deliverance from hunger
TRANSCRIPT
Deliverance from Hunger
Deliverance from Hunger
The Public DistributionSystem in India
K.R. VENUGOPAL
Under the auspicies of theCentre far Policy Research
Sage PublicationsNew Delhi Newburv Park London
T-
fo the poor wherever
Copyrtgh @ Centre for Policy Reiearch, 1992
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Contents
Foreword by V.A. Pai Panandiker
Preface
Chapter I Introduction
Chapter 2 Rural Poverty and Plan Strategies
Chapter 3 Poverty and the Indian Public DistributionSystem
Chapter 4 A Public Distribution-cum-DeliverySystem for India
Chapter 5 Andhra Pradesh Rice Scheme
Chapter 6 Conclusion
7
I
11
14
80
121
168
214
T
Foreword
The problem of poverty alleviation, which has remained intractablefor nearly a hundred years in India, is one that rightly bothers allthinking Indians. Many thinkers have, however, pointed out thatits resolution is not impossible.
Shri K.R. Venugopal, who has distinguished himself as theFood Secretary of Andhra Pradesh, has devoted a great deal ofthought to alleviating poverty by using India's public distributionsystem and its existing food stocks.
This study is the sum of his work over two years, helped by aleave of absence from official duties. It contains a number ofpolicy suggestions which in the present context of structural reformsand their impact on the poor will undoubtedly prove useful topolicy planners and makcrs both in and outside the government.
Centre for Policy RcsearchNew DelhiApfl 1992
V.A. Px PaxlxptrenDirector
Preface
Very early in my career-when I wm Sub.C-ollector, Rajahmundry,in the heartland of high agricultural productiorr-I came face-to-face with the highly untenable paradox of the common man livingin that prosperous city often going without rice. Women queuedup before rice shops with children clinging to them only to beturned away on the ground of non-availability, with despair writlarge on their faces. The organisation of a public distributionsystem guaranteeing a certain entitlement of rice'per family perweek dramatically changed this situation. This was in late 1964 butthe moral of the experience has remained with me till today andhas kept validating itself, which is that for the common man, ev€nin a land of milk and honey, there is no assurance of deliverancefrom hunger unless those chhrged with the task of governing himtake conscious and deliberate steps to channel that abundance inhis direction so that he can absorb the little that he needs.
This oft-repeating experience persuaded me to withdraw fromday-to-day work in the govemment to study how food supplieswere being managed in the country. I obtained two years of studyleave from the Government of India in May 1985 and turned to myfriend Mr T.L. Sankar, Director, Institute of Public Enterprises,Hyderabad, for advice. He guided me to Dr V.A. Pai Panandiker,Director, Centre for Policy Research (CPR), New Delhi, beforewhom I placed my proposal for a study of the implications of apublic distribution system for poverty.
Dr Pai Panandiker put me through a tough session of inquisitionby the eminent members of the faculty and of the governingcouncil of the CPR. I survived it to join the CPR as a SeniorFellow and spent two memorable years of total intellectual freedomwriting this book. No praise can be too high for, and no words cando adequate justice to, the intellectual support and guidance Ireceived from Dr Pai Panandiker in my work. A staunch andopen-minded liberal, he encouraged me to put across my point of
t0 Delivcrancc from llunger
view freely and without inhibitiop. I am grateful to him for all thesupport given by him in my enddavour.
To Mr Nirmal Mukarji, formet Cabinet Secretary and presentlyVislting Professor at the CPR, I pwe a great deal for not only didhe read through the manuscript !f this book but has contributed toits manner of presentation in maity ways. The constant encourage-ment and help that I have receive$ from him have been of a qualitythat can be only described as
I am grateful to Mr Kamal Jit Kumar, Librarian CPR, whospared no effort to provide me the material I needed for mvwork. And I regerve a special of gratitude to Mr R. Krishna-
of India. There are fcw whoseswarny, Manager, Foodpractical knowlledge of food can rival his and Igratefully acknowledge the that he has made by goingthrough this book at the draft stage in complete detail. I owesimilar thanks tq Mr P. Kamalafl<ar Rao, Deputy Director, CivilSupplies, Andhra Pradesh, for his assistance in the chapter on theAndhra Pradesh rice scheme. Mr M. Raju, Joint Manager, FoodCorporation of India, gave me ;nany valuable hours of his timehelping me check the data base. I am beholden to Mr A. MohanDas Moses, Managing Director; Food Corporation of India, forpermitting Mr R. Krishnaswamyi and Mr M. Raju to assist me inmy effort.
My labours to write this book took me to several states of Indiaand into the villages where I recelived considerable assistance fromofficials and other people. To alf of them I am deeply grateful"
A special word of thanks is due to Miss Roma Mazumdar,Secfetary in the Department of lVomen and Child Development,Midistrv of Human Resource who not only read thebook at the draft stage but
Aind lastly and most impme to publish it.
, I should record my gratitudeto the Government of India for me study leave to work onthe problem of hunger andwritten. I may add that the
to publish what I haveexpressed in this book are my
owl and do not reflect those of the Government of 'India or of anyof lhe state governments. It is affirmation of the strength ofIndian democracy that public are not onlv entitled to theirviews but may even publish
New DelhiMay 1992
K.R. Venugopal
Introduction
Poverty is normally understood to mean very much more thanmere hunger. Given, however, the abject living conditions of thelarge masses in rural India, it is obvious that at the present stage ofour development measuring poverty in terms other than hungerwill be far-fetched. The Planning Commission has, therefore, rightlyadopted certain caloric norms to determine the incidence of povertyin our country. It is the chronic, endemic hunger, widely prevalentin the country, which is defeating all efforts to fight the otherdimensions of poverty such as education, employment and health.Strategies to generate incremental incomes at the household level,such as those through the Integrated Rural Development Pro-gramme (IRDP) schemes for the poorest of the poor, are falteringessentially because hunger disables the poor households fromparticipating in these schemes successfully. Though it appearstheoretically logical to say that employment would eliminate poverty,self-employment efforts seem to be defeated by the same everpresent hunger at the household level.
This is indeed a vicious circle but it can be broken by building asupport strategy or sub-strategy to eliminate this hunger or At leastalleviate it to a considerable extent, even as the main strategy ofgenerating additional incomes is worked over a period of two orthree years to stabilise the incomes of households at levels whichwould bring them above the poverty line.. One such support strategycould be a well-managed rural, public distribution system, supervisedby the people themselves with the involvement of voluntary organ-isations, which, at least to begin with, would provide the ruralpoor households with a part of their cereal needs at prices they canafford.
Dcliveranco from Hungcr
Such a rural public distribution system could also provide the
infrastructure which is essential to deliver the nutrition component
of tho minimum wages payable t0 participants in the wage em-ployrnent generation programmes for poverty alleviation.
A rural public distribution syst{m (PDS) should therefore be
one which would provide all the fdentified and sharply targetedhungry households a certain minitnum quantity of foodgrains tome€t at least a part of their minirdum caloric needs at affordablepriceg to render their existence me{ningful. It would also provide a
furthcr quantity of foodgrains tq the households identified as
beneficiaries under schemes such as those under the IRDP, tothwart hunger from eroding the very assets provided to themundei those schemes, and the wage employment programmes.
Tho first component could be ivaried to discourage drop-outsfrom primary schools. Depending bn, for example, the number ofchildlen of schoolgoing age in a hoirsehold, foodgrains can be used
to provide the opportunity costs tO parents who would otherwiseuse those children as wage-€arners for the household; or to provide
for pfegnant and nursing motherg to ensure better nutrition formothtr and child. A variant of lthis could be a mid-day mealprogrFmme for schoolgoing childr4n provided at the school' How-ever, fior obvious psycho-social re{sons, that system would be b€stwhicl would provide food security to the family as a whole'
Tht second component is the corgumption finanoe required for the
duradon of an asset-based scheme desigrcd to lift the poor house-
holds above the poverty line till it a4hieves its purpos€. Consumptionfinar*e is, as a concept in this pontext, the equivalent of theentrepreneur's remuneration that is universally accept€d as a regularpart of any viablo project report df a modern, small-scale, indus-trial gntrepreneur, but which is tQtally ignored when it oomes tocreating production capacities thiough the poor, as if a hungry,unskilled, poor man's needs are not the same as an educatedentrepreneur's. Part of this remdneration should be foodgrainsand the balance, cash. In the codtext of wage employment Pro-grammes, this component will forrir the nutrition component of themini*rum wages payable to the p4rticipants in such programmes.
This strategy c|n be supported iir any year-. be it normal or oneof drought-at the levels of prod$ction presently reached by thecounfy through appropriate procu$ment and distribution measurcs.
Thesd would involve adjusunents i[ the presently undifferentiated,
tnMuction
generalised, urban-oriented public distribution system, and anadditional cost which the country can and should afford, given thatthe issue is one of life and lingering death for nearly 40 per cent ofthe country's population.
'Subsidy' is no longer a respectable word these days. Modern-day economists often tend,to regard the conceBts of .subsidyt and'dole' as being synonymous. I, therefore, admit to a oertain amountof nervousness in pleading for strong subsidy support both in thePublic Distribution System and in the Wage Employment pro-grammes in favour of the poor, while calling for its elimination forthe non-poor. Nevertheless, I am convinced that in the presentcontext of acute hunger, poverty and unemployment for millionsof people in the country, such subsidies are both inevitable andessential. After all, if the country could forego its central revenuesin the form of reduction in import duties and customs payments sothat industries and businesses may import and compete better, asimilar kind of logic for inducing higher levels of nutrition, health,literacy as also rural employment generation should not be faulted.This should be viewed not so much as a concession but as anecessary condition to help our people feel part of a nation that weare still building.
13
2
Bural Poverty and Plan Strategies
Povefty manifestb itself at the hou{ehold level when its memberr-able-bodied adults who can and sh{uld work-are without adequate
employment and/or earn low wales when employed, making itimposible for tho household to aoiess the.minimum nee& requiredfor survival. Whlle specialists an{ expert groups have identifiedthe ompenents that should con{ribute to levels of living, it isagrecd by erleryone that food, clothing and shelter are basic for thesustcnance of life. These are thb core needs for mere humanexistcnce.
While without the of a certain minimum level ofiood, energy needs for thi and mental well-being of aperson are not met and the debiliw which results aff€ctsprodtrctivity in the fields, and schools in terms of outputand learning, clothing is both a
minimal level. Housing providesand social need, even at a
has implications for health and in the mmt fundamentalsense. Thus all the three needs are connected with thehealth of people. Preventive andfourth most essential comDonel of a minimum level of livingalong with drinking water since it once sustains life and health.
else such as education, condi-If th€6e five needs are.met. thentions of work, social security, and human freedorn--theadditional components by the UN report on Interna-
of l,evels of Living-An Interimtiond Dfinifron an&Gui&' as indicalors of the level living, will follow.
I Rlfeflcd to in thE paper'Index of th€ of Living', by T.N. Sinha. Sec,
Rcglotlal Dlmcnslotx of Indit's Proceedings of the Seminar held atby thc Statc Planning C-ommiarion,Nliniol, Indi!, 22--X AP'il 1982,
U.P., Lucknow, 198f, p. 7E1.
from the elements and
health care would be the
Rural Poverty and Plan Stntcgies
Full employment to those who are capable ofwork at wages thatare adequate enough to enable households attain access to the firstthree of these five minimum needs by their own effort, and provi-sion of health care and drinking water by the state, is the key toensuring a minimum level of living to the people. Households thatdo not have access to these minimum needs can be said to bebeiow the poverty line. The difference between the lives of peoplewho exist below the poverty line and the denizens of the forest isthat the latter are better off for they can do without clothing andhousing and the natural laws of the jungle take care of theirnutritional requirements.
In India, there is no total count of such households; there is onlyone by the National Sample Survey Organisation (NSSO) of indi-viduals who live below the poverty line. Minimum per day energyrequirements of 2,400 calories per individual in the rural areas and2,100 calories in the urban areas has been taken as the standard.The Planning Commission has put their number at 271 millionpersons as on 1 March 1984, or 37.4 per cent of the country'spopulation, constituting 40.4 per cent of the rural and 28.1 per centof the urban population of the country. These figures, however, donot reflect poverty in its entirety even in the limited sense ofthe fiv€basic minimum needs, not to speak of the longer list of househoftlcharacteristics which experts believe should be legitimately con-sidered in identifying the poor.,
Still, to the extent that rhe effort behind these figures is to try toreflect the concept of poverty in its most primary sense-in termsof hunger-the approach is unexceptionable. Listing out largenurnbers of characteristics, such as whether the household readsnewspapers to determine poverty-as one expert body has done_is really missing the wood for the trees,r at least at the currentstage of India's development. poverty--in particular, rural poverty_cannot be understood without, quite simply, understanding itsprimary form: hunger.
Table 2.1 gives the state-wise and all-India details of the popula-tion living below the poverty line for rural and urban areas and for
: Tlrc 'Interim Report of the Working Group for Evolving an Acceptable Method-ology for the ldentificatioo of the Poor'. with thc Director Gencral of ahe CentralStatistical Organisarion as Chairman, scr up by the Standing Committee of thcConference of Central and $ate Statistical Orgaoisations at its I lth meeting on 5May 1982. suggested as maoy as 28 characteristics related to poverty. tbid.
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R|.tZ'l PovcrtY tnd Pt.n Strrtcgtos l7
both ar€as taken together in 1977-78 and 198H4 as estimated bythe Planning Commission.
I do not intend to discuss and analyse here how satisfactory anddependable the methodology employed by the NSSO or the planningCommission is in estimating the number of poor peopte livingbelow the poverty line. Its several serious shortcomings have beenthoroughly and elaborately discussed by a number of authorities..It is, however, essential that the doubts these figures cast in theminds of those who are day-to-day observers of the poverty scene,especially in the rural areas, and those who are actually chargedwith the responsibility of devising schemes and programmes toalleviate poverty at the household level, are stated and recognised.The 1981&l poverty figures on which have been based the SeventhPlan's anti-poverty stratcgies have troubled many minds. In a spanof six years beginning 79'1718, poverty is shown to have comedown by as many as 11 percentage points for the country as awhole, especially in the context of the country's prime anti-povertyprogrammes. The states where, according to the Planning Com-mission's figures, rural poverty has come down by more than thereduction in the national average of 10.8 per cent, are:
Percentage
AssamGujaratHimachal PradeshJammu & KashmirKarnatakaKeralaMadhya PradeshMaharashtraManipurMcghalayaOrissaTamil NaduTripuraWest Bengal
24.715.5'13.8
15.3
15.7
11.3
18.9t7.517.523.l12.2zo.114.5
Nots In Rajasthan, howevcr, rural poverty has been shown to have gon€ up from33.5 to 36.3 per cent.
a Regional Dimerrsions of India's Economic Development, proceedings of theS€minar held at Nainital, 22-2.4 Aprit 1982, op. cil., pp. 258-84, 331-48, and35y47.
poverty during 1985, within a4d outside the Parliament, was
dominated by the realisation tfrat the country's premier anti-
poverty programme, the IRDP, frad run into serious problems in
its irnplementation. While the fovernrnent claimed that it had
helped 15.6 million poor in the rural areas cross the
pov€rty line, these figures have challenged by Nilakant Rath,
who is of the view that 'less thaq 10 per cent' of this number may
have benefited from it.' the statistics, doubts about thestrengthened by what the thensuccess of the IRDP were
Prirre Minister Raiiv Gandhi saw during his visits in1985 to Madhya Pradesh, Orissa fnd Rajasthan. This was reflected
in the statement made by him in ltre t-ot< Sabha on 12 August 1985'
that the IRDP was being 'recast' to enable the poorest of the poorto cross the poverty line. measures were subsequentlY
announced in this direction ing 'repeat assistance to old
beneficiaries'.It is thus obvious that despite efforts to fight it, acute poverty
still persists in the rural areas pf the country. So acute is it incertain areas that the starving ttibals of drought-stricken Jhabua
and Dhar districts of Madhya flradesh resorted to looting food-grains from the weekly markets and from passing trucks (lndtanExpress,8 Juty 1985). In Orissa, the famine-afflicted people of the
Kalahandi, Koraput, Phulbani lnd Botangir districts were eating'wild leaves. mahua flowers and bakes made out of tamarind seeds
which have become their traditional famine food'. Prime MinisterRajiv Gandhi was shocked whe4, during his visit to Kalahandi on
26 and 27 July 1985, Phanas funji, a woman farm worker inAmlepalli village, told him that she had indeed sold her l4-year-old sister-in-law, Banita, for Rs.40 to f€ed her three starvingchildren. Conditions of acute stafvation have been reported in thissrate, in 1987 and 1988 and again 1991.
1 Nilakanr Rath. 'Garibi Hatao--Can IIRDP Do it?' T.A. Pai Memorial bcture,2 Jqnuary l9tl5. p. 22.
nunl Poy.ttl tnd pttn St'{/togld6 t9
In this apparently contradictory situation of .declining poverty,projected in the Seventh plan document, and its acute prevalenc€all over the country, the problem of statistics deserves mention.The differing estimates of poverty for the year lnT74 made byvarious authorities such as the NSS consumer expenditure survey,the consumption estimates by the Central Statistical Organisation(CSO)6 and Montek Ahluwalia,? point to the same kind of problemabout these.figures, if acrepted, as the poverty figures in theSeventh Plan document. The figures in question-peiain to ruralpoverty (see Table 2.2).
The difference between the NSS and CSO figures is very high,qojng up to nearly 1l per cent in Assam, and to as high as about8.5 per cent in heavily populated statej such as Uttar p-radesh andBihar. The difference between the figures based on the CSO levelof consumption and those of Ahluwalia is somewhat to*er in ttrecase of a few states but high in many others. ilut Ahluwalia,sassessment is sigrificantly higher in the case of Bihar and, comparedto the CSO figures, significantly lower in the case of AndhraPradesh. The overall differerrce between NSS-based figures on theone hand and those based on CSO data and Montek Ahluwalia,son the other, is8 per cent. Atthe 1973-j4level of population, thatmade a difference of 46.1 million people, depending upon howpoverty was looked at. Obviously, th€se affect planning for thepoor and resource allocations.
-- While this is the position relating to the computation of poverty
figures for various states and the country as estimated by differeniexperts and expert bodies, what do the states think of these figuresin their particular contexts, based on their own estimates of povirty?
Kerala Stete Ptanning Board Survey
The _Kerala
State Planning Board carried out a Hourchold Savingsand Investment Survey in 1977-78, the sarne year in which the NSS
^_6 Rcgional Dimensiorrr of India,s Economic Dcvelopnan,op. cii., pp. 225 and
277.7 Montek Ahluwafia, RurA povcrty end Agricuharal performancc in IMia,
World Bark Reprint Scries; Number 62 (reprinied frcm Thc iourna! of Devctop_,nent Srudi.s,1977, p. !OS-
20
FoYGrty hofile tul Models (l9l}7tl)
Deliveiance from Hunger
Fixed expenditure Aceording to
model: CSO Monekcase 6 Ahluwalia 7
Andhra Pradesh
AssamBiharGuiaratKarnatakaKerglaMadhya Pradesh
MaharashtraOrissaHaryanaPuniabRajasthanTamil NadulJttar Pradesh
West BengalIndia
Ftxed cxpendituremod.el: NSS
case 6
61.651.049.2
50.458.255.161.1
55.469.932.926.641.2
63.956.964.855.5
54.040.140.740.9
50.6
47.654.347 .2
64.226.018.1
56.548.5
57 .44't .6
39.839.358.4
35.646.949.3
52.349.858.023.O
23.029.848.34.366.04't .6
also conducted the 32nd round {f its household consumer expendi-
ture survey. The Kerala . which enumerated 7,880 house-
holds, found that 68 per cent df the population in its rural areas
was adoPted. For the same yeir, the Planning Commission used
the povJrty line of Rs. 65 per (apita per month at 1977-78 prices
corr;sponaing to a minimum daily calorie requirement of 2'400
per p;rson in the rural areas. Table 2.3 gives the compararive
figures for rural Kerala as derii'ed from these various surveys'-Just
a year later, after obslrving about 18'000 households in
rural Kerala, a survey by the tJnited Nations Research Institute
for Social Development found {hat, on the basis of average house-
hold incomes, beiween 70 and B0 per cent of the households lived
below the poverty tine, thus confirming the survey results of the
State Planning Board.*
Regionol Dimewions of India's Elonomic Development' op cit ' pp 759-6O'
nural Poverty end nen Strategies
. TABLE 2.3People Delow the Poverty Lina: Kerala (Rurd) (lyn-?t)
21
Seventh Plandocumeht
Planning Commissionbevlsed figuret)
Kerah Smte PlonningB oard. : H ouse ho ld S avings
qnd Investmenl Survey
47 .4
The position in the north was not very different. The 1981Himachal Pradesh Government survey to identify families belowthe poverty line in the rural areas of the state adopted Rs.3,500per year for a family of five as the norm. The. survey, whichcovered all the 69 development blocks of the state, revealed thataccording to the 1981 census, 42.78 per cent of households livedbelow the pov€rty line. This is 14.98 per cent higher than the 27.80per cent shown in the 1977-78 Planning Commission figures basedon NSS data. Here, one will also have to take into account the factthat the annual income per family adopted by Himachal Pradeshsurvey as the poverty norm in 1981 was Rs. 3,500, a figure actuallyapplicable to the year ly77-:78, with implications of the intewerringinflation.'
A third and final illustration is that of India's most populousstate, Uttar Pradesh. The Perspective Planning Division of thatstate estimated poverty figures relating to the year 1977-78 usingthe Planning Commission's norms but with a poverty line per
, capita monthly requirement of Rs.67.75 at Lg76-77 prices (asagainst the all-India level of Rs.61.80), the difference being aresult of the variations in the consumption basket and price levels.This estimate placed rural poverty at 57.A6 per cent in rural areas,against the Planning Commission's figures of only 49.8 per cent.'o
According to the Planning Commission as on I March 1984, thepercentage below the poverty line in the rural areas of Kerala was26.1, while in the urban areas it was 30.1. The composite urban-rural figure was 26.8 per cent. Athiyannool Block, with its head-quarters at Athiyannoor which is at a distance of about 35 km fromTrivandrum, has a population of 1.78 lakhs (1981) with 34,707
' Ibid., pp. 801-02.
'o lbid.. D. 363.
Deliverance from Hungcl
households. Accordins to its Development Officer (BDO),Athiyannoor is not by anyterms of relative
the poorest block in the state. Inaccordins to the BDO and the
President of the Kerala Villase Extension Officers Associa-tion. in 1986. there were 35 other Blocks that were morebackward.
Households below the povert5f line are identified in the block inorder that a selection of the poodest 600 can be made each year forcoverage under the Integrated Rural Development Programme(IRDP). This is done through a Base Line Survey which records ingreat detail each household's adsets, income through all sources,number of members, number of working members and their wageincomes based on the annual of days of employmentavailable to them, and the rate of daily wages. This house-to-housesurvey is carried out by b officials and supplemented byenquiries among neighbours t! determine actual incomes. TheAthiyannoor Block survev in Februarv-March 1985showed the number of with annual incomes of belowRs. 3.500 (the official all-India line figure in use prior to1986) to be 17,346. Providing fof the growth of households at thesame rate as Kerala's , which is an annual compoundgrowth rate of 1.77 per cent, the projected ho[seholds in the blockwould have been around 37,230 in mid-1985. Thus a house-to-house enumeration based on a detailed survey conducted by theblock staff showed the number of households falling below thepoverty line to be 45.60 per cen! of the total population. Now thisis not the whole story because, *hereas the block authorities weredetermining households living bbkrw the poverty line on the basisof an annual income of Rs.3,500, the Planning Commission'spoverty line figures for 1981-841 were derived on the basis of anannual household expenditure of Rs. 6,ztoCr. The fietd agencies inthe block had no knowledge abciut this latter figure. They did notknow, even in mid-February 198$, what annual household expendi-ture or income currently constifuted the line that separated thepoor from the non-poor. The resirlt was that household surveys forpurposes of identifying benefigiaries for the Integrated RuralDevelopment Programme were $eing conducted on the basis of anannual household income of Rd.3,500. Obviously, at Rs.6,4fi),the Athiyannoor Block figures fbr poverty would have been con-siderably more than 46 per centl Nevertheless. allowing for some
Rural Poverty and Plan Strutegies 2g
degree of exaggeration . set off against the inflation factor fromRs. 3,500 to Rs. 6.400, a poverty figure of around 46 to 50 per centis inescapable. According to the Athiyannoor BDO and the presi-dent of the Village Level Extension Officers' Association ofKerala," an overwhelming majority of the blocks in Kerala w.ereeither at the same level of development as Athiyannoor or worse.Yet the Planning Commission's poverty figures for rural Keralawere only 26.1 per cent of the population.
Chikballapur Block
Chikballapur Block in the Kolar district of Karnataka is classifiedby lyengar and Sudarshan as a 'developing' district and as beingdifferent from backward and very backward districts. Here, too, asimilar household survey conducted by the block authorities in1985-86 showed that as against a total number of 22,365 households,those with annual incomes of less than Rs. 3,500 numbered 10,973,the percentage below the poverty line being 49. The PlanningCommission's poverty figures for rural Karnataka, however, were37.5 per cent of the population. Here again the households weresurveyed against an unrealistic income figure of Rs. 3,500 when itshould have been at least Rs.6,400.
Field-level figures are not always exaggerated. For years now,the BDOs and their staff , wbo have to take knocks from the publicat the field level, have known that such exaggeration cannot be totheir advantage. Whatever the figure, beneficiary households in ablock under the IRDP cannot exceed 600 per year. Thus it isactually disadvantageous for a BDO to inflate lists and invite thediscontent and wrath of more and more people in the context ofhis severely limited resources.
Obviously, then, there are serious gaps in the estimation of theextent of poverty as rneasured by the central agencies and those atthe field level. The attempt here, however, is merely to highlightthe differences that exist in understanding the sheer size andintensity of povertf in its primary form. Even at 271 millionpeople, poverty is a gigantic problem. In understanding poverty,
rr They were interviewed in the Block Office, Athinyannoor, on 22 February1986.
'T
Deliverance from Hunger
nurnbers are less important than it means to be poor
in real-life terms. For the of our people in rural areas
pov€rty and hunger are facts of nce. But it is equally import'ant that others realise how poverty can be when measured
in terms of hunger and howmanifestations of poverty.
ger is the cause of all other
This study is based on data during field visits in 1985
and 1986 to selected villages in the states of Bihar, Uttar Pradesh,
Kerala, Karnataka and Andhra fradesh. The villages visited were
Hasanpur and Dakraphool Naptfrolia in Bihar, Bindawa in UttarPradesh, Vizhinj am, imalh-Tenmala and Modaravoval inKerala, Kabbina halli villages in Karnataka and
Kolavennu, Valivartipadu, Mahadevapatnam, IslandPradesh.Polavaram, Manur and Varli in
The villagen were asked designed to elicit informationon, among other things, costs of ting the main crops and theprices at which farmerb sold produce; profitability of agricul-
system functions; what a
poor rural household consumes by way of various items of foodand what thev cost. A basic ion posed was, how often in ayear do the rural poor go And under what circumstances?
It would be fairly accurate toi describe the rural people as the'ruled' in this they be landowning farmers or
per cent of the rural labour indispossessed rural labour.this country eke out a living tlandowners are the primary
on the lands of the farmers: thethough in the 'rural devel-
ture; wages for agricultural laborlr; number of days employment ina year; relationship between landlprds and the labour force; between
the farmprs and the traders and petween the farmers and govern-
ment agencies and officials, and the relationship between thepoverty groups and government pfficials and ageniies; thb state ofcomrption, its levels, modes and magnitude; migration; the imple-mentation of antipoverty progr{mmes as seen from the viewpointof the target groups: what, accqrding to them, were the defects
and what did they consider to be fthe right way of implementing the
Rural Poverty and Plan Stlategies 25
tackle it, the relevance of a public distribution system to ruralareas and its effectiveness in urban areas; and on how people couldbe involved and made participants in decisions affecting them. Thetopic discussed with them most was the magnitude of the problemof hunger and the reasons for it (see Table 2.4).
T,{BI^E ?.4Mrgnitude of Hunger for lnbour Househdds and lts Caus€s
Village No. of days on Reasonwhich all or sonemembers of thelabour households
may go to bed.
hungry in a year
Uttar Pradesh
Bihar
Kerala
Karnataka
Bhindawa
1. l{asanpur2. Dakraphool
Naptholia
1. Puravimala-l €nmala
(tribal village)
2. Modaravoyal
3. Vizhinjam{fishing villagc)
60 to 90 days
up to 90 days
up to 150 days
Nil
90 days
up to 180 days
60 to 70 days
Lack of employmentin the rainy season
Lack of employmentLack ofemployment
(The tribals, whilenot working on theland encroachedupon by them or onwage employment,go idto the forestcollecting honeyetc. )Lack of,employmentin June, July aodAugust being theralny season.Because of uncer-tain weather in th€sea and some timesno catch resultiog,even when the sea
is calm.
Lack of €mploymentl. Kabbinayana-palya-Seegehallivillages
KolavennuValivartipadu
l..2.
Andhra Pradesh Negligible
26
Table 2.4 (Conrinued)
Dellveranca f rom Hungor
Village
3. Medapadu4. Mahadeva-
patnam5. Island
Polavararn(mostly amongwornen)
6. Marur7. Varli
tnembers of lhe
labour ho seholdsgo to bed
tn a yegr
Table 2.6.
Lack of employment
Lack of employm€ntLack of employment
30 days
80 days
100 days
Noter: 1. In villages shown as , the labour households reported goinghungry for l0 to 15 days in a
2. In Marur and Varli villages, in the drought-prone Anantapur dis-
trict, in years of drought these went hungry up to 18{} days ina year.
The Athiyannoor BDO in Kerdla felt that in his block, up to 40per cent of the families probably go hungry for up to 100 days in ayear and the fishermen householdq up to 150 days. The ChikballapurBDO, Karnataka, stated that in fris block, between 20 and 25 percent of the people went hungry for up to 80 days in a year. Onthese occasions, they try to borrdw money from others; otherwisethey just starve. The Tahsildar of Chikballapur, however, felt thatthis figure would be only 10 pet cent of the block's population.Whatever the figure, acute hunger and indebtedness amongst thepoor was obvious.
Rural labour holds lack of nt responsible for thehouseholds going hungry (Table 4). Table 2.5 gives the number
to most of the rural labourof days of employmenthouseholds-both within and the village-and the averagedaily wages in the villages The total annual earninss of thelabour households, and for men,each of the 14 villages are given
and children separately in
employment in a year, its totalThe total picture of
Poyerty and tha tndian Public Distribution S'.stam 8:t
rural areas with special attention to remote and inaccessible areas,
so that the public distibution system becomes supplemennry o thepoverty alleviation programme' .
As we have seen earlier in this study, a population rangingaround 270 million has been going hungry continuously for thepast several years because of unequal distribution. Given the.lackof puichasing powir, the stimulation of food consumption on thepart of the poor or the equitable distribution of food between allcan be achieved only .through the instrumentality of a PDS that isspecifically geared to serve those who cannot compete for theirfood in the so-called open market. When people are so poor thatthe household wages of some of them are as low as Rs. 1,335 perannum (see Table 6 in Chapter?),they arc automatically excludedfrom the purview of the'free' market. A very large percentage ofsuch poor in India-54.1 per cent in t972-73, 51.2 per cent in1977-:78 and 40.4 per cent in 1981-84 lived in rural areas, the veryareas where all the country's production takes place. Dr EdwardSaouma, Director General, Food and Agricultural Organisation(FAO), explains the FAO view on food security thus: 'the ultimateobjective of world food security should be to ensure that all peopleat all times have both physical and economic access to the basicfood they need.'
What is true of world food security is also true of householdlevel food security. And in order that the basic point about foodsecurity at the village and household level may not be missed, theDirector General added that, 'Ironically food shortages are usuallymost acute in rural areas, where the majority of the world's popu-lation, and its farmers live."
A few hundred million people in the country have been ack-nowledged in the Plan documents as not obtaining even theirminimum nutritional requirements. The Plans also recognise that aPDS is a permanent feature of their development strategy. TheSeventh Plan document outlined the objectives of the PDS in thedevelopment contexti
| 'Food Security for a Safer World' W.F.D./2:/83-World Food Day, Food andAgricultural Organisation of the United Nations, Rome. See background papersfor the FAO/AFMA/FCI seminar, 23 to 25 April 1985, Vigyan Bhawan. NewDe lhi-
, tbid.
uThe public distribution
Dcliverance from Hunger
will be a permanent feature ofreduce fluctuations and achievethe strategy to mntrol pri
an equitable distribution of goods. Expansion of thepublic distribution system beenmade an important pointof action in the new 2G Programme, the main thrust ofthis expansion will be in the areas with special attention toremote and inaccesible so that the public distribution
to the poverty alleviation pro-svstern becomesgramme. To this end the Government will confine itsresponsibility to seven namely wheat, rice, sugar,imported edible oil, soft coke and controlled cloth,
of the public distribution systemdistribution system will be peri-
which would mnstitute theand the working of the pubodicallv reviewed bv the in consultation with the StateGovernments and corrective ures taken from time to time,
essential commodities to theto improve the supply ofconsumers, for which the machinery has been createdat the Centre like the council on PDS.3
These obiecflves make it that, like other major Plan object-ives the planning, sustenance supervision of the PDS areessentially the respgnsibility the Central Government. This isnot. however. to minimise thegovernments of the states and
Central to the objectives of
operational role of the
goods, poverty alleviation andof the countrv. Fluctuations in
of prices are the poor peopleconditions and mnsequently
in prices too, affect the poor more than the rest of societv for.
territories in this task.distribution of essential
as seen earlier in our study,defenceless against hunger. A
indebtedness renders themstrategy for the country
should include (a) a public system airhed at s€rvingthose identified as poor; and (b that it should necessarily span therural areas, Inherent in these requirements is a third need, (c)
the poor should bear a relation-that the essential goods neededship to their purchasing . In other words, the prices fixed
such that they can be afforded byfor the essential goods shouldthe poor pegple for whom are intended.
I For the role assigned to the PDSChaptcr 20, Volume II, S€venth Five
the dcvelopment pftxcss, soc page 4O3,
Commission. Ncw Delhi. Octoberear Plan, Government of India, Planning
Poyefty tnd the tndian Public Dlstrtbdion System Es
A fourth need that is self-evident is (d) that the quantity of thecommodities that are made available should be able to meet, if notthe entire requirements, at least a part of the requirements of theneedy households, so that the system is meaningful to the benefi-ciaries in terms of household satisfaction and the desired effect onprices.
While there can be little doubt that in order to be meaningful, aPDS should make available to the consumers not only the sevencomrnodities for which the centre has taken responsibility, but alsoother commodities like pulses as well as what are consideredessential food ingredients such as chillies and tamarind, salt, teaand matchboxes, to mention a few. Given the current state ofdevelopment of the PDS in the country, it would be quite anachievement if it starts supplying consumers all over the countrytheir essential cereal needs such as rice, wheat, coarse grains andkerosene on a regular basis. At the moment the system is notperforming even this limited job satisfactorily. Outside the metro-politan cities of Delhi, Bombay, Madras and Calcutta and a fewothers, neither in the urban nor in the rural areas are foodgrainslike rice and wheat made available in a sustained manner to theconsumers. The exceptions are the states of Kerala, Tamil Nadu,Andhra Pradesh and, to a certain extent, West Bengal. Gujaratand Karnataka have also recently initiated measures to distributefoodgrains in rural areas. These states will be discussed separatelyelsewhere; meanwhile, all discussion of the distribution system willrefer to the PDS as it exists in the remaining states, which consti-tute the bulk of the nation.
As far as regular supply of foodgrains is concerned, in statesother than Kerala, Tamil Nadu, Andhra Pradesh and Bengal, andnow Gujarat and Karnataka, the fair price shops in rural areasexist mostly on paper. The total number of fair price shops in thecountry is officially reported as being 337 ,684 at the beginning of1987,n but most ofthose shown as existing in the rural areas are notreally there, in the foodgrains context. While it is not possible toassess their precise number, it would not be very inaccurate topresume that perhaps around 200,000 of these fair price shops donot exist in reality, in the sense that they do not distribute food-grains. In India, the PDS today has reallv come to mean a system
I Government of India, Ministry of Food and Civil Suppties, Department ofCivil Supplies, New Delhi.
