be prescribed by the Centre including criteria for

priority households, exclusion criteria, reforms in TPDS, price at which the State Government is

required to sell the food grains to the entitled persons – to name a few. It leaves no room for

experimentation/customization for the States suited to their specific choices, institutional

strengths and weakness. Once the Act comes into effect the existing schemes pursued by the

states will suffer considerably. For example, Tamil Nadu (TN) follows a "Universal PDS" system

with no BPL/APL classifications – which is different from TPDS. But under NFSB, TN would have

to put an end to this system. Currently, State Governments can adopt their own PDS structures

as the PDS System is governed by PDS (Control) Order, 2001 under the Essential Commodities

Act (ECA), 1955. ECA empowers the State Governments to issue orders there under for their

relevant state. The NFSB however creates a new statutory framework governing the PDS. PDS

systems in States will have to first comply with the NFSB and in the event of a conflict between

NFSB and ECA, the provisions, rules, regulations and orders issued under the NFSB will override

the provisions, rules, orders issued under the ECA.

NFSB mandates Central Government to procure for the Central Pool. State Governments are

responsible for further distribution. Decentralized Procurement System (DCP) was introduced in

1997-98 in view of the practical difficulties faced by the Central Government/FCI to procure on

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its own. Under DCP, States were invited to assist in the procurement and distribution of food

grains under the TPDS. This experiment has been quite successful in Madhya Pradesh &

Chhattisgarh as far as augmenting the level of procurement is concerned. NFSB seems to be

suggesting a retrogressive step of going back to centralized procurement model which was

found unsustainable in the first place.

o Attainment of self-sufficiency in food grains at the macro level has been one of the country’s

major achievements in the post-independence period. The production of food grains

increased from 51 million tonnes in 1950-51 to 108.4 million tonnes in 1970-71 and has

touched 257 million tonnes in 2011-12.

Agriculture has been growing at a trend rate of growth of 2.9% during 1991-92 to 2011-12-much

lower than the targeted 4% in the Five Year Plans. The increasing divergence between the growth

trends of the total economy and that of agriculture and allied sectors during the Plan periods

suggests underperformance by agriculture. The average growth rate of food grain output has

declined from 2.2percent in 1990s to 1.8percent in 2000s. Similarly, growth rate of yield of food

grains has declined from 2.4 per cent in 1990s to only 1.3 per cent in 2000s. Although, in principle

the system is applicable to the country as a whole, effectively the system operates primarily in a few

surplus states such as Punjab, Haryana, Western UP and Andhra Pradesh.

Agricultural marketing infrastructure is inadequate across states in India barring a few. Unlike in

Punjab and Haryana, which have a well-laid out network of mandis and procurement centres, other

major producing states of UP, Bihar, West Bengal, Assam and Orissa present a somewhat dismal

picture. Lack of adequately equipped mandis/procurement centres and storage poses a major

challenge for procurement from other states. Even in states like Chhattisgarh and Madhya Pradesh,

which have recently ramped up procurement of paddy and wheat, respectively, infrastructure for

proper procurement and storage is woefully inadequate. This leads to large wastages of grain.

The financial challenges and issues of procurement and distribution by the

Centre and the States in the NFSB:

o Negative impact of large government food grain procurement on the open market prices

The expected procurement of 53.22 million tonnes in 2010-11 works out to about 50 per cent of the

marketable surplus. A larger procurement has the danger of distorting the food prices in the open

markets. This is an important consideration, since the proposed entitlement of 7kgs per capita per

month for the priority category, does not cover their total consumption requirement, necessitating

the purchase of the balance food grain from the open market.

Higher government procurement will lead to a lower availability of food grain for the open market,

pushing up prices. According to the NSSO consumption expenditure survey 2004-05 the average

monthly per capita rural consumption of wheat and rice for the lowest MPCE (monthly per capita

expenditure) classes constituting 49.9% of the rural population was 10.11 kg while the urban

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consumption for the lowest MPCE classes constituting 30.2% of the urban population was 9.35 kg.

