Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

2025 nutrition targets call for a multi-dimensional focus

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Nutrition safety

The article highlights the issue of nutrition and suggest the ways to achieve nutrition security in the country to drive sustainable growth for India.

Nutrition in India

  • A recent United Nations report-  The State of Food Security and Nutrition in the World, 2020 highlighted that there are 189.2 million undernourished people in India.
  • Even though this number has declined by 60 million over the past decade, the progress is far too slow.
  • While we recorded a drop in undernourishment, obesity amongst Indian adults grew from 25.2 million in 2012 to 34.3 million in 2016.
  • India is likely to miss the 2025 global nutrition targets according to the Global Nutrition Report 2020, unless more is done, soon.

Impact of POSHAN Abhiyan

  • With the launch of POSHAN Abhiyan in 2018, the government mainstreamed nutrition, with this multi-ministerial and multi-sectoral approach.
  • It converges all existing programs to improve the nutritional status of pregnant women, mothers and children.
  • It brings together several programs such as National Rural Health Mission, Mid-Day meals, Integrated Child Development Scheme, Sarva Shiksha Abhiyan, and others to improve nutrition intake in India.
  • The success lies in following an outcome based approach to ensure all the benefits under these interventions are delivered to mothers and children within the first 1000 days, setting the base for healthier lives.

Micronutrients through food fortification

  • Food fortification is another effective way to deliver micronutrients to Indian masses, through existing food delivery systems such as mid-day meals and the public distribution system.
  • Regulators have already been promoting fortification in food products like salt, edible oil, milk, rice and wheat flour to improve nutritional content.
  • Going forward, we will see more and more food products and crops getting covered.

Need for innovation

  • It is crucial for the food and beverage industry to make nutrition an integral part of their strategy.
  • Healthier ingredients, fortification, reformulation to reduce saturated and trans-fat content and optimize sugar and sodium content, immunity boosting product is already commonplace across urban markets.
  • This will soon permeate to rural markets.
  • Factors such as product taste, convenience, shelf life, and price – all of which determine consumption – are also important elements that ensure higher intake of nutritious products by consumers everywhere.
  • This calls for more innovation. Innovation in product, pricing, technology, digitalization, and research and development by food companies.

Rising nutrition awareness

  • Solving the problem of malnourishment has to start with awareness.
  • In rural areas, general nutritional awareness has historically been lower.
  • In urban areas even though people are generally more aware a large percentage still consumes excess sugar and salt, leads sedentary lifestyles coupled with lack of exercise, resulting in lifestyle diseases like diabetes, obesity, high blood pressure
  • Consumers everywhere need to be better educated about nutritional benefits of common food items and the importance of including them in regular diet.
  • This can be done effectively through government led awareness campaigns and healthy public food distribution initiatives, industry acting responsibly.

Conclusion

Good nutrition is the best investment we can make in human capital. It has the power to drive sustainable economic growth for India.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

State coverage ratios under NFSA

Note4Students

From UPSC perspective, the following things are important :

Prelims level : NFS Act

Mains level : Assurance of Food Security

The government has initiated the process of ascertaining the new State/UT-specific coverage ratios for rural and urban areas under the National Food Security Act, 2013 (NFSA).

Try this question:

Q.In the ongoing crisis, maintaining the level of food security has become one of the most essential needs. In light of the above statement, critically examine the priority areas for maintaining food security in the country. Suggest measures to make accessibility and availability of food easier for all. (250W)

National Food Security (NFS) Act

  • The NFS Act, 2013 aims to provide subsidized food grains to approximately two-thirds of India’s 1.2 billion people.
  • It was signed into law on 12 September 2013, retroactive to 5 July 2013.
  • It converts into legal entitlements for existing food security programmes of the GoI.
  • It includes the Midday Meal Scheme, Integrated Child Development Services (ICDS) scheme and the Public Distribution System (PDS).
  • Further, the NFSA 2013 recognizes maternity entitlements.
  • The Midday Meal Scheme and the ICDS are universal in nature whereas the PDS will reach about two-thirds of the population (75% in rural areas and 50% in urban areas).
  • Under the provisions of the bill, beneficiaries of the PDS are entitled to 5 kilograms per person per month of cereals at the following prices:
  1. Rice at ₹3 per kg
  2. Wheat at ₹2 per kg
  3. Coarse grains (millet) at ₹1 per kg.
  • Pregnant women, lactating mothers, and certain categories of children are eligible for daily free cereals.