I
Dollve?anc€ from Hunger
households (normally about 2 per month per household), noprivate wholesaler finds it to invest large sums ofmoney towards tankage at theSo the retailers are forced to
or taluq headquarters level.very long distances from their
villages to secure the kerosene
that distributes sugar rather thAn foodgrains, even though sugarhas no relevanc€ to an overwh$lming majority of the rural poor.Even in the case of sugar, what happens geqerally is that the .fairprice shop dealer' only brings sulh quantities of sugar as the villagepradhan or sarpanch or mukhija or the headman directs him to,and sells it to such consumers as lnay need them, on the instructionsof these viltage leaders. In any qase, the transport margins and theretailers' margin that the Govefnment of India gives to the sugarretailer is so unrealistic and inldequate that no dealer can reallytransport small quantities of su$ar from the taluq headquarters orother central places where the g{downs of the FCI or state agenciesare located, all the way to the villages and sell them equitably to allconsumers at quantities and prides notified by the Government ofIndia. It is now well known that lthe.sugar meant for distribution inthe villages quite often gets sold in urban areas. No fair price shopin a village can exist viably on {he basis of the allotted quantitiesand profit margins that are perrhitted on sugar if it has to dependupon sugar sales alone.
Aside from foodgrains, kermgne oil is by far the most importantessential commodity for which lhe central government has takenthe responsibility of supplying 1o the villages. However, it is notalways available through fair prifre shops or retailers nominated bythe government or even at pric{s notified by the authorities. Thisis because many districts in thp country do not have wholesalekerosene oil dealen at the block or taluq headquarters. Consideringthe small quantities of kerosend that are made available to rural
the business unviable.for their shops, which makes, they either indulge in mal-
practices such as charging high prices or they allow thekerosene trade to be plied by 'entrepreneurs' whose activ-
Povetty and tho tndtrn Public Disulbution Systern a7
in rural areas at prices notified by government: the difference is
frequently as much as 30 to 50 paise per litre.'As far as imported edible oil is concerned, its non-availability in
rural areas is more the rule than the €xception. The quantities
allotted by the centre to the states are so small-it would never
measure up to even 1 kg per capita, per year-that the balance ofadministrative convenience for the authorities in the states lies in
these oils. being retained and distributed at the state headquarters
or in a few important urban centres of the state. Sending them to
the rural areas would actually be inviting trouble since there is so
little to distribute. It is not unfair to say that a rural household maypeihaps get one kilogram of cooking oil in the village fair price
shop once in three or four months. There have been times when
the situation has been a little more comfortable, but only very
occasionally.6It is thus clear that the uncertainty of supplies induced by a total
lack of relationship between people's actual needs and supplies'coupled with the lack of infrastructure facilities and unrealistic
rates of margins allowed to fair price shop dealers by central andstate governm€nts, have rendered the public distribution ofsugar, kerosene and edible oils in rural areas extremely ineffec-tive.
It should be stated at the outset that procurement is fundamental
t The basic ceiling selling pric€ of keroscne in bulk at storag€ points was mad€
uniform from the financial year 198H4. This pric€, which was Rs' I '644.93
pcr
kilolitre in that year, was revised to Rs. 1,E21.93 in March 1985' It was furtherrevised on 5 February 1986 to Rs. 1,956.93 per kilolitre.
Thc prices notified by the various state Sovernm€nts for ihe sale of kcro6cne inthe retail outlets vary, going up to Rs. 2.65 per litre in 1986. In truth' however,
owiog to the problems of infrastructur€, among others, keroscnc gets rold at riuchhigher prices in rural areas.
6 Of lhe edit'le oils impon€d, govemment allocatcs roughly 50 p€r cent to thcstat€ governmcnts for us€ through lhe PDS. The imPorts by the Strtc TrediryCorporation of India during the tirst threc years of the Sixth PIan pariod have bccn
around a million tonnes, but incteased to 1.4 million tonnes Lr 1983-&4 and to 1.6
million tonn€s in 1984-85. Of this, the Vanaspati industry utiliscd betwceE 0'5 and
0.7 million tonnes while th€ states'PDSs received betwecn 0.4 and 0.7 miniontonnes during the samc period.'
In this context, it must be pointed out that oft€n thcrc can bc gaPc bctw€cn whstthe Civil Supplies Ministry allots to a state and what is actually madc availablc at
the ports by the STC of lndia, bccause of problems of movcmcnt.
88 Deliverance from Hunger
to a PDS. A PDS does not merely the opening of fair priceshops or running delivery To ensure equity in the distri-bution of essential goods, it is to plan for the procurementof a specific quantity of f and its distribution to a specificnumber of targeted households. This quantity will have to include
the farmers cultivating rice and wheat a floor price or a supportprice. This has been done throulh the mechaniim of the Agricul-
at the national level includine le surpluses.
a back-up buffer stock t(turn, would presuppose a
By far the most enlighpursued in the agricultural
and procurement €fforts byTamil Nadu, have built up
of 119.07 million tonnes of1973-74 to 1983-84, the quantityThis is as rtruch as 52 per cent ofHaryana, the procurement in17.20 million tonnes against awhich is 32.29 per cent of thequantities purchased by themillion tonnes against an
continuity of supply. This, inlevel of agricultural production
policy that the government hasin recent years has been to assure
such as Andhra Pradesh and
that out of a total productionin Punjab during the years
was 61.90 million tonnes.total production. In the case of
these years taken together wasof 53.26 million tonnes.. In Uttar Pradesh the
agencies amounted to 18.78production of 21L.27 million
tural Prices Commission, which was set up in 1965 and which hasnow been redesignated as the dommiand Prices. Tafting advantage oF this price assurance, the Indian
for Agricultural Costs
farmer, whether in the north or the south, has. within the limits ofthe agro-climatic conditions avAilable to him. done his best toimprove production. At degrees of efficieniy, the FoodCorporation of India (set up in 1965), as also the other procure-
western UP and Haryana, as allo a combination of price support
ial stocks over the yeats. InJuly 1985, they stood at a 29.1 million tonnes; on July1986 they were 28.8 million
Table 3.1 gives the productionstates of India from 1973-:74 to
of cereals for all the major
quantities procured foi the98!84 while Table 3.2 gives theperiod.
It can be seen from these two
tonnes. Here the proportion of t to production is only
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Povefty and the tndi.n Pubtic Distributlon Sfstem 91
8.9 per cent. Basically, in all these three states the'procured'quantities are really the quantities 'purchased' under 'price suPport'
operations by the state agencies. The large marketable surpluses
generated by the green revolution have flowed into the govern-
ment kitty without any effort. On the other hand, the productianfigures for Tamil Nadu and Andhra Pradesh, when examined inconjunction with their population figures, show that though theirper capita production of foodgrains was less than these three states
or only as much as certain other states, by efforls involving acertain amount of compulsion against the farmers and rice millers,these states too have procured substantial quantities of cereals
either just for the central pool or for both the central pool and tomeet the needs of their public distribution systems.
A look at Table 3.3, which gives the production, population andper capita production of foodgrains in the 15 major states of thecountry for a cycle of three years-1981J2, 1982-83 and 198H4-which includes a good production year (1981-82), a very baddrought year (1982-83) and an excellent year of production(1983-84), shows the importance attached to procurement incertain states compared to others
Despite a low per capita production of 147 kg,90 kg and 117 kgduring these years, Tamil Nadu, which has always displayed a
deep concern for the poor and recognised the need to channelfoodgrains through the PDS to all areas including the rural, did notabandon its procurement efforts even when production plungedduring 1982-83 to a mere 90 kg. It was in a far more difficultposition vis-d-vis the per capita availability of cereals than most otherstates in all these three years; yet its proc'urement was 1.729 milliontonnes compared to the 1.267 million tonnes attempted by MadhyaPradesh. The latter lends itself to an even more educative compari-son with Andhra Pradesh. Thes€ two states have approximately thesame levels of cereal production and similar population levels andhence more or less the same per capita availability, though in termsof production, Madhya Pradesh was significantly better placed in198!84. However, their efforts in procurement do not reflecttheSe similarities. In the period 1981-82 to 1983-&1, Andhra Pradesh
procured 4.30 million tonnes for the central pool alone, whileMadhya Pradesh procured 1.267 million tonnes. Further, AndhraPradesh also made very substantial purchases in the open marketat marginally higher prices than the levy prices fixed by theGovernment of India.
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Poverty and the tndian Pubtic Distribution System 93
The percentage of procurement to production in the six majorstates of India that contributed to procurement in the period
1g7T'14 to 198!84 is given in Table 3.4.
TABLE 3.4
hoportion of Procurcment to Pmduction Dudng f97l'74 to 1989
Production(in million
tonnes)
Procurement Percuttageof(in million procurement tb
tonnes) production
PunjabHaryanaAndhra Pradesh
Ultar PradeshTamil NaduMadhya Pradesh
Apart from the differences emerging from a comparison ofAndhra Pradesh and Tamil Nadu on the one hand and MadhyaPradesh on thC other, Table 3.4 also shows that over the years,
Andhra Pradesh made greater efforts at, and achieved betterresults in procurement than even Uttar Pradesh.
On the whole, however, India has been registering higher and
higher procurement, whether through price support operations orthrough the procurement efforts of some of the states, with theresult that a procurement of 10.69 million tonnes achieved in1975-76, gradually rose to around 12 million tonnes in the follow-ing five years (the exception b eing 197718). The year 1981-82 saw
a jump to L4.10 million tonnes, the next year to nearly 15 milliontonnes and the year after that to a still higher figure of 16.17
million tonnes. A fall in the production of cereals in 1982-83 by as
much as 4 million tonnes compared to 1981-82 not only did notaffect procurement, the procurement that year actually went up bya little less than a million tonnes. The year 1984-85 saw a sharp fallin the production of cereals compared to 198!84, the drop being a
very substantial 5 million tonnes, but proqrement rose by 3 milliontonnes compared to the previous year! Thus, regardless of sub-stantial decline in cereal production in certain years, its procurementby the government has been constantly going up. In 1985-86 itwent up by yet another million tonnes to 20.04 million tonnes.
Details of the state-wise and all-India off-take of cereals fiomthe Central Pool tor the years I97T74 to 198H4 are given inTable 3.5.
119.07)J. ZO
1V2.93
ztt-2770.56
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3.984.05
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Poverty and the tndian Public Distribution SyEtam
While thanks mamly to growtng production in Punjab, Haryana
and Uttar Pradesh, and to some extent in other states like AndhraPradesh and Madhya Pradesh, arrivals in the hands of the govern-
ment increased steadily and continuously, there was no significantincrease in the cereals that went into the 'public distribution system'
until the end of the 1970s. The 10 rnillion tonne mark in releases tothe PDS from the central pool was not attained until 1979. Fiom10 million tonnes in 1979, it made a big leap to 13.87 milliontonnes in 1980 but subsided by 2 million to 11.85 million tonnes in1981. It recovered somewhat to reach 13.06 million tonnes in 1982,
and in the acute drought year of 1983 reached a peak of 14.65
million before registering a sharp fall by 2.47 million to 12.19
million tonnes in 1984.
Not all these quantities, however, went directly to benefit con-sumers through fair price shops. A very sgbstantial part, 4s far as
wheat was concerned, really went to roller flour mills. In otherwords, these figures are a total of what went into fair price shops,to the defence services and other armed forces of the union, theroller flour mills and employment programmes such as the Food .
for Work Programme (FWP), the NREP and the RLEGP. Since a
substantial part of it went to roller flour mills, it is essential toguage exactly how much of the central pool allotments went tothem. This is important because wheat products such as maida andsooji made from the wheat allotted to roller flour mills from the
central pool at subsidised prices, were hardly ever controlled bythe state governments and distributed through the PDS. Suchcontrol, where it did exist, was confined to very few states. As aresult, the roller flour mills obtained wheat from the central poolat subsidised prices and sold the resulting wheat Products in thefree market to consumers and buyers like biscuit manufacturers atprices decided upon by the millowners. ln other words, to a verylarge extent the quantities of wheat sold at subsidised rates toroller flour millers benefited businessmen rather than consumersin the price context. ft would therefore not be correct to includethese quantities undei the head 'public distribution' as the Bulletinon Food Statrst cs does.
Actual figures of distribution to the state governments fromcentral pool stocks and allotments made to the roller flour millsbetween 1973 and 1984 are given in Table 3.6.
It is clear from this table that since 1977, roller flour mills drew
96
Ccntml Pool Atloarcnt lo Rollcr Flour
Total distibuionfrom Cenrrol
Pool
Deliverance from Hunger
irnd Stcte GovernmenG (19L19t4)
(in millinn tonnes)
Allotment to Actual distributionroller flour lo stste government
millt from central pool
LC73
tn4tn51976r977
.1n81979
19801981
1982
1983
1984
9.808.519.186.829.308.74
10.04
13.8711.8513.06t4.&t2.r7
2.11r.24r.261.42
2.763.303.473.U3.143.272.93.14
7.697.n7.92
5.,10
6.54
5.446.97
10.238.779.79
11.659.03
Sources: l. Statistical Panoratna, Food2. Bulletin on Food Statistics
of India. New Delhi. 1984.
, Directorate of Economics andStatistics, Ministry oftgu.
Govemment of India. New Delhi.
3. Thc Food C-orporatiron of Ncw Delhi.
at an average a little over 3 tonnes of wheat a vear.bringing the distribution of to the PDS, including grainsmeant for the defence forces employment programmes, to a
tonnes in 1976 to I 1.65 millionquantity ranging from 5.2[0
tonnes in 1983. Table 3.6 with appropriate adjustments,that between 8 million and 11 tonnes of foodgrains havegone into fair price shops all over the muntry since 1980,as against 5 million to 7 million in the 1970s.. The state-wise and all-India from the central pool through
1980 to 1983 can be s€en infair price shops alone for theTable 3.7.
During the Sixth Plan period ( 980-85) thdre were two years ofhigh off-take: 1980 and 1983.off-take under the FWP, withhighest for any year between 1
Despite such a high off-take
year 1980 was also one of highto roller flour mills being the
the central pool, the actualquantity that went into the fairmillion tonnes. The year 1983
shops alone was only 7.888
and 1984 at 3.64 million tonnes.
described by the then Union
Povarty and the tndian Pubtic Distribution Sqstem 97
rerI-s 3.7Actual OIT-take of Cereds Throqh the Fdr hcc Sbops (f9gH3)
(h tho$and tonnes)
t9w 19E1 19E2
Andhra Pradesh
AssanrBiharGujaratHaryanaKarnatakaKeralaMadhya PradeshMaharashtraOrissaPunjabRajasthanTamil NaduUttar PradeshWest BengalDelhiJammu and KashmirHimachal Pradesh
All-India including otherstates and Uni,onTerritories
49E.2 1,184.4
358.0 414.0
5m.4 739.9318.7 196.731.7 73.3181.3 257.5
1,231.0 1,495.5
415.7 394-21,051.9 964.1
153.1 353.951.9 5Z.O
190.6 83.3165.6 381.0
624.5 729.3
2,341.1 2,444.06{b.1 576.2t76.1 232.253.3 57.4
9,378.6 t1,M7.2
270.1
333.0455.8244.5
45.452.'
819.0779.4En.9205.46.6
165.2
84.31,M3.7l,@4.9
424.5151.922.1
7,888.7
428.1
342.0
323.9298.122.7
21L.41,7L3.5
457 -2
t,lzt.463.393.8
178.7
340.7573.2
1,508.5572.O
.743.9
36.1
Sour,cc: Food Corporation of India, New Delhi.
Food Secretary as 'the drought year of the century'. This year sawthe largest off-tak€ ever in the fair price shops at 11 million tonnes:an all-time record for drawals by fair price shops from the centralpool till 1985.
Starting with the laudable promise of food for all. over timeplann€rs diluted the role of the PDS to one of mere interventionistcontainment of prices in the open market, a market that waslargely irrelevant to the country's poor. At the beginning of theSixth Plan, the planners made a positive move by way of a state-ment regarding 'equitable distribution' of essential commodities,'especially in rural areas, where productivity and wages are low' byexpanding the PDS 'than has been done so far'. Against thebackground of FAO's objectives of food security, the role assignedby planners to the PDS and the four touchstones identified forevaluating it, the figures given in Table 3.8 make interesting reading.
Providing a picture of what the PDS did through central pool
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Poverty and the tndian Public Distribution Slrstam 99
allotments during three years (1981, 1982 and 1983) of the Sixth
Plan, Table 3.8 shows that it failed to achieve any of the objectives
set for. it by the planners. At 11.91 kg of foodgrains distributionper year per capita, the monthly distribution in 1981 was less than
one kilogram per individual. It was only slightly better at l -29 kg
per month per person in the 'drought year of the century' (1983)'
the year which witnessed the largest ever quantity of foodgrains tobe channelled through the PDS. The table also shows that in 1983'
of the 15 major states, 10 provided even less than the nationalaverage of 1.29 kg per person per month, though for obviousreasons Punjab and Haryana should be excluded from them. Alsoto be excluded from this list is Tamil Nadu, since Table 3.8 does
not fully reflect the total quantity of foodgrains channelled throughfair price shops by the state through its own efforts. What is true ofTamil Nadu is also true of Andhra Pradesh, though in 1983, even
at the level of drawals from the central pool alone, the per capitadistribution through fair price shops in this state stood above thenational average.
There are vast differences among the four states and the UnionTerritory of Delhi, which had a per capita off-take of more thanthe national average of 15.42 kg in 1983. Delhi, the metropolitancapital of India, leads the four states with a per capita off-take of85.33 kg, a lead it maintained in the irrevious years as well at theeven higher levels of 91.96 kg and 93.51 kg in 1981 and 1982
resp€ctively. Way behind Delhi is Kerala with a per capita off-takeof 56.73 kg. This is followed by Bengal with 42.95 kg, a levelalmost the same as that of the previous year (1982), but substantiallyhigher than the 27.62 kg that was distributed in 1981. It is notdifficult to understand the high levels of distribution in those threeareas. Metropolitan Delhi is where the seat of the central govern-ment is. It is therefore a city dominated by the most articulatesections of our population-politicians, bureaucrats and industriallabour. Naturally, the PDS here is saturated with foodgrains,despite the fact that Delhi lies literally within a stone's throw of the
country's green revolution belt-Punjab, Haryana and westernUP-from where grains flow into the city without interruption. Asfor Bengal, it is a state dominated by Greater Calcutta and theAsansol-Durgapur industrial area where a regular system of ration-ing is statutorily under enforcement since 1960, covering at least L0
millioh people. According to reports available in the Government
I
100
of India's Ministry of Civil
Delivarancc from Hungcr
Calcutta draws 35 per cent ofthe entire rice allotment made to est Bengal. If in Bengal at least10 million people are underentire population of 27 million
tory rationing, in Kerala thebeen covered by it since 1964.
Kerala has traditionally been a state, and there has been apolicy, acquiesced in by the of India itself. that it betaken care of udder a system of ' rationing. The only statesthat in 1983 had a per capita level higher than that ofthese three areas were Andhraa level of 21.21 kg the latterAndhra Pradesh came to enjoyhaving previously had low perkg in 1981 and 1982enjoyed an off-take of around I
At this stage, a reference tokg per capita in 1983,
rdesh and Assam, the former at19.59 kg per capita. However,status for the first time in 1983.
off-takes of 7.99 kg and 9.12Assam, even in 1981 and 1982,kg.
is necessarv. At 14.70's off-take was only marginally
lower than the oational average cif 15.42 kg. However, in 1981 and1982, it had per capita averages of 18.33 kg and 16.39 kg respect-ively, which were substantially higher than the national averagesof 11.91 and L3.39 for those tqro years. Again, Maharashtra isdominated by the city of Bombay. Information available with theCentral Civil Supplies Ministry shows that of the total allotmeirtsof wheat and rice made to the st4te, Bornbay alone benefits to theextent of 33 pet cent and 50 per cent respectively. Further, at anurban population level ofa little {bove 35 per cent, Maharashtra isthe most urbanised state in India with a large industrial and organ-ised labour force demanding attdntion.
The point to remember, of co$rse,.is that in 1983, the'droughtyear of the century', when a rebord quantity of foodgrains wasdistributed through the PDS, statFs dominated by the metrcpolitanurban areas were the main ben$ficiaries, though droughts are arural phenomenon.
All the states discussed abovel namely Bengal, Kerala, Assamand Maharashfia, make nq notible contribution to procurementefforts to build entral pool stocksl Nor do they make any sig ficantefforts to strengthen their PDSs by procuring or purchasiqg stockson their own account and suppl$menting the grains they receivefrom the Government of India. They merely distribute ryhat theyreceive fronr the central pool.
There are, however, certain slates that procure and filake pur-chases both for the central pool and for themselves. Apart from
Poverty and the lndian Public Distribution System 101
.the Food Corporation of India, in the states of Punjab, Haryanaand Uttar Pradesh, where the major part of the country's procure-
ment for the central pool takes place, state government agencies
also play a significant role in the procurement process. But none ofthese major procurement states operates a PDS of any significance.Given the low levels of poverty in Punjab and Haryana, it isunderstandable that in the context of the very large per capitaavailability of foodgrains, these two states do not need to run a
PDS of the kind envisaged in the national Plan. However, of thecountry's total poverty population of 271 million in 1983$4, UttarPradesh and Madhya Pradesh alone accounted for 78.55 million.The per capita production of cereals in these two states was 227 kgand 226 kg respectively in that year. The per capita level ofproduction was higher than for any other state in the countrybarring Punjab and Haryana. But it can be seen from Table 3.9that in 198H4, while Uttar Pradesh procured only 8.39 per centof its production, Madhya Pradesh procured an even lower 3.12per cent.
A comparison of the performance of Uttar Pradesh and MadhyaPradesh in 198!84 with Tamil Nadu, which had a per capitaproduction of a mere 117 kg but procured 12.30 pet cent of itsproduction, highlights the radical difference in Tamil Nadu'sapproach on the one hand and that of [Jttar Pradesh and MadhyaPradesh on the other. 1982-83 reyeals a similar pattern. WhereasMadhya Pradesh made a negligible procurement of 2.59 per centat a production per capita of ,181 kg, Tamil Nadu at half that percapita production procured 9.36 per cent of its production, aperformance that was better than the 8.13 per c€nt of Uttar Pra{eshwhich had a per capita production of 205 kg that year. The per-formance of Tamil Nadu in 1981-42 was again superior to that ofMadhya Pradesh, which in that year shared a per capita productionlevel of 194 kg with Uttar Pradesh. While procurement-wise UttarPradesh performed distinctly better than Madhya Pradesh (9.98per cent to 5.94 per cent) and Tamil Nadu (9.98 per cent to 7.93per cent), the important point is the absence of any difference inper capita production between Uttar Pradesh and Madhya Pradesh(19a kg) as against Tamil Nadu's per capita production of only 147
kg.Andhra Pradesh of course, did better than all these states.
However, comparing Andhra Pradesh with Madhya Pradesh andUttar Pradesh would be more appropriate than comparing.it with
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Poyert| and the lndi',n Public Distribution System 103
Tamil Nadu. Although in terrns of per capita production, it was
only marginally better than Madhya Pradesh in 1981-82' more or
less on even terms with it in 1982-83 and decidedly at a disadvantage
in 198!84, by way of procurement Andhra Pradesh was far ahead
of Madhya Pradesh in each of these years. Again, it had only a
marginaliy better production level than Uttar Pradesh in 1981-82'
and was decidedly at a disadvantage in 1982-83 and 198!84, but
the achievements of Andhra Pradesh in the 'drought year of the
century'and in 198!84 were respectively 14l per cent and 168 per
cent higher than those of Uttar Pradesh. Not only this, when the
Government of India discouraged higher levels of procurement at
levy prices, Andhra Pradesh undertook purchases at prices above
those notified by the Government of India to meet its PDS com-
rnitments. In 1982-83, these purchases amounted to 0.280 million
tonnes, while in 198!84 nearly a million of the2.47 million tonnes
it purchased were from the oP€n market, of which 0.75 milliontonnes were bought at a price of just Rs. 5 per quintal above the
procurement levy prices fixed by the Government of India, and
0.237 million tonnes at Rs. 10 above the procurement levy prices.
The remaining 1.48 million tonneswere purchased at Govelnmentof India's notified procurement prices under levy. Even if one con-
siders only the quantities purchased at the procurement prices, the
percentages of procurement to production in 1982-83 and 1983-84
are 16.86 and 13.47 respectively--significantly higlier than thos€ of
either Uttar Pradesh or Madhya Pradesh. However, it should be
pointed out that neither wheat and paddy price support op€rations
nor the purchase of rice from millers at procurement Prices are
conducted satisfactorily in Uttar Pradesh. Discussions with official
agencies and the rice milling industry in 1986 showed that there were
large-scale distress sales of paddy and wheat as also refusal by various
procurement agencies to receive all the rice offered by the millers
under levy. On the other hand, because paddy prices invariably rule
well above the Government of India's support prices in Andhra
Pradesh, procurement is done almost exclusively under levy in-
volving serious measures of enforcement under the Essential Com-
modities Act, 1955. Alm, the state government considers it essential
to purchase rice over and above the proculement level permitted by
the Govemment of India by way of levy operations, in order to make
it available to consumers through fair price shops. In L982-83 and
198!84, the Government of India desired that the Andhra Pradesh
lOrl
government limit thetonnes and also moderated theperc€ntage of levy against thestate government paying afor levy purposes, for thefeed an expanded PDS coveringthe state. The expanded pDS,first time in the state inhouseholds identified as poor atper household of fivedealt with in a later chapter; atthe basic point that if there isto the poor in terms of thePlans, then it is essential tocredible PDS which will satisfuthis chapter, backed up bycan only be creilible if itfoodgrains to t}te households itshows how, barring a fewTable 3.9 distinguishes the sratessuch systems from those that dogaps in procurement efforts that
Despite a substantial perconcentration of production inefforts of Uttar Pradesh arelarge-scale distress sales ofplace. While wheat is purchasedcentres set up at thi village levelas the Food Corporation ofPradesh, the Uttar PradeshFood and Essentlal CommoditiesAgro-Industries Corporation,of a levy on the rice millers. Butlevy is also a price supportAndhra Pradesh, noindustry in Utar Pradesh toment agencies, thanks to the lowfor their produce. The millersand, as the author was informedRs. 3 per quintal even in
Delivcrance from Hunger
of rice to around 1.5 million's proposal for enhancing themillers. This resulted in the
price than was officially notifiedquantities that it needed to
entire rural and urban areas ofeffectively introduced for tne
L983, making rice available tos. 2 per kg to the extent of 25 kgThe details of this scheme are
stage it will suffice to highlightfor making the PDS relevant
strategy and objectives of theinto existence in every state a
four criteria identified earlier inprocurement efforts. A PDS
a certain minimum quantity ofto serve. While Table 3.8
Indian PDSs lack this quality,show a concern for operatingby highlighting the massivein their operations.
production level and heavywestern wing, the procurementweak (Table 3.9). In this state,
wheat and rice-takea price support measure through
a multiplicity of agencies. suchia, the Government of Uttar
Federation, the Stateand the Uttar Pradeshof rice is on the basis
all practical purposes, the mill. Unlike in Tamil Nadu or
is needed for the rice millinsthe levy. rice to the procure-
that are paid to the farmerstraders would buy up the paddy
1986, make a profit of Rs. 2 toIevy rice to the state's agencies.
Poy&tl .nd the lndian Public Distributian System 106
The result was that the rice milling industry wanted the percentage
of levy enhanced from 60 to 90 per cent in 198tr-86. While thisdemand may be surprising, what is even more surprising is the
Uttar Pradesh Government's reported refusal to accede to the
request of its rice milling industry to deliver'3O per cent more of allthe rice manufactured by it to the central pool. Obviously, this
would have meant still lower prices for the farmers of UttarPradesh, for if the state government did not accept a higher level
of procurement, the wheels of the rice milling industry would slowdown with paddy suppty outstripping demand artificially and paddy
prices getting depressed even further. In this situation, a procure-
ment operation changes to a price support operation for the millerand goes on to finally become a no-support operation for everyonein the rice economy, particularly the primary producer.
The state government, however, stands to gain. It gets morethan handsomely paid for whatever level of operations as it cares
to maintain. Unlike in certain states such as Andhra Pradesh, inUttar Pradesh, which has a rice levy system under which the stategovernment enforces the Essential Commodities Act, an additionaltier is added to the operations. Instead of the rice millers directlydelivering the levy to the Food Corporation of India, it is the stategovernment that first takes over the stocks from the rice millersand then hands it over to the FCI. For this needless operation, thestate goverilment collects from the Government of India storage,administrative and interest charges--all of which add up to a
sizeable amount each year. On the basis of transactions made in1985-86, the amount so transferred was Rs.43.4 million. This isavoidable and unjustifiable expenditure. A detailed study of itmay throw further light on what quantities of the rice levy handledactudlly get moved to the state government godowns, whether theinstitutional finances employed for this purpose cannot be deployedmore fruitfully elsewhere, and whether the large staff engaged inthis activity is not redundant. In the mean time, both wheat andrice farmers continue to make distress sales of their produce totraders as has been acknowledged by the officials themselves. Atthe same time, millions of the rural poor continue to remain unfed,unable to purchase foodgrains even at the low prices at which thefarmers have to part with their produce. A vigorous procurement-cunrpublic distribution system which could rectify both thesewrongs is thus long overdue.
106
l-
Deliverance from Hunger
the two preceding years, Westmassive upsurge in 1983-84.
's cereal production recorded aproduction in 198!84 was 8.91
million tonnes as aqainst onlv 5.65 million tonnes in 1982-83. theincrease being a whopping 3.26 rfrillion tonnes or 58 per cent. Butits procurement that year barely 80,000 tonnes. Given thehigh level of production in that y$ar, this was a surprising responsefrom a state which knows why thQ Bengal famine occurred and onethat has the oldest and by far thd largest PDS in India in terms ofthe quantity of foodgrains ed through it.
into the hands of the govern-Large-scale arrival of
A quick comparison between mighty Uttar pradesh and littleAssam in the matter of productidn and distribution would give thecountry a telling lesson of certaih possibilities in the field of foodadministration. Against a per caflita cereal production in Aisam ofonly 115 kg, 128 kg and 122 kg if rhe years 198L-82, 1982-83 and1983-84 respectively, which maldes availability very low, Assam,sper capita distribution of foodgralins through the PDS by obtainingfoodgrains from the centre was 17.I9 kg, L7.46 kg and 19.59 kgrespectively. Uttar Pradesh, on the other hand, with a high percapita production level of 194 k9,205 kg and 227 kg during thesame period, and without bein$ dependent upon movement offoodgrains from elsewhere in Indla but having to alleviate constanthunger on a massive scale, mana[ed to distribute through its PDSless than one-third of the quantify rnade available by Assam.
A word about West Bengal fvill not be out of place in thiscontext either. While West Ben$al cannot be faulted as far as itsoperating a well-organised statutbry system of rationing in metro-politan Calcutta and the Asansol {rea is concerned, its procurementefforts have been less than flattpring. A comparison with TamilNadu makes this point clear (see Table 3.2 and 3.3). Compared to
ments or their agencies is by itself no guarantee that the grains willeventually be made available td those who are hungry or needthem. Uttar Pradesh is once ag{in a telling example of this pro-position. What Uttar Pradesh gdthers is by way of price supportoperations. Not only does it prbcure inadequately, it makes noeffort to feed its poor either. As qan be seen from Table 3.8, its percapita per annum distribution wds 5.16 kg, 5.50 kg and 6.28 kg inthe years 1981-42, 1982-83 and 198!84 respectively or less thanhalf a kilogram per person per igronth. Obviously the State doesnarr a Kuogram per person per rnonrn. uDvlously tne Jlate ooesnot have a meaningful rural PDS.] While it has 112,500 villages, the
Poverty and the lndian Public Distribution System
number of fair price shops in 1985 in the rural areas was only
27 ,696.-elearly indicating the absence of a basic organisation for arural PDS. The inadequacy of allotment and basic infrastructure in a
state where 44 million rural poor do not have minimum nutritiononly illustrates a lack of conc€m for the hungry. Similarly' Madhya
Pradesh at an average distribution of a little less than 8 kg per annum
per capita, where 21.8 million rural poor lived below the poverty line
in 198H4, and whose per capita distribution was only slightly better
during these three years than that of Uttar Pradesh, has no sigrificantrural distribution system either. Bihar, where the per capita off-takeper annum has shown an increase from 4.63 kg in 1981-82 to 10.14 kg
in 198!84, also does not have a rural PDS. The number of fairprice shops reportedly serving 77,870 villages is 31,758. Studies ofthe Bihar villages show that distribution of foodgrains through
village fair price shops is more or less non-existent' Foodgrains
distribution, if any, is known to the rural Biharis as having occurred
purely as a flood relief measure once in several years. In 198!84'according to the Ptanning Commission's poverty figures, 51.4 per
cent or 32.94 million of Bihar's rural poor did not have enough toeat.
But this does not mean that there is a properly planned urban
distribution system in these states either. Discussions with officials
and fair price shop dealers concerned with urbair distribution inUttar Pradesh and Bihar showed that supplies are both inadequate
and erratic. And, since the PDS does not have the set purpose ofserving identified and targeted groups with an assurance that they
would be supplied with certain specified quantities of foodgrainsduring a specified period-a week, a fortnight or a month-theresult is an unsystematic allotment of foodgrains to urban fair price
shops without reference to specified needs. This leads to a first-come first-served situation in which the Poor obviously have nopreference. It would thus be somewhat of an exaggeration to say
that any kind of credible PDS exists even in the urban areas. The
number of urban poor in these states is not small, with UttarPradesh accounting for 9.06 million and Bihar 3.61 million' in198H4.
This analysis of the situation obtaining in states like Uttar Pradesh
and Madhya Pradesh which have a per capita cereal productionabuve or around 200 kg and hence a high procurement potential,and states like Bihar that have a much lower availability at an
107
108 Delivoranco from Hunger
this hunger is acute in the rural have endeavoured to expanda historicallv inherited. urban PDS to th€ rural areasfor the benefit of the poor. efforts have been to obtain fromthe Government of India as quantities of foodgrains aspossible and also to procure cir purchase with their own andborrowed funds, the remainder of their assessed needs and channelthe foodgrains so mobilised fair prici shops to those who
states are Kerala.need them. The most lotable among theseTamil Nadu and Andhra
Kerala, as stated earlier, has been a deficit state witha per capita production level of in the early 1980s hovering
makes no effort to procurearound a negligible 50 kg. Itat levy prices on its own and entirely upon allotmentsfrom the central pool. Through I system of statutory rationing, ithas endeavoured to assure itsof foodgrains at fixed prices
population a certain quantity
Every household is and issued with a card which
pool, Kerala also makes open market purchases of rice fromneighbouring states to its PDS. This is done throueh achain of 150 retail outlets called Stores in urban and semi-urban areas operated by the State Civil Supplies Corporation
s or cooperatives in the villages.
of household incomes.
and I ,lzlo Sahakarana MaveliThe prices at which these are bought are higher than those
Povotty and tha lndlan Public Distribution Sfstem
at which the PDS sells them through the 12,605 fair price shopsspread all over the state. In addition, it tries to control the openmarket prices through the Maveli Stores, making its approach, atwo-pronged one. Kerala's public distribution system, which is oneof statutory rationing, has been in existence since 1964.
Chronologically speaking, Tamil Nadu was the next state inIndia which attempted to ensure that its rural areas were alsocovered by the PDS. Unlike Kerala, the Tamil Nadu approach wasto identify households falling within a certain income limit andprovide them with a certain quantity of foodgrains at prices theycould afford. The PDS in Tamil Nadu was extended to the ruralareas for the first time in L977. lt caters to households withmonthly incomes of Rs. 1,000 and below. The quantity of ricesought to be distributed is 1 kg per week per adult and half that perchild, with an entitlement ceiling of 20 kg per household permonth. In 1984, the number of households covered under the PDSin Tamil Nadu was 12 million, whereas the total number of house-holds estimated was around 10.16 million. Since the Tamil NaduGovernment believes that a PDS should provide foodgrains to theidentified target groups at affordable prices, rice sold to consumerswas subsidised. In early 1987 these prices were:
Rice Rs.lkg
109
CommonFineSuperfine
1.752.r52.50
Tamil Nadu had 2f ,035 fair price shops, for 16,000 villages in 1987.Of these, 75 per cent of them were run by cooperatives and theremaining by the Tamil Nadu State Civil Supplies Corporation. Ithas no privately-owned fair price shops.