This implies that even the priority households which constitute the most vulnerable section of the

population will have to procure 25 to 30 per cent of their consumption requirement from the open

market.

o Subsidy implications for both the phases and sustainability of these levels in the future.

The total subsidy outgo is expected to be higher than the projections by NAC on account of a

number of factors.

Firstly, according to the NAC projections the total subsidy will work out to Rs 71,837 crores in the

first phase and Rs 79,931 crores in the final phase. However this figure needs to be revised upwards

if we change the population figures to October 2011 and 2013 projections for the two phases and

assume 100 per cent off take. The subsidy then increases to Rs 85,584 crores and Rs 92,060 crores

respectively.

Secondly, with the current procurement and storage capacity of a little above 42.5 million tonnes,

providing 68.76 million tonnes of food grain in the first phase and 73.98 million tonnes in the final

phase implies significant scaling up of the procurement warehousing and supply chain operations.

This involves large financial outgo which has not been quantified as yet.

Thirdly, since the promised entitlements are legally enforceable we will need to either scale up the

procurement by large increases in the MSP or imports. Both these options imply a large fiscal burden

which is difficult to quantify.

Fourthly, this does not include the subsidy on supplying grain to the non-entitled households at MSP

based prices which are lower than the economic cost of procurement, storage and carrying this

grain. Moreover there are other components like the cost of carrying the buffer stock and the

increase in the economic cost over time, all of which will inflate the subsidy outgo.

o Food Security Allowance under the NFSB has a few unclear provisions.

The Central government has limited its responsibility to procurement for the central pool and

delivery to the State government for distribution through the TPDS. The State Government is made

responsible for collection of food grains from FCI depots and further ensures that the legal

entitlements are enforced. If the Central Government is unable to provide food grains from its

Central Pool, it has to provide funds to the extent of short supply of food grains from its central pool

to the State Government-that also as determined by it. But if the State Government is unable to

provide the entitled grains, then it has to pay a “Food Security allowance” to the excluded

beneficiaries. But it remains unclear as to how the state governments will distribute that cash to

ultimate beneficiaries without having developed a proper financial structure. This also entails that

the State would have to provide the entire administrative back up for the food security

allowance/decentralized procurement triggered in case of failure by the Central Government and

distribution, which would then cost the State additionally. This would have large financial

implications for the State Governments.

The amount payable would depend entirely on the rules framed in respect of the same. The statute

does not mandate that the allowance has to be suitable to enable the relevant entitled persons to

obtain the food grains from the market. Since the entitlement is essentially to obtain the identified

food grains at the subsidized prices specified in Schedule–I, if FSA is according to these prices (much

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lower than market prices), then this monetary support during distress conditions would be grossly

insufficient to buy food grains from the market. Whether this FSA would be triggered in case of

Force Majeure is also unclear.

o The NFSB has a cereal centric approach

Though cereals are central to the issue of food security, diversifying demand patterns to protein rich items also needs to be appreciated. NFSB deals only with supply of cereals ignoring the demand side of food consumption. It should be worth noting that the latest consumption data of NSSO shows that in each decile expenditure group, the per capita consumption of cereals has been falling. Thus, while NFSB will try to make the production basket cereal-centric, diversifying demand will throw pressures on non-cereal segment, creating an imbalance in demand and supply of food items. This will lead to higher inflationary pressures and imports of non-cereal foods, especially edible oils, pulses, fruits and vegetables, protein foods, etc.(Refer Annex Table-6)

Poverty alleviation programs & their drawbacks

o Jawahar Gram Samridhi Yojna

This programme was later called joharalaldytfyh rozgar yoga then got changed to Jawaharlal Nehru

.It was started on 1 April 1999. The main aim of this programme was development of rural areas.

Infrastructure like roads to connect the village to different area, which made the village more

accessible and also other social, educational (schools) and infrastructure like hospitals. Its secondary

objective was to give out sustained wage employment. This was only given to BPL families and was

to be spent for individual beneficiary schemes for SCs and ST's and 3% for establishment of barrier

free infrastructure for the disabled people. The Gram Panchayats can effectively determine their

infrastructure needs and the responsibility of implementing the programme was thus entrusted to

the Gram Panchayats. The funds are directly released to the Gram Panchayats by the DRDAs/Zilla

Parishads. The JGSY is implemented as a CSS {Central Secretariat Service} with funding in the ratio of

75:25 between the Centre and the States.