Why such a move?

  • At present, NFSA covers up to 75 per cent of the rural population and 50 per cent of the urban population in the country.
  • Based on this, state-wise coverage under NFSA was determined by the erstwhile Planning Commission—now NITI Aayog.
  • It was done by using the National Sample Survey Household Consumption Expenditure Survey data for 2011-12.
  • Since then, the state-wise coverage ratio has not been revised.

Statewise data

  • Currently, Manipur has the highest coverage in rural areas across the country (88.56 per cent), while Andaman & Nicobar Islands has the lowest (24.94 per cent).
  • Manipur is followed by Jharkhand (86.48 per cent), Bihar (85.12 per cent) and Chhattisgarh (84.25 per cent).
  • In urban areas too, Manipur has the maximum coverage ratio (85.75 per cent), while Andaman & Nicobar Islands has the lowest (1.70 per cent).
  • In urban areas, Manipur is followed by Bihar (74.53 per cent), Uttar Pradesh (64.43 per cent) and Madhya Pradesh (62.61 per cent).

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Redefining essential items: why it was needed, and who it will impact

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Essential Commodities

Mains level : Essential Commodities (Amendment) Bill, 2020

Recently, the Rajya Sabha passed the Essential Commodities (Amendment) Bill, 2020 which is aimed at deregulating commodities such as cereals, pulses, oilseeds, edible oils, onion and potatoes.

Try this question:

What are the salient features of Essential Commodities (Amendment) Bill, 2020?

Essential Commodities (Amendment) Bill, 2020

  • It amends the Essential Commodities Act, 1955, by introducing a new Subsection 1(A) in Section 3.
  • After the amendment, the supply of certain foodstuffs — including cereals, pulses, oilseeds, edible oils, potato — can be regulated only under extraordinary circumstances, which include an extraordinary price rise, war, famine, and natural calamity of a severe nature.
  • In effect, the amendment takes these items out from the purview of Section 3(1), which gives powers to the central government to “control production, supply, distribution, etc, of essential commodities”.
  • Earlier, these commodities were not mentioned under Section 3(1) and reasons for invoking the section were not specified.

How is an ‘essential commodity’ defined?

  • There is no specific definition of essential commodities in the Essential Commodities Act, 1955. Section 2(A) states that an “essential commodity” means a commodity specified in the Schedule of the Act.
  • The Act gives powers to the central government to add or remove a commodity in the Schedule.
  • The Centre, if it is satisfied that it is necessary to do so in the public interest, can notify an item as essential, in consultation with state governments.

Which are those commodities?

  • According to the Ministry of Consumer Affairs, Food and Public Distribution, which implements the Act, the Schedule at present contain seven commodities.
  • They are drugs; fertilizers, whether inorganic, organic or mixed; foodstuffs including edible oils; hank yarn made wholly from cotton; petroleum and petroleum products; raw jute and jute textiles; seeds of food-crops and seeds of fruits and vegetables, seeds of cattle fodder, jute seed, cottonseed.
  • By declaring a commodity as essential, the government can control the production, supply, and distribution of that commodity, and impose a stock limit.

Under what circumstances can the government impose stock limits?

  • While the 1955 Act did not provide a clear framework to impose stock limits, the amended Act provides for a price trigger.
  • It says that agricultural foodstuffs can only be regulated under extraordinary circumstances such as war, famine, extraordinary price rise, and natural calamity.
  • However, any action on imposing stock limits will be based on the price trigger.
  • Thus, in case of horticultural produce, a 100% increase in the retail price of a commodity over the immediately preceding 12 months or over the average retail price of the last five years, whichever is lower, will be the trigger for invoking the stock limit.
  • For non-perishable agricultural foodstuffs, the price trigger will be a 50% increase in the retail price of the commodity over the immediately preceding 12 months or over the average retail price of the last five years, whichever is lower.

Why was the need for this felt?