Though the Andhra Pradesh public distribution system, intro-duced effectively from I April f9$, is similar in its approach tothe Tamil Nadu scheme, there are some important differences.The objective of rhe Andhra Pradesh scheme is to target onlythose living below the poverty line, which was defined by a monthlyincome of Rs. 500 per month per household or an annual incomeof Rs. 6,000 per household. It aims to assure every member of thetarget household 5 kg of rice per month, subject to a ceiling of 25
110 Deliveranca from Hunger
kg. The scheme does not discrilhinate between adult and child andin order to ensure inter-personfl equity, provides 5 kg of rice permember of the household. Since it believes in making rice availableto the target households at affdrdable prices. it sells all the threevarieties---<ommon, fine and Rs. 2 per kg. The target
may be held in check in ins urban areas such as thetwin cities of Hyderabad and , Vijayawada and theindustrial area of urban agglomeration which liesin a heavily deficit district, the hon-poor households in these citieswere also assured a maximum df 25 kg per household at the rate of5 kg per person-adult or childl-at rates ranging from Rs. 2.65 toRs. 2.70 per kg. This measure rtas, however, discontinued in 1988.To keep the open market priceg in check, the government controlsthe flow of levy-free rice outsidF the state through a permit systemprovided for by the Andhra Pradesh Rice Procurement (Levy)Order, 1984 made under the E$sential Commodities Act, 195!--amechanism which makes domestic sales of levy-free rice by the ricemilling industry a pre-conditiorl for moving rice outside the state.This mechanism, introduced in 1983, was challenged by the ricemillers of Andhra Pradesh the Hish Court of Judicaturewhich. however. in a judgement upheld the mechanismas good in law. Vigorous levyin which movement of rice isthe state's borders are thePradesh procurement systemlarge public distribution syst
efforts and the mannerfrom the mills and across
on which the Andhrabased, which in turn has made afeasible. Procurement of rice for
the central pool in the year 1990-91 stood at 3.3 million tonnes. In1987 there were 35,193 fair priqe shops in Andhra Pradesh serving27,221 villages and towns.
As illustrated by Uttar Praddsh, the mere arrival of grains intothe hands of the goverilment dQes not, ipso facto,lead to its beingchannelled to the needy or the poor. This was also true of AndhraPradesh until 1983. For examplp, Andhra Pradesh procured 0.697million tonnes in 198G-81 and 11.10 million tonnes in 1981-82. Yetin these two years only 0.261 million tonnes and 0.370 milliontonnes respectively went into fdir price shops. However, with thegovernment taking a decision i[ early 1983 to identify and targetpoor households and provide ihem with 25 kg of foodgrains per
Poyertr tlrd lhe lndian Pubtic Distribut on Syatem 1 11
month on an assured basis, procurement and purchases were stepped
up sharply. The quantities channelled through fair price shops
registered a quantuxr jtmp to 1.368 miltion tonnes in 1982-83'
1.831 million tonnes in 198H4 and 1.89 million tonnes in 19&l-{5'the per capita distribution per annum (taking the whole ratherthan just target population identified into consideration) advancing
from 5.90 per kg in 1981-82 to 34.53 kg in 198'{-85.
The essential points of difference between Kerala's PDS on the
one hand and those of Tamil Nadu and Andhra Pradesh on the
other are:
1. Kerala's is a comprehensive systern covering every house-
hold, whereas those of Tamil Nadu and Andhra Pradesh
attempt to cover households indentified on the basis ofincome.
2. The Tamil Nadu and Andhra Pradesh systems subsidise
foodgrains sold to the identified households while Kerala's
does not.3. In Tamil Nadu and Andhra Pradesh, the respective state
agencies, namely, the Tamil Nadu State Civil Su-pplies Cor-poration and the Andhra Pradesh State Essential Com-modities Corporation, as well as the cooperatives of TamilNadu are responsible for carrying foodgrains right up to thevillage fair price shops. In Kerala, on the other haird,, theprivate fair price shop deale r is responsible for movinggrains from the wholesale depots situated at the taluq head-
quarters to the village fair price shops.
Price and transport subsidies cost the Tamil Nadu exchequerRs- 1,000 million annually while to Andhra Pradesh, the cost was
Rs. 1,760 million in the financial year 1985-86.The similarity among all the three systems lies in the measures
they take to maintain open market availability of foodgrains inorder to keep prices under control. It may-also be argued that,given the very large coverage of targeted households by theAndhra Pradesh and Tamil Nadu schemes, especially with thelatter keeping the household income limit as high as Rs. 1,000per month, these two schemes are similar to that of Kerala. Thecommitment in these two schemes is to provide a certain quantityof foodgrains per month at fixed prices. This makes them akin to
112 Deliverance from Hunget
It is also instructive to the efforts of Tamil Nadu withthose of some other states in the matter of procurement anddisfribution of foodgrains. is chronically deficit and hasnecessarily to bd supported by allotment of foodgrainsby the central government. Pradesh has more or less theright food-population balance in terms of effective demand. itis a'surplus' state even in a year. Tamil Nadu does notcome under either the deficit or category, even though in ayear of good monsoons it get to be 'surplus'. Given the
production between the years,significant fluctuations inand its relatively low level ofwell have, as certain other
capita cereal production, it couldhave done, relied entirely on
central pool allotments tomaintained steadv levels of
after its needs. Instead, it hasand purchases, mostly
from its own production but toits borders, in order to runappropriate that the allotmentstime from the centre, and the and purchases it hasmaSle of its own accord, be placed in juxtaposition with
the value and result of its efforts.a good period for this evaluation.
c€rtain other states toThe Sixth Plan period will serve
Tables 3.10 gives the efforts made bv Orissa. astate which is much better than Tamil Nadu in terms of percapita production of cereals; Pradesh. which is verv muchbetter placed than Tamil Nadu terms of per capita production;and Bihar. which is onlv sli
The Uttar Pradesh datait made no effort to make anyOne can argue that since it was
certain extent even from outsidecredible PDS. It is, therefore,it has received over a period of
worse off than Tamil Nadu.that during the Sixth Plan period
on its own account.
of foodgrains that could have atagriculturally far poorer Tamil
large quantities of grainfor the central pool, it did notaccount. But then it also made
to procure anything on its owneffort to maximise the receipt of
sto€ks from the centre, which have enabled it to providethrough the PDS a per capitaleast matched, if not bettered,Nadu. Bihar, like Uttar Pradesh,to obtain adequate central pool
no effort either to procure orion to make a PDS possible.
Orissa, too. made no effort in last three years of the Sixth
Poverty and the tndian Public Distribution System
resle 3.10
Off-take in PDS (rg&I-tl to 1984-t5)
113
(in millioa tonnes)
Year In State PDS
Quanttty Quantitydrawn from procured bycmtral pool staE
for use government
for rue
Total Per capilooff-uke off-take per
year (in kg)
A. Uttar Pmdesh
1980-81
1981-821982-831983-84
198+85
B. Bihar
1980-81
1981-821982-83
198184198+85
C. Orissr
t980-811981-82
t 982-83198!841984-85
D. Tamil Nadu
1980-81l98l-821982-83
198!84198+85
0.688
0.4830.8670.501
0.242
0.52'.1
0.3350.5870.7010.244
0.870.103
0.2770.2290.196
o.20'7
o.4490.0,61
0.5870.344
0.071
0.0480.0190.0550.073
0.t23o.t29
0.1490.440.595
0.82 tt.023
0.688
0.4830.867
0.501
0.242
0.391
0.368o.5970.7u20.255
0.t67o.2520.303o.2360.206
o.22'7
0.'t r'l0.827
1.087
r.079
6.204.257 .47
1.99
5.595.158. 18
9.403.34
6.33
9.38I1.08E.47
7 .26
4.6814.57
16.542r.q20.E9
Sources: A. Department of Food. Covernment of Uttar Pradesh.B. Secretary. Food and Civil Supplies. Covernment of Bihar.C. Food and Civil Supplies. Government of Orissa.D. Food and Consumer Proteaion Deoartment. Oovernment of Tamil
Nadu.
I
i.tireran"e from Hungcr114
Plan period, though it did try id the previous two years to match,on its own, central allotments to the state. Compared to thesestates, Tamil Nadu's consistent pprformance in more than matchingcentral allotments, usuallv undef difficult conditions, stands out asan example of what the state goriernments can do if they have evena little concern for the hungry.
A look at procurement of oefeals at the national level shows asteady increase in the flow of cefeals into the hands of the govern-ment right up to 198!84. In tlrat year, when cereal productionbroke all records and reached 139.15 million tonnes, procurementreached a level of 16.17 million tonnes (see Table 3.2).
In 1984-85, cereal production fell sharply by 5.15 million tonnesto 134 million tonnes compared {o 198}84. However, procurementwent up from 16.17 million tofrnes to 19.12 million tonnes, anincrease of 2.95 million tonnes. The production artd procurementtrends in the 1980s have shown that regardless of the fluctuationsin production, government agbncies were receiving increasingquantities of grain because of the low purchasing power of themasses. The price that the averflge poor Indian could pay for hisfoodgrains requirement, whereVer he lived outside of the Punjab-Haryana belt, was less than even the support price that government
had notified for the purchase of wheat and paddy. Otherwise, thewheat and rice produced in the lreen revolution belt would have,if classical economists are correft, found their way if not down tothe southern peninsula, at least to the neighbouring acute povertybelt of the Indian heartland, Mdharashtra and Gujarat. But whathappened was that stdte agencles bought up whatever the poorcould not afford, building up in fthe process maintains of food thatliterally overflowed from the government warehouses into theopen.
The year 198!86 only exaglerated this phenornenon. Therbwas an increase in the country'q cereal production by 1.50 milliontonnes to 135.5 million tonnes, hnd a further increase in procure-ment by one million tonnes, (aking the level to 20.04 milliontonnes. Table 3.l l gives the l98zt-85 and 198!-86 production andprocurement figures for the six major states that contribute morethan half the countqfs produttion of cereals and account fornearly all its procurement. ,
Despite the increasing quantilies coming into government handsduring the years 198!84, l9E-85 and 198${6, the foodgrainsgoing into fair price shops showpd no increase either in 1984 or in
Poyerty end the lndian public Distribution System 11S
rerle 3.11Celeal Producdon and hocurement In the Slx Ststcs thrt Account
for Procurem€nt Stgnfftcsntty (f $+ES rnd f9$-E6)(in million tonnes)
198'La5 1985-{,6
Prcduction Proculement Production Procurement
PunjabUttar PradeshHaryanaAndhra PradeshTamil NaduMadhya PradeshAll-India including all
other states
1,4.97
n.516.489.10
6.8410.75
134.0
0.8070.M7
19.12
16.7628.49
13.00
135.50
10.330
3.zffi3.0001.550
0.8500.605
20.M
Sourc!; Mioistry of Agriculture, Government of India, and the Food CorDorationof India. New D€lhi.
1985. On the contrary, compared to 1983 public distribution throughfair price shops actually came down in these years. Against adistribution of 11.04 million tonnes in 1983, the quantities distri-buted in 1984 and 1985 were only 8.49 and 9.01 million tonnesrespectively. This is less than the peak 11 million tonnes that wentinto fair price shops in 1983 by 2 to 2.5 million tonnes. Thus thequantity made available in 1984 and 1985 actually declined by 2 to2.5 million tonnes, even though procurement went up by 3 to 4million tonnes with a corresponding increase in stocks.
An analysis of the distribution made in 1985 shows the emer-gence of certain new trends in the management of food stocks 6ygovernment. With a view to liquidating accumulated stocks resultingfrom increased production and price support operations, in 1985the governririint worked out a new scheme under which it decidedto sell wheat stocks purchased from the farmers by public agenciesto private traders. It did this through auctions and by calling fortFnders. This scheme, which was adopted in August 1985, wasabandoned in October of the same year. and in November andDecember wheat was sold at a fixed price of Rs. 175 per quintal toprivate trade. (The issug price of wheat to the state governmentsor their agencies for use in the PDS was Rs. 172 per quintal duringthis period.) Table 3.12 shows how cereals from central poolstocks were managed during 1985.
It can be seen from Table 3.12 that of the off-take of 15.31
RLEGP)
Source: Food Corpomtion of India, Nev Delhi.
million tonnes from the centrai pool in 1985, a staggering 5.0
million tonnes were lifted by t$e roller flour mills' an all'timerecord for a single year and 2 mill]ion tonnes more than the average
of 3 million in previous years, fl.nother 0.42 million tonnes weresold to private trade. As against this, the quantity utilised in fairprice shops was 9.01 million torlnes. The quantity of foodgrainsused for employment was 0.36 million tonnes. Asmuch'as 27 per cent of the procure{ at public cost by theGovernment of India went to business, while 0.34 milliontonnes were exported. The distributed through fair price
shops at 9 million tonnes was higher by half-a-milliontonnes compared to the year (1984) and 2 million tonnes
. Table 3.13 gives details of the
Fair price shope
Rural employment programmcs (NREPDefence services
Roller flour millsFree sales to private tradeExportsOthersTotd
less than that distributed inmanagement of central pool
Deliverance from Hunger
Pml Stocks (r9E5)(in million tonnes)
9.010.360.165.000.40.340.02
15.31
in 1986.
Distribution in 1986 shows tulo significant departures as far as
the rural poor are concerned. Irl December 1985, Government ofIndia initiated a programme td distribute foodgrains to people
living in the Integrated Tribal Project (ITDP) areas.
It is therefore appropriate to adp this quantity to the distributionthrough fair price shops. Thus in 1986, a total of 11.28 milliontonnes was distributed in the through fair price shops, alevel which is approximately th{ same or a little higher than thatreached in 1983. the record year. The policy move todistribute more foodsrains fair price shops is undoubtedlYcommendable but, given the distribution level of 18.62
million tonnes in 1986, th€re was no need to restrict this programme
to iust ITDP areas, since there was no shortage of
Poy.tty tnd th. tndi.n Publla Dktribtttion Systenr
rrllp 3.13
Mrnrgemcnt of Cchtrd Pool Grrlns (19t6)
117
fin million mwus)
Fair price shopsITDP areasRural employmcnt programmes (NREP, RLEGP
and EGS)Defence servicesRoller flour millsFree sales to private tradeExportsOthersTotrl
9.6t.a
r.910.272.402.490.?l0.06
r8.62
Source: Food Corporation of India, Nel' Delhi.
foodgrains in government stocks. This is borne out by the fact thatduring this year, the government also made available a quantity of5 million tonnes to private business,2.40 million tonnes to rollerflour mills and 2.49 million tonnes to private trade. The sales toprivate business in 1986 were only half-a-million tonnes less thanin 1985. While the roller flour mills secured 2.zO million tonnes, a
little less than the customary 3 million, private trade obtained 2.5
million tonnes. There appears to be no good reason why these 5
million tonnes could not also have been distributed through fairprice shops in rural areas. It is the government's declared policythat the PDS should be taken to the rural areas, including thosethat are distant or remote. Though the ITDP sch'eme unquestion-ably seeks to distribute grains in remote areas, it is not clear why,when grains were available, other rural areas closer to storagepoints were excluded in favour of private trade. The country was
disposing of an unprecedented 18.62 million tonnes of foodgrainsagainst an arrival of about 20 million tonnes by way of procurement.Yet the PDS was not preferred as a channel for distributiondespite the prevalance of acute hunger in rural areas.
In view of this, the government's decision in Octob€r 1986 to notsell any more wheat from the public agencies' stocks to roller flourmills, a! the expense of the taxPay€r, was commendable. At thesame time, however, disposal of grains-heavily subsidised at thefarm level and.acquired, stored, quality-protected, and carried todistant parts of the country at heavy public expense-to privatetrade, defies logic. All that it would do is to encourage the roller
118 Dcllvrrancc fiom Hunge
flour mills to buy the grains froni the Food Corporation of Indiain the form of 'free trade'. This is ofactly what happened and, what ismore, sales to roller flour mills oflwheat at subsidised prices wereresumed by the government and fontinued in 1986 and 1987.
During the financial year 1.98${6, the roller flour mills securedwheat from the Food Corporatiou of India at Rs. 172 per quintalwhile private trade acquired it at Rs. L75 per quintal. For rollerflour mills, this price went up tp Rs. 190 and subsequently toRs. 220 in 1986-87, then came dbwn to Rs. 205 (Rs. 200 for 'C'and 'D' categories) and to Rs. 195 for imported wheat (Rs. 190 for'C' and 'D' categories). As for salfs to the trade, from Rs. 175 perquintal it rose to Rs. 193 in Febuiary 1986, going up ro Rs. 222 inJuly before being reduced to Rs. 2q5 per quintal in the same month.
The issue price of wheat to fair price shops during 1985-86 wasRs. 172 per quintal up to 1 Febgrary 1986; subsequently, up toMarch 1987, it was Rs. 190 per qfrintal. After this, it was revisedupward to Rs. 195 per quintal.
By selling wheat to the free tr{de at prices mentioned above,' the subsidy that the governmen( incurred in the financial year1985-86 was Rs. 67.94 pr quintal or Rs. 679.40 million per milliontonnes. For sale to the roller flour mills, the corresponding subsidywas Rs. 65.57 per quintal or Rs. 655.70 million per million tonnes.Thus in 1985*86, the total burdeh on the taxpayer on these twoaccounts--at 0.42 million tonnes for private trade and 5 milliontonnes for roller flour mills--was F+. 285.35 million and Rs. 3,278.50million respectively, making a toraf subsidy of Rs. 3,563.85 million.The costs in 1.986-87 were estimdted at Rs.60.88 per quintal ofwheat sold to pri\rate trade or Rs. 608.80 million for every milliontonnes. The corresponding subsidy for roller flour mills was esti-mated at Rs.55.03 per quintal o{ Rs.550.30 per million tonnes.The burden on the taxpayer in Lp86 was Rs. 1,515.90 million onaccount of the sale of 2.49 tonnes to the private trade and
sales to the roller flour mills ofRs. 1,320.72 million on account2.40 million tonnes, totalling Rs. .63 million. All this is partof the funds which the of India provides for in its
'food subsidy'. About 4.09non-plan budget, under what ismillion tonnes were similarlv of in 1987.
In 1986 there was a sharp rise the allocation of foodgrains forrural employment generation which, at 1.91 milliontonnes of grains, was somethingthe NREP and RLEGP durine
a record since the inception ofSixth Plan period. While this
Poverty and the tndian Pablic Distribution System 119
was entirely in the right direction, its full and appropriate use and
absorption in terms of real wages for the rural poor has to bejudged against the matching cash resource that was allocated in theplan budget of the Rural Development Department. Enough has
been said about this in the first chapter, which also indicates thesteps needed to rectify the cash-grains imbalance. In the absence
of such a balance, the rural poor will not receive the benefits that a
large allocation of foodgrains may apparently promise.To sum up, the approach to foodgrain management in 1985 and
1986, so far as it depended upon channelling 10.31 million tonnesto roller flour mills and private trade in order to deal with therising stocks of foodgrains in government hands, shows a seriousflaw in the central government's food supply management policiesgiven the levels of hunger prevalent in the country.
The fndian Public Distribution System has thus failed to fulfilthe role assigned to it by the planners in every crucial respect,thereby directly contributing to the continued existence of the kindand level of poverty that characterises the country today, parti-cularly in rural areas. The exceptions are the states of Kerala,Andhra Pradesh and Tamil Nadu and, to a certain extent, WestBengal. Karnataka has also initiated a PDS modelled on the one inAndhra Pradesh, but on a much smaller scale. Likewise, Gujarattoo has started a distribution scheme to help households identifiedas poor. It is therefore crucial to find out why the endeavour todesign and operate a credible or near-credible PDS as a basic anti-poverty measure is restricted to a few states.
The Indian food security system has not recognised or acceptedthe position that for food security to be meaningful, it should be atthe level of the household, both urban and rural. Notwithstandingall that is said to the contrary in the PIan documents, the PDS inIndia has remained a metropolitan, or at best, an urban pheno-menon catering to the 'stability of prices' for better-off consumersin the metropolitan and a few, select urban cities of the country.This is because, despite the stated policies, we still seem to bedominated by the Bengal famine syndrome. The policy-makerslook upon even the massive stocks built up in the mid-1980s as
merely a guarantee against sudden fluctuations in foodgrainsoutput caused by the vagaries of weather. This policy attitude,which is a combination of maintaining price stability for the urbanconsumer and insurance against a calamity, is the hangover of apast that is not relevant to the realities of current production and
distribution capability or the im{ge of India as a fast-developingand emerging agricultural powef. This mmbination of a lack ofawareness of the country's capabiuties and an over-defensive attitudewhich ignores the basic needs of the poor, has given birth to anuntenable theory in Indian,food rtanagement circles that the Indian
Dellverence from Hungr
PDS is designed to what, in metropolitan urbanareas, is available in the 'free , thus negating the objectivesproclaimed in the Plan of the PDS ensuring 'food forall' or of the Cquitable of available foodgrains amongstall. The result is that while thepains to identify the number of
Commission has takenliving below the poverty
line. which is neallv the of those living in hunger, noefforts have been made torequirements of this hungry
even a part of the foodgrainsto them, by identifying it
are the state authorities for, byreference whatever to specifichouseholds. they are not pinned
at the household level. Even whfn plenty of food has been avail-able in the country, masses of
There is no policy directivestates that they should identify
continue to go hungry.the central sovernment to the
living below the povertyline for the purpose of creating PDS based on either the incomecriterion adopted by the Commission or bv anv otherappropriate melns. The result is that there is no responsibility on
available a specific quantity ofthe part of the centre tofoodgrains to the states based on certain minimum quantity to beprovided to each poor per month. This is a convenientsituation for the central to be in, for then they can
to various states without anymake vague allotments of freference to a socio--economic jective based on people's needs
for which thev can be held . Equally delighttully placedallotments that bear no
by way of reaching specificto a specific performance in
this branch 9f developmental ion. Since there is noexpectation on the part of the bentre that the poor householdsalone should be the the states find it convenient todistribute foodgrains allotted to almost exclusively in urbanareas. The result is that the subsidies' do not go to the reallypoor in any substantial manner.
The Central Government has responsibility and a lead role inrectifying this situation, for,the States alone.
of hunger cannot be left to
4
A Public Distribution-cum-Delivery System for India
It has been generally accepted that in the war against poverty' the
first battle is against hunger. The need for food security was
underscored by ieading economists from India and abroad, particularly from the World Bank and the Food and Agricultural Organ-
isation (FAO) at a seminar held in Delhi in April 1985'' The onus
of responsibility to ensure food security to the poorlay on society
and governments everywhere. By far the most specific equation ofpoverty with hunger came from Shlomo Reutlinger's paper which
irad earlier been presented at a World Bank symposium' Reut-
linger recommends that 'the ultimate solution is obviously to provide
the chronically food insecure with opPortunities to improve their
income...."The Sixth and Seventh Plan documents bear testimony to this
approach which has been adopted in the planing process' The two
anti-poverty programmes-NREP and RLEGP-were part of the
implementation measures adopted. There can be no objection to
this approach. But as seen in an earlier chapter, three problems
arise: one is that the segment of the poor for which self-employment
opportunities are sought to be created through subsidy-cum-loan-
financed asset-based programmes is unable to operate these schemes
because of that very chronic hunger which the schemes seek to
abolish; the second is that, apart from being inadequate in terms of
' See Vol. I---+eminar papers-'seminar on the Role of Foodgrain Agencies in
Food Security in Asia and the Pacific', sponsored by the FAO, AFMA and the
Food Corftoration of India, Vigyan Bhavan' New Delhi' 23 to 25 April 1985',Ibid.
122
T
Deliverance from Hunger
outlays, wage employment progfammes for the rural poor lack anefficient delivery system; the is that the continuing rise inprices of foodgrains and essential commodities leads toerosion in such additionalpoverty measures and by the
as are generated by anti-growth process. The fact that
the rural poor are unorganised {nd have no ielief from erosion ofwages has been well by the Report of the SubCommittee of the Consultative Committee for the
L987.A public distribution system hfs obvious and intimate relevance
to all three anti-poverty. issues mentioned above, because onlvsuch a system can have the to deliver essentialcommodities to meet the food requirements of hungryhouseholds, to control prices in tfre open market and to deliver thefoodgrains required at the level on a day-to-day basis tothose participants in the ruralwho are dependent on daily
ment generation prograrnmes. As has already been said
before, this kind of deliverv does not exist in most parts' of
Ministry of Labour for Studying ind Reporting on the problems ofUnorganised Workers in the Alricultuial SeCtor, released in late
the country at present. To expeft a block's official agencies like,the engineering staff or village d{velopment officers to carry food-grains to work spots in different jrarts of the block and ensure thatthey are actually deliveredto the workers, is to ask for the imposs-ible. No technical officer consid$rs this to be his job. The villagedevelopment officer who, in most areas, is essentialiv an agriculturalextension worker, is already burdened with a multiilicity ofresponsibilities--from motivatin! candidates to observe familyplanning practices to T&V work in the villages under his jurisdic-tion. So in truth. the NREP and RLEGp, conceived strictly as'departmental' programmes as {gainst programmes that .can beexecuted by contractors, came to be in fact executed by contractorsin most places, although under vafrying labels. The result is that thecontractor becomes the arbiter qf when and whether at all grainsshould be brought to the work spfts. He often finds it burdensometo take delivery of grains from fa{-off godowns and transport themto the work spot. And there has always persisted the feeling thatoontractors have sold away the fciodgrains at taluq or sub-divisionlevels. In short, the delivery of t[re nutrition component of theseprogrammes is not legitimately fhe responsibility of any of the
A Pubtic Distribution'-cutn-Detivery System for lndia 12?
prime actors in these prograxrmes. The essence of the nutrition
component is that foodgrains be given to a worker as wages on
each and every day that he participates in the programme' To the
extent he does not get this component, a worker suffers wage
erosion for he is forced to buy his foodgrains in the open market at
a much higher price. He suffers equally if, on another day, under
the guise of compensating him for the grain wages not paid to him'
he is paid the equivalent of a few days' grain lvages all at one time,
for hi may not need that much grain on that occasion. It might also
pre-empt his cash wages with which he might want to buy other
essential goods. Thus in a rural employment generation prograrnme'
the essence of the foodgrains component lies in its daily availability at
the concessional prices announced by the government, at daily
scales that are neither inadequate nor excessive' All these condi-
tions can be met by a regulaily-run fair price shop in the village
where the employment programme is under implementation, the
functioning of the fair price shop being appropriately kept under
the voluntary vigil of the elders and other representatives of the
public, including the target group, to ensure that the shop dealer
does not behave in the same manner as the more powerful works
contractor. The non-recogrrition of the absolutely essential need fora rural foodgrains delivery infrastructure in rural employmentprogrammes is a serious defect in the very design of these pro-grammes as seen in the NREP and RLEGP and had the potential
to defeat the very objective of these programmes.
However, as seen earlier, except in a few states, the PDS in
India is not visible in the rural areas even though 261'519 fair price
shops were shown to exist in the rural areas in 1987.3 Being
essentially an urbarmetropolitan system, and an undifferentiated,untargeted system, ostensibly serving everyone, and at a per capita
, level of release that can make no impact on the large rnajority ofhouseholds in the country, it has little relevance to the rural poor
as a food security system. That a PDS can, however, act as the
all-important delivery system required to implement the ruralemployment programmes is obvious.
The need to provide consumption finance that is crucial for the
successful implementation of the IRDP has been pointed outearlier in this study. An important part of the consumption finance
I Ministry of Civit Supplies, Government of India, New Delhi.
Ileliverance from Hunger
required by the beneficiary can and should be madeavailable in the .form of Here, again, the PDS canfunction as the conduit to foodgrains meant for IRDPbeneficiaries, whose number into millions and all of whomlive in rural areas.
Perhaps the greatest of our development managementprocess has been the lack of a eredible deliverv svstem at thebeneficiarv level in rural only in the rural developmentprogrammes but in most of o$r programmes. A properly istab_lished, well-run PDS in the areas, covering every village, and
. with its management under constant vigil of the villagemmmunity, will remove this thus eliminating the deliverybottleneck in rural programmes. Can the country runsuch a composite fpod system? Does it havethe quantities of foodgrains to operate such a svstem andcredible anti-poverty ? What will be the cost of such a
system?To answer these questions, first need to pinpoint the following:
L. the total number of housQholds that woutd benefit from thepublic distribution
2. the number of man daysrural wage employment
should be generated under the
3. the number of that would need to be providedfood security of a level, covered under the asset-based IRDP
4. the other sectors for supplies of foodgrains have to be
5. the price at which should be made availablethroush the system and thedelivery cost involved.
Before we answer the questions, we must have a basican average household needs byunderstanding of what it is
way of its minimum nutritionalour efforts and results by that
so that we may judge
versus quantity always arises hnd advocates of balanced dietswould recommend one that is bdth qualitatively and quantitativelyadequate. Quality includes no{ only a balance between energy
In discussing nutrition the question of quality
A Pubtic Distributiorr'currtsDetivery System fot lndia
' C. Gopalan, B.V Rama Sastri and S.C' Balasubramsnian, Nuritiuc-Volue ofIndisn Foids, National lnstitute of Nukition' Indian Council of Mcdical Rcfcarch'
Hyderabad, 1974, P. 9.1 lbid., p. 10.6 lbid., p. 2?.7 lbid.. p. 33.
1E
needs and nutrient needs, but also preferred tastes in the con-
,u-ption of food. But while discussing poverty in the context in
which our rural poor live, we are' even now' concerned only with
quantity, that too *ith th" -ini-.rm required to supply the minimum
Jn".gy'n""O"A to live and work. As Gopalan, Rama Sastri and
Balasubramanian Point out:
Naturally, ensuring both is obviously the most desirable' But
where a priority is inevitable, the question of enough foodshould take preiedence over quality and other considerations'
It is comparatively easy to decide whether or not enough is
being provided because in the absence of enough food' com-
plaints of hunger can reasonably be expected''
From the 'complaints of hunger' recorded by us in Chapter f it is
obvious that 'not enough is being provided'to the rural poor'
What should this 'enough food' be? Gopalan and others point
out that the body's total energy requirements ca! be divided into
two components: the basal energy required for such vital functions
as respiration and circulation; and the energy required for the
actual physical activities of the individual, determined by his or her
o"",rp"iion (writing, shoe-making, woodtutting): while writing is
light work, shoe-making is moderate work and wood-cutting is
heavy work.5Aocording to the recommendation made by the Nutrition Expert
Group of the ICMR in 1968, while a sedentary male worker needs
2,400 calories of energy per day, a moderate worker needs 2,800
catories, and heavy worker would require as much as 3,9(tr calories'
The corresponding figures for females are 2,?-00 calories for amoderate worker and 3,000 for those engaged in heavy work'o
Gopalan et al. have pointed out that 70 to 80 per cent of the
calories in Indian diets come from cereals such as wheat, rice and
coarse grains, which are the cheapest source of calories in the diets
of the ;ajority of our population.'They have also pointed out that
extensive
126 Delivcranco from Hunger
, malnutrition accounts foramong our population..
diet surveys carried out inl our country over the last severalyears have shown that the diets of a good proportion of ourpopulllion who belong to thd poor ioco-" groupu
"re inadequate
according to-accepted standalds Among the poorer sectionsof the population even the basic caloric re!uir#"ot,
"r" no,
met . . Results of nutrifion surveys havi indicated a highincidence of frank nutritiohal deficiincy diseases, especiallyamongst the vulnerable sedtions of ihe population__pregnantwomen, infants, children an{ nursing mothers. It may be pointedout that for every case with frank signs, there are several casesin the sub.clinical or .twililht' zone of malnutrition, in thecommunity. Many may not pxhibit frank signs of malnutrition,but being far from the state of positive goo'O health. they mayfall an easy prey to intercurr{nt ailments.ln addition to aillentsdirectly attdbutable to ition, it is now known that mal-nutrition aggravates thediseases. Thus, directly ora considerable part of the
course of many infectious
maximum efficiency, namely 5Q per cent; at Z,SS0 calories at 32per cent and at 3,200 calories a[.30 per cent.o
For purposes of ptanning, in India has been measured interms of the daily calorie intake pf a person. Experts have variouslyestimated the minimum calorie of a person in Indianconditions. Dandekar and accept as adequate an intake of
' lbid., pp. 42 and 43.' K.C. S€al and A.R. Rao, .Nuritiod Statistics in lodia', reprint Irom lmpoct of
P-V. Sukhatme on Agiculrura! Statis,ici and Nutririon.
A Pubtic DistribidiorrcutttsItelivety System for lndia 127
2,250 calories per caPita per day in both urban and rural areas''o
Sukhatme favours a minimum 'requirement of calorie intake as
against an average requirement, his minimum being the level
bilow which an individual can be treated as undernourished' The
Nutrition Expert Group of 1968, however, recognised that age'
sex and nature of activity determined calorie needs and provided
for them accordingly. But on the average' the daily calorie require-
ments per person have worked out to 2,400 in rural and 2'100 in
urban ireai. Based on this norm, the poverty line is defined by the
Planning C.ommission as the midpoint of the monthly per capita
expenditure class having a calorie intake of this magnitude.
Th"r" *n be much debate about what is 'enough food' in the
context of the calorie needs abcepted by the Planning Commission'
V.K.R.V. Rao, who has examined the enitre gamut of the calorie
approach to nutrition spanning the FAO, Sukhatme and the Plan-
ning Commission, has pointed out the fallacies involved in deter-
mining distribution policies based on nutrition norms related to
caloriis. He and many other writers on the subject have pointed
out, inter alia, the enormous differences in climatic conditions
between various parts of India and questioned the soundness ofadopting an average caloric norm for Indians. Rao concludes that
we do not as yet have .authoritative findings on the relation between
food and nutrition and has stated that unless
nutritionists consider whether it is not desirable to examine the
relation between food and nutrition on an inter-regional and
inter-state basis, instead of on a national basis as they seem tobe doing at present . " . it is doubtful if we can make effective
use of nutritional criteria in framing long-range policies forlinking food with nutrition . . . or solving the nutritional problems
. . . especially ofthe weaker sections with their low level of botheducation and purchasing Power. "
Valid as this argument is, planners and decision-makers have to
start somewhere. An examination of the caloric criterion adopted
r0 V.M. Dandekar and Nilakantha R^th, Poverty in India' lndian School of
Political Economy, Poona, 1g7l p. 6.r) V.K.R.V. Rao, Food, Nutition on l Povedy in india, pP. 13E-45: addendum
on 'Some Nutritional Puzdes"
128
to reorganise the distribution
Delivcrance from Hunger
operating, it will be necessaryif one is to successfully supply
by the Planning Commission in fhe context of information gatheredthrough enctairies at the house[old level confirm that at least tothe extent of an average s cereal consumption, thecaloric norms adopted by the Commission and the findingsof the National Sample Survey Organisation on the consumptionof cereals and cereal approximate to the reality on theground. Given this, it seems to go by the PlanningCommission's caloric norms we consider a proposal for thecountry as a whole. this is not to say that further
needs should not be attemptedrefinements depending ononce the implernentation of a gets under. way.