During 1999-2000, 5.84 lakh works were completed as against a target of 8.57 lakh works.

An expenditure of Rs.1841.80 crore was incurred during 1999-2000 as against a total

allocation of Rs.2209.24 crore. A Central outlay of Rs.1650.00 crore was earmarked for JGSY

for the year 2000-01.

o National Social Assistance Programme

The NSAP was launched with effect from 15th August, 1995 as a 100 per cent Centrally Sponsored

Scheme with the aim to provide social assistance benefit to poor households in the case of old age,

death of primary breadwinner and maternity. The three components of the NSAP are:

(i) Indira Gandhi National Old Age Pension Scheme

(ii) Indira Gandhi National Widow Pension Scheme

(iii) Indira Gandhi National Disability Pension Scheme

(iv) National Family Benefit Scheme

(v) Annapurna

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Indira Gandhi National Old Age Pension Scheme (IGNOAPS)

As the name suggest this scheme provided pension to old people who were above the age of 65 who

could not fend for themselves and did not have any means of subsistence. The pension that was

given was Rs 200 a month. This pension is given by the central government. The job of

implementation of this scheme in states and union territories is given to panchayats and

municipalities. The state’s contribution may vary depending on the state. The amount of old age

pension is Rs. 200 per month for applicants aged 60–79. For applicants aged above 80 years, the

amount has been revised in Rs. 500 a month according to the (2011-2012) Budget.

Indira Gandhi National Widow Pension Scheme (IGNWPS)

Objective of the Scheme is to give financial assistance @ Rs.400/- per month to all the identified

pensioners who are widows of the age group of 40-64 years, and from BPL families. The coverage is

universal and there shall not be any quota at any level. Central assistance of Rs.200/- per month per

beneficiary is provided under IGNWPS. The States are urged to contribute another Rs.200 from their

own resources so that a pensioner could get at least Rs.400 per month.

Indira Gandhi National Disability Pension Scheme (IGNDPS)

Under IGNDPS, central assistance of Rs. 300 p.m. per beneficiary is provided to persons with severe

or multiple disabilities in the age group of 18-79 years and belonging to a household living below

poverty line (BPL) as per criteria prescribed by Government of India.

National family Benefit Scheme (NFBS)

This scheme was started in August 1995 by GOI. This scheme is sponsored by the state government.

It was transferred to the state sector scheme after 2002-03. It is under the community and rural

department. This scheme provides a sum of 10000Rs to a person of a family who become the head

of the family after the death of its primary breadwinner. A breadwinner is a person who is above 18

who earns the most for the family and the family survives on his/her earnings. It is for families below

the poverty line.

Annapurna

This scheme was started by the government in 1999-2000 to provide food to senior citizens who

cannot take care of themselves and are not under the targeted public distribution system (TPDS),

and who have no one to take care of them in their village. This scheme would provide 10 kg of free

food grains a month for the eligible senior citizens. The allocation for this scheme as off 2000-01 was

Rs100 crore. For the year 2012-13,10kg of food grains (rice or wheat) per month are provided free of

cost to the destitute who are at least 65 years of age, though eligible but remained uncovered under

National Old Age Pension Scheme since April 1, 2000.

The NSAP is implemented by states and union territories with the help of panchayats and

municipalities. During 1999–2000 the total allocation of funds for this scheme was 767.05 crores and

the amount used was Rs 596.99 crores. Under the Union Budget for the financial year of 2011-12, an

allocation of Rs. 6,158 crores was made to implement this scheme. Under the union budget 2012-

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2013 the allocation under the National Social Assistance Programme (NSAP) was raised by 37 per

cent from 6,158 crore in 2011-12 to 8,447 crore in 2012-13.

o Integrated Rural Development programme

RDP is a major self-employment programme for poverty alleviation. The objective of IRDP is to

provide suitable income-generating assets through a mix of subsidy and credit to below-poverty-line

families with a view to bring them above the poverty line. A family with an annual income of Rs.