  • The 1955 Act was legislated at a time when the country was facing a scarcity of foodstuffs due to persistently low levels of foodgrains production.
  • The country was dependent on imports and assistance (such as wheat import from the US under PL-480) to feed the population.
  • To prevent hoarding and black marketing of foodstuffs, the Essential Commodities Act was enacted in 1955. But now the situation has changed.
  • The production of wheat has increased 10 times while the production of rice has increased more than four times since five decades.
  • The production of pulses has increased 2.5 times, from 10 million tonnes to 25 million tonnes. In fact, India has now become an exporter of several agricultural products.

What will be the impact of the amendments?

  • The key changes seek to free agricultural markets from the limitations imposed by permits and mandis that were originally designed for an era of scarcity.
  • The move is expected to attract private investment in the value chain of commodities removed from the list of essentials, such as cereals, pulses, oilseeds, edible oils, onions and potatoes.
  • While the purpose of the Act was originally to check illegal trade practices such as hoarding, it has now become a hurdle for investment in the agriculture sector in general, and in post-harvesting activities in particular.
  • The private sector had so far hesitated about investing in cold chains and storage facilities for perishable items as most of these commodities were under the ambit of the EC Act.
  • The amendment seeks to address such concerns.

Why is it being opposed?

  • This was one of the three ordinances/Bills that have seen protests from farmers in parts of the country.
  • The Opposition says the amendment will hurt farmers and consumers, and will only benefit hoarders.
  • They say the price triggers envisioned in the Bill are unrealistic — so high that they will hardly ever be invoked.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

[pib] National Food Security Act, 2013

Note4Students

From UPSC perspective, the following things are important :

Prelims level : NFS Act

Mains level : Assurance of Food Security

The Department of Food &Public Distribution has issued directions to States/UTs to include all eligible disabled persons under the National Food Security (NFS) Act 2013.

Try this question:

Q.In the ongoing crisis, maintaining the level of food security has become one of the most essential needs. In light of the above statement, critically examine the priority areas for maintaining food security in the country. Suggest measures to make accessibility and availability of food easier for all.

National Food Security (NFS) Act

  • The NFS Act, 2013 aims to provide subsidized food grains to approximately two-thirds of India’s 1.2 billion people.
  • It was signed into law on 12 September 2013, retroactive to 5 July 2013.
  • It converts into legal entitlements for existing food security programmes of the GoI.
  • It includes the Midday Meal Scheme, Integrated Child Development Services (ICDS) scheme and the Public Distribution System (PDS).
  • Further, the NFSA 2013 recognizes maternity entitlements.
  • The Midday Meal Scheme and the ICDS are universal in nature whereas the PDS will reach about two-thirds of the population (75% in rural areas and 50% in urban areas).
  • Under the provisions of the bill, beneficiaries of the PDS are entitled to 5 kilograms per person per month of cereals at the following prices:
  1. Rice at ₹3 per kg
  2. Wheat at ₹2 per kg
  3. Coarse grains (millet) at ₹1 per kg.
  • Pregnant women, lactating mothers, and certain categories of children are eligible for daily free cereals.

Implementation

  • Section 38 of the Act mandates that the Central Government may from time to time give directions to the State Governments for effective implementation of the provisions of the Act.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Nutrition security along with food security

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Food security and healthy diet


  • The “State of Food Security and Nutrition in the World” was recently released.

About the report

  • It is published by the UN Food and Agriculture Organization (FAO) and other UN agencies including the WHO.
  • The report estimated that 820 million people worldwide did not have enough to eat in 2018, up from 811 million in the previous year.
  • At the same time, the number of overweight individuals and obesity continue to increase in all regions.

Highlights of the report

  • The number of people going hungry has risen for the third year running to more than 820 million. After decades of decline, food insecurity began to increase in 2015.
  • Africa and Asia account for more than nine out of ten of the world’s stunted children, at 39.5% and 54.9% respectively.
  • However at the same time, obesity and excess weight are both on the rise in all regions, with school-age children and adults affected particularly.

India scenario

  • The number of obese adults in India has risen by a fourth in four years, from 24.1 million in 2012 to 32.8 million in 2016.
  • While India’s undernourished population has dropped by roughly the same fraction in 12 years, from 253.9 million in 2004-06 to 194.4 million in 2016-18.