Therefore, when we discuss tlie performance ofor the need for aPDS in the context of , we have to keep in mind theminimum nutrltional of the household. The startinspoint, is thus an individual's need of 2.400 calories inrural areas, where the nature work is admittedly heavy andwhere a little over 82 per cent of the entire country's poor live.Another point to bear in is that given the lackadaisicalmanner in which the PDS has
the poor with at least the basic beginning with cereals.The 38th round of the Sample Survey, 1983, shows that
59.74 per cent of the household consumer expenditure on food inrural areas, as far as the that lives below the povertyline is concerned, is taken up b[ cereals. In the urban areas it is54.56 per cent. Taking the in rural areas as the guide-line, we find that 59.74 per cent <[r about 1,434 calories will have tobe secured from cereals which \ fill be the equivalent of about 414gm per person per day at a of. 2,4N calories. In urbanareas, 54.56 p€r cent or 1,146 calories will have to besecured from cereals which will be the equivalent of 331 gm perperson per day at a minimum o[ 2,100 calories. Since the size ofthe average rural household is 5.b0, its average cereal requirimentwill be 2.32 kg, while it will !e 1.81 kg for an average urbanhousehoid. which comprises 5.46 oersons. It would therefore hehousehoid, comprises 5.{6 persons. It would therefore beappropriate to assume a cereal of 2 kg per day perhousehold which would to about 60 kg per month.
A Public Distributiorr-cut tsOdtv'ry Sy gten for lndia 129
off-take in fair price shops since the inception of the PDS in India,we find that a release of that magnitude would provide 17.5 kg ofcereals per month per poor household to all the poor households
in the country, if the poor households alone, as reckoned at the198H4 poverty level by the Planning Commission, are the bene-
ficiaries of the PDS, say, in the year L986. For an average poorhousehold, at 17.5 kg of cereals, a little above 29 per cent orbetween one-third and one-fourth of its minimum cereal needs willbe met at the present consumption levels. the quantity is admittedlymodest. Considering, however, the very low purchasing power ofthe rural poor and considering that precious little by way of food-grains has been channelled to the rural areas until now, and thatwhat we are aiming to do is to bridge the energy gap, 17.5 kg permonth per poor household will indeed be a good beginning in areformed PDS. At this level, the daily calories provided per house-
hold of five members through the PDS will be 2,018.34 or a dailyper capita of 4(X calories.
Therefore, if we decide to utilise this level of foodgrains exclus-ively for the poor in rural and urban areas, the result will be apositive relief to the poor wherever they are in the country. Asmany as 51.67 million poor households will receive a guaranteedsupply of about 29 per cent of their cereal needs each month atfixed prices-a comfort that only their better-off brethren in themetropolitan areas have hitherto enjoyed. By the same token, thewell-to-do classes who have so far been the beneficiaries of thesubsidised PDS in metropolitan urban areas, will be denied access
to the subsidised supply of grains. The ones denied access, however,will be those who are non-poor as judged by the Planning Com-mission. What such non-poor need in terms of their legitimaterights is not the supply of foodgrains at subsidised prices, but theavailability of foodgrains. The govemrnent, thereforc, slrould assure
the states with the three metropolitan cities of Calcutta, Bombayand Madras and the Union Territory of Delhi the allocation requiredto meet half the cereal needs of the non-poor households, toensure availability at the economic cost of the Govemment ofIndia. Since the justification in favour of catering to the needs ofthe states with metropolitan cities is based on availability, it mustbe acknowledged that the urban poor in these cities are the mostvulnerable in the foodgrains market. Hence the households livingbelow the poverty line in Calcutta, Bombay, Madras and Delhi
130 Deliverance from Hungor
should be provided a quantity than the poor householdselsewhere in the country. The poor households shouldthus set half their total or 30 kg of cereals per month.Since the problem of is more special to Kerala than toany other state in India, the pdr capita production in that statebeing less than 50 ki per annum, the poor in Kerala should also betreated on par with the poor in the four metropolitan cities.
The emerging picture can bd seen in Table 4.1, which takes1986-87 as the model year for costs, adopting the 1986 populationand reckoning poverty ratios at [he 198]-84 level.
The off-take data have been based on that of the financial year198H4 keeping in mind the costs and budget provisions required.It will be noticed that the differenbe between the off-take particularsfor the calendar year 1983 showri in Table 14 of Chapter 2 are notmaterially different from those for the financial year 1983-84.While column 3 of Table 4.1 gives the off-take in 19838t, thehighest for any financial year, column 12 projects the needs at 17.5kg per poor household for all ther rural and urban poor householdsin 1986, the proportion of poverg households having been reckonedat the Planning Commission's 19E!84 poverty line percentages foreach state. This, however, is not a satisfactory way of meeting theneeds of special areas like Kerala] which, as seen from Tables I and3 of Chapter 3, is chronically an{ irreversibly deficit in foodgrainsproduction. As already pointed out. not only would the needs ofthe poor in Kerala be more acutf than those in other states, eventhe non-poor would. face a probfiem, despite purchasing capacitydue to the nonavailability of graihs. The requirements of the poorare ensured (see column 13 of T{ble 4.1) by the Kerala PDS beingprovided cereals at 30 kg per polr household. Column 15 of Table4.1 shows the roquirement of Kdrala's non-poor households to be30 kg per household or 1.212 miflion tonnes, which must be madeavailable to them. Thus, while 0f 1166 million tonnes of foodgrainssold to the poor households woirld be at subsidise d rates, 1.272million tonnes meant for the no$-ppor would be at the economiccost of the Government of Indid. column 13 in Table 4.1 showssimilar additional provisions fol Maharashtra, Tamil Nadu andBengal to meet the higher nee{s of the poor households of themetropolitan cites of Calcutta, Bombay and Madras, at 30 kg perhousehold per month. The diffefence in allocations against thesethree states as shown in columns !2 nd 14 reprcsents the additional
A Public Distrihttiohcun-Detiyerr System for lndia 131
allotments to the poor households of the cities of Calcutta, Bombayand Madras only. Similarly, for Delhi's poor households an addi-tional 12.5 kg per household (to provide 30 kg per household permonth) is provided in column 13. However, with the enhanced rateof 30 kg per poor household, the total allocations for Maharashtra,and Tamil Nadu are higher than in 1983-84. For Maharashtiathe increased allocation stands at 1.026 million tonnes, and it maybe argued that no further provision need be made under column15. Since, however, availability of foodgrains to the non-poor hasto be ensured at the same level as the allocation for the poor,though not at subsidised prices, Maharashtra is provided an addi-tional quantity of 0.527 million tonnes per annum at 30 kg permonth per non-poor household. Based on the pame principle, thepoor and the non-poor households needs at 30 kg per householdper month is provided for Madras, Calcutta and Delhi and includedin the overall allocation to the states concerned. Taking intoaccount the additional quantity of 3.017 million tonnes required toensure availability in Kerala and the four metropolitan cities, thetotal quantity of foodgrains needed to meet the demands of thePDS will thus be 14.29 million tonnes.
There is another area which needs the government's attention:the territories on the geographical periphery of the country whichare politically and strategically sensitive. These are Assam, Aruna-chal Pradesh, Himachal Pradesh, Jammu and Kashmir, Manipur,Meghalaya, Nagaland, Tripura, Mizoram, Sikkim, Andaman andNicobar Islands and Lakshadweep. The total allocation of food-grains to all these areas together amounted to around 1.152 milliontonnes in 1983-84, though the per household allotments variedfrom area to area. Since separate poverty figures for these areasare not available individually, distritrution in these areas will haveto be on a liberal basis rather than bound by any rigid allocations.Since the poor in these areas need to have their requirementsguaranteed, it is of paramount imponance that the allocations atthe 198184 level are maintained for these areas. This is shown incolumn 16. The total needs of the PDS then amount to 15 milliontonnes of foodgrains a year, of which about 12 million tonneswould be at subsidised rates.
If a PDS of the kind envisaged in this chapter is implemented,we shall be changing the character of a disorderly, metropolitan-urban oriented, undifferentiated, untargeted, free-for-all system
ncqdrenent of Ceredf ln l9t6{l for
S. .rvo. Srrtd Off-uke Popu-h latbn
IW-E4 tgUtthrough ceraut
PDS
Llvhg Llor thc Poycrty Llnc inMc6opotr.r Cltlcs of D.lhl,
Hotlscholbclow poverty
line I 6Hoatcholds
o.uz 0.22s 0.138 0.036
433 8.284 2.t53 4.tO 0.670
8.,fo4 4.63't 3.488 1.080
0.152 0.030 0.073 0.m5901 4.806 0.680 2.153 0.199
2.t54 0.905 0.235 0.190
.469 5.262 1.449 t.y26 0.378
0.060 0.013 0.029 0.002
Ptojca h for IW(nilti<n)
--
Rwdl UrbanRurol Urbarl
.656 1.686 0.5n 0.256 0.098
.76t 0.786 0.086 0.110 0.0()7
.414 9.350 2.7n 3.619 0.804161 3.452 0.433 0.A22 0.09.1
.837 11.2 1.595 5.W7 0.5q)490 4.561 2.140 t259 0.370
l Aodhra Pradcsh2. Assim3. Bihar4. C'uisrrr5. Hsryana6. Himachal Pradesh
7. Jamrnu and Kashmir8. Kimatak.9. K€ral.10. Madhya Pradesh
ll. M.harashtra12. Manipur13. Mcghalaya14. Nag.l&nd15. O.is6ai6. Punj.b17. Raiasthan18. Sikkim19. Tamil N.du20. Tripur.21. Uttrr Pr.desh22. W6l Beng.l23. Andaman & Nicobar2t. Aruna<ial Piadcah25. Chrndigsrh26. Dadra Nagsr Haveli2?. Dclhi28. Goa Dam.n .l Diu29. lakhadweep30. Mizoram31. Pondichesy
1,316 53.5y)448 19.W71f3 69.915l$ 34.08696 12.29252 4.28r
n5 5.9A3{ll 37.136
l,s.f,l 8.4543n 52.tT)918 62.1U35 1.121
94 1.336
48 0.n53m 2.63m58 16.789
30 y2n2,lO 0.316
6n 4E.{d99 2.053
542 1t0.8622,113 54.58t
l0 0.1s)31 0.6325 0.451
I 0.104565 6.m52 1.087
4 0.&o59 0.49413 0.6(x
.791 s.n8 2.0n 1.923 0.$7
.788 3.965 0.864 1.035 0.2il
.6y o.rn 0.069 0.023 0.fi}9
.534 0.241 0.053 0.081 0.m2
,f84 7.635 3.512 3.367 1.085
.t5t t7.7n 3.783 4.249 |.5250.386 0.050 0.091 0.010
7.W2 3.014 3.417 0.799I o.o37 0.015 0.01E 0.003
7y 0.t34 0.011 0.063 0.002
0.00/ 0.t24 0.m3 0.0220.ml 0.flI2 0.0t0 Neg0.fi8 1.4{b o.uz 0.2490.159 0.078 0.0?5 0.014
0.m4 0.m3 0.002 N.g.60f 0.(}?4 0.45 0.035 0.m4.6E3 0.(b3 0.(b7 0.030 0.012
.t23
.674,'ra
Toa.l I t.t23 585.185 193 104.778 32.m3 42.5,16 e.126
Rurd rnd Urbrtr hdb, rnd for the Non-poor lloucehoH.s in Neralr ond the FourCdcult , Dombcy .rd MrdrB
(N0 tonnes)
Annual r.qtirenEit at 17.5 kgper poor householdlmonth
irt 1986
Urbon
Addition^l Total Annuol Additionol Country'sannual onnuol rcquift- requirc- lotalfeguife- require- nEnts of ,ne4tt of cercalnwnt for ment for the house- the ser|li- require-,rvtro- poor hol^ tive statat rnentpolitan house- above to moin- fromcities holds povefly tain the PDS
and Kerala
@ 12.s ks
household
lin h I9B-44the m.to- supplypolitan level
cilias andKerola ol
3O kg./
ho4tehotd
1l
7ffi173
|,2r92U
54
23
,lO4
217
875
133
5
l5452
49,105
6707
l9|,732
?18
II2
9
t6I7
6
169
X124
78
mIE
r2755
141
227
2
NegI
40
79
224
2
3mt68
I
929t93
|,34334274
24
531
n21,016
9
7
t7l6
494
89
&935
21
2,O52
886
5
l4J
2
6lt9I8
9
ric
n,
;
;
I
9D193
| 1Al
34274-24
531
ffi r,2721,016
1,u26 527
7-
16-494
89
4U6-
980 Ul
2,O52
965 52t5-14-
l0r 449
19-l-E.9-
- 929255 ,148
- 1,343
- 342
28 52189 226
- 531
- 1,738
- 1,016
2A 35
71
32 ,18
- 494
-89_ 484
- ,t0
- |,2217894- 2,O5?
- t aal510
23 31
-)- 550
- 19
3451 59
-9t,916 10.85t I t.216 3.01?
134 Deliverance from Hunger
which largely patronises the not..lso-poor consumers at the cost ofthe taxpayer, into a Pl)S that is orderly in the sense that itsbeneficiaries would be sharply ipentified and targeted, and thatthey would know what their entitbment is on a regular, guaranteedbasis. In a system of specific {nd guaranteed entitlement, theconsumer, rather than the indiffdrent bureaucrat or the dishonestdealer, is the master. Once an entftlement is guaranteed, it becomesthe responsibility of the governfnent to ensure that it places inevery fair price shop a specific quantity of foodgrains for usewithin a specific time-frame-a wqek, a fortnight or a monttr--Sasedon the number of households to be served by that particular fairprice shop and the entitlement of each household. The entireadministration would thus becor{re public, with the various hier-archies of the government, the cpnsumers, the representatives ofthe consumers such as consumer bodies, people's representativessuch as the legislators, and non-g$vernmental, voluntary and socialservice organisations fully aware of the quantities that are by lawexpected to be received and distributed on a verifiable basis throughfair price shops. There will be no cause for action against trans-gressions such as those that charadterise the public distribution oper-ations at present. A fair price shop dealer will no longer be ablc totell the public that he has receive{ short supplies, and if he did andthe public found this to be true, [hen the political costs of such abreach of promise to the governmpnt of the day could be extremelyheavy. Conversely, the political gains to a government whichpromises a certain entitlement to needy consumers and ensures itsdischarge can be very handsome lndeed. Thus, guaranteed supplyof essentials to the poor households by way of assured food securityis also good political policy. In this system there is no gap betweenpromise and performance unless it be the result of administrativebreakdowns or breakdowns whigh are beyond the government'scontrol. In such a situation the cohsumers can always be taken intoconfidence and the reasons for fallure shared with them. The onlylosers in this system would be coirupt and indifferent governmentofficials and traders who thrive on pretended shortages, caused byunspecified and therefore artificially created uncertainty in supplies"
The first step, therefore, is to change the direction of publicdistribution, the flow in the reformpd system running in the directionof the targeted rural and urban peor who will clearly know exactlywhat their rights are in the supply system.
A Pubtic Distributiott-cuntDeiivery System lor tndia
We have seen, however, the acute poverty prevailing in rural
areas where wage levels are such that even at the presently subsidised
prices the pooi cannot afford to buy foodgrains' The centrally
is",re pricei in operation between February 1986 and October
1986 are given in Table 4.2-
TARLr- 4.2
Exdepot Issue Prices of Wheat and Rice Per Quint{l Rchss€d by tbe FCI
for th€ PDS from I Feubsry l9t6 eff€ctive till I (hober l9E6
WheatCommon riceFine riceSuperfine rice
135
Rs. 190
Rs.231Rs.243Rs.258
These were ex-depot prices. By the time foodgrains reach fairprice shops in urban and rural areas, to the small extent that thev
do, the costs of transport, handling, intermediate storage and the
shop dealer's margins are all added to the consumer price' There
have been cases where certain state governments have added
further charges called 'administrative charges'to these costs before
delivering foodgrains to the consumer and made them a source or
their general revenues at the expense of the consumers in the
PD$-a taxation without consent! This means that by the time the
foodgrains reach the consumer, in some cases at least, another 40
to 45 paise per kg could get added to the price. This in spite of the
government's instruction that such margins should not exceed 15
paise. Obviously, such a price would be completely beyond the
purchasing power of the poorest consumers. In Orissa, an amount
of Rs.44 per quintal of common rice, Rs.42 per quintal of fine
and Rs.47 per quintal of superfine rice was added in 1986 to the
FCI's issue price. before the rice was delivered to the consumer in
the PDS. Thus in mid-1986, the PDS consumer prices fixed by the
Orissa government for the three varieties of rice per kilogram were
Rs.2.75, Rs.2.85 and Rs.3.05 respectively' In Bihar, the prices
varied from Rs.2.65 to Rs.2.67 per kg for common, Rs.2.78 toRs. 2.80 for fine and Rs. 2.95 to Rs. 2.97 for superfine rice in the
same period. lf rice was distributed at a place beyond 20 km fromthe Bihar State Food and Civil Supplies Corporation's depots' itwculd cost more, depending upon the transport rates to be fixed
r:16 Deliverance from Hunger
by the Collector or Deputy Corilmissioner. In mid_19g6, the con_sumer price for wheat in the Blhar pDS consumer was fixedbetween Rs.2.16 and Rs.2.lg $er kg. In Uttar prua"rf, the ratefixed for wheat was Rs. 2.10 peikg *-hil" fo, ttr" it.""i".,"ti". otrice, the rates fixed were Rs. Z.{:, ns 2.65 and n..i.aO p", tg.These prices were above those at which tfrese gJns were availableln llre :p^e:r
market. In Bengal, t{e price fixedtrrt "'oL
ot *t "utj..-,|-"-l?: **Rs. 2._19 per kg w[riie for the three varieties of rice,it ranged from Rs. 2.62 io Rs. 2.190 per tg. Th" p.; ;f wheat inthe Bengal PDS in 1986 was trighei thai ttre tbSS prtces by 19
paise, while the price of rice was
paise higher in Orissa for the cor{rmon and superfine varieties and15 paise in the case of fine rice. The increase in the price of ricefrom 1985 to 1986 was around 6 per cent in all these states. Thedifference between the Governfiient of lndia,s issue prices andthe consumer price ultimatety filred by the state gou".nrn"nt. i,accounted for by the states' sales tax and market f"-" I",*ri"., t."nr_portltion.a1g landling charges, administrative charges of rhe StateFood and Civil Supplies Corporalion. interest charies and the fairp:t^.-" r-hgp dealer's margins. Thd administrative Jharges in mid_1986 of the Bihar State Food and Civil Supplies Corpoiations, forexa_mple, were Rs. 4 per quintal df tooAgrains, whili the sales taxand market fee accounted for bet*een ns. t t.SS and Rs. l2.gg perquintal,.depending upon the varioty of rice. In the case ofwheat,the incidence of sales tax was Rs. 7.60, with a market fee Rs. 1.90per quintal. All these were borne by the ,beneficiary,of
the pDS.From I October 1986, the Govefnment of India revised the issue
prices of rice by Rs.8 per quintal upwards to the levels givenbelow:
Common rice Ss. 239 per quintalFine rice Rs. 251 per quintalSuperfine rice Rs. 266 per quintat
Since taxes are ad valorem, the cohsumer price of rice at fair priceshops went up further, and after October 19g6, were even higherthan those in mid-1986. It is, ther(fore, not surprising if, on someoccasions, the prices of rice and u{,heat in .fair price;shops, werenearly as high as those in the open market. When asied why
A Pudic Dietributlon-cum-Delivery System for India 137
foodgrains were not distributed by state governments in ruralareas, the most common answer one got from the officials of theOrissa, Uttar Pradesh and Bihar state governments in 1986 and,prior to 1983, in Andhra Pradesh as well, was that in rural areasthere was'no demand'for foodgrains. The officials either did notknow or did not want to admit that the employment opportunities,wage levels and the consequent earnings of the rural poor over theyears are so low that they cannot afford to buy foodgrains even atprices available through the PDS, notwithstanding the fact thateven at the ex-depot issue price of central pool foodgrains therewas a subsidy of Rs.66.30 per quintal of foodgrains (wheat andrice pooled together) at the 1986 issue prices, borne by the Govern-ment of India. This central subsidy is the equivalent of the cost ofprocurement operations such as the labour, movement, storage,interest, gunny, administrative charges, purchase tax, mandichargesand the costs of distribution under similar heads.
The need to price foodgrains at affordable levels was acknow-ledged by the government in another context-that of the foodgrainscomponent of the wages payable in the rural wage employmentprogrammes like the NREP and RLEGP, with foodgrains beingpriced at levels which would ensure to a certain degree the principleof 'real wages'. In 1986 these levels were Rs. 1.50perkgof wheat,and Rs. 1.85 for common, Rs. 1.95 for fine and Rs.2.10 for thesuperfine varieties of rice. While it is arguable whether the poorestpeople can satisfy their needs even at that price at existing levels ofemployment, the prices at which foodgrains are made available inthe employment programmes can serve as a guideline for pricingfoodgrains meant for the poor in the PDS. If this strategy wereadopted, the central issue price would have to be lowered in such away as to ensure that these foodgrains are sold at these prices inurban and village fair price shops as welt. This would mean that inaddition to lowering the ex-depot issue prices, as in the case of therural employment programmes, the costs of transportation andother incid€ntals involved in the distribution of fooderains uD tothe time the grains actually reach the beneficiary have-to be borneby the central government. In terms of the PDS these would beequal to the costs of transportation, other handling charges andthe margins payable to the village and urban fair price shops,which constitute the centrepiece of the delivery system.
The basis and details of the costs that the centre will have to
138 Deliveranco from Hunger
incur on account of this PDS which would supply 17.5kg of foodgrains to all the living below the poverty line
at Rs. 16.332.20 million inbeing 12 million tonnes per
in rural and urban Indi1986-87, ttie quantity soyear, at the costs and prices1986-87, are given in Table 4
during the financial year
The costs of transportation handling. including shortagesand taxes, are assumed at Rs. 17 per quintal on an average forfoodgrains that will have to be moved from the FCI godowns tovillages, and Rs. 7 for
quintal cost of deliveringareas. In other words, the perto the consumer in the urban
and rural areas would be Rs. 15 hnd Rs. 25 respectively, in addition
Rs. 8 is provided as the fairper quintal, in both rural and
to the central issue pricesdistribution between wheat
grains effected to the villagesbe under the supervision of
to urban areas. An amount ofshopkeeper's margin or profit
the basis of the proportion ofdce in the stocks held by the
the FCI godown points shouldagencies, as otherwise these
government in 1987, which is i4 a ratio of 7:5, the entire costs ofthis reformed PDS have been out. At a distribution levelof 12 million tonnes of 7 million tonnes of wheat and 5million tonnes of rice would bd channelled under this scheme tothe urban and rural fair price all over the country.
The cost of transport and thp margins for the fair price shopdealer should be borne by the and the movement of
valuable fooderains would regularly reach the villages. Also,to keep malpractices and temptations donwn, the margins for thefair price shop dealers should bg fair and reasonable. Since on anaverage, around 350 to 400 houSeholds would be attached to a fairprice shop, a margin of Rs. 8 p{r quintal would ensure a monthlyincome to the dealer of Rs. 400 on account of cereal sales alone.With commodities such as cloth, soap, tea, iodised salt, and match-boxes also being sold in these shops, in addition to other essentialcommodities like kerosene, editlle oil and sugar being provided bythe government" the fair price shop dealer will have an income thatwill keep him well above the pbverty line. Assuming an averageoff-take of 5 tonnes of foodgraips per month in a fair price shop,around 250,000 jobs can be crlated and stabilised in the servicesector through an expanded PD$ spanning the country. The'sub-sidies'that are shown in Table 4f 3 will thus create employment for
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1lo Deliverance from Hunga?
a few hundred thousand unedlployed youth in the counrry, anoverwhelming majority of who{n are in rural areas. The spin_offsthat would be generated in the transport sector and the handling(loading and unloading) sector Sill lead to further employment, as
loodgrains are carried by all means of transport to villages all overIndia. All this will be generated by the costs shown in table +.3. lnother words, food subsidy is nQt just a.free lunch'; it is at once ahuman resource development afrd employment generation invest_ment, benefiting several milliori households.
The proposal for a reformed f,DS made here would mean that atan actual off-take of 15 million t[nnes, about 3 million would go tothe urban non-poor and the nbn-poor of Kerala. This quantityshould be non-subsidised. Therp is no danger of the open marketprices flaring up unduly because the quantity going into the pDS inthe urban areas would still be df the order of 4.3 million tonnes.poor and non-poor taken together, as against anestimated 7 million tonnes atby taking into account the I
The latter figure is arrived at
about a million tonnes each in Pradesh, Kerala and Bengal,and around a million tonnes in Tamil Nadu and elsewhere werebeing distributed in the ruralrural Andhra Pradesh in0.4 million tonnes.) The
At this stage it should also bediscussed only rice and wheat
level of distribution at which
(The level of distribution inyears was higher by another
also means that the roller flour
that while we have
mills that had been drawing 3 tonnes of wheat annually till1984 from the central pool atthese allotments. Thus. to the
rates will no longer getthat the roller flour rnills will
have to purchase wheat from the market, and the urbanprices for their cereal needs, thenon-poor will have to pay
farmers will get a higher ich is bound to stimulate pro-duction. Such market ptoduction is essential,especially when the strategy from the Seventh Planonwards is sought to be based On decentralised production, on abroader geographic basis than at A combination of supportprices and demand-based will be an ideal incentive forbetter prbduction and in the years to come. The non-poor in the metropolitan cities fnd Kerala will be paying, at the1986 prices, approximately Rs. ?.85 per kg. of wheat and Rs. 3.40per kg. of rice in the PDS and a higher price in the open market.
and their subsidised
A Pu ic Di.tribution-curn-Dalivery Sfttcm for lndh t.ll
distribution to the poor through the fair price shops, wherevercoarse grains are consumed and are available for procurement,their procurement (especially through price support) should betaken up and their distribution ensured through fair price shops.This is essential because they are cheap and are the poor man'sstaple. Since the focus of the PDS is the poor man, there is littlemerit in imposing on such rural poor as are accustomed to coarsegrains, expensive grains like rice. Rice subsidised and made avail-able at Rs.2 per kg. which was the average price of the threevarieties of rice in the rural employment programmes, would stillbe beyond the reach of the coarse grain consuming rural poor. Theright thing to do, therefore, is to procire and distribute at subsidisedrates Qoarse grains in areas where they are the staple. This wouldgive a great fillip to coarse grain cultivators-mostly dry land andsmall and marginal farmers-who can then aspire to get betterprices for their produce. This would also fit in with the curentPlan strategy of broad-basing food production with particularemphasis on dry land farming. The Food Corporation of India hasfought shy of procuring coarse grains on the ground that they aredif6cult to store beyond a certain period. We thus have a somewhatcontradictory picture of the Government of India fixing supportprices for coarse grains and the FCI refusing to undertake pricesupport operations. While it is true that, relatively speaking, storingcoarse grains is more difficult than storing wheat or rice, underproper conditions, coarse grains can certainly be stored for at leastone full year. It should also be pointed out that wheat or ricestored for more than a year (partially in the open as at present) isnot particularly healthy for the consumer either. The healthiestthing to do in procurement, storage and distribution-in the finan-cial, quality and management senses of the ternr-is to ensure aquick turnover of the grains. This would, among other things,cut down on cornrption and wastage. To ensure this, states likeMaharashtra, Gujarat, Madhya Pradesh and Karnataka whichconsume coarse grains on a large scale, and those like AndhraPradesh and Tamil Nadu where they are consumed in certainareas, should be assisted by the Government of India with con-cessional finance from the Reserve Bank of India to make theirprocurement locally and distribute the coarse grains to the poorthrough fair price shops. Having said this, one can anticipate a fewproblems that this might throw up. For instance, in Andhra Pradesh,
142 Deliverance from Hungol
jowar and ragi are consumed i{ certain areas, but their procure-lowar and ragi are consumed i{ certain areas, but their procure-ment is difficult due to low av{ilability of marketable surpluses.The high-yieldtng varieties of jo]war which are produced on a largescale in Madhya Pradesh and tlierefore available for procurementar€, however, not acceptable tp the Andhra Pradesh consumer,whereas the white Raichur jow{r of the Karnataka area has wideconsumer acceptance. This is a{ important pointer to the need forall these states to coordinate tlieir purchases and distribution sothat the necessary levels of dem{nd-based procurement are workedout and inter-state supplies effec{ed. The Civil Supplies Corporationof the concerned states will thus have to complement each other inareas affecting the poor and in fdodgrains distribution across severalstates. To this extent, the poligy of the centre in fixing supportprices for coar$e grains will assufne the credibility that is presentlymissing, which in turn will promfte dry land farming. The pressureon an expensive and scarce graid like rice will also be eased and itssurplus availability used fortrade.
In this context, thePradesh Government of
intervention or to boost foreign
made in 198!84 by the Andhrarice through the rural fair price
an obligation to supply not onlythe state's PDS at prices fixed by
shops in certain districts of theto consuming it at Rs. 1.60 per
where people are accustomed
deserves attention. About 21
tributed in that year through
(as against Rs. 2 per kg of rice)tonnes of broken rice were dis-PDS in these areas. Apart from
the availability of a grain that i cheaper than rice for the poor, itmeant a lower volume of r for the Andhra PradeshGovernment since the per unitquintal was lower by at leastConsequently, interest charges
of broken rice at Rs. 160 perRs. 80 compared to whole rice.were also lower. In addition. it
gave the government an to remind Andhra's powerfulrice milling industry that itwhole rice but also broken rice tthe State Government. Where milling industry was concerned,it helped them to quickly clearby-product and proceed with
ir godowns of the accumulatedfurther manufacture of rice,
which not only kept the of industry moving and labouremployed, but also ensured thatby the millers for his produce.engineered not just by broken
farmer was constantly pursuedkind of 'trigger-ofF effect is
consumption but by an activePDS which creates the for foodgrains by widening the
A Public Distributiortscun-Deliyery System for lndia
market to include the poor in it, which in turn means procurementthroughout the year. This induces awareness among the farmersthat there will always be a demand for their produce, which in turnwould stimulate production. The principle is the same whether wedistribute wheat or rice or coarse grains or broken rice. It isnecessary, however, that this cyclical movement is ensured on asustained basis so that, over a period, per acre productivity itself isincreased to such levels that agriculture no longer remains a highcost industry.
In our proposal, Andhra Pradesh and West Bengal will havetheir allotments substantially reduced compared to the 198!&tlevel. This is, however, fair since the national resources in terms ofsubsidy and allocation of foodgrains should be equitably distributedbased on the incidence of poverty. A lower allotment will also helpthese states to more sharply target their distribution to the reallypoor. Certain states, particularly in north India, such as UttarPradesh, Bihar, Madhya pradesh and Rajasthan, where acutepoverty stalks the countryside, will find their subsidised foodgrainsallotments dramatically raised. Maharashtra and Gujarat in thewest will also benefit substantially. However, in these two westernstates and in Madhya Pradesh, where coarse grains procurement ispossible, the states should be made accountable for such procure-ment with credit assistance from the Reserve Bank of India, andthe rnaximum possible quantities procured and channelled into thePDS fully subsidised by the centre. In other words, coarse grainsshould be made available at rates cheaper than wheat. This Jouldbe done in Kamataka as well, where procurement of ragi is feasible.Nutritionally, coarse grains have the same.caloric values as rice orwheat; in terms of quality they are in some respects even superiorto these more expensive grains. The wheat and rice saved by theuse of coarse grains should be chanelled for mnsumption elsewhere,especially in the urban areas for market intervention. Since itwould take some time for the northern states to create the infra-structure needed to absorb the large quantities of foodgrains thatwould become available, during the interregnum grains that arenot immediately used by them could be made available to stateslike Bengal and Andhra Pradesh, warning them, however, thatthere would soon be a reduction in allotments to them. This wouldbe fair to all concerned. While Kerala, Tamil Nadu and Karnatakawill also benefit by higher allocations, Delhi will continue to enjoy
Dcllvcrence from Hunger
the status quo. There will thus be a radical reorganisation of thedistribution pattern of central and foodgrains which willenthuse the various states toAt this stage, a cautionary
a new system of food security.about West Bengal and Andhra
Pradesh is appropriate. Andhra is an important contributor
Any reduction of central poolallotment of rice to it from tlre present level of around a milliontonnes mav become a ive to the procurement efforts ofthat state. On the other hand, dn its own, Andhra Pradesh has inrecent years been making efforts in procuring nearly a
million tonnes of rice in to the procurement it does for thecentral pool. Yet, it has had to its procurement from outsidethe central pool, because of tfte centre's refusal to receive theprocured stocks into its pool on the ground that the state, in turn,would expect a higher for its PDS. It is high time thatthe centre--state efforts are on a more rational basis, groundedin the national needs and the ial of Andhra Pradesh as asurplus rice producer. Anunder whici Andhra Pradesh isment to the central pool appropriate monetary incentivesand, in return, accept a PDS of foodgrains which islower than the 1.98H4 levels. Tlris would help the centre persuadeAndhra Pradesh to streamline its PDS in a manner that wouldtarget and serve only the of the poor. Bengal, too, shouldbe given appropriate incentives]to undertake procurement effortsfor the central pool. For one , it should be encouraged to
of ric€ to the central pool,being a little over 1.5 million
make up the entire gapproposed 1986 allotment
its current level of contribution
should be worked outto deliver all its procure-
the 1983-&4 allotment and theits own procurement efforts for
the central pool against a incentive. Uttar Pradesh,Madhya Pradesh and Bihar will also have to substantially step uptheir procurement efforts.
However, to put the of the PDS itself in perspective,we should take a look at the s policy of buffer stockingwhich has a significant on costs. The policy of supportprices for paddy and wheat has an important part in sustain-ing production in the green belt and elsewhere in thecountry. Sustaining production has meant sustaining the farmerand the farm economy of the n4tion. It would be no exaggeration
^to
say that the agricultural elonomy of Punjab, Haryana and
A PuHb Dt ribttdoln--.annVDr/rvcy Sfltem for India
western Uttar hadesh is sustained on this basis. That the pricesrpport provided by the Food Corporation of India in even AndhraPradesh, w$ch is not a heavily surplus state in the sense in whichPunjab and f.Iaryana are, has been responsible for sustainingproduction was dramatically illustrated in 1975-76 and a fbw years
. subsequently when large-scale purchases of paddy were madedirectly from the farmers at paddy purchase centres set up in thevillages. In 1976 the then Chief Minister of Andhra pradesh,J. Vengala Rao publicly acknowledged that but for such support,the farmers would have been in dire straits.
Agricultural pricing and a price support mechanism will thusplay a very vital part in.the new decentralised strategy we arecontemplating to boost food production in the country. As in thepast, the purchase of foodgrains to sustain production and encourageproductivity will therefore continue to be a necessary policy. Itwould be idle to pretend that private trade can take up a challengeofthis size, for they have neither the financial nor the warehousinscapacity for a task of this magnitude. In any case, if the governmeniwithdrew from the price support scene, it would be gambling withthe country's economy.which is still overwhelmingly agricultural.It would again be foolish to think that all stockJ that are beingpurchased from farmers are on behalf of the pDS. The temptation,therefore, to club the cost of maintaining buffer stocks with thecost of distribution and describe them as ,food subsidy' in ourbudget documents should be avoided. Such claims needlessly detractfrom the merit of government's efforts to support the farmer andthe nation's agricultural economy and to promote the country'sindependence in the matter of food. At the same time, they give amisleading impression that 'food subsidies' go entirely to supportthe onsumers. On the other hand, we should squarely acknowiedgethat 'buffer' stocks build up because of the price $upport extendedto the farmers. That there is no direct nexus between the built-upstocks and the PDS is evident by the government's reluctance todyanamise the PDS by giving it a new direction, even when theopportunity presented itself in 1984-85 and 1985-gd. The largestocks that were built up in these years were not considered asproviding an opportunity to feed the poor, but as an embarrass-ment to be liquidated by any means. Hence such measures : i theunprecedented volume of sales to roller flour mills and privatetrade by auction of foodgrains purchased and stocked with public
It|. D.llvranca from ]lung.r
finances. It would therefore be incorrect to dePict the costs
incurred in acquiring foodgrainsmaintaining suclr stocks as 'food
support operations and in. The allocations nrade in
the budget under the head 'Food Subsidies'. are oot futrds exclus'
go to serve the beneficiaries of the PDS, particularly the Pooramong them. Slnce both these are unwarranted,
space to the buffer stocking
ively spent to Provide food togives the misleading imPreseiort
we should devote some timepolicy of the government andso-called 'food subsidies' have the poor.