20,000/- and below per annum is considered to be below the poverty line based on the 1998 below

Poverty Line Census.

The aim is to raise recipients above the poverty line by providing substantial opportunities for self-

employment. During the 7th five-year plan, the total expenditure under the program was Rs 33.2

million, and Rs 53.7 million of term credit was mobilized. Some 13 million new families participated,

bringing total coverage under the program to more than 18 million families. These development

programs have played an important role in increased agricultural production by educating farmers

and providing them with financial and other inputs to increase yields.

This programme was started in 1978 and it later merged with Swarna Jayanti Gram Swarozgar

Yojana in 1999.

Limitations:

In the integrated rural development, the village has been treated as a homogeneous concept

and as a unit of development which is not there. Thus there is a serious problem of

uneconomic and non-viable villages or rural settlements that can form a more economically

efficient base for integrated rural development.

No attempt was made to consider the policy of distribution of land or for more equitable

distribution pattern and revitalizing the possessing of other productive assets in the rural

areas by limiting size of individuals units.

Inability of science and technology to solve, by itself, the problem of rural poverty.

o Rural Housing-Indira Awaas Yojana(IAY)

This scheme aimed at creating housing for everyone. It aimed at creating 20 lakh housing units out

of which 13 lakhs were in rural area. This scheme also would give out loans to people at subsidized

rates to make houses. It was started in 1999-2000. In 1999-2000 Rs1438.39 crore was used for this

scheme and about 7.98 lakh units were built. In 2000-01 an central outlay of Rs1710.00 crores was

provided for this scheme. For the year 2012-13, government allocated Rs. 11,075 crore under the

Indira Awaas Yojana for the benefit of BPL families.

Since 1985, 25.2 million houses have been constructed under the scheme. Under the Bharat

Nirman Phase 1 project, 6 million houses were targeted and 7.1 million actually constructed from

2005–06 to 2008–09. Additional, 12 million houses are planned to be constructed or renovated under

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the Bharat Nirman Phase 2. According to the official 2001 figures, the total rural housing shortage is

14.825 million houses.

Table 3: Financial Performance of IAY during the Eleventh Plan

Year

TAF Utilization

(Rs crore)

Per cent Utilization

(Rs crore)

2007-08 6,527.17 5,464.54 83.72

2008-09 14,460.33 8,348.34 57.73

2009-10 9,094.44 4,927.23 54.18

Source: Mid-Term Appraisal of the Eleventh Five Year Plan, Planning Commision, GOI

The programme is beset by several serious problems and challenges:

The main problem centres round the proper implementation of the programme and its

failure in reaching the poorest of the poor because of corruption and the design of the

programme.

The issue of land is a major hurdle. The majority of poor people do not possess their own

land and live on land that belongs to others, for example, land of landlords or Government

land etc. The IAY does not have any provision for providing houses to poor people who do

not possess their own land. So in the absence of land distribution measures poor people

with no land are left out of the programme and thus remain deprived of the benefits offered

by the IAY.

Corruption has also taken a toll on the proper implementation of the programme. The

beneficiaries of the IAY are supposed to be selected by the Gram Panchayats but it has been

found that a majority of the beneficiaries have not been selected by them. This has resulted

in many amongst the poor being left out from the programme whereas people who are not

in the BPL section are availing the benefits of the IAY.

o Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)

Started in 2005, this scheme guarantees 100 days of paid work to people in the rural areas. The

scheme has proved to be a major boost in Indian rural population's income.

This act was introduced with an aim of improving the purchasing power of the rural people, primarily

semi or un-skilled work to people living in rural India, whether or not they are below the poverty

line. Around one-third of the stipulated work force is women.

Workers hired under the MGNREGA program say they are frequently not paid in full

or forced to pay bribes to get jobs, and aren't learning any new skills that could

improve their long-term prospects and break the cycle of poverty. There are also

claims of fictitious laborers and job cards by corrupt officials causing so

calledleakage in program spending.

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Another important criticism is the poor quality of public works schemes' completed

product.