Compared with China

  • The report has a section on economic growth in China and India, and its effect on poverty.
  • Between 1990 and 2017, the two countries had an average GDP per capita growth rate of 8.6 per cent and 4.5 per cent respectively, the report said, citing World Bank.
  • In both countries, the increase in GDP per capita has been accompanied by poverty reduction.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Issue of Food subsidy in India

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Public Account

Mains level : Paper 3- PDS and FCI related issues

Solutions to Problems in Food Subsidy Delivery

The following solutions will help in addressing problems associated with PDS.

  1. Replacing Targeted Public Distribution System (TPDS) with Direct Benefit Transfer (DBT) of food subsidy. National Food Security Act (NFSA) states that the centre and states should introduce schemes for cash transfers to beneficiaries.Cash transfers seek to increase the choices available with a beneficiary, and provide financial assistance.  It has been argued that the costs of DBT may be lesser than TPDS, owing to lesser costs incurred on transport and storage.  These transfers may also be undertaken electronically. As per a report given by a high level committee of Food Corporation of India, DBT would reduce Government subsidy bills by more than Rs 30,000 crores.
  2. Automation at the Fair Price Shops is another important step taken to address the problem in PDS. Currently more than 4.3 lakh (82%) Fair Price Shops have been automated across the country. Automation involves installation of Point of Sale (PoS) devices, for authentication of beneficiaries and electronic capturing of transactions.
  3. Aadhar and introduction of Biometrics was recommended to plug leakages in PDS. Such transfers could be linked to Jan Dhan accounts, and be indexed to inflation. It  facilitates the removal of bogus ration cards, check leakages and ensure better delivery of food grains. In February 2017, the Ministry made it mandatory for beneficiaries under NFSA to use Aadhaar as proof of identification for receiving food grains.
  4. 100% ration cards had been digitised.
  5. Between 2016 and 2018, seeding of Aadhaar helped in detection of 1.5 crore fake, duplicate and bogus ration cards and these cards were deleted.
  6. Increase the procurement undertaken by states known as Decentralised Procurement (DCP), and reduce the expenditure on centralised procurement by the Food Corporation of India (FCI). This would drastically reduce the transportation cost borne by the government as states would distribute the food grains to the targeted population within their respective states. As of December 2019,17 states have adopted decentralised procurement.
  7. The Fair Price shops operate at very low margins as per findings of the Government. Hence the fair price shops should be allowed to sell even non-PDS items and make it economically viable. This will motivate them to not to resort to unfair practices in the distribution of Government subsidized food grains meant for beneficiaries of Government schemes.
  8. A greater and more active involvement of the panchayats in the PDS can significantly improve access at the village level.
  9. There is also an urgent need to set up a proper and effective grievances redressal system for both the fair price shops as well as beneficiaries

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

[pib] Pradhan Mantri Garib Kalyan Anna Yojana

Note4Students

From UPSC perspective, the following things are important :

Prelims level : PMGKAY

Mains level : Assurance of Food Security

The Union Cabinet has approved the extension of Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) as part of Economic Response to COVID-19, for another five months from July to November 2020.

Practice question for mains:

Q.Discuss how the Pradhan Mantri Garib Kalyan Anna Yojana has helped to ensure food security to the vulnerable sections of India during the Covid-19 induced lockdown period.

PM- Garib Kalyan Anna Yojana

  • Under the scheme it is proposed to distribute 9.7 Lakh MT cleaned whole Chana to States/UTs for distribution to all beneficiary households under the National Food Security Act, 2013 (NFSA).
  • Thus it would 1kg per month free of cost under for the next five months -July to November 2020.
  • All expenses on the extended PMGKAY are to be borne by the Central Government.
  • About 19.4 crore households would be covered under the Scheme.