To do this, it is essential to
consumers. Such b.descriPtionthese subsidies in their entiretY
how little relevance the
certain characteristics thatthe demand for foodgrains
itself is restricted to
requirements have to be
throughout the Year for
alone on this forced stockingfor a period of nine months'
about 4O davs in the case of and about 90 days in the case of
are typical of the food trade.persists throughout the Year,
rice. This means that the totalcollected in a short sPell, but
198ffi7 costs, the interestwork out to Rs. 23.75 Per
distribution. At a Pooled cost of Rs. 226.20 Per quintal at
even at the concessional interdstrate at which the FCI
te of 1.4 per cent Per annum' the
its operational funds from thc
Reserve Bank of India' It is that any other industry
op€rates under such . While every industrY has tostocks to meet demand, they
However, since the foodSrainsmaintain a certain order levelusually comprise a month'strade is sensitive, stocks are to be built uP beYond the
annual distribution as a securitY against Possible
shortfalls in Production.In March 1984 th€ of India decided,l'? on the basis
of the recommendations of the
chairmanshiP of the Secretary'
group set up under the. Government of India' that
1. the size of buffer stock be maintained bY the Publicagencies ln the country be 10 million tonnes, comPris-
and 5 million tonnes of rice;ing 5 million tonnes of
u Oflice memotandum of thc of India No. 9-IE4-B'P.I.' Ministry
of Food and Civil SuPPlies'
and
of Food, dat€d 7 Msrch 1984.
A P|,tbric Disaibutft/tF€tt lF.0clfucty System for ldla
2. the buffer stock of 10 million tonnes will be in addition to theoperational stocks ranging from 6.5 to 11.4 million tonnes ondifferent dates of the year, as shown in Table 4.4.
TABLE 4,4Slze of Opcntbnd Stodc ac lrm Down by tbc Govcrnmcnt of Indla
Wheot Rice
lst April1sr Julylst Octoberlst January
6.5
tt.47.8
10.1
2.1
8.46.34.2
4.43.01.55.9
This wduld mean that the total stocks would, normally go up to21.4 million tonnes in a year.
It is necessary to examine to what extent such a high level offood stocks as held, say, in 1986 can be attributed to a PDS meantfor the good of the poor.
With food production levels reaching an annual average of 135million tonnes and above, any scheme to build up a buffer stock ofa marginal l0 million tonnes as laid down by the Government ofIndia's Technical Comrnittee has no relevance. The productionlevels themselves should serve as an insurance for such contingen-cies as production shortfalls. Right up to 1985-86, including thecorresponding distribution year 1986 (which covers the periodJanuary to December 1985), issues of foodgrains in 1985, includingthose made to fair price shops as well as those to the roller flourmills, employnent prognunmes, defence services and private trade,did not exceed 13.74 per cent of total cereal production and 15.72per cent of total cereal availability, after providing for 12.5 percent towards seeds, feed and wastages (see Table.4.5).
This being the case, a buffer at l0 million tonnes. during theperiod 1982-83 to 198H6, represented between 7.17 and 8.49 percent of the total production of cereals and between 8.19 and 9.17per cent of the total availability of-cereals. While whether such aproportion gf stocks as buffer to distribution is necessary in thecontext of the rising levets of production is itself open to questibn,if ,the nation'holds a briffer in excess of these l0 million tonnes,then it can do so only on a diffcrcnt policy footing and cahnot
ttlE
Crop year Productionof cereals
Totaldbtibution
Percentagcof disti-butbn to
prodtt tion
12.51
8.73
1r.a13.74
Paccntageof diiti-budon to
'availability
14.29
9.9713.0515.72
rg2s5rn.utt1.2:7118.56
t4.7212.17
15.3118.62
Nots: The distribution year is the calenCar year, the corresponding years being:
1982-83198H4l9&H51985-86
117.6139.,18
134.42135.50
Crcp year1982-83198H4198/Fa51985-&
attribute it to the needs ofsuch excess holdings cannot bein the countrv's financial
Secondly, there appears totonnes of buffor on 1 MaY as
obvious that the arrival oftwo is inevitable. Holding aand charging the costs to the
Thirdly, any buffer that we
It is therefore clear that nosustaining the PDS. Whatever
ance should be properlythe same as the fertiliser
Distribution yeorr983
19E/1965
19M
Consequently, the costs ofcharged to food subsidy
no logic in holding 10 millionas on I November, when it is
10 million tonnes in a month orbuffer of 10 million tonnes
thus has no justification.has been an accidental build-uPprocurement is a commitment
the government has no choice or, PDS of the kind needed to serve
as agricultural snDsidy. Its role isincrrrred to augment Production.
rather than a planned one.born of a policy of pricecontrol over arrivals. And withthe masses, stocks pile uP. Butresponsible for this.
consumersi are not ln any way
Fourthly, it is not prudent policy to maintain such acost of Rs. 23.000 millionhigh level of inventory at a
(at 1985-87 prices), borrorred an interest rate of 14 per cent peris Rs. 3,220 miltion a year to theannum. The cost of credit
nation. at 1986-$7 rates.buffer stock is needed for
does exist is actually produc-
tion-oriented. and therefore all costs incurred for its mainten-
A Publlc Dlstribtrtio'D..',/'/>Oclrytl SVtt n for lndta t{9
While we have argued that public distribution did not requireeven a buffer of 10 million tonnes, the total stocks in July 1985 andin July 1986 exceeded the limit of 21.4 million tonnes by about 8million tonnes, in the context of a continuing procurement level ofL9 to 20 million tonnes. The least this should have done was tosignal the use of additional quantities of foodgrains over and abovethe 11 million tonnes distributed through fair price shops in 198H4.This. however, was not the case.
Two points emerge from these arguments:
1 . It is not appropriate to assign the entire cost of stocking 21 . 4million tonnes to the public distribution system; and
2. any stockholding beyond 21.4 million tonnes cannot beascribed to the needs of the PDS.
Considering the crucial role that price support operations play insustaining foodgrains produclion and the resultant foodgains stocksin the hands of the government agencies, and at the same recoglisingthat buffer stocks are needed to baik up a PDS, it would berelevant to determine the buffer required to back an appropriatelevel of public distribution.
In the financial year 1985-86, 9.85 million tonnes of grains werer distributed through fair price shops alone-9.43 rnillion in the non-ITDP and 0.42 million in the ITDP areas. At the same time. tliegovernment disposed of 18.96 million lonnes, which was thecornbined total of fair price shops, roller flour mills, employmentprogrammes, defence needs, sales to the traders and exports. Thismeaps that a quantity of 9.11 million tonnes over and above thefair price shops allotment was disposed of in 1985-86. This wasobviously because the levels of procurement in the country hadsteadi$ increased, not only in that year but over the entire SixthPlan period, and this, in turn, had improved stock levels to adegree that they could be maintained at a level in excess of thatrequired by fair price shops. Since the annual procurement inflowmatched the distribution level, the stocks suffered no depletion:on both 1 April 1985 and 1 April 1986 they stood at a little abqve t
21 million tonnes. The sigrificance of the amount of stock disposed,i.e., 18.96 million tonnes in the year f985-86 is that the govern-ment felt confident enough to dispose of L9 million tonnes offoodgrains, even if the stock level reached at the beginning of thefinancial year was 21 million tonnes.
foodgrains or an average of 19.$ million tonnes. If, of these, 15
million tonnes are earmarked the consumers. the balance-available is 4.5 rnillion tonnes.
The employrtrent generation will naturallv claimthese foodgrains. Of the two employment generation Pro-
our poverty alleviation efforts,granrmes around which we have
namely, the IRDP and the JRY ( erstwhile NREP and RLEGP),claim considering the greaterthe IRDP should have the
ability of that programme to : incomes over a period, ifproperly implemented than of the purely wage employmentprogrammes which can at bestoperation till the other strategies,
only as a kind of a holdingand industrial. succeed
in providing assured incomes the poor households based onstable and sustained opportunities throughout theyeaI.
Earlier in this study rve
consumption finance to the
whether such an income level
the need for providingof the subsidy-+um-loanprogrammes under thesupported asset-based, seH
IRDP. While the Reserve I must expand its advances underconsumption finance, the of the target households as
far as food is concerned shouldcountrv.
met from the food stocks of the
The gestation periods of the schemes differ. Normallythev are assisted bv medium loans that are repayable in 36
months, but the schemes start generating incomes
much earlier. The criterion for assistance. however.should not be determined bv the asset has started gener-
ating an income but whether 'it has started generating an incomesufficient to maintain the above the poverty level and
even after the loan instalmentowed to the financing institution has been paid. All the evaluationstudies, includihg the ones undertaken since October1985 by various independent at the Govemment of India's
It is, therefore, obvious that the fonsumption finance contemplatedin the form of foodgrains would have to be made available till therepayment stabilises during the layback period. This can be esti-mated as betwe€n one and two ypars. The exact number of months
instance. make it clear that such are not being generated.
A Publtc Dlstriffir>ann-Dcllvery $Wtclr, lor tndt. t6t
for or at which particular period of the scheme's implementationsuch assistance ihould be made available to the beneficiaries willhave to be judged by the local authorities at the development
block level. But a maximum provision of up to 24 months, during
which period a mediuin-term loan assisted scheme can be expected
to stabilise in terms of income and repayment, is reasonable. Thisprovision could be of the order of L5 kg per household per month'and it should be in addition to the 17'5 kg that the same Poorhousehold would be entitled to at the village fair price shop under
the PDS. Thus every IRDP beneficiary household will obtain in all32.5 kg of foodgrains during the best Part of the loan repayment
p.eriod, when it needs it most to successfully work the scheme
provided for it. The price and delivery costs of the additional 15 kgof foodgrains should also be subsidised in the same way as the 17.5
kg of grains through the PDS. By this method, half the total needs
of an average rural poor IRDP beneficiary household will be
provided at affordable prices. At the end of the. scheme period'
subsidised foodgrains assistance, both under the IRDP and thcPDS. should be withdrawn since the family concerned will have
crossed the poverty line. We would thus phase out families fromboth the PDS and the IRDP through a constant review so thatsubridies do not turn out to be open-ended doles, but are sharply
targeted to assist only the needy and the deserving. A subsidised
FDS thus becomes a support strategy to the government's anti-poverty strategies.
Since 3 million households are assisted under the IRDP each
year, the foodgrains requirement for these households under con-
sumption assistance will be 3 x 0.18 = 0.54 million tonnes offoodgrains in the first year. Since this assistance will continue foranother yedr for ihe same families, the requirement of foodgrainsin the second year would be 1.08 million tonnes, which will coverthe new batch of 3 million households that would bc brought intothe programme. In the third and strbsequgnt years it would still be
1.08 million or rounded off to a rhillion tonnes per annum since
every year 3 million old beneficiaries will leave the programme-having crossed the poverty line-while a fresh batch of 3 millionwill join the programmg. In other words, one million tonnes offoodgrains would be needed every year for this programme fronthe second year onwards. Although the costs of distribution' thatis, of carrying graim to the villages and subsidising the pricedifferential, will be the same as those under the PDS, they will
152 Ddlvorance from Hungcr
have to be charged not under subeidy'but under the IRDPhead in the Union Budget. The at 198G87 prices on pricedifferential and deliverv at the level for this million tomcswill be Rs. 1378.74 million
available to the target group as loans, they would berecoverable. Their cost should be borne by the central govern-ment. But in keeping with thefunding, the delivery costs shou
pattern of IRDP subsidybe shared by the centre and the
states on a 50:50 basis. Details of costs of this million tonnes ofgrain, in terms of price, delivery and the cost of the grain
price will be Rs. 1708.50 million.
at issue prices are given in TabbHowever, the significance of
Consumer subsidy (atR.E. 1986-87rates) on foodgrainsalready borne byGovemment ofIndia 69.8E Nl.N
Carrying charges tovillagbs (deliverycosts) 25.n A5.75
Futher subsidytowards pricedifferential /t0.00 A3.m
(whcat: 190.00 - 150.00)(Ri€e;255.7-200.m)
Total subsidies 134.88
the cost of the grains at issueSince.the grains would be made
4.6.this proposal would lie in the
utilisation of the infrastructure through a rural PDS. The
4.6Otre M lb[ Toun.s of foodSr:h.P€r Yerr
(in mi ion torrrrfilrrrpc8)
25.00 rM.25
55.n 23256
66.30 662.98
25.m 250.00
46.58 465.76
142.6 592.39 137.87 1378.74
0.417
Cost of foodgraiG 150.0 874.50 834.00 170.85 170E.50
A Pubtb Dtstrituttlot€tt''-JD.ttvqy Sftttm lor lndia 15:'
deliverj system created for making foodgrains available to all the
households identified as poor in a village will be the very system
.which will ensure that the food requirement component of the
entire consumption finance is delivered to the IRDP beneficiary
household which, as a poor household, would already have an
identity or ration card. An endorsement could be made on this
identity card indicating the additional allotment. The card wouldgo out of circulation at the end of the programqre period when the
household will hav€ crossed the poverty line. A delivery system ofthis kind wil make for a constant review and evaluatidn of both the
programmes-the PDS and the IRDP-which will compel thegovernm€nt and its field agencies to think about the actual results
that are being achieved against the stated aims, since field-levelprogrammes tend to overlap and the implbmentation of one partof the overall programme shows up the deficiencies in the imple-
mentation of the other parts.The foodgrains needs of the defence services and the armed
forces such as the BSF and CRPF and of Modern Bakeries, taken
together, would amount to 0.4 million tonnes. This brings the totalrequirement of foodgrains to the PDS, the IRDP and the defence
and other forces to.16.5 million tonnes. With the stability alreadyachieved on tlre foodgrain production front, a procurement ofaround 19.5 million tonnes on an average-it could be a little more
or a little less in a given year--in the comingyears appears certainif all the states put their shoulders to the wheel. Therefore, the use
of up to 3 million tonnes of foodgrains for the rural wage employ-
ment generation programmis is always possible.
It was earlier pointed out that the daily wage component offoodgrains in rural employment programmes should not exceed 2
kg per household since a proportion beyond that would actuallylimit the choices open to a Poor worker in acquiring his other food
.and non-food needs. We have also seen that a household's minimumneed of cereals would be around 2 kg per day. It is thereforeappropriate to work out the costs of using 3 million tonnes offoodgrains in the rural employment programmes assuming, as we
did, a minimum wage of Rs. 10 per day, and a grain wage compo-nent of 2 kg per man day. The number of man days that will be
generated with 3 million tonnes is 1,500 million. The costs ofimplementing a rural wage employment programme of this size aregiven in Table 4.7. The outflow of grains for all the various
t5{
Midmum wage per dayC.ost of 2 kg foodgrains at the r.at€ of li33 kg of wheat
and 0.67 kg of lice as per the existin{ guidelinesof the c€ntral govcmment on the retib of wheatand rice releases for the employment programmes,at Rs. 1.50 per kg for wheat and Rs. 2 per kg fornce
Cash component of the wages per man day (10 - 3.34)Mat€rials component of a man day's crlploymentTotal cash component of a man day's eFployment
generatedCash cost of generaring 1,500 million
of employment (3,000,fiX) tonncs3,000,000,000 kg which will generate15fi),000,000 mdn days at 2 kg p€r day)
Cost of 3 million tonnes of foodgrains milliontonnes of wheat and 1 million of riceat a pooled cost of Rs. 1,900 per ofwheat and Rs. 2,557.70 per tonne of
rn days€qual to
3.346.6
10.m
16.66
24,990.00
million(1500 mi[ion
x rar.66)6,357 .70
million(wheat: 3&n.00)
(rice:2557.70))
programmes taken together arb summed up in Tableimportant to note that the deployment of foodgrains
Carrying cost of 3 million tonnes ofto the viuages and the marginsfair price shop dealer (the same rateRs. 250 per tonne adopted for thepublic distribution system)
Total cost of the programme750.0 million
32,097.70 million
ar( 4.8. It iscan vary,
'depending upon actual procureinent in any given year.Considering the fact that
systgm level that matches thedevelopment of a distribution
level is perfectly feas-ible. we have to determine thel level of buffer stocks needed toback the system. Since a period of three months will beneeded to position the stocks, { buffer of three months' require-ment, i.e., 5 million tonnes will pe appropriate. A break-up of themonthly needs of the system is given in Table 4.9,while the requirements of4.10.
stocks are shown in Table
Given the required levels of (Table 4.10), any accumulation
A Pubtic Dlstributio*can>Dfirty 9r'frtr lor t di. t55
resr-E 4.8
Yearly Outtlow of Foodgrrhs on AI Courtsfin miAion to',,'r,s)
Fair priceshops(subsi-dised)
Releases IRDPto the bene-
mefio- ftciariespol an (subst
etties and. dised)
Kerala(non-poor,non-subsi
dised)
Rural Defence Sensitive Totllemploy- ond oher border
ntent pro- forces sla.zs
grnmn es M.B.I.(subsi- etc.
disedt.
11.30 3.O2 1.00 3.00 0.,tO 0.82 t9.52
regle 4.9
M|xlmi|m Needs ln Any Glvcn Mo h of the SupPly Sysiem(in million tonnes)
Fair price sbops' needs
Metropolitao and defence needs
IRDP consumption finance needs
Rural employment wage needs
Total per monthN€eds for three months
1.00
0.290.08o.E
1.624.86 or 5 million tonnes
TABLE 4.10Size of Opcratlond Stod(s ao Me€t Demrnd
(in million mrnes)
Tot^l
lst Aprillst Julyl st Ocloberlst January
2.911.68.7).6
6.04.07.98.0
8.915.610.7r3.8
beyond 20.6 million tonnes, inctuding a buffer of 5 million tonnes'
shoutd encourage discussions at th€ policy levels as to whether
more foodgrains should be channelled through the PDS or used
for the generation of rural emPloyment or gxported, depending
upon policy priorities and resource constraints, As for costing'
156 Dclivsance from Hunger i
excepting for the 5 million of buffer stock required to backthe distribution system, the on the rest should legitimately be
an 'agricultural subsidy' and theascribed to what mav be calledexpenditure shown under the of Agriculture's budget.
The procurement and support prices announced by the govern-ment are production-oriented. the case of wheat it is higher
this policy is not to be criticisedthe price incentive offered is
than the intemational price.
being shown as a'food subsidy' However, the golden rule is toapply whichever price iscalculating food subsidy.
price or market price-in
price of wheat is Rs. 180 per the pric€ differential ofRs. 22.38 per quintal (the ion eost of wheat to the Govem-ment of India in 198G87 beine 202.38 per quintal), should beappropriately charged fo an agri subsidy, as it has nothingto do with the'consumer in the rDS. The same is true of levies
fee imposed in the surplus pro-such as purchase tax andduction areas. These levies are to augment production interms of the infrastructural ities they help create, and aregenerally taken advantage of byfarmers. Further, states which
better-off surplus-generatinghave large surpluses and from
since self-reliance in food is
whom these surpluses arebenefit even more by the
tax on the distribution of
would need a separate study byhere because, while discussing a
, if the international landed
by the Government of Indiative charges they are paid by
like to levy or collect salesFor example, Tamil Nadu
. However, it bears mention
the centre. Oi the other hand. state which aims at distributinefoodgrains to the identified poor
abolished the levy of sales taxthere can be no iustification for
foodgrains long ago. Therefore,elements such as purchase
tax and market fee in the of foodgrains acquisition andshowing them as 'food subsidy'. I is true that a subject of this kind
iable PDS for the country, it isabsolutely essential to point that when the Government ofIndia provided Rs. 20,000 mi in the 1986-87 or Rs.22,0dmillion in the 1987-88 budget or 23,000 million in the 1988-89
certainly not meant exclusivelybudget towards 'food subsidyr, itto feed the PDS, as is understood and believed. This
bsidy and, what may be calledlarge subsidy covers productionpolicy-<um-policy failure In view of all this. the real costsof the PDS can be identified bv following method:
A Publlc Distribution-cun-Dalivery System for lndia 157
1. A buffer requirement of 5 million tonnes of foodgrainsshould be assumed:
2. expenses on market levies, purchase tax and state admin-istrative charges should not be reckoned while computingsubsidies; and
3. the effect of price subsidy on wheat, at least to the extent ofRs. 22.38 per quintal, amounting to Rs. 2238 million at
1986-87 prices on 10 million tonnes of procurement shouldbe assumed.
A food budgeting of the kind advocated here will provide ataffordable prices, every year, about 29 per cent of the caloricneeds of poor households estimated at 51.67 million, in the country'It will provide a little more than one-half of the total caloric needs
of 6 million rural poor households who are the beneficiaries of theIRDP schemes, will help provide for one member each in 15
million rural poor households 100 days of wage employment at aminimum wage of Rs. l0perday,partof which will be paid in theform of 2 kg of foodgrains at Rs. 1.50 for wheat and an average ofRs. 2.00 for the three varieties of rice. It will also meet the needs
of the defence and other armed forces of the union and of ModernBakeries and of the sensitive border states; and finally, it willmake available for 9 million households of Keiala and metropolitannon-poor to the extent of 50 per cent of their total requirements tomoderate the foodgrains prices. The cost, at 1986-87 prices, of allthese put together to the central exchequer will be as shown inTable 4.1I .
The subsidies required to support the PDS designed for the poorare only Rs. 16,332.20 million, which will include Rs. 1,200 milliontowards the emoluments of 250,O00 fair price shop dealers cal-culated at an allotment of 5 tonnes a month per shop or 60 tonnes a
year, which alone would provide each shopkeeper an annual incomeof Rs. 4,800. Coupled with other essential commodities and the
sale of other domestic requirements, the shopkeeper's income willkeep him above the poverty line. As for the buffer of 5 milliontonnes, the maintehance cost of which is Rs. 2,536.50 million peryear, it would support not only the PDS meant for the poor butalso all other needs, i.e., of the metropolitan non-poor, IRDP,JRY, etc. (Table 4.8).
To summarise, the cost of the reformed PDS which will look
158 Dcliverancc from Hungcr
(in million rupecs)
r Er.lE 4.11Ccir to Ce$nl Erchcqucr
l. Coct of ensuritrg aoc$s (physical
2(a) Cort of providing a million ronncscomumption ffnance for the IRDP
2(a) (i) of (s) above, c€ntre's share ofthe total price differential and halfcosts 8s per tht IRDP pattem
(b) by wsy of cosr of grains which willloan and hence rccoverable from(Table 4.6)
3(a) Crst of utilising 3 million tonnes
economic) of 12 millionthc PDS as envisaged
costs, beingtransportation
a consumptionbeneficiaries
foodgrains in thefor gen€rating 1 ,500
buffer stock
tonncs of foodgrains to the poorio TsUc 4.1 (rce Tablc 4.3 for of costing), i.e.,thc pria dificrcntial plus delivery
foodgrains as
by wayof ensuring aocess (physical and ) of grainsto thc benefraiaries which will be a
16,332.20
7,378.74
1,253,74
1,708.50
32,491.70
2,412.@
2,536.50
54,632.74
.rural wage employmentmillion man days of employmenr will includethc cost of gr'ains, price differential dcliverycosls, and cash wage and mat€rialdclails s€e Tablc 4.7)
(b) Consumcr subsidy to be bome by Govemmentof India (see Table 4.3 for details)
4. Cost of maintaining 5 millior torines
(for
lo $rpport the above programmesc€rrying charges calculst€d at Rs.
the buffer.30 per
tonne as per tlre FCI's revisedl9E6-87
for
Total co6ts excluding the consumption compon€nt(i.€., the total of it€ms I + 2a(i) + 3+4'
after th€.,fural and urban poor a$ well as the urban non-poor, willamount to Rs. 18,868.70 milliori, which will include the carryingcosts of a buffer of 5 million tonnfs at 19ffi7 prices (Rs. 16,332.2fr+ 2536.50 = 18,868.70 mitlion).
.lp against this, 'food subsidfes' for the supply managementsystem in India as at present aonqived and operated, were estimatedby the FCI at Rs. 807.60 milliroh more for the year 198G87, atRs. 19,676.30 million, whictr included storage cosrs of Rs. 5,190million fot a buffer stock of 10.2p million ronnes. It is essential toclarify here that this buffer stoc! of 10.23 mitlion tonnes does notaccurately reflect the actual buffer quantities hetd in the countryon central pool account but reprpsents only the FCI buffer, while
I
I
A Public D/is,tributior>cutr>Ddtttty SY*qtt for lndia
actually a few million tonnes are hetd by the agencies of certain
state governments which may not have been physically taken over
by the FCI. Since this taking over is a continuous process' at a
particular iroint in time the actual quantity of buffer stocks held inthe country's central pool is really more than that reflected in the
FCI's accounts. The quantity thus held by the agencies of the state
governments and not taken over by the FCI as on 31 March 1987
was 3.29 million tonnes, as estimated by the FCI. In other words,
with no additional expenditure, we can operate a reformed PDS
that will serve the poor without sacrificing the interests of the
metropolitan non-poor who are the primary beneficiaries of thepresent PDS.
A word of caution here about the problems in the use of food-grains in rural employment programmes: Against a plan touse 2million tonnes of foodgrains at a wage rate of Rs. L0 per man day'which should cost Rs. 21,2100.66 million (see Table 2.17 in Chapter
2) towards the cost of grain, cash wage component, delivery andprice differential costs, and the materials component, the budget
provision in 1987-88 was only Rs. 14,6fi) million. The step'up in1988-89 by the centre for these programmes only amounted toRl 544.3 million. There are limits beyond which foodgrains cannot
be imposed on target groups to their benefit. A short provision inthe cash component results in non-payment of even a bare minimum
wage, the construction of poor quality assets and irrelevant and
therefore wasteful use of the foodgrains component. This is why
the 1986 guideline of the Government of India that foodgrains
should form 50 per cent of the wage component imposes more
foodgrains on the individual beneficiary than actually needed by
him. This only leads to his having to sell those grains again'probably at a Iower rate, leading to leakages on the one hand, and
erosion of real wages for the beneficiary on the other. In fact, one
state in India went to the extraordinary extent of paying 7.3 kg ofwheat as the daily wage in the employment programmes to cover
the entire daily wage of Rs. 11. A wage employment programme
should not providb more than 2 kg of grain wages per man day,
wlile ensuring only one person in a household is provided guar-
anteed employment in the programme. If these basic realities are
built in to the desigit of the wage employment programmes, the
need for providing ap,propriately larger .cash outlays for these pro-
grammes will become obvious. Howcver, if these cash outlays cannot
be provided in the central budget,'thed it would be more appropriate
t60
to use these foodgrains. in thedistribute the same quantitywage employment programme.taining a cash-grain balanceemployment, a correct mix ofemployment strategies has toavailability of cash resources.around 3 million tonnes ofemployment programme. Tofor productive employment' andof the availability of angenerating rural employment,of caution. Even as a strategystocks in govemmentrelevance beyond a point,treasury has in matching
One question that islike the ones in Tamil Naduquanrrty of about 15 kg (thestates) per month makes anywhy it baecessary to organise anproblems to deliver such abeen answered in Chapter 5, itaccording to the proposal weholds will get one-fourth tothe PDS, the poorest amongof assistance under theprogrammes will get a littleby way of foodgrains. If thenecessary in such programmes,support to.the poor is seen notthem to achieve a better livingup to the half-ivay mark isresearch also shows that afterthe poor household looks forclothing, shelter andhas critical relevance to the
Finally, it is essential to add.through nutrition workers, if ahealth education is imparted to targetedJ)aor households, the
Deliverlnee from Hunger
. where it costs much less tothe poor than it does through a
we have a problem in main-utilising foodgrains for wage
distribution and rural wageadopted depending upon the
the appropriateness of usinga year in the rural wage
up, the slogan 'food grains onlycomfortable feeling it generates
resource in foodgrains forto be regarded with a great deal
the liquidation of the accumulatedwhenever this occurs it has no
the limits that the centralwith rupee resources.
asked by the critics of the PDSsAndhra Pradesh is whether a
quantity it provides in theseto the poor household and
PDS with a[ the attendanr' quantity. While this question hasneeds to be mentioned here that
made, while all the poor house-of their requirements through
who are identified as deservings employment generation
half their total household needsinitiatives that are so
not to be lost entirely, and ifa dole but as a catalyst, motivatingandard, then meeting their needs
more appropriate. Oura certain nutritional level.of other needs like better
A modest PDS effort thereforeof a poor household.through the use of media and
nutrition education and
A Public Distrlbutiotu cunr-D.titcrY System for lndia
effect that the additional foodgrains will have on these householdswould be dramatic in bringing down the levels of malnutrition,infant mortality and maternal mortality rates. One goal we shouldaim to achieve through a PDS of the kind advocated here is toenhance the decision-making power of women in tlle country bymaking the wife rather than the husband the owner of the entitle-ment or'ration'card. Also, as in Andhra Pradesh, there should beno discrimination between adult and child in indicating the scalesof eligibility in the household cards. The nutrition educationaccompanying a reformed PDS should stress the needs of maternalnutrition in (he context of pregnant and nursing women and therights of women and girl children to their legitimate share of foodwith the rest of the household. Nutrition and health education canmake even a little additional food go a long way in achievingdramatic socio-economic results.
In organisational terms, a PDS is the base, the foundation anclinfrastructure on which alone can a delivery system needed toprovide the essential nutritional component of the employmentprogrammes be built. Even at a modest level, the PDS as a baseprovides for and assures a higher level of delivery to others whoare poorer than the base level target groups. However, even atthat modest base level, the PDS in Andhra Pradesh, with atl itslimitations, has acted as a catalyst in ushering in important benefitsto the poor at a soci(Fpsychological level.
What is certain, then, is the country's ability to distribute about19.5 million tonnes of foodgrains a year, earmarking up to 4.0million tonnes for rural development programmes alone. Can wesustain a procurement of this magnitude given the level of cerealproduction reached by the country so far and the procurementefforts made by us in the past several years? And can we operate aPDS of this size? The answer is definitely in the affirmative,despite the 1987 drought.
India's cereal production has kept pace with its population in the1970s and in the 1980s. Its growth rate was 2.31 per cent ;gainstthe 2.25 per cent registered by the gr.owth of the population during1971-81, as shown by the Report of the Regional Commission ofFood Security for Asia and the Pacific, Bangkok (August 1983).''
I' Background papers presented at the FAO/AFMA/FCI seminar held from 23to 25 April 1985, Vigyan Bhavan, Nerv Delhi: 'Review of existing food securitysituation and medium-term prospects in Asia and the Pacific-l'.
161
According to this report, while thb production of rice in this periodrose by 1.8 per cent, wheat showed a remarkable growth rate of
r6:2 Dellverence from Hunger
being unirrigated, the annualdecade 197!83 has been the
rate of 2.90 per cent in theof yield improvements. At a
low per hectare consumption of 30 kg of fertiliser nutrients, whichis the main reason for low ity, there is a scope for a muchhigher level of fertiliser use and for much higher per hectareyields. An imaginative price policir for paddy in the south has beenlong overdue and such a step can lryetl bring about high per hectareyields of rice based on a higher rfse of inputs and employment ofappropriate post-harvest Andhra Pradesh, for in-stance, grows much of its rice cfop in extremely adverse agro-climatic conditions and would need to be given a higher .price forits paddy if yields are to be su$ained and increased, but eventhough such a differential suppoit price was suggested for paddygrown in the southern, westerh and north eastern states byChaudhari Randhir Singh, Meripber, Agricultural Prices Com-mission, in 1983, on the ground ttlat the farmers in these states are'handicapped by comparatively liigher production costs and riskelement', the recommendation hab not been taken seriously by theGovernment of India. The shift irf production away from commonvarieties toward$ fine and superfine high yielding varieties of rice
ifferentials between these threepositive role pricing plays in
can support better techno-logical inputs for still higher
India's foodgrains production ential has been well presented
appears to be the result of pricevarieties and is an indicator ofincreasing production, which in
''' Background papers presented at theto 25 April 1985, Vigyan Bhavan. New De
AO/AFMA/FCI seminar held from 23. S.S. Puri, N€xus betw€en Cooperativc
5.2 per cent per annum. India als[ increased its wheat arca by Z.Bper cent during this period. In a llater study made by the FAO forthe decade 1973-83, referred rq by Dr S.S. Puri, Assistant Di-rector General, in the second Jauiaharlal Nehru Memorial IFFCOLecture at New Delhi in 1984, India's cereal growth rate wasassessed at 2.90 per cent..!4 The dereal that has caused concern isrice at a per hectare paddy yield df 2.2 tonnes in 1983. The overallyields of cereals at 1.6 tonnes per hectare are also very low.Despite this and a very large proportion of the area under cereals
Dev€lopment and Agricultural in Asia-Pacific region (extracts).
A Public Dlstributior'-cufiF.DaltY.cry Syttern for lndia
by G.R. Saini in a paper given by him at the FAO seminar in 1985.'5Even more interestingly an analysis of what V.M. Dandekar forecastfor India's.food production potential in the paper 'Achieving aBalance between Population and Food: The Indian Case', pre-sented in August 1976 at the Nairobi seminar which was jointlysponsored by the IAAE, the FAO and UNFPA, sholvs that whatthe country has actually achieved in the foodgrains sector subsequentto 1974 should alleviate all anxiety in this regard.'6
.In 1975 Dandekar had taken the view that a balance betweenfood and population was nowhere in sight, as far as India wasconcerned. However, he conceded that even in the period 196&-74,the per capita foodgrains consumption increase of 3.13 kg wasalmost entirely due to increased domestic production. He alsoconceded that the increase by 6.20 kg in per capita consumption inthe period 1,96U74 compared to 1952t-58, was supported to theextent of 5.59 kg by increased domestic production. On the basisthat an output of 200 kg per capita would be adequate to achieve abalance between food and population, even if in very bad yearsfood production fell, Dandekar projected a growth rate of food-grains output at 2.08 per cent based on production trends between1954 and 1974;he also forecast a trend output for 1981 and 1986 at183.84 kg and 189.93 kg respectively, and concluded that therequired food-population balance was not likely to be achieved inthe near future by India. ln the event, however, the foodgrainsproduction in 1981 at 129.59 million tonnes turned out to be higherby about 9 million tonnes than the 120.84 million tonnes projectedby Dandekar. At a per capita output of 189.57 kg, it was higher by5.73 kg than the 183.84 kg projected for the same year by Dandekar.Dandekar's foodgrains production projection for 1986 was 133.94million tonnes, whereas this level of production was achieved in1982 itself (133.30 million tonnes) and was far eiceeded in 1984with production reaching 152.37 mitlion tonnes. Even a lowerproduction in 198,{-85 of 145.54 million in 1984-85 exceededDandekar's projection for 1986. Production in 1985-86 was 150.5
" Volume I of the background papers presented at the FAO/AFMA,/FCIseminar held from 23 to25 April 1985, Vigyan Bhavan, New Delhi. G.R. Saini,'Foodgrains Production and Potential: the Indian Experience'.
'6 T.Dams, K.E. Hunt, G.L Tyler (eds.), Food and popul.ttion: p/,orities inDecision Making, Saxon House, UK, 1978, pp. l19-30.
163
Dcliveranco from Hunger
million and production was lzl4.07 million in L986-82.'? Dandekar'sfood-population balance of a per capita output at 200 kg wasreached in l9M (206.94 kg) ev0n if the estimared population forthat year is taken as 732.27 million (at a compound growth rate of2.25 per cent over the l98l cehsus figures of 685.1 million), asagainst only 705.20 million projpcted for L986 by Dandekar.
It must, however, be recogniped that in the period 1964-65 to1982-83, foodgrains production ln the country rose in L0 years andfell in eight years. In this periQd, production rose sharply in sixyears, and fell sharply in four yeprs. The country has, therefore, toguard against situations of this kind that have occurred on fouroccasions in a period of 18 yeaps-in 1965-{6, 1972-:13, 1976-77and 1979-80. However, as Bhatia has pointed out in an analysis ofthe food production trends in tge period 1970-71to 198H4:
. . . the trough of f979-80 w{s not only higher than the earliertwo troughs since 1970-71, hut about the same as the peak ofl97V7l. Since the beginnin[ of the green revolution, whilethere have been wide fluctuptions in agricultural production,the production trend has beep upward so that each succeqdingtrough or peak has been higlrer than the preceding trough orpeak. ''
Bhatia also makes the point thaf 'the gains in agricultural produc-tion in the country since the miiJ-1960s have been made possiblelargely by increase in crop yields'.'n Therefore, to provide a minimumstandard of nutrition to the pedple living below the poverty lineand to hold the prices of foodgfains in check in years when ptg-duction falls through interventio,n in the market, it is essential thatthe central and state governments should step up procurement tolevels higher than those presently achieved. The stocks held by thecentre, as already mentioned, are not so much the result of mnsciousefforts at procurement as of the price support mechanisms cominginto play in the face of high leveljs of production in select areas. Wehave already analysed at some ldngth the scope for better procure-ment in certain states. It is offipially acknowledged that in UttarPradesh and Bihar, not all of the fair average quality grains offered
t1 Economic Survey, 1987-8E..'r B.M. Bhatia, Food Security in Soulh Asia, p. .