The MGNREGA program has been found to distort labor markets and has helped —

along with fuel and fertilizer subsidies — to balloon India's federal fiscal deficit.

Another criticism is the unintended effect of MGNREGA in terms of skill growth.

The lack of skilled technicians at almost every site under MGNREGA program, along

with rules banning the use of machinery or contractors leads to labourers learning

no new skill, and that the ponds, roads, drains, dams and other assets built with

manual labour are often of wretched quality.

o Swarnjayanti Gram Swarozgar Yojana (SGSY)

The single self-employment programme of Swarnjayanti Gram Swarozgar Yojana (SGSY), launched

with effect from 1.4.1999, has been conceived keeping in view the strengths and weaknesses of the

earlier schemes of Integrated Rural Development Programme (IRDP), Training for Rural Youth under

Self Employment (TRYSEM), Development of Women & Children in Rural Areas (DWCRA) and Supply

of Improved Toolkits to Rural Artisans (SITRA) along with Million Wells Scheme (MWS). The objective

of restructuring was to make the programme more effective in providing sustainable incomes

through micro enterprises. The SGSY lays emphasis on the following:

Focussed approach to poverty alleviation.

Capitalising advantages of group lending.

Overcoming the problems associated with multiplicity of programmes.

SGSY is conceived as a holistic programme of micro enterprises covering all aspects of self

employment viz. organisation of the rural poor into self help groups (SHGs) and their capacity

building, planning of activity clusters, infrastructure build up, technology, credit and marketing.

Micro enterprises in the rural areas are sought to be established by building on the potential of the

rural poor. The objective of the programme is to bring the existing poor families above the poverty

line.

Since its inception in 1999, around 2.252 million SHGs have been established comprising 3.554

million people. Apart from SHGs, the scheme has also benefitted 3.143 million self-employed

individuals. The total investment provided for the cause has been calculated at Rs. 14,403.73 crores

including Rs. 1,200 crores provided by the Government of India for the calendar year 2006-07. Of the

beneficiaries, 45.54 percent have been SC/STs and 47.85 percent, women.

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Table 4: Financial and Physical Performance of SGSY, 1999–2009

Activity Total

SHGs formed(lakh) 35

Grade-I SHGs(lakh) 23

Grade-II SHGs (lakh) 11

SHGs economically assisted(lakh) 8

Total swarozgaris assisted (lakh) 127

Total SHGs swarozgaris assisted(lakh) 82

Total individual swarozgaris assisted(lakh) 45

Total credit mobilized(Rs crore) 19,600

Total subsidy disbursed(Rs crore) 9,500

Total investment(Rs crore) 29,100

Per capita investment in 1999(Rs crore) 17,000

Per capita investment in 2009(Rs crore) 31,500

Source: Mid-Term Appraisal of the Eleventh Five Year Plan, Planning Commision, GOI

In the above section we thoroughly discussed the criticisms of the proposed Food Security Bill. It has

a number of drawbacks and needs amendments if it has to be a success in a country with around

400 million people below poverty line. On the other hand, production is being shifted to more

production of wheat and rice as farmers know the price at which they will sell, thus affecting the

production of oilseed and pulses. In 2011-12, India imported US$9.7 billion (Rs46242 crore) worth of

valuable oils and US$1.8 billion (Rs8767 crore) of pulses. While foodgrains are central to food

security, diversifying demand patterns need to be appreciated for holistic approach to food and

nutritional security. It has to be appreciated that the issue of food security is not so much about

availability of food grains but more the composition of the overall food basket as observed in

changing consumption patterns. In light of the issues raised above, the long-term feasibility of the

envisaged strategy under NFSB needs to be carefully debated in national interest.

We also observed that the existing poverty alleviation and women and children empowerment

programmes are beset with a number of drawbacks both in terms of implementation and efficiency,

the schemes though theoretically successful, have failed to show any considerable success on the

ground level. Whatever little help they have been to the poor of the country has turned out to be

negligible on a larger picture.