Benefits of the scheme

  • Extension of the scheme is in line with the commitments of the GOI to allow anybody, especially any poor family, to suffer on account of non-availability of food grains due to disruption during next five months.
  • Free distribution of whole Chana will also ensure adequate availability of protein to all the above-mentioned individuals during these five months.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Universalising the PDS

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- PDS and related issues

  • The Public distribution system (PDS) is an Indian food Security Systemestablished under the Ministry of Consumer Affairs, Food, and Public Distribution.
  • PDS evolved as a system of management of scarcity through distribution of food grains at affordable prices.
  • PDS is operated under the joint responsibility of the Central and the State Governments.
    • The Central Government, through Food Corporation of India (FCI), has assumed the responsibility for procurement, storage, transportation and bulk allocation of food grains to the State Governments.
    • The operational responsibilities including allocation within the State, identification of eligible families, issue of Ration Cards and supervision of the functioning of Fair Price Shops (FPSs) etc., rest with the State Governments.
  • Under the PDS, presently the commodities namely wheat, rice, sugar and keroseneare being allocated to the States/UTs for distribution. Some States/UTs also distribute additional items of mass consumption through the PDS outlets such as pulses, edible oils, iodized salt, spices, etc.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Applying the lessons learned from GST to One Nation One Ration Card (ON-ORC)

Note4Students

From UPSC perspective, the following things are important :

Prelims level : GSTN

Mains level : Paper 3- Challenges ON-ORC could face and how the GST could offer valuable lesson for ON-ORC

Never before we felt the necessity of portable benefit schemes as we did in the wake of the pandemic. Portable ration card could have mitigated the suffering of migrant workers to some extent. But it was not to be. This article examines the challenges in implementing the idea of ON-ORC and offers the solution to these challenges by drawing on the lessons learned from GST. At the same time, the shortcoming of GST can also be avoided in the ON-ORC.

What is One Ration Card (ON-ORC)?

  • In the present system, a ration cardholder can buy foodgrains only from an Fair   Price Shop that has been assigned to her in the locality in which she lives.
  • However, this will change once the ONORC system becomes operational nationally.
  • Under the ONORC system, the beneficiary will be able to buy subsidised foodgrains from any FPS across the country.
  • The new system, based on a technological solution, will identify a beneficiary through biometric authentication on electronic Point of Sale (ePoS) devices installed at the FPSs.
  • This would enable that person to purchase the number of foodgrains to which she is entitled under the NFSA.

Portable welfare benefit and attempts so far to achieve it

  •  The idea of portable welfare benefits means a citizen should be able to access welfare benefits irrespective of where she is in the country.
  • In the case of food rations, the idea was first mooted under the UPA government by a Nandan Nilekani-led task force in 2011.
  • The current government had committed to a national rollout of One Nation, One Ration Card (ON-ORC) by June 2020, and had initiated pilots in 12 states.

Progress on intra-state and inter-state portability

  • While intra-state portability of benefits has seen good initial uptake, inter-state portability has lagged.
  • The finance minister has now announced the deadline of March 2021 to roll out ON-ORC.

So, to ensure a smooth rollout, let’s review the challenges thus far

1) The fiscal implications:

  • ON-ORC will affect how the financial burden is shared between states.

2) The larger issues of federalism and inter-state coordination:

  • Many states are not convinced about a “one size fits all” regime because i) they have customised the PDS through higher subsidies, ii) higher entitlement limits, and iii) supply of additional items.

3) The technology aspect:

  • ON-ORC requires a complex technology backbone that brings over 750 million beneficiaries, 5,33,000 ration shops and 54 million tonnes of food-grain annually on a single platform.

How the lessons learned from GST can be applied to deal with the above 3 challenges?

1. Fiscal challenge

  • Just like with ON-ORC, fiscal concerns had troubled GST from the start.
  • States like Tamil Nadu and Gujarat that are “net exporters” were concerned they would lose out on tax revenues to “net consumer” states like UP and Bihar.
  • Finally, the Centre had to step in and provide guaranteed compensation for lost tax revenues for the first five years.
  • The Centre could provide a similar assurance to “net inbound migration” states such as Maharashtra and Kerala that any additional costs on account of migrants will be covered by it for the five years.

2. We could have a National council for ON-ORC

  • GST also saw similar challenges with broader issues of inter-state coordination.
  • In a noteworthy example of cooperative federalism, the central government created a GST council consisting of the finance ministers of the central and state governments to address these issues.
  • The government could consider a similar national council for ON-ORC.
  • To be effective, this council should meet regularly, have specific decision-making authority, and should operate in a problem-solving mode based on consensus building.