" Ibid.. D. 37.
A Puhtic Dittfibutioltscun-DellnerY Sptem lor lndia
are purchased by public agencies. Considerable distress sales take
place in these states and in Orissa. All these grains should properly
be procured by the state agencies so that the farmers get the
support needed for not only maintaining the present levels ofpro<luction and productivity but to increase productivity as well.This will also improve procurement. While the country's achieve-
ments in cereal production are noteworthy, this is no time to relax'as was advocated in 1986 in certain quarters. There was consider-
able pressure then to reduce the area under cereals so that 'more
pulses and oil seeds' could be produced. Unfortunately, this line ofargument reflects our failure to create the vital infrastructureneeded, especially in the area of proper storage and rapid move-
ment of the cereals produced in the green revolution belt of the
country, and purchased by the public agencies. Up to 60 per centof a poor man's caloric needs are met by thc cereals component inhis daily food consumption while the more expensive pulses and
edible oils are not yet relevant to him in his quest for his energyneeds, as any survey of the food consumption habits of the ruralIndian poor will show. Such a shift can only mean that the betteroff will eat more and the poor will eat even less than at present'
The need of the hour, therefore, is to produce more cereals toensure that they are adequately available, including with thegovernment, while stepping up simultaneous efforts to produce
more pulses and oil seeds. Oil seeds and sugarcane should not
triumph at the expense of wheat and rice.The position, then, is that the production trends are such that
we can sustain and even improve upon our present levels ofproduction and procurement. It is, however, necessary to step up
investment in agriculture and create the infrastructure needed tosupport the farmer and ensure the quality of the foodgrains cominginto the hands of public agencies.
In a PDS, the most important task is the organisation of thedelivery system. kgitimate costs as well as leakages render asubsidised delivery system suspect in thg eyes of the taxpayer, and
rightly so. In a growing economy like ours, given the escalation ofcosts because of inflation, a subsidised PDS can be looked upon as
a wasteful exercise that is open-ended. There is need therefore todevise means to cut down even the legitimate costs, while relent-lessly eliminating leakages caused by malpractices.
The starting point in this exercise is the identification of the
165
166 Deliverance from Hungar
beneficiaries of the PDS. The elrd point is the distribution of theessential commodities at the faii price shop level. In between liesthe conveyance of the from storage points to the fairprice shops. Leakages are at all these points. Identificationis a matter of laying down clear-qut guidelines as to who the targetgroups should be and the i agencies being trained andmotivated for the job. The of identification are notpeculiar to a PDS alone. They are also present in the implementationof the IRDP where, therefore, thi: Gaon Sabha is now sought to beinvolved'in the identification of lhe beneficiaries to elimitate mal-practices. Non-governmental ions or voluntary agenciesand the village community itself ban play a very significant role ineliminating bureaucratic and political partisan pressures.which are the chief causes of the ineligible joining the target
lands held and nature of crops can always be laid down. thedecision as to who amons the in a village should legitimatelybe included to receive subsr grains will best be made by thevillage community itself, likeassisted in making shortlists ofagencies, wherever suchcredibility over a period.
Gaon Sabhas. These can beby non-governmental
exist and have functioned withsuch agencies do not exist, res-
ponsibility will have to be giveh to official agencies subject tooonsensus in the Gaon Sabha. Similarly, over a period, the deli-very system itself should be tal<en over and managed by thecommunity, including decentralided local procurement and distri-bution through farmers'and con$umers' cooperatives. This woulddrastically bring down state subsldies.
Evey sit.. the rural PDS becar{re a reality in Andhra Pradesh, ithas been-noticed that the villagrb fair price shop has become asimportant an institution as the vlllage school. The non-arrival ofrice evokes strong resentment qmong the beneficiaries and thecommunity leadership. Since the village fair price shop provides abasic benefit, it has become the focal point around which the pooras also those who depend upon tlr,eir electoral good will, rally. In asituation of this kind, it should bp easy to organise, through non-governmental agencies, a viable d{ivery system which woutd includetransportation of essential commgdities from storage points to thevillage and their distribution to the beneficiaries in the villaee.Official arrangements are always procedure-bound, leading to
A Pubtic Dixributlot>c1{tn>Oclful Syxtcm lor lndla
higher operational costs. Community efforts, on the other hand,can enable the community itself to take responsibility for it, and
use its own resources such as carts, tractors and even animals
where necessary, to transport essential commodities to the villageand distribute them, without having to formally employ paid man-power at the fair price shop level. Costs can thus be cut over a
period and altogether eliminated at some future date.Also, the costs of price subsidy which depend upon the quantities
supplied are bound to come down as households climb above thepoverty line. In other words, apart from a regular daily vigilagainst ghost cards, the target households should be reviewed onceevery two or three years to ensure the elimination oJ the ineligible.This kind of a review can help provide an additional supply offoodgrains to households which may, at a given time, have in theirmidst pregnant and nursing mothers. While organising a PDS, thecentral and state governments should therefore make monitoringof costs an essential aspect of programme implementation.
5
The Andhra PradEsh Rice Scheme
While discussing the reorientation of the existing public distributionsystem in favour of the poor, and its extension to rural areas, itwould be useful to draw lessons from a study of a system withsimilar goals in order that the ndtional PDS could guard againstthe pitfalls such an attempt could encounter.
Among the PDSS that have tried to cover rural areas, are thoseof Kerala, Tamil Nadu and Artdhra Pradesh. Of these states,Kerala is always deficit, while Tafnil Nadu is marginally deficit inyears of bad rainfall. Andhra Pfadesh, on the other hand, is asurplus state, encompassing larg@ surplus as well as deficit tractswithin its area. While Kerala and Tamil Nadu are essentially'distribution' states (though Tarlril Nadu's Tanjore District is asurplus district where procurement takes place on a scale compar-able to that in some of the districts of Andhra Pradesh), AndhraPradesh is both a 'procurementl and 'distribution' state. It has
several districts that are heavily surplus in rice such as WestGodavari,.East Godavari, Krishna, Guntur, Nalgonda and Karim-nagar; on the other hand there ale also chronically drought-proneand heavily deficit districts such as Anantapur, Chittoor, Cuddapah,Kurnool, Adilabad, Visakapatnafir and Vijayanagaram. It also has
a large tribal population with as many as eight districts coveredunder the ITDP. It would, therBfore, be of value to study thepublic distribution efforts in this state at some length. In a way,Andhra Pradesh reflects the cotditions obtaining in India as a
whole at the macro-level, with ldrge stocks of surplus foodgrainsand vast masses of population goihg hungry-a situation crying outfor a solution by which the surplup stocks could be used to feed thehungry.
Andhra Pradesh Riae Scheme
Rice varitiesCommonFineSuperfine
t69
1982-83 witnessed the prevalence of acute drought conditions
throughout the country, and Andhra Pradesh was no exception'
The siate was to go to the polls in the first week of January 1983 to
elect its repres€ntatives to the state legislature. Ever since. it came
into existence, the Telugu Desam Party (TDP)' which was trying to
wrest power from the ruling Congress-I, had been repeatedly prornis-
ing that it would make rice available to the people at Rs. 2 per kg if itcame to power. In November 1982, the Congress Govemment
announced that in order to ensure that the price of rice did not rise
in the open market as a consequence of drought conditiols, itwould subsidise the rice distributed through the PDS from Decem'
ber 1982 and make the three varieties of rice available at the prices
given below:
Rs.lkg.1.90
2.102.15
The election'manifesto of the Telugu Desam Party (TDP) which
was released just before the January 1983 elections, stressed the
need for streamlining the PDS so that essential commodities could
reach the villages and be sold at reasonable prices, making the sale
of rice at Rs.2 per kg the central objective of this larger policy.
The manifesto also stated that rice would be made available to the
poorest of the poor.Table 5.1 gives an indication of the relative benefits that the
consumers were promised as a consequence of the price policy
announced by the Congress Government and the TDP in November
1982.Andhra Pradesh is predominantly agricultural and has a large
rural population. According to th€ 1981 census the rural population
of Andhra Pradesh constituted 76.68 per cent of its total population'
which is practically the same as the all-lndia figure at 76.69 per
cent. Thus, of a total population of 53.55 million' the rural popula-
tion of Andhra Pradesh accounted for 41.06 million; and of a totalnumber of 10.88 million households,8.43 million were rural. The
8.32 million agricultural labourers in Andhra Pradesh constituted
as much as 36.76 per cent of the total 22.63 million workers, as
against nnly 24.94 per cent for all-lndia. At the same time, the
170 DCivoranco from Hunger
Rlcr Scheme
FCI issue
price
1.882.N2.15
Rtcc hcea.end
Price atwhich*'as being
Subsidisedpice
announcedby the ststegovernment
from1 December
1982
TDP'spromised
price
2.@
3$]
State
avefageretqil
prrces
in 19E2
sold inthe PDS
in Novembar12.
CommonFineSuperline
1.90'r.2.102.15
2.52
2.79
Notc: ' Tliese pric€s could be slightly l[rore or less depending upon distances overwhich rice was transported.
" The actual production of comdron varieties of rice in Andhra pradesh wasaround 10-12 per cent of the total rice production.
proportion of cultivators to tota[ workers was only 32.73 per centas against 41.57 per cent for all India. According to the planningCommission, as on I March 1978, the percentage of AndhraPradbsh's rural population living lbelow the poverty line in lg7-7g,based on the 32nd NSS round oir Household Consumer Expendi-ture, was 43.89.'
Although the level of rural poverty in Andhra pradesh was quitehigh, prior to 1983 its PDS, like those in the rest of India (barringTamil Nadu and Kerala), was oriented mainly towards urba;areas: very little rice, if at all, wjas distributed through the systemin rural areas. For example, in 1982, the Government of Indiaallotted Andhra Pradesh 36,410 tonnes of grains per month. Ofthis,12,865 tonnes or a little ovei 35 per cent was re-allotted by thestate govemment to two districts;lhe urban city_dlstrict of Hydera_bad, and Visakhapatnam, which included the ihdustrial City ofVisakhapatnam. This left a balance of only 23.545 tonnes fordistributlon through the PDS in the remaining 2l districts. whichhad their own u,rban areas to prof,ide for. In Hyderabad city itself,the entitlEment of rice per housfhold per month was 50 kg.
' The revised figures published in l98j for 1977-28 by the planning Commissionshow the pcrccntagc of rural popularion living below the poverty lini at 45.4. Theprovisional figure for 1983-84 is 38.7 pet cenr.
Andhn Pradesh Elca Scheme
While the PDS was thus catering essentially to the urban areas,
almost all households in the state, urban as well as rural, had been
issued with identity cards. In addition to the ones in urban areas, a
large number of fair price shops had also been opened in the ruralareas of the state. However, the households had not been identifiedon the basis of either a firm or uniform economic criterion. Insome districts the Collectors had divided the population into fourcategories; in others into three, and in yet others only into two.The economic definition of these categories also differed fromdistrict to district. In any case, the family identity cards applied tosugar and not rice, since no worthwhile quantities of rice werereaching the viltages through the PDS whereas, in accordance withthe guidelines set by the Government of India, sugar had necessarily
to be distributed in the villages. In December 1982, 12.60 millionidentity cards were in circulation; these were attached to about29,095 shops all over the state, including non-urban areas. Most ofthe shops in the rural areas, however, did not really serve anyuseful purpose since rice was hardly ever distributed there throughthe PDS. Palmolein oil came to the villages only once in threemonths; wheat hardly ever did. A substantial portion of the poorvillagers did not buy sugar. While kerosene was bought regularlyby all villagers, it was not always retailed through fair price shops.
These shops thus had very little relevance to rural Andhra Pradesh
from the point of view of food supplies, though about 80 per centof the 29,905 then in existence were in rural areas. Most of themwere in fact dormant.
Prior to 1983 the PDS in Andhra Pradesh was handicapped bytwo factors: the low quantities of rice released for use in the PDS;and the non-utilisation in full of even those quantities by the state.Table 5.2 shows the allocation of the central pool rice to the state'sdistribution system between 1980 and 1982 and the off-take duringthose years.
In keeping with its poll promises, the new government in 1983
tried to rectify this situation. The new government's objective was
to make rice available at Rs. 2 per kg to all the poor, both in urbanand rural areas. It therefore became necessary to identify poorhouseholds using a verifiable economic criterion that could beuniformly applied all over the state. The Planning Commissionhad adopted an income criterion of Rs. 75 per capita per month inurban areas and Rs.65 per capita per month in rural areas to
171
172 Dollverance from Hunger
r^Br.lE 5.2Allocedon rnd Ofr-tsle of Centrsl pml Rice
in million tonnes
Rice allotment
from thecentral pool
Quantity notutilised.
1980
19E1
1982
0.3680.4160.437
0.2220.35s
0.416
-0.146-0.061- 0.021
Sotlr(fr Bulletin of Food Statistics Iand Statistics, Ministry ofSupplies, Andhra Pradesh
published by the Director of Economicsand the Commissioner of Civil
indicate p<iverty levels based on a minimum daily calorie require-ment of 2,100 in the urban and 2,400 in the rural areas. This meantthat an annual income of beloriv Rs.4,800 and Rs.3,600 for ahousehold of five persons in the rlrban and rural areas respectivelyconstituted the poverty level. The state government also notedthat against a poverty level of Rs.3,600 per annum for ruralfamilies adopted by the Planninl Commission, the Rural Devel-opment Department of the Government of India adopted a levelof Rs.3,500 per annum to assist them cross the poverty line. In1978, the Planning Commission'd estimates placed the percentageof the combined rural and urban population living below thepoverty line in Andhra Pradesh dt 42.18.In 1983, this was revisedto 43.6 per cent or 24.33 million feople or 4.95 million households,calculated at 4.92 persons per hpusehold. A study of the figuresrepresenting agricultural labou{ers, marginal farmer holdings,workers engaged in household industries and the urban slum popu-Iation as obtained from the 198f census data, the l97G-77 Agri-cultural Census of Andhra Pradesh and the state's Directorate ofTown Planning, persuaded the stdte government that the incidenceof poverty in Andhra Pradesh was probably higher than thatindicated by the Planning Commission figures. The state govern-ment also felt that an income letel of Rs. 3,,500 or Rs. 3,600 perannum did not adequately indicdte the actual level of poverty in1983, considering the rapid erosibn of real wages that was takingplace due to rising inflation. A scheme whose objective was toprovide the poor with an essential need, should not just be confined
Andhra Prad*h Rice Scheme
to the poorest deciles of the population but should also encompass
groups that are only slightly better off but who are liable to slide
down to the status of the Poorest in adverse conditions, such as
those induced by the failure of monsoons. In view of this, the state
government felt that an annual income level of Rs.6,000 per
household would reflect poverty more accurately. Therefore, though
the original intention was to make rice available at Rs' 2 per kgonly to househotds with annual incomes up to Rs. 3,6fi), the
scheme warmodified aud broad-based to include households withincomes up to Rs. 6,000 per annum.
The next step was to plan for the procurement of rice to supportwhat would be a vastly expanded PDS. To do this, the stategovernment had to make certain estimates of the probable numberof households that had to be served through the scheme. Since the
object was to help the poor, the natural beneficiaries of the pro-gramme would be agricultural labourers, marginal farmers, ruralartisans and slum dwellers in urban areas.
Based on the 1981 census provisional figure for agriculturallabourers at 8.29 million or 3.7 million households, calculated at
2.24 persons per household, taking the household-industriesworkers population of the 1981 census and the marginal holdingsfigures of the 7976-77 Agricultural Census as proxies for theartisan and marginal farmer households respectively, and based onthe urban slum population figures gathered by the Director ofTown Planning in 1982 which placed the slum population at 2.5
million, projections were made as to the number of households
needing coverage under the rice scheme (see Table 5.3).It was recognised that this was at best a rough projection in which
there was a lot of overlap, but it was deemed to be a safe figure onwhich to base the prgcurement requirements.
Having decided to identify the poor households and provide
TAaLE 5.3Proj€cted Number of Hous€holds for Rice Sch€nrc
(million)
173
Agriculturallabourhouseholds
Urban-slum Totaldweller
households
Maryinal
farmerhouseholds
Arlisanhouseholds
3.70 0.50
174 Delivcrancc from Hungcr
them with rice at Rs. 2 per kg, state government had to decidehousehold should be entitled toupon the quantlty of rice that
get per month. A clear of the poor households andproviding them with identity would naturally involve assuring
of foodgrains. In any case, thisthem a certain minimumwas the objective. Taking into ion the level of procure-ment (1.10 million tonnes) in the previous year l98l-82,and the fact that the state, asobligation to make a certain
surplus rice producer, had an
central pool for use in deficit , the state goyernment decidedthat initially, 10 kg of rice per should be made available
household. Given that aevery month to everymaximum of 8 million be provided for, theirrequirements would be about aof half-a-million tonnes to the
household and decided that thiskg per household per month,procured from the millers by an
of rice available to the
tonnes. With a Contribution, the procurement require-
should be raised to 25the quantity of rice to be
1.5 million tonnes. The
poor; had
ments would be around 1.5 tonnes. It was decided toprocure this quantity from the millers. The Government of
. Subsequently, however, theIndia also agreed to this arranstate government felt that 10 kg of foodgrains was .too small aquantity' comparrcd to the ion requirements of an average
decisions regarding income ceilings for eligibility under the schemeand the quantitative rice entitlemdnt of households, after importantadministrative arrangements ha{ been set in motion pursuant tothe original decisions, were laterlto cause serious problems in theimplementation of the rice schemp. The reversal of the decision onthe income ceiling was commuriicated to the enumerating fieldstaff after the work of enumeratipn was already in full swing. Thedrastic revision of the income ceiling from Rs. 3,600 to Rs. 6,000caused considerable problems fo!' the district collectors and led toa loosening of the very strict contfols needed in an enumeration of
total procurement level would be around 3 million tonnes.It should be mentioned here the reversal of the two vital
this kind" Since the needs had been worked out onthe basis of an income limit, of Rs. 3,6ffi, the projection of bene-ficiaries was kept high so that the government would be in aposition to provide more than ttie 10 kg promised after the enu-meration results came in and the could be placed on a
Adhrt tur,drch Bb *hmra
firm footing on the basis of actual results. The decision to procure1.5 million tonnes of rice was based on this higher projection ofbeneficiaries, in the expectation that some elbow room would beavailable to provide more rice to the actually identified poorhouseholds. The amount of rice to be procured was unprecedented,but the rice milling industry was persuaded to deliver this largequantity under levy though the major crop of 1982, the kharif ricecrop, had been significantly affected by a severe drought. Thisagreement with the rice milling industry was essential because,unlike in Punjab, Haryana or western Uttar Pradesh, AndhraPradesh is not a'green revolution' state nor is rice a'commercial'crop in the sense it is in the north-west. In Punjab and Haryana,the consumption of rice is minimal; their entire production is thusmore or less a marketable surplus, and hence reaches the procure-ment agencies with little effort required on the part of the latter.On the other hand, in Andhra Pradesh, where rice is the staple, itsprocurement always requires tough enforcement measures. Thestate government enforces these measures and the Food Corpor-ation of India buys and stores the resultant deliveries. While underthe levy laws, a rice miller certainly ftas to deliver a portion of therice he manufactures in his mill, there is, however, no law in thecountry under which he can be compelled by the centre or the stateto buy a particular quantlty of paddy and manufacture rice. With nograins coming to the public agencies under a price support scheme,their procurement in Andhra Pradesh is no easy task. In view ofthis, an agteement with the millers which persuaded them to buyenough paddy so as to deliver an unprecedented levy of 1.5 milliontonnes of rice in a drought year to the central pool was a very ggodaugury for the scheme. The Government of India approved theentire package, under which a million tonnes of central pool riceprocured through the enforcement efforts of the Andhra Pradeshgovernment would be released to the state's PDS and 0.5 milliontonnes would be used by the central government for distribution inthe other needy parts of the country. However, after alt thesepolicy measures were finalised, the Andhra pradesh Governmentannounced that instead of the original 10 kg, 25 kg of rice would beprovided for each identified household. This meant procuringtwice the quantity originally planned and agreed upon. The strainthat this decision put upon the state's civil supplieS administrationwas considerable.
t75
I
t76 Dcllvcrance from Hunger
Serious problems arose whpn the results of the enumerationemerged in April 1983. Againqt the maximum projection of about8 million h'useholds that werq expected to be the beneficiaries ofthe rice scheme, the numbe4 that actually emerged was 10.85million, which is almost the nulmber of the total households in thestate (11.35 million in 1983). A drive had therefore to be launchedto eliminate the ineligible houpeholds and in subsequent months,nearly 1.2 million green cards rfreant for the identified poor house-holds for the issue of subsidised rice were either cancelled orconverted into yellow cards, rReant for the non-poor households.
Table 5.4 gives a breakdowq of the total number-of green cardscitculating in the rural and urban areas of the state in 1985.
TAIBLE 5.4Grccn Crtds IF Clrculrdon (f9E6)
Projected popula-iion of AndhnPradesh in 1966
No. of households No. tif green cards
Urban
(mitlion)
59.4t4 9.35 2.73 12.08 8.t7 10.43
Sourcr: Commissioner of Civil Supplips, Andhra Pradcsh.Note: According to the 1981 ce[sus the average number of membcrs in a house-
hold in Andbra Pradesh was 4.9p (10.88 million households for a populationof 53.54 million).
A beneficiary number of 10i43 million households in a total of12.08 million households in thq state which works out to a percent-age of 86.34 is certainly on the high side for an anti-povertyscheme, however broad-based it is in conception. Considering thata total of 13.90 million familf cards (including the yellow onesissued to non-poor householdf to enable them to draw essentialcommodities like sugar and epible oils but not subsidised rice),were in circulation in 1986, the excess cards or 'ghost' cards cir-culating in the state acco.unted fior 1.82 million since the number ofhouseholds projected for 1986, based on the 1981 census was 12.08mitlion. In view of the benefis fihey conferred on the holden in theform of subsidised rice, it would not be incorrect te assume that amajor portion of thes-e ghost cards were green. Even the stategovernment's projection of thq poor households, overlapping andbroad-based as it was. had estirfated them at 8 million in 1983. It is
Andhn Pradesh Rice Scheme
thus obvious that there were a few million ineligible households '
benefiting from the scheme. Concerted effort was thus required toeliminate these and the ghost cards from the purview of the scheme.As mentioned earlier, such an effort was indeed launched in198!84 and nearly 1.20 million green cards were either eliminatedor converted into yellow cards. But the political instability whichovertook the state in late 1.984 rendered the continuance of thiseffort impracticable, with the result that the drive not only came toa halt, but the situation reversed itself and demands were made torestore the cancelled cards. This sent the number of green cards upto 10.43 million, a spurt of 0.8 million from 1984. A situation ofpolitical instability gives rise to a demand for more and morebenefits for the ineligible, and the political will so necessary toresist it becomes conspicuous by its absence. It is to be hoped thatthe drive to eliminate the ineligible households from the purviewof this poor man's scheme will be re-started and taken to its finish.This is an area of the highest priority calting for the immediateattention of the state's political leadership. If this is not done,there is danger of the most deserving being elbowed out of thescheme by the least deserving, and of the scheme itself, conceivedas an anti-poverty measure, becoming discredited. The eliminationof every million cards means a savings to the state's exchequer ofRs. 162 million each year, at 1986 prices.
This problem is riot unique to Andhra pradesh, but dogs allcountry-wide programmes designed to help the poor. The result isthat the better-off always manage to corner the cream. Even TamilNadu, which has been operating a well-organised PDS, had a totalof 11.94 million household cards circulating in 1986, whereas thetotal number of households in that state must have been around11.17 million only. Of these, those who were entitled to subsidisedrice were 11.36 million or 95 per cent of all card holders, or 0.19million households more than the actual number households inthat state. In Delhi, for an estimated l 5 million households, 1.7million cards were in circulation in 1986.
Thus, for the first time in Andhra Pradesh an attempt was madeto identify the poor, including those in rural areas, with a view toproviding them direct succour by assuring them a certain minimumlevel of nutrition at affordable prices. To achieve this, the stategovernment had to undertake a massive programme of procure-ment from rice millers and traders. A procurement policy based on
177
174 Dollv€.ance flom Hunger
a 50 per cent levy on millers an{ traders combined with restrictionson the movement of their bala{ce production outside the state toareas with better purchasing p{wers till after the requirements ofthe qnlarged PDS were met, as also those needed to ensure avail-ability within the state in order to hold the open market prices incheck, was intnoduced. The ainf of this comprehensive policy wasto compel a section of the rich fo support tfe poor by maximisingthe levy. This policy was challeriged by the millers, but the AndhraPradesh High Court of Judicatule in a land-mark Judgement upheldthe state government's powers [o regulate the movement of levy-free rice outside the state. While it is not intended here to go intothe formulation and execution of the procurement policy of theGovernment of Andhra Prad{sh in 1983, which then was andcontinues to be the backbone !f the PDS in that state, its successcan be measuted from the fact that rice procurement, which hadtouched a level of 1.10 million tonnes in the crop iear 1981-82, ayear of high production not only in Andhra Pradesh but all overIndia, was stepped up in 1982-{3, a year of acute drought and lowproduction, and a quantity of 1.62 million tonnes of rice wasprocured through the Food Corgoration of India. Since 0.57 milliontonnes of rice out of this quantity was to be used by the centre andthe balance of 1.05 million tonfes was not adequate to meet therequirements of the PDS, the sfate government had to undertakefurther procurement on its own dccount, both at levy and negotiatedprices, to the extent of 0.38 miflion tonnes during that year. Thetotal quantity thus procured arld purchased during the crop year1982-83 through the central ahd state agencies amounted to 2million tonnes. This was in a ydar of severe drought and the step-up was from 1.10 million tonneF procured in a year of higher riceproduction (7.87 million tonnesD to 2 million tonnes, procured in ayear of drought and a lower level of production (7.67 milliontonnes). The percentage of propurement and purchase to produc-tion of rice in the crop year 198{-83 was 26.07 as against 13.98 percent irt 1981-82. With the Go\4ernment of India stepping up thecentral pool releases to 1.10 mil]lion tonnes (it had never exceeded0.44 million tonnes in any previpus calendar year) and the AndhraPradesh State Civil Supplies Cqrporation procuring rice at pricesnotified by the central governnlent and at negotiated prices to theextent of 0.38 million tonnes, fhe total quantity of rice that wasmade available through the PD$ to the identified target groups, 79
Andhra Pradesh Rice Schome
per cent of whom were in rural areas, amounted to 1.51 milliontonnes in 1983 as against 0.41 million tonnes distributed in 1982. Inthe crop year 198H4 the quantity procured through the FCI was1.48 million tonnes and that purchased in the open market by theAndhra Pradesh State Civil Supplies Corporation was 0.99 milliontonnes, making a total of 2.47 million tonnes or 28.82 per cent ofthe total rice production in that year. The quantity of rice distributedin 1984 through the PDS rose to 1.73 million tonnes.
Apart from the sound,ness of the procurement policies pursuedand the fact that Andhra Pradesh is a rice surplus state, what madesuch large-scale procurement under levy and otherwise possiblewas the uncompromising commitment to the programme of makingrice available at Rs. 2 per kg to the poor on the part of the state'spolitical leadership at the highest level.
In the crop year.198,1-85, while the FCI procured 1.78 milliontonnes of rice, the Andhra Pradesh State Civil Supplies Corporationpurchased 0,97 million tonnes, bringing the total procurement andpurchases to 2.75 million tonnes. The quantity of rice distributedin 1985 was 1.8 million tonnes.
Table 5.5 and 5.6 summarise the details of procurement and off-take of rice through the PDS during the Sixth Plan period and inthe first year of the Seventh Plan period. The sharp rise in bothprocurement and offltake from the year 1983 was the direct resultof the PDS being exppnded to serve the rural poor.
With the enumeration of households in the entire state and theprocurement policy reshaped to support a massive foodgrains dis-tribution systCm which was expanded to include all the rural areas,the Rs. 2 per kg rice scheme finally brought the rural poor house-holds into the ambit of the PDS. For the first time, as many as
27,221 villages saw the actual arrival of rice into their fair priceshops, for distribution to the poor at near-affordable prices. Thevillage fair price shops, which hitherto wefe essentially sugar orkerosene shops, could now hope to operate as viable small busi- ,nesses because of an a$sured average allotment of about 50 quintalsof rice every month, wifh a margin of Rs. 7.38 per quintal guaranteedto the shopowners by the state government. Rice began reachingthe remotest corners of the state, previously not served by thePDS. Table 5.4 shows that of the 10.43 million green cards incirculation, 8.17 million or 78.33 per cent were in the rural areas.The number of fair price shops which was 29,025 in mid-1982,
179
Delivcrance lrom Hunger
Crop year Procurementof levy rice
thlough FCI
0.4151.o321.6i261.,l841.708r.571
Rice allotment
flom cenfiqlPool
0.3680.416o.437
1.1031.0100.0,16
t.2Q
for PDS: Sirth Plen(in million tonnes)
Purchates by Total,he Stote
Civil SuppliesCorporation
198{Hl1981-421982-83198!84r98,t-851985-86
0.189 0.6970.044 t.wl0.378 2.W0.987 2.47r0. 5 2.7540.897 7.M
Soorce: Sradra'cal Pcnorama by the Food Corporation of India, NewDelhi, a d the Commission€r Civil Supplies, Andhra Pradesh.
Noter 1. In 1980-81, the Food of India and the State Civil Supplie$Corporation also puchas€d 0.138 million tonnes of paddy from thefarmers, of which 0.133 tonnes was purchased by the FCI.
2. In 1981-82, the FCI alsothe farmers.
0.032 million tonnes of paddy from
Rice Ofi-trkc PDS: Sixih Plen(in million tonnes)
Year(Jar-Dec)
1980l98t\9421983
1984
1985
1986
o.2220.35so.4161.5821.8,1{)
r.9202.185
Differencein quantity
utilised
-0.746-o.061-o.o2l+o.479+0.730+0.874+0.945
Surce: Bulletin on Food Statistics published by the Directorate of Eco-nomics and Statistics.Civil supplies, Andhra
of Agriculture, and the Commissioner of
Notc: The gap bdtween the off-takenon-utilisation of rice allottedoff-take and allotment duringadditionally put into the publicthrough its purchase
allotment in the years 1980 to 1982 shows
the cerltre, whereas the gap between th€years 198H6 shows the quantity of rice
system by the state gov€rnment
Civil Supplies Corporation.undertaken via the Andhra Pradesb State
Andhra Prlded, Bicc sc,'6'me
stood at 34,030 in March 1986, of which 27,764 or 81-59 per cent
were in the rural areas, duly activated.In rural areas, the basic problem faced by the poor, who subsist
on daily wages and earnings, is the inability to purchase essential
mmmodities even at prices offered bi the PDS. It was in recognition
of this that the Andhra Pradesh Government introduced the sub-
sidised rice scheme. The state governmen! also recognised that inthe context of a lack of purchasing power on the part of the ruralpoor, it was essential to make rice available in as many instalmentsas was financially and physically possible for the poor to buy.Instguctions were therefore issued by the govemment to the districtauthorities in May 1983 to ensure that ric€ could be drawn by thebeneficiaries in upto fjve instalments a month.
At the time of writing, the government of Andhra Pradesh has
been implementing this subsidised rice scheme for the sixth con-secutive year. Under it, an average of about 180,000 tonnes of rice
are distributed every month. In August 1983, the actual off-takethrough the PDS was as high x 213,452 metric tonnes. The scheme
was estimated to cost the state's exchequer around Rs. 1,710 millionin 1985-86. Taking a consumption of 1.98 rnillion tonnes and an
estimated expenditure of Rs. 1,710 million in 198F86, the subsidyper tonne of rice added up to Rs.903 or about 90 paise per
kilogram. With 1.89 million tonnes of rice consumed by 10.43
million households, the average per household consumption throughthe fair price shops in L985-86 amounted to 181.5 kg per annum orabout 1.5 kg per month. The annual subsidy expended on theaverage beneficiary household was therefore about Rs. 163.95 per
annum.In order to understand how the rice scheme in Andhra Pradesh
was functioning in June 1985, the author undertook a study ofseven villages in four districts of Andhra Pradesh. The villagesconcerned were seleqed from among the most affluent in thecoastal delta districts as well as from a district that is chronicallydrought-prone and considered to be the most backward in theRayalaseema region. These villages are the same as those discussed
in Chapter 2.The study revealed certain serious drawbacks in the scheme. Fint,
as has already been mentioned, the presence of ineligible householdsand 'ghost' cards is a serious threat to the basic objective of the
lg2 Dsliverance from Hunger
progr:rmme. Although a drive *las launched and about 1.20 millionineligible households were elimi]nated from the scheme in 1983-84,the pressures for allowing such households to continue to benefitfrom the scherne still persist. lwith the scheme having been inoperation for six years now, a fresh enumeration using the latestpoverty figures of the Plannin$ Commission for 1983-84 as theguideline needs to be undertakfn. While it is quite probable thatthese figures understate povert$, they will answer the criterion ofenumerating tlle poorest of the poor who alone should be eligiblefor the benefits of this scheme. [he guidelines issued for identify-ing the poor upto an annual inbome level of Rs. 4,800 under the
The gap between this figurebeen used as the basis for
4,800) and Rs. 6,,1fi), which has
at the poverty figures for1983-84, could act as a for errors that may occur'in
field level. In the event, theto the 198H4 poverty percent-
enumerations of this kindemerging figures willage levels, which would reflect the number of the poorest of thepoor at the piesent time. enumerating households, careshould be taken to exclude all owning above 1.50 acres ofirrigated land under assured ; above 2.00 acres of irrigatedland under other sources of tion such as wells and tanks:above 2.00 acres of dry land cullivated with commercial crops suchas chillies and cottoni and 5.00 acres of all other types of dryland. This would be justified, that the average yield of rice rnAndhra Prade$h during the Plan period was about 2,000 kg
as jowar, bajra, ragi and maizeper hectare; of coarse grainsfrom 600 kg to 1,600 kg a ; and of chillies around 1,100 kg ahectare. However, an annual of Rs. 4,800 should be usedas a touchstone while exclusions. All other poor shouldbe included in the rice scheme.
not become available to the heneficiaries on the first of everymonth or in the first week of month or on any specified datewithin a month. Invariably, thd position is that rice reaches thevillages whenever, in the of the beneficiaries, 'the dealer is
Secondly, while the'ration'ripe or'quota'rice, as it has come tobe known in the villages, does e]ventually reach the village, it does
pleased to bring it to the villag$'.In four out of the six villageN, including the two villages of the
chronically drought-affected dlstrict, it was found that the fair
AndhrE Pradesh Rica Scheme
price shop dealers insisted that the total monthly entitlement ofrice, amounting to 25 kg per family and costing Rs. 50' be purchased
by the beneficiaries in one single instalment, that is, all at one
time. In these villages, the dealers brought in the rice when itsuited their convenience and kept it on sale for short periods-inone village for as short a period as four days and in another village
for a week. The result was that a very substantial percentage of the
beneficiaries who were daily wage earners were unable to buy
their entire monthly entitleuent since they could not mobiliseRs. 50 within a short span of four to seven days. Sometimes they
lost upto 10 kg of rice in a month, especially in the lean season' orthey were forced to bonow money from the village moneylenders-usually the big farmers in the village-in order to buy the entire
entitlement. And in no village is such a loan available at a rate ofinterest that is less than 24 per cent. This position obtained notonly in the four villages where the 'ration' rice was brought and
offered all at one time by the fair price shop dealer but also in one
of ihe other two villages. Here, when the dealer brought rice to the
village in two instatments, he did not do so for the benefit of the
consumers. The cardholders had to buy their entitlement in one
go. In this village, which is agriculturally very prosperous, the
beneficiariei reported that 75 per cent of them were unable to buy
their entire entitlement, since only 25 per cent among them had
the financial capability to do so. Those who could buy only L0 or15 kg at a time were not entertained by the fair price shop dealer ifthey returned after a few days with money to buy the balance. The
rest of their entitlement was thus lost to them. In the other village,where rice could be drawn in two instalments, many beneficiariesstill did not get their entire quota because rice was distributed'whenever it was available' and if, at the time rice was available inthe shop, the beneficiary did not have the money to buy his
entitlement or the balance of his entitlement, he went without his
entitlement to that extent.A visit to the fair price shop in one of the villages in the
chronically drought-prone district and discussions with the fairprice shop dealer showed that though three weeks had gone by inthe month, he had not yet remitted the amount required to move
the rice into the village. Conversation with the villagers revealedthat this was a regular practice with him. In the previous month,that too on the 2lst, he had remitted an amount required to buy
18il
only 65 quintals of rice, rwhile88 quintals. These 65 quintalsmonth and according to his billquantity irr just six days. Most4s having bought 25 kg of ricebought less than l0 kg. Duringany money to cause theEnquiries revealed that hebusinessman. fle reportedlyalso ran a fertiliser business invery high incidence of poverty
landlord who owns 15 acres ofown cultivation than in running
Deliverance from Hunger
quota allotted to the village wason the first of the following
, he had disposed of the entirecardholders had been shownhim in one go; no one had
next L5 days he did not remitof further rice into his shoo.
both a big agriculturist and a40 acres of land and his family
district he,adquarters. There is athis village situated, as it is, in a
and is more interested in his
184
drought-prone district: 85 per of the land is dry. According tothe youth of this village, only about 25 per cent of the greencardholders among the poorer of this village can buy 25 kgrice at one time. Yet the fair shop dealer's bill book recordeda sale of 65 quintals of rice in a ce of six days. with most of thepurchases having been made at rate of 25 kg. This kind of aone-time sale had also been earlier in an extremelvprosperous village in a delta ict. This delta villaee has twoshops---one run by a and the other by an agriculturistwho owned five acres of land. In th shops, the green cardholders
at one go. Those who failed towere told to buy their entiredo so were subsequently denied ir balance entitlement. Even inthis prosperous village, a ial percentage of green card-holders cannot buy 25 kg of rice one lot. The question therefore
that is left unclaimed by thelders of another delta villaee
arises: what happens to thebeneficiaries? The greenreported that their fair price dealer sells such unclaimed'quota rice' at higher prices a private shop of his own,where he sells other me as well. Once, when the bene-
authorities that the dealer wast stipulated by the government,
ficiaries dared to complain toselling rice at prices higher thanhe retaliated by altogether re from bringing rice and otheressential commodities such as and kerosene to the villase forfour months at a stretch. are two fair price shops in thisvillage and both are owned by same person, even though oneof the shops is shown in the of a dummy dealer. The realowner of the two shops is, to the green cardholders, a
shops and that his brother was
Andhn Pradesh nice Sct eme
handling the fair price shops on his behalf. That the rice not liftedby beneficiaries leaks into the private trade channels to the benefitof the traders is a safe guess.