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Section 7

Summary and Conclusion

Poverty alleviation and empowerment of poorest of poor remains one of the most important and

highlighted agenda of the past governments of India. Ever since independence India has been

suffering from chronic poverty, malnourishment, low mortality rate for the children below age of 5,

inequality of women in society and also low share of women in labour force as well upper tier of the

management in number of institutions across the country. The present government in power seeks

to hit all these challenges and issues by giving a food security bill. If made into a law, it would

provide legal entitlement of food grains to nearly 67% of the population. In this working paper we

analysed the bill thoroughly, pointing out features, challenges and options of the bill.

Not only in India, but many countries of the world are facing similar challenges with their population.

The paper at hand discusses the various, similar schemes and programmes launched by different

countries in the past and how and what made them successful. The scheme followed by other

countries not only takes into account food security but also encompass social cash transfer schemes,

social agricultural cooperation schemes and social assistance programme schemes. Apart from giving

them their basic food requirements, these schemes empower the population to work and earn their

bread. They give them incentives to develop themselves and grow as a community by giving them

assistance in every walk of life. The National Food Security Bill on the other hand just gives legal

entitlement of food grains along with reforms with a promise to secure interests of small and

marginal farmers, it takes less interest in social empowerment and the incentive and motivation to

grow out of poverty with their own skilled effort.

The NFSB, though having a number of drawbacks, has a number of positive aspects to it. The bill will

provide basic food grains to the poorest of the poor, and it merges two schemes which already exist-

Targeted Public Distribution System and Antyodaya Anna Yojana. It has an important clause which

will go a long way in empowering women as it lays the control and responsibility for the Ration Cards

in their hands. For poor and destitute children mid-day meals are also to be legally provided.

The NFSB can be a huge success if it makes a number of amendments. The bill in its present form is

beset by a number of drawbacks like the huge fiscal pressure of the subsidy on the purchase of food

grains and the pressure on the existing leaky PDS system in our country. Recently, a number of

reports have come to light, exposing the poor quality of mid-day meals provided to the children,

many who have lost their lives. How will the government bank upon such an inefficient and

corrupted system of PDS is a big question, which the UPA government in power will have to answer

in the parliament.

Not only the fiscal and distribution challenges, the bill has a number of clauses which need to be

looked into and redrafted. The clause of “non-liability of the government for provision of food grains

under the conditions of natural disaster or any act of god” is atrocious. It is in these situations that

the poor are in most need for support and assistance from the government.

In this paper we also saw some schemes and programmes which have or are being carried out by the

government to eradicate poverty and illiteracy from the country and to enable each and every to

work and earn a living. But these have not shown the results which they had promised. Apart from

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multifaceted corruption, inefficiency in carrying out the schemes in every department of the

government led to wastage of government’s funds, which at the end of the day is the tax payer’s

precious money.

The Food Security Bill is long step by government of India to reach one of the Millennium goals of

total food security in the country by the year of 2015. The ordinance for the food security bill has

been passed by the government in the 1st week of July, which will be further discussed and debated

in the present monsoon session of the parliament.

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Annex

Table 5: Food grain Requirement for implementing the proposed NFSB

Population - Scenario 1 – October 2010; Scenario 2 &3 – Phase 1-October 2011; Phase 2- October 2013

Source: Report of the Expert Committee on NFSB, NAC

Table 6: Consumption of Cereals in 2004-05 and 2009-10 in All India under PDS

NAC Projections* Scenario 1

Scenario 2* Off take – priority- 95% ; general-85%

Scenario 3* Offtake-100%

Phase 1 Final Phase Phase 1 Final Phase Phase 1 Final Phase

Priority Households

34.40 36.42 38.91 39.83 40.96 41.93

General Households

14.96 19.17 15.13 18.75 17.80 22.05

Sub Total 49.3 55.6 54.04 58.58 58.76 63.98

Other Welfare Schemes

8.00 8.00 8.00 8.00 8.00 8.00

Buffer Stock - 2.00 2.00 2.00 2.00

Total Food grain

57.36 63.59 64.04 68.58 68.76 73.98

Cereal Year Consumption Per Capita in 30 days

Annual Consumption Per Capita

Population Annual Consumption(Total)

Kg Kg Million Million Kg Million Tonnes

Rural Urban Rural Urban Total Rural (69%)