3. Technological aspect: PDS Network

  • GST is supported by a sophisticated tech backbone, housed by the GST Network (GSTN), an entity jointly owned by the Centre and states.
  • A similar system would be needed for ON-ORC.
  • The Nilekani-led task force recommended setting up of a PDS network (PDSN).
  • PDSN would track the movement of rations, register beneficiaries, issue ration cards, handle grievances and generate analytics.
  • Since food rations are a crucial lifeline for millions, such a platform should incorporate principles such as inclusion, privacy, security, transparency, and accountability.
  • The IM-PDS portal provides a good starting point.

Also, there are certain shortcomings in GST which we could avoid in ON-ORC

We should learn from the shortcomings and challenges of the GST rollout. For example:

1) Delay in GST refunds led to cash-flow issues.

  • Similar delays in receiving food rations could be catastrophic.
  • Therefore, ON-ORC should create, publish and adhere to time-bound processes.
  • The time-bound processes could be in the form of right to public services legislation that have been adopted by 15 states, and rapid grievance redress mechanisms.

2)  Increase in compliance burden for MSMEs, especially for those who had to digitise overnight.

  • Similar challenges could arise in ON-ORC.
  • PDS dealers will need to be brought on board, and not assumed to be compliant.
  • Citizens will need to be shielded from the inevitable teething issues by keeping the system lenient at first.
  • This can be done by providing different ways of authenticating oneself and publicising a helpline widely.

Consider the question “One Nation-One Ration Card(ON-ORC) could solve many problems faced by the beneficiaries when they move across the country. Examine the challenges the ON-ORC could face. Suggest ways to deal with these challenges.”

Conclusion

If done well, ON-ORC could lay the foundation of a truly national and portable benefits system that includes other welfare programmes like LPG subsidy and social pensions. It is an opportunity to provide a reliable social protection backbone to migrants, who are the backbone of our economy.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Private: In news: Public Distribution System

Given the lockdown due to COVID crisis, Many experts are proposing that On the PDS front, we need to move towards cash transfers that can be withdrawn from anywhere in the country.

What is PDS?

  • The Public distribution system (PDS) is an Indian food Security System established under the Ministry of Consumer Affairs, Food, and Public Distribution.
  • PDS evolved as a system of management of scarcity through distribution of food grains at affordable prices.
  • PDS is operated under the joint responsibility of the Central and the State Governments. 
  • The Central Government, through Food Corporation of India (FCI), has assumed the responsibility for procurement, storage, transportation and bulk allocation of food grains to the State Governments.
  • The operational responsibilities including allocation within the State, identification of eligible families, issue of Ration Cards and supervision of the functioning of Fair Price Shops (FPSs) etc., rest with the State Governments.
  • Under the PDS, presently the commodities namely wheat, rice, sugar and kerosene are being allocated to the States/UTs for distribution. Some States/UTs also distribute additional items of mass consumption through the PDS outlets such as pulses, edible oils, iodized salt, spices, etc.

Evolution of PDS in India

  • PDS was introduced around World War II as a war-time rationing measure. Before the 1960s, distribution through PDS was generally dependant on imports of food grains.
  • It was expanded in the 1960s as a response to the food shortages of the time; subsequently, the government set up the Agriculture Prices Commission and the FCIto improve domestic procurement and storage of food grains for PDS.
  • By the 1970s, PDS had evolved into a universal scheme for the distribution of subsidised food
  • Till 1992, PDS was a general entitlement scheme for all consumers without any specific target.
  • The Revamped Public Distribution System (RPDS) was launched in June, 1992 with a view to strengthen and streamline the PDS as well as to improve its reach in the far-flung, hilly, remote and inaccessible areas where a substantial section of the underprivileged classes lives.
  • In June, 1997, the Government of India launched the Targeted Public Distribution System (TPDS) with a focus on the poor.
  • Under TPDS, beneficiaries were divided into two categories: Households below the poverty line or BPL; and Households above the poverty line or APL.
  • Antyodaya Anna Yojana (AAY): AAY was a step in the direction of making TPDS aim at reducing hunger among the poorest segments of the BPL population.
  • A National Sample Survey exercise pointed towards the fact that about 5% of the total population in the country sleeps without two square meals a day. In order to make TPDS more focused and targeted towards this category of population, the “Antyodaya Anna Yojana” (AAY) was launched in December, 2000 for one crore poorest of the poor families.
  • In September 2013, Parliament enacted the National Food Security Act, 2013. The Act relies largely on the existing TPDS to deliver food grains as legal entitlements to poor households. This marks a shift by making the right to food a justiciable right.