It was noticed that in some districts rice was not being distributedin the villages because the fair price shop dealerships had been
cancelled on account of disciplinary action taken against the dealers
uxder the Essential Commodities Act, 1955. This is a ticklishproblem for the district administration, considering the simultaneousneed for swift action against malpractices and making substitutearrangemerits for the uninterrupted supply of rice to the beirefi-ciaries.
The biggest snag in the successful implementation of the ricescheme was thus seen to be the village fair price shop. The PDSmust ensure that cardholders can buy their entitlement wheneverthey wish to during the course of a month, in whatever quantitiesthey want within the entitlement ceiling. In order to do this, thestate government had issued instructions in May 1983 to the effectthat a green cardholder had the right to draw his rice entitlementin five instalments during a month. However, the rural fair priceshop dealer 'brings' in the rice allotted to him as and when it suitshim, causing great inconvenience to the daily wage earning benefi-ciaries.
It needs to be pointed out that we sliould use the expression'bringing rice to the village' with great care, for it is the stategovernment's policy to transport rice to the village fair price shops
at its own cost, which it does through the Andhra Pradesh StateEssential Commodities Corporation. It is essential to do this forotherwise there is no certainty that the fair price shop dealer who,when authorised to take delivery of rice at the godowns of the FCIor of the Andhra Pradesh State Civil Supplies Corporation, wouldactually take the ricg to the village and distribute it. Experienceshows that in such circumstances essential commodities more oftenthan not do not reach the villages. However, the assumption ofresponsibility by state government of carrying rice to the villagedoes not by itself guarantee that the rice will reach the villages intime.
There are several reasons for this. Chief among them is thatalmost the entire fair price shop trade in both rural and urbanareas is in the hands of the private sector. Of the 34,030 shops inAndhra Pradesh in 1985, 30,970 were in private hands while 3,060
185
186 Deliverance from Hunger
were in the cooperative sector, the private sector, there are twotypes of owners. One is the businessman who had beenin the trade for a long time; the other is the self-employedkind. usuallv the educated assisted under the govern-ment's anti-poverty schemes as the IRDP or that of the
Castes, Tribes and Women'sAndhra Pradesh StateFinance Corpoiations. In 1985, 6.158 of the 30,970 privately-owned fair price shops in An Pradesh were in the hands ofScheduled Caste or Scheduled5.7r.
entrepreneurs (See Table
Th:ivat€ly-Owned Frir Shop6 in AP (1965)
Classilication of Shops No. of Shops
CooperativesPrivately-owned thops(a) Scheduled Castes(b) Scheduled Tribes
3.060
a )\1901
24,812"30,97034,030
6,2627 ,764
(c) Othe6TotalTotal (1 + 2)
3. Urban4. Rural
Sorrce: Commissiolrer of Civil Supplies, Pradesh.Note: The total number of fat orice in Andhra Pradesh subsequently rose to
35,193, of whlch 28.335 were in areas.I This would include a substantial of the educated, unemployed belonB-ing to the backward and other poor who require loan assistance from banks,iust like Scbeduled Caste and Scheduled ribe entreDreneurs do.
The success of entrepreneurs to lhe weaker section ofsociety in running their fair priceloan assistance extended to them
)ps depends entirely upon thethe commercial banks around
which revolve all the indivi beneficiary oriented schemesunder the IRDF and similar anti programmes.
Even though it is the ty of the state government totransport rice to the fair price through the agency of thestate's Essential Commoditiesation cannot start the '
poration, obviously the Corpor-t'.of rice until the shop dealer
remits the cost of the rice to the . which itself buvs. therice allotted by the state from FCI on credit. In a system of
Andhra Pradesh Rice Scheme 147
private ownership, the fair price shop dealer is the owner of the
rice that comes into the PDS. He therefore first needs to buy the
rice from the state's agency (the Essential Commodities Corporation
or the Civil Supplies Corporation) before he can move it to his
shop in the village. So, if the dealer does not have ready cash to
buythe rice allotted to him in time, either the rice does not reach
the village in the course of a month, or it moves to the village at
erratic intervals. The consequence is that the cardholder either
does not get his quota at all or he loses a portion of his entitlementif rice arrives late in the village. In the latter case, if rice arrives
say, on the 20th of the month, the cardholder is forced to buy his
entire entitlement within the limited span of the remaining 10 days
of the month. This is usually beyond his means, especially in the
off-season, even in irrigated delta tracts. If this occurs in dry,upland tracts or other agriculturally poor areas like the drought-
prone and tribal areas, it is almost certain that the cardholders lose
most of their entitlement for that month. It should also be noted
that whenever the shop dealer brings in rice during the murse of a
month, it is not as if he brings in the entire entitlement quantity ofthe village. Thanks to the manifold restrictions placed upon him'the dealer hardly ever manages to obtain a loan that would cover
the entire cost of the commodity. The loans invariably take care ofless than half the cost required to purchase the full entitlement of a
village. The result is that once the vicious circle of delayed arrivalstarts in a village, it becomes difficult to break it.
It will no doubt be argued by bankers and other financial experts
that it is sound economic sense to use one-third or one-half of the
total requirement of credit at a time and to keep 'rotating' it. It is,
however, not possible to apply this rotation theory to the maiorityof fair price shops in the state which are located in about 27,000
villages. Most of the agriculturally backward districts have verypoor banking facilities. Shop dealers thus have to travel long
distances to visit banks. The prospect of undertaking two or more
such trips can be daunting for the price shop dealer, both in terms
of time and money. Since eight of the 22 rural districts in AndhraPradesh have large tribal tracts, the task becomes even more
formidable. In addition, since the shop dealer has to visit not onlythe bank office where he credits the collections realised from the
sale of essential commodities in order to draw fresh authorisation,
but also the office of the Civil Supplies Deputy Tahsildar who has
188 Deliverlnce fiom Hungor
to authorise the release of rice recovering its cost, the plightof the dealer and the who depend upon him for their
solution, therefore. is for therice can be easily imagined.banks to advance shop dealerstotal entitlement of essential
equivalent to the cost of the
attached to their shops. But for poor fair price shop dealer theinterest on such a large invest-problem here will be the mounti
ment.This problem is only slightly
Reserve Bank of India whichby the guidelines of the
loan limit of Rs. 6.000 withoutgiven in full, is not enough to
to the weaker sections of societyshowed that 614 Scheduled Caste
received being Rs. 4,267 perother hand. where bank adv
of the cardholders
t an individual a maximum. This Rs. 5.000. even whenan average fair price shop.
of Rs.6,727 per shop. Theavailable to dealers belonging
in three of these four districtsand Scheduled Tribe fair price
. In the fourth district on theto fair price shops were the
But if the fair price shop dealer a higher loan, he has toproduce security, It would be to pretend that young men andwomen who belong to the sections of our society canafford to show agricultural lands and other assets as security tobank managers. Since the objective of the IRDP is tohelp the poor who have no of their own to set out ofpoverty, expecting such personsobtain loans and then excludingbecause they have no such assets
produce assets as security tofrom earnins a livelihood
is, of course, a problem facednot only by the fair price shopthose who are eligible to pz
in Andhra Pradesh but by allte in the IRDP all over the
country.The inadequacy of the loaning can be seen from the fact
that in 1985. of the 6.666 fair shops which required bankcredit in the four districts where sample villages were studied,only 3,034 (45 per cent) received from the banks. Thetotal amount of finances by these 3,034 fair price shopswas Rs. 20.41 million at anavailable data on loan finances
shop dealers received Rs, 2,620 ion in all, the average credit
highest at Rs. 8,414 per shop, an verage fair price shop requiredaround Rs. 14.500 for rice alone. there are other commoditiessuch as sugar. palmolein and which a fair price shopdealer is supposed to provide, the requirement of an average
Arrdhra Prudesh Rice Scheme 189
shop will be between Rs. 18,000 to Rs. 20,000. According to theCommissioner of Civil Supplies, Andhra Pradesh, an average fairprice shop in the state needs to handle essential commoditiesworth at least Rs. 17,000 a month. The inadequacy of credit ex-
tended by banks is thus quite obvious given the constraints.One solution would be for the Reserve Bank to permit the state
government to use the credit given to it for wholesale rice trade forthe purposes of retail trade as well. In this dispensation, the stategovernment or the Essential Commodities Corporation becomesthe owner of the rice stocks purchased from the FCI right up to thevillage fair price shop level and rotates the limit sanctioned by theRBI against the same government guarantee offered by it for theoriginal credit line. Similarly, the RBI pan also permit the creditextended to the State Civil Supplies Corporation for financingprocurement operations at open market prices to be used to theextent necessary to carry such stocks to the village fair price shops,with an appropriate increase in the credit limit. By this arrange-ment, it can be ensured that essential commodities, especially rice,reach the rural fair price shops in time and are made availablethroughout the month to daily wage earners. It will also preventthe poorer among the cardholders from turning over their cards tonon-beneficiaries, thus preventing the misuse of the public distri-bution system by the well-to-do. What is more important, it willreduce the opportunities for fair price shop dealers to divert 'raticin'rice to the open market since the state government, as the ownerofthe rice, can keep feeding the fair price shops in the villages ininstalments on a continuing basis, depending upon actual needs,without allowing the shops to dry up at any time in the course ofthe month. This would be a better solution than burdening the fairprice shop dealers with large, high-interest carrying loans.
A solution suggested by the programme beneficiaries themselves is
that the element of private trade be altogether eliminated from thePDS and the state government take over the running of fair priceshops through its Civil Supplies Corporation. This is being done inTamil Nadu where the Tamil Nadu State Civil Supplies Corporationand the cooperatives run the entire network of fair price shops.
The main problems here lie in the finances required by way ofgovernment investment, including rent for the premises and otherinfiastructural expenses, and a burgeoning bureaucracy with all itsattendant consequences extending right down to the village shop
level. The Andhta Pradesh Goverfrment did consider adopting thissolution and in 1984 actually orde6ed its implementation as a pilotmeasure in three districts, but thp scheme was deferred possiblydue to resource constraints.
The most practical solution woul{ be to opgrate the PDS through amix of cooperatives and private, educated, self-employed entre-preneurs, with the RBI financing fhe State Essential CommoditiesCorporation's purchase and morlement of rice to the fair priceshops. This will ensure that rice redches the villages on a continuousand controlled basis. At the same time, it will help provide employ-
190 Dollverancg from Hunger
ment to the rural youth whohousing fair price shops in the
have to locate premises for
infrastructure such as gunnies,and provide other businessand measures and a trade
deposit to the government. things would require an invest-The banks can easily advancement of not more than Rs. 5,
this amount to the entrepreneur, t expecting security. Theentrepreneur can also be to sell in the fair price shopother everyday requirements of villagers such as match boxes,tea and soap. This would help tomotivate self-reliance and also
base his entrepreneurship,him a further profit. Those
beginnings of a new andthe rural areas, satisfying
able effectively at the village levelsupport from the banking system
small entrepreneur class int needs to a certain degree.
the poor. Fint, the inadequatethe educated unemployed and
who have other avocations like their own business or asriculturalinterests, should be summarily from operating as fairprice shop dealers. An of this kind may well see the
Obviously, this would call forpart of the Government of India
cooperative endeavour on theand the state sovernment. The
former would have to issue te suidelines to the RBIregarding its credit policy on food see that i{ is enforced, whilethe latter would have to safegu4rd the public finance involvedthrough appropriate linkages andshop entrepreneurs especially by
supervision of the fair price's groups.
Meanwhile. it rnav be seen that at present a combination of twofactors thwarts the state s intention to make rice avail
others who belong to the weaker of society and who areinducted into the fair price s trade throueh the IRDP andother anti-poverty programmes. makes it impossible for suchentrepreneurs to run the fair shops properly, denying both
Atldrhra Pradadt FIcp Schcmc
the entrepreneurs and the beneficiaries dependent on their shops
the benefit meant for them. There is not much that the stategovernment can do here except to try and persuade the bankers toimprove their support measure. Secondly, the private element inthis trade, which is either the village landlord or the traditionalbusinessman (or a badly run cooperative society), by adoptingpractices like bringing 'ration' rice to the village only once or at themost twice a month and selling it for a short period of four to sevendays, pre-empt the poor from buying their entire entitlement,deny them.their legitimate due and divert such rice for their ownbenefit.
These two factors are actually interconnected. The state'sadministration at the district level cannot be blamed for the secondtype of situation, for it is really caught in a cleft stick. Since,despite its best efforts, the district administration is unable tomobilise adequate credit for the educated, unemployed entre-preneurs, it is forced to rely on the landlords and traders todistribute rice in the villages. We have already seen what thetraditional trader can do with the PDS. The instinctive popularreaction to this situation is that the errant private fair price shopdealers should be replaced by the district collector. But who does
the c.ollector induct as the dealer in the place of this man? A poor,educated, unemployed entrepreneur, as part of the government'semployment programme and we know what problems this involves.The collector's dilemma is thus complete. Which is why we needbold and radical reforms in the policies regarding the loaning ofpublic funds to poor entrepreneurs, especially in rural areas. Aneven better solution would be for the RBI to provide governmentagencies with all the finance they need to successfully deliver theintended benefits of the PDS to the rural poor.
Equally important is the need for the state govemment to displaythe political will required to exclude ineligible households from thescheme and eliminate ghost cards.
Yet, in spite of all these problems, the district collectors andtheir officers in Andhra Pradesh do manage to move an average ofnot less than 180,000 metric tonnes of rice evbry month to allcorners of the state. Poor families in villages, both in the agricul-turally prosperous coastal districts and in the chronically drought-prone districts, have welcomed the provision of rice at Rs.2 perkilogram. They are unanimbus in their opinion that the scheme
19t
coastal districts, the poor stated that whereas beforethe scheme was introduced thev ften went to bed hungry, this wasnot happening any more. of the rice scheme, the savings
month ranged ftom around atthat were accruing to themleast Rs. 12.50 to Rs. even more. When askedwhether a saving of this size any difference to the wageearners whose average daily ings in the agricultural season rnthe delta area ntas about Rs. 10 day, tho response was positive.The agricultuial labourers, constitute the rnijority of thepoor, pointed out that while thca male could be Rs. 10, it washave to face unemployment for
wage in the delta area forfor women. Also, since thevintervals, lasting months on
end. the availabilitv of rice at affordable price and a4 overalla month on the whole, were asavingj of up to Rs. 25 or more
great help.The savings that accrue to are being put to various uses.
r92
should be continued. In the
open market was being held independence on private tradefeelins was that but for thisaccess to rice to the extent they
By far the most interestingduring the study came from twosituated in one of the coastalCodavari. It was that the
Dollvcrancg from Hungcr
villages of the more prosperous
were less indebted than before.Rs. 2.75 to Rs. 3.25 for a kilo ofa significant part of their require-
because the green cardholder'sbeen reduced. The dominint
they would not have had
of information that emercedprosperous villages
districts irrigated by the Riveror th€ attached farm servant
Some families reported thatWhile previously they had torice, they now paid only Rs. 2ments. This made their Iess burdensome. Others usedtheir savings either to buy more and vegetables for consump-tion, or spent it on items likeutensils.
-oil, clothes and stainless steel
The beneficiaries of the felt that the price of rice in the
- svstem was on its wav out as a uence of the rice scheme. Inone village this was reported byagricultural labourers themselabourer who zittaches himself
farmers and in the other by thees. A paleru is an agriculturala landlord for a yearly wage-
. partly in kind and partly in works exclusively for him.However. detailed discussion in two villages with the.farmersin one case and the agricultural in the other. showed that
Andhra Pradesh Rice Scheme
this was neither the main nor the only reason for the easing out ofthe paleru system. What was really happening was that with therecently constructed Godavari barrage, the command area hasbeen stabilised. This also helped, coupled with the early trans-planting of paddy in the second crop seaso , to provide water foralmost 70 per cent of the entire Godavari delta for the rasing of asecond crop. A few years ago, only one-half of the first crop paddyarea was .rsed in the second crop season.; but now, over two-thirdsof the entire first crop area is receiving water for a second paddycrop also. Because of the higher availability of water, the areaunder second crop paddy in the Godavari delta, comprising twodisticts. increased from 0.236 million hectares in 1980 to 0.348million hectares in 1984. This has stabilised higher levels of employ-ment for both male and female agricultural labourers. Withemployment rising, the agricultural labourer has a relatively higherlevel of security and therefore chooses to work as an independent,daily wage labourer rather than as a paleru. Thus, better irrigationfacilities for the farmer has simultaneously brought for the agricul-tural labourers a sense of relative freedom. While this phenomenonwas emerging, the rice scheme was introduced, providing about 40per cent of an agricultural labour family's requirement at Rs. 2 perkilogram. This is a price which the delta agricultural labourer canaffor'd, aided by the fact that his wife also earns wages alongsidehim and, not infrequently, one and sometimes two of his childrenas well. The agricultural labour iamilies in the prosperous deltavillages of the coastal districts of Andhra Pradesh have been ableto buy. mosl of the time if not always, their entire quota of rationrice, notwithstanding all the obitacles placed in their way by thefair price shop dealers, including by saving their wages for a fewdays to be able to buy the one or two instalment sale of rice by thedealers. Deplorable as the tactics of the latter are in forcing theworlting class to buy their full entitlement all at one time, it hasencouraged the habit of saving amongst the poor. All these incombination have made the rural labour independent of the villagelandlords. Such, however, has been its catalytic impact that bothfarmers and agricultural labourers tend to believe,, and even statewith conviction. that it is the rice scheme alone that has beenresponsible for the weakening of the age-old palera system.
Yct another development in the delta villages is the increasingdemand on the part of the agricultural labour for wages in cash
194 Deliyor.nce from Hunger
rather than in kind. This is beca[se, with the cash equivalent of hiswages in kind-normally paddj-the agricultural labourer is ableto buy more rice than what thp paddy equivalent of cash wageswould yield. In one delta villa$e the landowners mentioned thatthe agricultural labourers, after the introduction of the rice scheme,began demanding cash wages lvhen the paddy prices came downand wages in kind (paddy) whef the prices went up. For the samedaily wages expressed in term$ of so many rupees per day, it isadvantageous to have wages in kind when the paddy prices go upand wages in cash when the pdddy prices go down. This is againbecause of the better bargaining power resulting from a combinationof improved employment and gfeater value for the wages inducedby rice becoming available at dffordable prices. The rice schemehas thus imparted an edge to tle bargaining power of the agricul-tural labourers in the delta This is a sisnificant accretionto the strength of the agri labour class in the villages, andthev have become conscious
It is not as thoush this is confined to the villaeesstudied in the agriculturally rous coastal delta districts.Farmers reported that a situation obtained in one of thetwo villaees visited in the drought-prone district-avillage that was relatively the prosperous of the two studied.
It was the unanimous of the ereen cardholders in all thevillases studied--deltaic or the quality of ricedistributed in the PDS was good. This is not surprising con-sidering that the FCI and theCorporation accept from the
Pradesh State Civil Suppliesonly rice that is of fair average
quality and that the of India does not agree to anyprocuring rice for the centralrelaxation in specifications
pool in Andhra Pradesh. , the more important reason isstocks being subjected to longthe quick turnover of rice
storage periods. This is the result of an expanded PDSbacked by affordable prices,which otherwise would bedeteriorating in quality with
the consumption of rice
scheme. certain mvths aboutAndhra Pradesh have alsostrongly-held belief is that in
n exploded. For example, onePradesh people do not eat
the second crop varieties of ri at ali: they consume only the rice, however, applies only to the rice
in godowns and in the open,passing day. Thanks to the riceeating habits of the people of
grown in the l rarif season.
Andhra Predesh nice Scheme
producers and the middle claqses who have the wherewithal to pickand choose the variety of rice they want. Since rice distributionthrough the PDS in the past had in any case been confined strictlyto the urban areas and catered essentially to the urban middleclasses, this preference of the middle classes was treated as some-
thing sacred and considered as being universally applicable to theentire Andhra Pradesh population, including the rural poor. Thismyth was exploded when the state government put through thefair price shops, even those in the agriculturally advanced coastaldelta Andhra districts like West Godavari and East Godavari, a
second crop variety of rice called BPT 1235-a variety grownextensively in the delta districts during the rabi season-and IR50-a new second crop variety-and the consumers gladly accepted
them. The same thing happened with Hamsa, a variety of rice thatwas put through the fair price shops in the Telengana area. This isan example of how the articulate few can spread myths that haveno application to the vast masses of the people and how importantpricing is for the poor.
Thus the advantages accruing frorn the rice scheme-because ofthe affordable or nearly affordable prices at which rice is madeavailable, its availability at the village itself, its good quality andthat extra bit of bargaining power it gives the beneficiaries-havemade it a popular measure among the poor, especially in the ruralareas. The strength it has imparted to the agricultural labourersmakes the rural landowners somewhat nervous. Some of themhave even said that the labourers have become lazy and less
productive because of the rice scheme. But this is not based on anyhard evidence. All that has happened is that the increased bargain-ing power for wages--for which the rice scheme is only partiallybut certainly responsible-has shifted the balance somewhat infavour of the working class. From the point of view of the farmersthiF makes it appear as though the apiricultural labour force has
become less productive just because it demands more. There isalso a lurking resentment among the landholding class that the ricescheme has to a certain extent reducgd the dependence of theagricgltural labourers and other workers on them.
Our study of the rice scheme in seven viliages of four districts inAndhra Pradesh shows that the stated objective of the AndhraPradesh Government in introducing it, namely, helping the poorby extending the PDS to the villages, has been achieved. However,
because of this achievement, the general objective of streamliningthe PDS has assumed greater urbency. To do this, there are threemain steps that need to be takedr:
Deliverance from Hungel
Non-poor households shodld be eliminated from the cover-age of the scheme through a fresh enumeration based on theprinciples mentioned earliQr in this chapter.The RBI should permit thd use of the credit it extends to thestate govemment both for the wholbsale purchase of centralpool rice from the FCI and for purchasing rice in the openmarket, for retail purpose! as well, namely, for carrying therice to the village fair pricd shops as the owner of such rice,against a single state govet'nment guarantee.In order to combat leaka$es, the state govemment shouldstrengthen the government and non-government supervisorymachinery to oversee the working of the rural PDS at thevillage and taluq levels, whdre large stocks are held for rnove-ment to the villases. At the level the community, parti-cularly women, should be in the distribution work.
l.
2.
J.
which as an anti-poverty is in itself, a desirable objective,
The study also shows that inobjective of providing rice to
the scheme has alSo changed thePDS and has achieved certain
tion to achieving the originalpoor at ,an affordable price,
of the Andhra Pradeshunanticipated gains for the
agricultural labour class andcan be listed as follows:
poor in the rural areas. These
In the agriculturally prospjerous coastal delta villages, in acontext of improving daily lvage ernployment, the rice schemeis acting as a catalyst to bnd the age-old paleru or semi-bondage $ystem among agficultural labour.The scheme has also resulted in savings in the beneficiaryhouseholds. This has not only helped to reduce the tradi-tional indebtedness of the agricultural labour class to someextent but has also enco{raged a greater consumption ofrice, vegetables and the usd of other domestic essentials suchas clothes. hair-oil and utdnsils.The price of rice in the op$n market has been held in checkbecause the dependence o[ the poorer sections on the freemarket has been correspoddingly reduced.
1.
2.
J.
Andhn Pradesh Rice Scheme
4. The bargaining power of agricultural labourers in thr matterof wages has been enhanced by the rice scheme. Theirdependence on the landlords has been reduced. They nowdemand cash wages when the price of paddy is low andwages in kind when the price of paddy is high.
5. There is an awareness that an expanded PDS helps quickertumover of stocks and therefore provides better quality offoodgrains to the consumers, questioning the validity of thefrequently touted criticism of state intervention in the food-grains trade that a PDS invariably implies the supply of poorquality foodgrains to the consumers.
6. There is also an awareness that unlike the middle classes, thepoor people find the lack of choice in variety of rice lessimportant than the price at which fair average quality rice ismade available.
7. Around 34,030 fair price shops in rural and urban areas arerendered financially viable by the scheme, thus providing theeducated youth potential for staLrle self-employment in theirown or neighbouring villages, as well as for jobs in theservice sector. It also prornises the emergence of a newsmall-entrepreneur class in the rural areas.
8. Other spin-offs in rural areas are stable employment forhamals and the gains accruing to and from the transportindustry as it reaches out to the rural areas regularly.'
9. Above all, in a number of villages, households which wenthungry prior to the introduction ef ths rice scheme, do notdo so any longer.
In a vast country like India, problems differ from state to state.But crucial issues such as those pertaining to identification, the
I While a s€parate study would be needed to quantify these spin-offs, it isinteresting to note that in order to reduce leakages in the transportation of rice andat the same time utilise the rice scheme to provide employment to the ruraleducated unemployed, the Andhra Pradesh Government has identified beneficiariesfrom the weaker sections and assisted them with bank finances to buy and operatetrucks, tractors, cabstars, and Hippohaulers so that they may find employment inthe area of transporting essential commodities. According to the figures furnishedby the slat€ government, as part of these effo s, entrepreneurs from the weakersections of society were, in early 1987, operating six trucks, 66 tractors, 199cabstars, and 100 Hippohaulers. The potential for rural spin-offs of this kindthrough a public distribution sysrem is obvious.
197
Dolivorance from Hunger
need for a delivery system that $upplies foodgrains to village fairprice shops through the state's ofvn agencies, and the need for theRBI to eliminqte credit bottlenSks so that the delivery system isnot clogged are common to the dntire country. Decisions on theseissues have to be taken at the ndtional level to ensure the smoothfunctioning of the PDS with a rdinimurn amount of leakages. Onthese vital issues a certain degree of uniformity is desirable and it isthe responsibility of the Governinent of India to ensure this. Forinstance, the level of poverty that should form the indicator foreligrbility in a subsidised national PDS should be determined by thecentral government and assistadce uniformly made available onthat basis to all the states, so that { strategic, anti-poverty programmeof this type does not degenerate into a political ploy with differentstates.adopting different poverqy norms and different scales offoodgrains entitlement. In other words, there should be a nationalconsensus on this vital subject df foodgrains for the poor so thatregardless of the philosophies Sf different political parties, thepoor are assured of their basid nutritional needs leading as inAndhra Pradesh, to other strenlths that they would derive as aresult of this sort of food securi(y.
The Andhra Pradesh rice schlme, which was conceived to helpthe poor, ran into a number of pfoblems in its implementation. Inaddition to subsidising the pric$ of rice provided to householdsidentified as poor and issued green cards, and providing suchgreen cardholding households wilth rice at Rs. 2 per kg, during theyears 1983 to 1988, the Govetnment of Andhra Pradesh also
subsidised the price of rice draWn by households other than thegreen cardholders, in the cities of Hyderabad, Visakhapatnam andVijayawada. Non-poor householps also obtained rice at the rate of5 kg per peison (subject to a c{iling of 25 kg per household) inthese three cities. These non-po$r households were provided withyellow identity cards. However, only yellow cardholdets living inHyderabad, Visakhapatnam an{ Vijayawada were provided withrice at subsidised prices. Those living elsewhere in the state are notentitled to rice in the fair price shops. They are, however, entitledto other essential commodities s[rch as sugar and kerosene.
When the subsidised rice schefne was introduced in April 1983,the rates fixed for rice to be issrled to yellow cardholders in thesethree cities were:
Andhra Pradesh Ricc Scheme
City
HyderabadVisakhapatnamVijayawada
199
Rs.lkg
2.652.702.ffi
The price of rice in Vijayawada was revised to Rs' 2'70 per kg in
1985; bringing it on par with Visakhapatnam' The price at Hydera-
bad remained unchanged till 1988, when subsidised rate for yellow
cardholders in all these three towns was discontinued.
Table.5.8 shows the state's total budget and the provision ofsubsidy made for the rice scheme as a whole-the Rs' 2 per kg
scheme and the yellow card scheme combine&-for the years
198H4 to 1986-87.
Andhrs prad€str ni* s.r,"^"[ii$18. leEH?) sobsidv *?liil,".],
^".,,
Financialyesr
Budgetprovition
for subsidy
for entirerice scheme
Stete's
annualbudget
Percenlageof column
3 to column 4
1983-841984-851985-86198G87
tl20t37016m17@
3.824.444.223.50
29299.Q30864.4137881.1950234.20
Sourcer Commission of Civil SuPplies' Andhra Pradesh.
However, what we really need to be concerned with is the actual
expenditure on this scheme rather than the budget provision'
While these figures had not been audited at the time of writing, the
estimated figures of expenditure for these four years on the scheme
are given in Table 5.9.Since our first concern is with the expenditure on green cards,
we should determine what the subsidy expenditure likely to be
incurred on the green cardholders will be, per kilogram and per
beneficiary. Table 5.10 gives the subsidy estimated to be incurred
per kilogram of rice distributed on green cards alone.- It is nicessary to recall that the Andhra Pradesh rice scheme is
I
200
Estlmatc3 of
Estimalcd aapenditute
three cities
1,0651,600r,7lo2,W
Estfunsted Subsidy On
Subsidyestimated
ftn millionrupees)
1,0651,600
1,71O
Delivorance from Hunger
on Rlce Schcne(million Rs.)
Perce uge Percentageof col. 5 of col. 3
col. 6 to col. 6Greencards
aloie
Source: Commissioner of Civil Andhra Pradesh.
5.10
Scheme for Green Cards
3.79 3.635.33 5.r84.65 4.514.08 -?.98
Subsidy Subsidyper tonne per kg(in rupees) (in paise)
1983-84198.f851965-861986-87
4545
5050
I,l D,299.ffi30,86/..4137,880.1950,234.20
1
1,
FiMnciclyear
198!84198.1--85
1985-86
million)
.748
.716
.893
6fJ9.27
932.40m332
61
93q)
Sourc€: Commissioner of Civil Supplies, Andhra pradesh.
Note: 1. Figures for quantities distributed in col. 4 are actrial figures.2. An amount of Rs. 50 million wolJd need to b€ deducted from the subsidy
estimates. This is the administiative surcharge provid€d on the centralpool drawals which does not act+ally get spent on subsidies. For example,the subsidy in 1985-86 would thdrefore onty be Rs. 876.91 per tonne or 88paise per kilogram
supported not only by the rice feceived by the Govemment ofAndhra Pradesh from the central pool but also through purchasesmade from the rice milling induglry in the open market throughthe Andhra Pradesh State Civil Sirpplies Corporation (Table 5.5).Since there is an element of subsifly in the FCI's issue price for thecentral pool rice sold to the statq government, which is borne bythe Government of India as its cofsumer Subsidy, the subsidy costsborne by the Government of An{hra Pradesh for makins the rice
Ycllow T'
cords in
(per kg)
Andhn Prad*h nica Scheme
drawn from the central pool available to the consumer at Rs. 2 per
kilogram are somewhat lower than those expended to distribute at
the same price the rice procured by the Andhra Pradesh State CivilSupplies Corporation. This is because the very purchase price ofthe State Civil Supplies Corporations rice is higher than the levyprices notified by the Government of India and the movement ofthat rice is effectod totally at the state govemment's cost. Tables5.11A and 5.11B give the details of the respective costs in 1985-86.
TABLE 5.1lACocts of Distributing Centrat Pool Rlct
(Rs.lquintol)
m1
Prior to9.10.1985
From10-10.19E5
Fromr.2.1986
Average cost of riceHamali and shortage
1.. Taluk level stockistmargin
2. The State EssentialCommodities Corporation'smargin
.State administrativesurcharge
2n.501.30
2.37
2.73
5.00
236.50
1.30
2.31
250.50
1.30
2.31
2.73
5.00
2.73
5.m
u7.u 261.84
Average transport chargesFair price shop dealer's marginTotrlRelease price 1o the consumer
Subsidy
10.977.38
25"t .r9200.00
10.97/.J6
266.r92ffi.ffi
r0.977 "38
280.192m.m
57 .t9 66.19 80.19
The average expenditure on rice, based on the expenditure ofRs. 1,710.million for the distribution of 1.893 million tonnes, is anestimated 90 paise for the financial year 1985-86. Table 5.12attempts to present the details of the estimated subsidy.