Urban (31%)

Rural Urban Rural+Urban

Rice 2004-05

0.84 0.53 10.22 6.45 1096 756.05 339.67 7726.81 2190.33 9.9

2009-10

1.41 0.81 17.16 9.86 1177 811.95 364.79 13929.04 3595.01 17.5

Wheat 2004-05

0.31 0.17 3.77 2.07 1096 756.05 339.67 2851.56 702.56 3.6

2009-10

0.62 0.37 7.54 4.50 1177 811.95 364.79 6124.82 1642.16 7.8

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Estimates of Leakage from PDS

Table 7: Off take compared to Consumption of Rice & Wheat- All India

Source: NSSO, DFPD

Table 8: Undernourishment in the developing regions 1990-92 to 2010-12

*Projections

Source: FAO

Cereal Year Off take Allocation Consumption as per NSS

Leakage % Leakage

Million Tons Rice 2004-05 16.46 34.45 9.9 6.5 39.8

2009-10 23.41 24.82 17.5 5.9 25.1

Wheat 2004-05 12.89 37.25 3.6 9.3 72.4

2009-10 18.99 22.78 7.8 11.2 59.1

Rice + Wheat

2004-05 29.35 71.70 13.5 15.9 54.1

2009-10 42.40 47.60 25.3 17.1 40.4

Number (millions) and prevalence (%) of undernourishment

1990-92 1999-2001 2004-06 2007-09 2010-12*

World 1000 919 898 867 868

18.6% 15.0% 13.8% 12.9% 12.5%

Developed Regions 20 18 13 15 16

1.9% 1.6% 1.2% 1.3% 1.4%

Developing Regions 980 901 885 852 852

23.2% 18.3% 16.8% 15.5% 14.9%

Africa 175 205 210 220 239

27.3% 25.3% 23.1% 22.6% 22.9%

Northern Africa 5 5 5 4 4

3.8% 3.3% 3.1% 2.7% 2.7%

Sub-Saharan Africa 170 200 205 216 234

32.8% 30.0% 27.2% 26.5% 26.8%

Asia 739 634 620 581 563

23.7% 17.7% 16.3% 14.8% 13.9%

Western Asia 8 13 16 18 21

6.6% 8.0% 8.8% 9.4% 10.1%

Southern Asia 327 309 323 311 304

26.8% 21.2% 20.4% 18.8% 17.6%

Caucasus and Central Asia

9 11 7 7 6

12.8% 15.8% 9.9% 9.2% 7.4%

Eastern Asia 261 197 186 169 167

20.8% 14.4% 13.2% 11.8% 11.5%

South-Eastern Asia 134 104 88 76 65

29.6% 20.0% 15.8% 13.2% 10.9%

Latin America and the Caribbean

65 60 54 50 49

14.6% 11.6% 9.7% 8.7% 8.3%

Latin America 57 53 46 43 42

13.6% 11.0% 9.0% 8.1% 7.7%

Caribbean 9 7 7 7 7

28.5% 21.4% 20.9% 18.6% 17.8%

Oceania 1 1 1 1 1

13.6% 15.5% 13.7% 11.9% 12.1%

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Introducing a core set of additional food security indicators

Following the recommendation that emerged from the CFS (Committee on World Food Security)

Round Table on hunger measurement, an initial set of suitable indicators aiming to capture various

aspects of food insecurity has been developed; the values for these indicators are available on the

State of Food Insecurity in the World website (www.fao.org/publications/sofi/en/).

The choice of indicators has been largely informed by data availability with sufficient coverage to

enable meaningful comparisons across regions and over the years. While most of these indicators

are already being produced and published by FAO and other international organizations, other

indicators have been introduced for the first time, to fill some of the recognized gaps in food security

information systems, most notably with regard to capturing the socio-economic dimensions of food

insecurity. To facilitate interpretation of the proposed indicators, they are classified along two

dimensions. First, a distinction is made between indicators that describe determinants of food

insecurity, those that describe outcomes, and those that convey information on

vulnerability/stability. The first set includes indicators that describe structural conditions that are

likely to worsen food insecurity in the absence of adequate policy interventions, including

emergency assistance; the second set aims to capture the end results of food insecurity, irrespective

of policy interventions or coping strategies put in place. The third set of indicators aims to capture

the conditions that determine the vulnerability to possible future food insecurity. Within the first

group, indicators are then classified based on the dimension of food insecurity on which they provide

information, namely availability, physical access, economic access (or affordability) and utilization.