There is obviously scope for economy in the storage and deliveryprocedures. State corporations can transport rice both from theFCI godowns and the rice mills, directly to the fair price shops,thus avoiding double handling, intermediate storage and incidental
202 Deliverance from Hunger
Rh€ Purchss€dSupplie3 Corporrtion (tulquintal)
Incidental charges to millersDriage at 1 per centHandling and Transit loss at
0.5 per centDestacking, weighring, lo_ading etc_State Civil Suppli6s
Corporation's administration surcharte
Purchase price of riceGunny costTransport chargesStorage charges for 3 months
Storage shortage at 0.5 p€r c€ntInterest at 17.5 per cent for
3 monthsFair price shop dealer's marginTotalRelease price to the consumerSubsidy
frame and to always functiontackle unforeseen threats to
administrative surcharge. Sinceand paid for by the government,
interest charged by the RBIrevision from the high 17.5
a position of safety in order toprogramme, like strikes. An
away with the so-called stateentire operation is subsidised
calls for a substantial downwardcent charged. Table 5.13 gives
Pfior to30.9.1985
From1.10.198s
256.908.30
16.m2.401.35
2.56
5.001.25
t2-757.38
316.1,7
200.00t16.17
250.00
8.3016.m2.401.35
2.50
r.251.00
5.001.25
12.707.38
3(B.13200.00109. r3
t.?81.00
losses. Appropriate buffer at decentralised warehouses is asine qua non for the smooth ion of the rice scheme. bothbecause of the need to complete within a limited time
appropriate balance needs to be in these op€rations. Anotherarea for economising lies in
is no need for state agenciesto further charge the an administrative surcharge.Considering that foodgrains the common man's need, the
details of the subsidy per household as also the subsidvper beneficary per annum for first three financial years of therice scheme in Andhra , i.e. 198!84 to 1985-{6. Theaverage quantities of rice per household per annumand per month during thes€ years is given in Table 5.14
Andhra Pradesh Rice Scheme
rrnvr. 5.12
Components of tbc Suboldy ln tlrc Andhra Prrd€sllRtc€ Scheme ln 196${6 (esdnatcd)
203
(in paise)
Price subsidy (the differential bctween actualcost and Rs. 2
Gunny costTransport charges
Storage chargesIncidental charges to millersDriage )Handling and transit lo*s IStorage losq )Stacking an{ dBtacking (handling charges)
Administratlve charges
InterestFair price shpp dealer's margn
't
4o7
Notc: As pointed out €arlier, the actual subsidy should be around 88 paise per
kilogram if we deduct the administrative surcharge of Rs.50 lrcr tonneprovided in the budget for the scheme.
rABLE 5.13
Srbcldy for B€neltct{ry Households (l9t}E6)
474
tz
1
Financialyear
Subsidy No. ofestimahd beneficiary
(million Rs.) househoWs(milliotts)
Subsidy per Subsidy perbeneficiary beneftciaryhousehoW (Rs.)
(Rr. )
1981841984-45198ffi
I,0651,6001,710
10.8510.1010.43
98.15158.41
163.95
19.9532.20
'J.JZ
Notc: 1. The beneficiary households could vary during a year because of elimina-
tion or additions, brt only marginally.2. Accdrding to the 1981 Census, the average size of a bousehold in Andhra
Pradesh was 4.92 persons.
One of the most important changes effected by rice scheme inAndhra Pradesh is that it transformed the PDS from being a moreor less exclusiv€ urban system to one that serves the urban and
rural areas equitably. Table 5.15 gives the quantity of rice that was
distributed in the rural and urban areas as also the proportion ofthe green cards in these areas to the total number of green cards
Quantity Totol
distfibuted households(million (millions)tonnes)
198!84198+851985-86
1.7,18
1.7161.893
10.85
10.1010.43
Total quantity distdbured(in million tonnes)
In rural arcas alone(in million tonnes)
Percentage distributed inin rural areas
Quantity dist.ibuted in urbanareas (in million tonnes)
Percentage distributed inurban areas
Rural Population as percentage
of total population (1981 census)Percentage of green cards in
ntral areas to totdl green cards
Percentage of grcen cards inurban areas to total gr€en cards
Percentage of rural fair pric€shops to total fair price shops
Percentage of fair price shops inurban areas to total fair price shops
Deliverance from Hunger
(198ffi)(Rs.lquintol)
Qutntity Distributcd ( kg)
Per Perhouseholdl ben$ciarylmonth annum
161.10
169.90181.50
13.4314.1615.13
32.74
34.5336.89
Fituncial Year
196,H5 1985-{6
1.748
1.381
7e.06
o.367
2t.w
76.78
78.33
21.67
81.59
18.41
1.338
78.00
0.378
22.W
7.477
78.00
0.416
22.W
1,.716 1.893
TABL; 5.15Percentrge of Rice Golng to the Rural rnd Urbsn Ar€{s
circulating in the state, and the broportion of fair price shops inthese areas to their total number i]n the state, for the years 1983-84to 1985-86. It can be seen from this table that in all these essentials,the scheme in its implementation iq tilted in favour of the rural areas.
Andhra Pradesh Rice Scheme 205
Based on the respective quantities of rice distributed ip the ruralareas and urban areas under the scheme, the subsidies that reached
the rural areas during these three years are estimated in Table5.16.
rABLE 5.16Amounts Going to Rural and Urban Areas as Subsidy
on Account of Ricc Scheme(million Rs.)
Financialyeatf
Eslimatedsubsidy
To lurolafelE
To urbanoreqa
198!84198,1-85
1985-86
1,0651,600
1,,7tO
841.351,248.00
1,333.80
223.65
352.ffi376.20
On the other hand, Table 5.17 shows the estimated subsidy perkilogram of rice incurred by the state government in the financialyears 1983-84 to 1985-86 on account of the rice distributed to thenon-poor yellow cardholders of Hyderabad, Visakhapatnam andVijayawada.
renre 5.17Subsidy for Yellow Cards in Hyderabad,
Vishakhapatnam and Vijayawada
FinancialYeqr
Estinntedsubsidy
expenditure(millionrupecsl
Quslitydktributed
(milliontonnes)
Subsidy perkg of rice
@aise)
198!84198+85198H6
0.1080.1100.115
4545
504l43
Green cardholders were at an advantage, receiving about 15 kg ofrice or about one-fourth the cereal reqirirements of the averagehousehold at Rs. 2 per kilogram of fair.average quality rice. Thiswas mostly either the fine or superfine variety of rice, given thatabout 90 per cent of all the rice distributed through the PDS inAndhra Pradesh belongs to these two varieties. It must also beclarified that it is not as if the poor households always receive only
206 Deliveranco f rom Hungor
15 kg of rice. Our study that despite all the difficultiesencountered, manylabour households received
that superior qluality rice ofthese average prices in the
including the poor agriculturalentire monthlv entitlement of 25
kgl-possibly also because not green cardholder in the stateor yellow cardholder in the cities of Hyderabad, Visakha-
entitlement, either entirely orpatnam and Vijayawada dreweven in part, from the fair shop..
The green cardholders were at an advantage where'priceis concerned. This becomes when we examine the averageretail prices for the entire state i the years 1980 to 1986 as also theaverage prices obtaining innon-producing area, and in
city, which is an urban,town. situated in the heart
of the heavilv deficit, drought-prone Rayalaseemaregion during these years.
It can be seen from Table 5 that, except for Sort II rice tnf 980. in no Year was rice in Pradesh available, eitherbefore or after the of the rice scheme in 1983, at less
than Rs. 2 per kg- In fact, the ranged from a minimum ofRs. 2.31 per kg in 1981 for I rice to a maximum of Rs. 3.52
per kg in 1984. In 1986 it was 3.92 pet kilogram. While it can
be argued that these prices to better than the fair averagequality rice channelled the PDS. it must be remembered
varieties was not available ateither. In anv event. even the
Sort II rice, which compared with the rice sold throughthe PDS in Andhra Pradesh at all times, ranged fromRs. 2.34 per kg in 1981 to Rs. 86 in 1985 and to Rs. 3.11 in 1986.
I When in Januarv 1983. th€ state originally decided to provide 10
kg of ricg per month to all poor it was not thought nec€ssary to sPecify
th€ entitlement ofeach member of the household, since obviously, even
a single member household would 10 kg of foodgrains per month. However,care had been taken as part of th€ of providing more foodgrains to th€ Poorhouseholds once the scheme settled to its appropriate rythm, to irdicate in
the household identity cards, the of members in each famlly and their age'at subsidis€d rates to every household, itm€et inter-household equity. The state
Subsequently, with 25 kg beingwas decided to ratiooalise eligibilitygovernment, thereforc, ordered in 1983 that each membcr of the
identified household would be to 5 kg of rice, subject to a ma mum
household ceiling of 25 kg p€r month. , in order to cnsur€ interpcrronal€quity within the household, no was madc b€tween adult and child.Every membir of the identifiedkg of rice per month.
whether adult or child, was provided 5
Andhra Pradesh Bice Scheme 207
(per kg.)
rABLE 5.18Strle AYerrge Retr Ptlcca
1980 1981 1982 1983 19U
RiceSort IRiceSort II
3.v2
3.tl
3.47
2.86
2-31 2"69 2.79
r.92 Z.v 2.52
3.25 3.52
2.74 2.79
Source: Bureau of Economic and Statistics, Govemment of Andhra Pradesh.
The price advantage to the green cardholders is quite obvious,depending on whether they purchased Sort I or Sort II rice. To putit another way, the price at which rice was sold in the publicdistribution system from 1983 onwards, restored the price levels of1981 for atldast the Sort II rice, for part of the needs of the greencardholders.
Table 5.19 which gives the price of rice prevailing in Anantapur,shows the even greater price benefit that the green cardholderswho live in rice-deficit areas, have derived through this scheme.The price differential in this area is greater than that for thestate average retail prices in each of the first six years in.theeishties:
TABLE 5.19Retril Price of Rice in Anantrpor Msrk€l
(per kg)
1983 194 t985IgN t98t t2
Sort ISort II
2.6 3.202.20 2.70
3.94 4.202.U 3.30
3.002.Q
4.m3.30
Source: Bureau of Economics and Statistacs, Govemment of Andhra Pradesh.
The same position obtained for Hvderabad city, details of whichare given in Table 5.20.
It might be useful to try and quantify the extent to which thepoor in Andhra Pradesh have benefited from this scheme. Thereare several ways of estimating households that live below thepoverty line. The Andhra Pradesh administration made a prdectionof the likely number of households that would have to be coveredunder the scheme (Table 5"3). That number came to 8.29 million
Deliverance from Hunger
Retsil hlce of Rlce Hyderabad Mrrket
1980 1981 1983 1984 19E5
2.90 3.21 3.47 3.60 3.98 4.232.38 2.52 2.67 2.6't 2.W 3.00
Sort ISort II
Unemployment based on thereliable data as the survey
households. If we take the prolvisional figures of the populationliving below the poverty line aS estimated by the Planning Com-mission based on the 38th NSS round in 1983. it would be 20.40million or 4.16 million . But the Plannins Commission'spoverty percentage of 36.4 for Pradesh for 198!84, whichis nearly the same as for all- the percentage (37.4) does notreflect the figures thrown up by the NSS, which shows the country-wide percentage of households less than Rs. 106.25 permonth to be 55.6 per cent in the rural and 25 per cent in the urbanareas. At that level, the households in 1983 in AndhraPradesh would be 4.88 million ln the rural areas alone. Another0.64 million households would to be added to this from theurban areas making the total 5.52 million households, with eachhousehold in Andhra Pradesh cpmprising 4.92 persons accordingto the 1981 census. While in 1988. the Andhra Pradesh authoritiestook marginal holdings as a for marginal farmer households,a re-analysis of the figures in TAble 5.3 can be made based on theresults of the Second Survey on Employment and
round of the NSS. This providesconducted on the basis of the
distribution of households by $ize, class of land possessed andhousehold type. Taking the proportions of the agricultural labourhouseholds, marginal and smal]l .farmer households, and 'otherlabour households' to the total r{ral households of that survey andapplyrng them to the 1983 andl 1986 rural household level, thepoverty households could be estlmated as they have been in Table5.21. As far as the smali farmer households are concerned, only 67per cent of their number is taked, since 33 per cent of all net sownareas in the state have one forr$ of irrigation or another, thoughnot all of it is dssured irrigation under canals and tubewells.
The 'other'labour households f,an be divided into two categories
Andhn Pndcsh Ricc Scheme
rABLE 5.21Estlmf€d Poyerty Houscholds ln the Rural Areos ln l9t3 end 1986
2rx)
Percentage of totalRursl hou.seholds
in 1977-78
Number of households(million)
1963 1986
Agriculturallabour houscholds
Marginal farmerhouseholds
Small farmerhouschol<,s
Oth€r labourhouseholds
Toral
41.46
8.29
9.22
5.24
3.9
o.73
0.54
0.465.37
3.87
0.78
0.58
0.495.72
in the Andhra Pradesh context: the artisan and the non-artisan.non-agricultural labour groups, in the sense that they derive amajor portion of their income through labour other than agricul-tural-for example as toddy tappers or earth workers. In 1968, thepopulation of the artisan class alone was estimated at 5.9 million inAndhra Pradesh by the Anantaraman Commission on BackwardClasses. In 1982-83, after 14 years, this population can be estimatedto be, based on the growth rate of population in the decade197 l-81, of 22 .7 6 per cent , 7 . 89 million or 1 . 60 million households ,
taking the average size of a rural household in Andhra Pradesh tobe 4.92 according to the 1981 census. The figure assumed in Table5.21 as being 0.46 million for artisans is therefore lower than theactual figure of 1.60 million by a big margin. Making allowancesfor exceptions, the urban slum population can be broadly acceptedas living below the poverty line. For example, excluding an urbanrickshaw plier living in the urban slums from the poverty grouponly on th€ ground that he may sometimes earn more than Rs. 500
. a month would be far-fetched. The categories that could thus bebroadly grouped under the poverty class in 1983 are shown inTable 5.22.
The total poor households in 1983 in Andhra Pradesh thereforeapproximate to 7 million households.
The Andhra Pradesh Government did not consider the small
210 Deliveranca from Hunger
rABLq 5.22PoYerty CbS Crtcgorles
(in milliotts)
Agricultural labour householdsMarginal farmer householdsSmall farmer housdholdsOthcr rural labour householdsUrban stum dwellefsTotd
in the Andhra Pradesh rice Any attempt to quantify thereally poor among the of the rice scheme will thereforebe a hazardou$ one: any on the ground that itincludes too many non-poorwarranted, either.
purview may not be entirely
We shall. nevertheless. to answer this question againstthe background of this discussign. As has been seen, the totalnumber of cards that emerged in lhe l983.enumeration were about1.82 million rnore than the adtual households. Obviously, an
overwhelming majority of them *ere bound to be green cards thatneeded eliminating. If we refer tp the 1983 estimates made by theAndhra Pradesh Government anid compare them with the figuresemerging from the re-analysis, a figure of around 7 million house-holds seems to represent the poof Thus at the 1983 level, nearly 3million households should have feen ineligible for the benefits ofthe programme. This would be the figure if we understand theprogramme to help not only rhQse who would are the poorest ofthe poor but also those who woulp be marginally above the povertyline only in good years of agricullural production. However, if thescheme is expected to assist orily the hard core poor, it wouldprobatrly serve only the 5.52 million or so households estimated by
3.4o.730.541.600.507.0r
Andhn Pradcsh Rice Sdtame 211
the NSS in 1983-84. Thus the ineligible households could rangefrom 3 to 4.5 million, dependihg upon how we view poverty. It isobvious, however, that given what we have disussed about thecosts of the scheme, a political decision to the effect that thescheme should serve only the poorest of the poor needs to be
taken, making the pcrcentage of poor emerging in the 1983-84Planning Commission estimates as the reference point.
It would be interesting to compare the benefits of a programmelike the one implemented in Andhra Pradesh with the NREP andRLEGP in the context of the criticism that a subsidised distribu-tion system pel re is pdpslist'afid that the us€ of the foodgrains foremployment generation is intrinsically superior to it.
We have seen in an earlier chapter that around 2 kg of cerealsper household per day would meet the average minimum caloricneeds, normally derived from cereals and cereal substitutes, of afive-member household. Since the government objective is toprovide a maximum of 100 days employment to a beneficiary froma household, the quantity that may be provided in this programme, ifproperly implemented, will be 200 kg of rice per annum perhousehold. Using a wage component of 2 kg of rice per day,distributed at Rs. 2 per kg, and assuring a daily wage of Rs. 10, thec4sh component of generating a man day's employment will be
Rs. 16. The subsidy expenditure in 1985-86 on the green cardholders being Rs. 1,710 million for distributing 1.893 million tonnesof rice, the number of man days that can be generated would be107 million, which would mean providing employment for L.07
million households for 100 days at Rs. 1O per person per day. Thiswould also result in the construction of assets. As against this, thenumber of households benefiting by receiving about the same
quantity of rice in a year, i.e. 20O kg, through the PDS would be9.47 million. In other words, at the same expenditure, nearly 8.85times the number of households that would benefit from an em-ptoyment generation programme, would benefit from the PDS. Ata level of 1.07 million households, around 4 million other hard-cori poor households would obviously be left without any of thebenefits that our study shows they received from the rice,scheme.
This, therefore, brings us back to the conclusion that what weneed to do is provide a certain basic caloric satisfaction of thenutritional needs of all the poor on a broad base through a PDS ofthe kind that Andhra Pradesh is operating, eliminating all its
212 Dellvcrencc from Hungcr.
weaknesses as identified by the qtudy and, as discussed earlier,utilise that base as the essential delivery infrastructure for theemployment tene ration schemes.l An integrated systern of thiskind will provido, at graded levlls, satisfaction to the differentlevels of the population living bglow the poverty line. lt must,however, he poinSed out that the $sets resulting from employmentgeneration programmes should be such as to also provide produc-tive employment in the future to lhe target groups themselves, asotherwise these programmes woufd be merely wage-slavery pro-grammes.
To conclude, the Andhra rice scheme highlights thebenefits that the poor can derivc a subsidised rural PDS interms of the secufity and it generates among the broadmasses of the people. It has, to the beneficiaries, broughtthem relief and a sense of from dependency and added to
else, it has diminished hunger.their bargaining power. AboveWhile household surveys of the P.S. George has conducted ofthe Kerala rationing system, maythe details of thi$ benefit. thepoor households is obviously felt by the beneficiaries them-selves. One of tho major of the scheme is the transferof resources, through intensive and distribution ofrice. in favour of the rural benefiting the farmer and theconsumer. The farmer has because of the constant needfor the rice milling industry to its wheels moving to satisfy the
turn has to seek out the farmerpresence of an insupportable
demand for procurement, whichto buy his produce. However,number of households that are above the poverty line inthe rice scheme brings discredit to it as a purely anti-poverty
to be undertaken to establishof the scheme on the rural
of those who have no right. The elimination of the ineh-
gible households should bealong the lines sqggested.
withctut any delay, and
The Andhra Pradesh is already taking steps toutilise the PDS as the deliverv relevant to the wage employ-ment programmes. This has to be further streamlined in terms ofprocedures and the and use of wheat, which is a
measure and diverts resources into the subsidised distribution of
cheaper grain than rice, in thesustained adminibtrative effortand the media to disseminate
. Also needed will be anon-government agenciesand health educati,on so
Andhn Pndah Eb sg/lcnrc
that vulnerable groups within poor households suclr as girl children,pregnant women and nuning mothers benefit from the programrne.This can also lead to the involvement of the beneficiaries in nationalprogrammes such as family planning and promotion of literacy andelementary education. Social progress for the poor will not reglrltautomatically from schemes that create a purchasing power amongthe poor. The power so generated also needs to be channelised byorganised education and motivation. With the bonafides of thegovernment established through a scheme that touches a vast massof households, and with the necessary receptivity and sense ofparticipation having also been generated in the p€ople, thatreceptivity has to be capitalised upon to improve the delivery ofnation-building programme packages. If such motivation is notsystematically built up and the opportunity to fight poverty onvarious fronts is mined, a scheme of this kind woutd degenerateinto a mere populist ploy. Andhra Pradesh has to guard againstthis risk while utilising the limitless opportunities for nation-building that this scheme has generated in terms of the good will ofthe poor.
PDS, in Andhra Pradesh can serve as a potent entry point formobilising the people to deal with many of their own problemsthat have a bearing on the country's effort at eradicating povertyon a broad socio-economic front.
213
P
Conclusion
It is difficult to avoid repetition while writing a conclusion. It istautological to say that Indian pofverty or rather, India's hunger, isstaggering in its size and frightening in its intensity. In our attemptto fight it, we have adopted a fumber of strategies-industrial,agricultural as well as a direct pttack approach. All these havetaken time and will continue tO do so before they reduce theintensity of people's hunger. In a mixed bag of strategies, therewill be competing claims for respurces. While a periodic conven-tional rise in re$ource allocation [o programmes that have a directbearing on poverty reduction haq been managed, given the size ofthe problem, the inadequacles fre transparent. The spectacularrise in cereals production in recbnt years and the quantities thathave been flowing into governmdnt hands generated the hope thatthey would result in a substarltial reduction of hunger at thehousehold level. Also that they Would trigger off the generation ofemployment in the self-employmQnt and wage employment sectors.Actually, however, the off-takq in the PDS through fair priceshops in rural areas, which should be a good indicator of whetheror not the poor are eating better, is not registering a sustained rise.The cause for this lies in the verj absence of a system where it hasurgent reason to exist, namely, in the rural areas. The so-called'food subsidies' really go, . in mbre than substantial measure, tosupport tlie surplus farmer and lrban consumers rather than thethe poor, the vast majority of wliom live in rural areas without theminimum nourishment needed t4 live and lea.d a productive life. Itis therefore crucial to reform thd PDS and shift its focus from theundifferentiated to the targeted $oor, from a predominantly urban
Conduslon 215
to a predominantly rural target with the poor as the centre of the
effort. It is also essential to ensure that it guarantees the poor their
basic right to food at costs they can afford, and that it also acts as
the delivery base for the consumption and real wage inputs needed
to give content to the self-employment and wage employment
programmes,- This is not to suggest that a PDS is an end in itself. What is
suggested is that it fights hunger and also that it helps those who
want to fight hunger, by other means, to fight it better. Since the
conventional measures that have been advocated so far have not
by themselves been successful, a PDS can supplement these
measures in a crucial way. All experts on poverty and food man-
agement acknowledge that there is mounting hunger and also that
there are stocks of foodgrains available' What is not dcknowledged
is that there is a resource constraint that is limiting employment
possibilities. We, therefore need to go beyond just talking about
how employment can bridge the gap between hunger and the
available food, and recognise the need to convey foodgrains to
those who are unemployed and underemployed so that their needs
are met and to those for whom employment is sought to be created
so that such employment can be rendered viable in terms of actual
generation of incremental incomes. The concretisation of this
recognition will result in a PDS that will bridge the gap between
available food and the existing hunger, and that will also make the
realisation of the employment objective more feasible. However,even as a subordinate strategy to the employment strategy, the
PDS will not by itself guarantee income generation. In the IRDPfor instance, the initial per capita outl4ys are so low that it is
doubtful whether they can generate the returns necessary to take
the target households beyond the poverty line. But a combination
of higher per capita outlays supported by the kind of public-
distribution--cum-delivery system envisaged here, has a far greater
chance of achieving the desired result than a mere enhancement ofthe per unit outlays. In other words, tl|e outlays and institutionalfinances have necessarily to go up to support the IRD programmes,
but they also need to b€ supported by a PDS. It will be {utile toindicate with any precision what such per capita outlays should be.
For instance , there is no use demanding that the subsidy level
should go up from Rs. 3,000 to Rs. 7,000-for one cannot be
dosmatic about the minimum or maximum level of per capita
household, the back-upspecific scheme designed for theservices and above all the bene-scheme. All that can be said.ficiary's full involvement in th€
therefore, is a vastly greater ion of resources is needed, notonly for providing individual idies but also for building theinfrastructure relevant to iented anti-poverty schemes.
216
investment needed to take aline. That would depend uponbeneficiary's level of skills, theinfrastructure built to support
All in all, then, these aremay provide no permanenthousehold level to a vast masstime to come. This is the stark
implemented in the country, asto reach specific target groupsscheme should be guarded
The foregoing chapters showserve the poor without muchground of existing productionand 1986-87 would have beeneffort. This leads us to thefor the governm€nt toadvocated, in 1987-88, in spite ofwhich the country faced in the
Deliverancc from Hungcr
household beyond the povertynumber of factors such as thematerial supply-<urn-marketing
allev iation programmes whichto the issue of poverty at the
the rural poor for quite some, given the size of the problem.
as in schemes which attemptas the Andhra Pradesh rice
a PDS can be restructured tocost against the back-
and how the years 1985--86ideal time to undertake this
of whether it was still possibtrea reformed PDS of the kind
adverse production situationyear 1987. Without an
It is this grim picture that bringsprovides, at affordable prices,
the relevance of a PDS that
different target groups in thekinds of suppon to thestrategy. It provides for
all the poor households about aneeds and to the IRDP and the
ird or a fourth of their cerealEmployment Generation
target groups, about half their . With this minimum nutritionguaranteed to its poor, the has to devise further stratesiesto fight poverty including massive mation and development of
in the PDS as it is presentlywaste lands. Thai the pitfalls
examination of this question, this cannot be concluded.The agricultural scenario in I was quite dismal. Even though
the 1987 rabi harvest of wheat was Itlsfactory, unseasonal rains inthe wheat crop in Punjab andApril 1987 caused beavy damage
Haryana. This adverselv affected arrival into government handsof wheat by about 2.5 million compared to the normalarrivals by way of proc.urement
,,(
f about 10.5 million tonnes.
Conclusion
However, these 2.5 million tonnes were purchased by the rollerflour mills and the private trade. With a severe drought following,there was a shortfall in the production of rice and the procurementby government agencies was significantly lower. In Punjab andHaryana, where a developed marketing system exists, the arrivalsof paddy were around 8.20 million tonnes by the middle ofDecember 1987, as against 9.30 million tonnes during the corre-sponding period in 1986. Thus, there was a drop of about a milliontonnes in paddy arrivals in these two surplus states alone. It wasestimated that the government would procure around 6.5 milliontonnes of rice as against 8.5 million tonnes procured in 1986-87. Inother words, a drop of around 2 million tonnes of rice was anti-cipated in procurement. Thus, as against a normal procurement of19 million tonnes, procurement during 1987--88 was 14.3 milliontonnes.
The position on the sto'ck front also changed adversely. As of 1
October 1987 the level of foodgrains stock was 15.86 milliontonnes as against a level of 23.61 million tonnes reached on 1
October 1986. According to the guidelines of the Government ofIndia, the stock as on 1 October should have been 17.80 milliontonnes, including a buffer of 10 million tonnes. The stock on 1
October 1987 was thus about 2 million tonnes less than what wastechnically needed to be held by the government. As against this, a
surplus of around 6 million tonoes was held by the government onthe same date in 1986. The stock position dipped to 14.05 milliontonnes by I January 1988 as against the technical norm of 20.10million tonnes. This was the result of the releases from the centralpool registering a substantial increase during the year 1987 incomparison to the corresponding period in 1986.
Table 6.1 gives the breakdorvn of releases made from centralpool food stocks during the year 1987. It also provides comparativedata for 1985 and 1985.
Distribution in the year 1987 showed a clear departure in orien-tation towards the people through fair price shops and otheremployment programmes. It is, however, significant that therewas no let up in the sales to roller flour mills and to private trade,even though 1987 ryas a drought year. The roller flour mills andprivate trade were provided as much as 4 million tonnes of wheator roughly around 30 per cent of the total wheat disposals duringthe year. At this point, it ma-v be reiterated that the roller flour
2ra Dallv.?enco from Hunger
Dels[s of Mrnqlo3nt Cenlrd Pool Foodgrelns ln1S5, .nd l9B7
(in million ronnesl
1 7 1986 1985
Fair price shopsITDP areasRural employment programmesDefence servicesRoll€r flour mills and
open market sales toprivate trade
ExportsOthers
11.142.13J. -.f0.30
4.09
0.30
9.61.821_91
o.27
9.01
4.E9
o.2l0.06
0.16
5.420.34o.g2
21.31 18.62 15.31
Not€: The 1987 figures are
mills and private trade on theh o\ryn procured around 2 milliontonnes of inferior quality wheatr in Punjab, which the governmentagencies could not procure. Thus what the roller flour mills andprivate trade obtained amountN to a total of 6 million tonnes, afigure which is much the same as that obtained by them in 1985and 1986. In 1986, also, private Sade is estimated to have purchasedabout a million tonnes in the Plrnjab market.
We have already seen that a rlestructured PDS of the kind advo-cated in this paper, would reqlrire a grain flow of around 19.52million tonnes in a year on all cpunts. The fact that releases madein 1987 were of the order of 21.31 million tonnes, especiallyagainst the background of dwi]ndling stock levels, demonstratesthat the reforrned PDS could h{ve been implemented even duringthis drought year. A reformed FDS would have ensured that thefoodgrains released really did feach the targeted group of poor,particularly thp rural poor, whd needed all the assistance that thegovernment could provide them during rhis critical drought period.Also, in the absence of a regtllarly established PDS that wouldfacilitate accurate monitoring, rie hane to date, no authentic datato indicate how much of the fclodgrains presently stated to havebeen distributed through fair pri$ shops and the other programmes,have really reached the poor iir the far-flung rural areas of the
eonctuaion 219
country. The problem is illustrated in Table 6'2, with reference to
the four poorest states of the country.
IAB]-E 6.2
MsnoSem€nt of Centrrl Pool Stodks In l98t rYlth Rcferencc
to the Four Poorcst Stst€s of lndir(JanuerY-SePtember 1967)
(n million tonncs)
Fair priceshops including
those in the
ITDP oreas
Distribution Issu6 to
through all the roller
fair price flour mills
shops including and oPen
. those in ITDP markt sales
areas, employment& other reliefpfogrammes
Uttar Pradesh
Bihar. Madhya Pradesh
OrissaTotalAll-IndiaPercentage of
total to all-India
0.340.400.32o.t21.189.25
12.75
o.7'Io;720.610.202.N
12.22
18.82
o.29o.t70.060.fi0.592.89
20.41
Four states-Utiar Pradesh, Bihar, Madhya Pradesh and Orrisa-'
account fot 47 per cent clf the total population living below the
poverty line in this country. These states were issued 1'18 million
iottn"s of cereals duiing the first nine months of 1987' for use in
the PDS including in the ITDP areas. This quantity represents
\2.75 pet cent of ihe total issues made to fair price shops in the
entire country against the requirement projected by us earlier of
4.9 million tonnes per annum (or 3.7 million tonnes for 9 months)
at a modcst 17.5 kg per household per month intended only for the
poor (see Table I in Chapter 4). So not only is it a bare one-third
of the modest requirement projected by us, but also there is no
basis to presume that even this quantity reached the needy under
the present undifferentiated, untargeted and generalised PDS with
an urban bias. Even if we take into account the central pool
releases to these four poverty-stricken states for use in fair price
shops, employment programmes and other relief programmes' the
ZN
total amounts to 2.3 millionthe total releas€s made to theIt is paradoxical that we have sold 0.46 rnillion tonnes of
the private trade in the wheat-wheat to roller flour millsgrowing states when there was need to conserve stocks so asto deliver them to the poor with the acute poveny prevalent inth€se states, and wheat productf sold nearly ut 0""6t" the cost ofwheat, a luxury that the poor pedple in these states coukl ill afford.
About a million tonnes of w[reat were released to these fourstates under the various rural enfployment programmes during thefirst nine months of 1987. It is pbvious tnat in the absence Jf anappropriate delivery system, {he chances of these foodsrainsreaching the villages or the rurlal poor were remote. Had therebeen a PDS, based on proper iddntification and enumeration, andbacked by a well-planned deliv$ry machinery, there would have
these sectors.The picture one has of food
one of stepped up releases ofthe reduction of stocks.
disigned and brought intohave helped to generate anmonitor the rational use of
This situation also'buffer' stocks in our
Doliverancc lrom Hunger
which is only 18.82 per cent ofcountry for these programmes.
in 1987 is thereforewhich might have helped inthese releases continued to
had a reformed PDS beenin 1985-86. This would also
been no such apprehension.We have already seen that rFral labour goes hungry even in
irrigated areas. In periods of d{ought, the plight of rinorganisedlabour is compounded into one of utter misery. bn the other hand,the urban middle classes and in{ustrial labour are not affected tothe same extent, as they have grfaranteed compensatory measureslike dearness allowances. It is thfrefore paradoiical thai we shouldwant to channel more stocks i4to the cities sometimes throughprivate trade in the name of crlrbing prices in order to protect
preserve the several historical [istortions in grain distributionwhich could have been
data base, with which tofoodgrains.
highlights lhe weakness in the concept offood securi{y system. A notional limit of 10
million tonnes encouraged the go{,ernment to continuously releasearound 5 million tonnes of whdat to roller flour mills and theprivate trade during 1985, 1986 anp l9g7 on the ground of reducing'surplus' stocks. In 1987, a yeat !f drought. or even in a normalyear, these stocks, had they beef conserved, would have served
condwbn 2!27
the needs of the poor in a reforrpd PDS. The argument, sometimesadvanced, that in the context of the 1987 drought, implementationof a reformed PDS would have been possible only by resort toimports, should therefore be viewed against this background.
We thus need to examine the concept of 'food surplules' as ouragricultural production situation is presently interpreted by cer-tain circles in the country. India has achieved a food-populationbalance or food security at the national level but not food securityat the household level. What were regarded as'food surpluses'in1985 and 1986 were, in reality, the absence of food security at thehousehold level. Therefore, to determine a 'surplus' it would benece$gary to have, at any given time, a medium-range perspectiveof at least five to seven years, allowing for fluctuations in produc-tion for at least two seasons in between. and to see if there wouldbe any surplus left over and above what would be needed duringthese five to s€ven years. Any other penpective could only lead tothe kind of stock maragement witnessed in 1985, 1986 and 1987.In short, a well-organised PDS of the kind advocated here wouldhave been the prop€r tool with which the government could havetackled the drought of 1987.
The later part of 1987 and early 1988 saw the rise of discussion inIndian food management circles of imports to tide over the crisis ofthe 1987 drought. Since imports and buffer holdings are interrelatedin a context of this kind, we should take a look at the stocks heldby government agencies in 1987 and early 1988. Table 6.3 gives thecentral pool stock position during 1987 and early 1988.
rasl-E 6.3C6lrd Pool Sfocfs h thc It rdE of Govcrnmcna Ag€ncle.
lgtrt-{t(in million tonnes)
Stocks held Requirement as Excess orper the Technical shortfallsCommittee norms
I April l9E71 July 19871 October l9&7I January 19881 April 1988
(projected)
18.3923.nr5.E614.0510.50
16.502r.N17.E0
20.1016.50
+ 1.89+2.50
- 1.94
-6.05-6.00
,: -I
D.llv.r.nc. trom tfungo?
That the rains had failed to a serious drougbt was notunknown when the year started in July 1987. Yet thepolicy of liquidation of stocksthe private rbde continued.buffer stocks to be held as laidto the extent of 6 millionshould therefore be viewedmillion tonnes. in Januarv Ifave been contributed by salestrade, at subsidised costs.
in 1988. and if the buffermillion tonnes as laid downsurely, resort to importsother hand, the monsoonsprocurement resulted from
sales to roller flour mills andhigl point of shortfall in the
rn by the Technical Committee,in January 1988 or April 1988,
this cont€xt. Of this deficit of 6a little above 4 million tonnesroller flour mills and the private
, if the monsoons failed againholdings had to be restored to l0the Technical Committee, then,be imperative in 1988. If, on thenot fail, and a good rabi wheat
winter crop of 1987-88 at around10 million tonnes, the countryThis only goes to show three
do without resorting to imports.
l. that the country was preppred to draw, and indeed did draw,the buffer stocks down to a 4 million tonne level as against a
technica,lly laid down 10 fnillion tonne level;2. that this could have beeri done to support the kind of PDS
proposed in this study rfther than to support roller flourmills and private trade; lnd
3. that if imports have to bd resorted to, that would not be onaccount of a PDS.
At a distribution level of 21.01 million tonnes in 1987, a year ofsevere drought, the releases r{ere nearly 2 million tonnes morethan the proposed of 19.5 millipn tonnes. Obviously then, even inthe second 'drought year of thl century', we could have broughtinto existence a PDS to cover all the poor in the country, as has
been argued in this study. Thi! is the message that comes to us inthe context of India's agricultUral production attainments and itsdistribution needs.
The conclusion, then, is that any time---surplus or drought-is a
good time to re-orient the PDS in favour of the poor, whereverthey are. making sure that avallability (not lower prices) is simul-taneously ensured for the metrppolitan and urban non-poor. And
Conclusion tB
in doing this, procurement in a projected cycle of 5 years shouldfbrm the basis for determining allocations for the PDS, ruraldevelopment and employment progrirmmes, nutrition progranrmesand the non-poor, so that spectres of droughts and imports do notdeter a policy in favour of the poor. Affordability for the poor andavailability for the non-poor should govem Indian food manage-ment.
--T