Similarly, outcome indicators are classified in different groups, depending on whether they refer to

outcomes in terms of inadequate food access, or to anthropometric deficits due to inadequate food.

These new indicators are briefly described below.

• Prevalence of food inadequacy. This is conceptually analogous to the prevalence of

undernourishment, but calculated setting the caloric threshold at a higher level corresponding to the

energy need for moderate (physical activity level [PAL] = 1.75), normal (PAL = 1.85) and intense (PAL

= 2.25) physical activity. It measures the percentage of the population at risk of not covering the

food requirements associated with particular levels of physical activity. While the existing prevalence

of undernourishment indicator is a conservative estimator of chronic food deprivation (“hunger”),

such new estimators are less conservative measures of food inadequacy.

• Relative dietary supply index. This is the ratio of the dietary energy supply in the country,

expressed on a per capita basis, net of food losses, normalized by the country’s average dietary

energy requirement (ADER), a measure of the average caloric needs of the population depending on

its age/sex structure and average height distribution. It provides indications on food scarcity relative

to needs in each country.

• Food price level index. This is an index of the food price level in each country that is comparable

across countries and over time. It is based on purchasing power parities (PPP) calculated for the

International Comparison Program by World Bank researchers. The PPP relative to the food

aggregate, available for 2005, is projected over time by taking into account the food and general

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inflation rates for each country, as measured by the consumer price index (CPI) – both the food CPI

and the general CPI – published by the International Labour Organization and FAOSTAT.

• Share of food expenditure by the poor. This indicator measures the average share of total

expenditure spent on food by households belonging to the lowest income quintile (the first 20 per

cent). It is compiled based on data from household expenditure surveys, and aims to capture the

economic consequences of rising food prices and poverty. A rising share of food expenditure reflects

the hardship that poor families face when trying to maintain food consumption when either food

prices rise or incomes fall, by sacrificing other household spending, whether for consumption or

investment.

• Domestic food price volatility. This is an index of observed variability in the annual food price level

index, aimed at capturing the consequences of all factors that determine local imbalances in the

food market. Together with the other two indicators of variability, in domestic food production and

food supply, it provides an indication of the past ability of a country to maintain food price stability.

Source: The State of Food Insecurity In The World: Food And Agriculture Organisation

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References:

http://agriinfo.in – My Agriculture Information Bank

http://rural.nic.in/sites/downloads Our Schemes

Annual Report 2010-11, Survey of India, Department Of Science and Technology

http://www.surveyofindia.gov.in/files/ANNUAL%20REPORT%202010%20-

11%20ENGLISH.pdf

National Food Security Bill: Challenges and Options, Discussion Paper-2

Department of Agriculture & Cooperation, Ministry of Agriculture, Government of India.

http://online.wsj.com/public/resources/documents/CACPReport.pdf

The National Food Security Bill, 2013.

http://www.thehindu.com/multimedia/archive/01404/National_Food_Secu_1404268a.pdf

Report Of The Expert Committee On: National Food Security Bill

http://eac.gov.in/reports/rep_NFSB.pdf

The State of Food Insecurity In The World

http://www.fao.org/docrep/016/i3027e/i3027e.pdf

International Food Security Assessment 2011-21

http://www.ers.usda.gov/media/123436/gfa22.pdf

Food Prices, Wages, and Welfare in Rural India:Policy Research Working Paper-6412

http://elibrary.worldbank.org/docserver/download/6412.pdf?expires=1375012112&id=id&a

ccname=guest&checksum=C0675E69D9BF974C5CB472CA37FCCFBC

Neo-Liberal Policy and Food Security in India: Impact on the Public Distribution System

http://www.networkideas.org/ideasact/jan09/PDF/Madhura.pdf