How does the PDS system function?

  • The Central and State Governments share responsibilities in order to provide food grains to the identified beneficiaries.
  • The centre procures food grains from farmers at a minimum support price (MSP)and sells it to states at central issue prices. It is responsible for transporting the grains to godowns in each state.
  • States bear the responsibility of transporting food grains from these godowns to each fair price shop (ration shop), where the beneficiary buys the food grains at the lower central issue price. Many states further subsidise the price of food grains before selling it to beneficiaries.

Importance of PDS

  • It helps in ensuring Food and Nutritional Security of the nation.
  • It has helped in stabilising food prices and making food available to the poor at affordable prices.
  • It maintains the buffer stock of food grains in the warehouse so that the flow of food remains active even during the period of less agricultural food production.
  • It has helped in the redistribution of grains by supplying food from surplus regions of the country to deficient regions.
  • The system of minimum support price and procurement has contributed to the increase in food grain production.

Issues Associated with PDS System in India

  • Identification of beneficiaries: Studies have shown that targeting mechanisms such as TPDS are prone to large inclusion and exclusion errors. This implies that entitled beneficiaries are not getting food grains while those that are ineligible are getting undue benefits.
  • According to the estimation of an expert group set up in 2009, PDS suffers from nearly 61% error of exclusion and 25% inclusion of beneficiaries, i.e. the misclassification of the poor as non-poor and vice versa.
  • Leakage of food grains: (Transportation leakages + Black Marketing by FPS owners) TPDS suffers from large leakages of food grains during transportation to and from ration shops into the open market. In an evaluation of TPDS, the erstwhile Planning Commission found 36% leakage of PDS rice and wheat at the all-India level.
  • Issue with procurement: Open-ended Procurement i.e., all incoming grains accepted even if buffer stock is filled, creates a shortage in the open market.
  • Issues with storage: A performance audit by the CAG has revealed a serious shortfall in the government’s storage capacity.
  • Given the increasing procurement and incidents of rotting food grains, the lack of adequate covered storage is bound to be a cause for concern.
  • The provision of minimum support price (MSP) has encouraged farmers to divert land from production of coarse grains that are consumed by the poor, to rice and wheat and thus, discourages crop diversification.
  • Environmental issues: The over-emphasis on attaining self-sufficiency and a surplus in food grains, which are water-intensive, has been found to be environmentally unsustainable.
  • Procuring states such as Punjab and Haryana are under environmental stress, including rapid groundwater depletion, deteriorating soil and water conditions from overuse of fertilisers.
  • It was found that due to the cultivation of rice in north-west India, the water table went down by 33 cm per year during 2002-08.

PDS Reforms

  • Role of Aadhar: Integrating Aadhar with TPDS will help in better identification of beneficiaries and address the problem of inclusion and exclusion errors. According to a study by the Unique Identification Authority of India, using Aadhaar with TPDS would help eliminate duplicate and ghost (fake) beneficiaries, and make identification of beneficiaries more accurate.
  • Technology-based reforms of TPDS implemented by states: Wadhwa Committee, appointed by the Supreme court, found that certain states had implemented computerisation and other technology-based reforms to TPDS. Technology-based reforms helped plug leakages of food grains during TPDS.
  • Tamil Nadu implements a universal PDS, such that every household is entitled to subsidised food grains.
  • States such as Chhattisgarh and Madhya Pradesh have implemented IT measures to streamline TPDS, through the digitisation of ration cards, the use of GPS tracking of delivery, and the use of SMS based monitoring by citizens.

PDS VS Cash Transfer

  • National Food Security Act,2013 provides for reforms in the TPDS including schemes such as Cash transfers for provisioning of food entitlements.

Arguments in Favor of substituting PDS grain transfers with cash?

1.PDS Prone to corruption and leakage: Proponents of substituting PDS grain transfers with cash argue that PDS is an inefficient mode of transfer of subsidies, prone to enormous leakages into the black market and high waste in costs of transferring subsidies in the form of food transfers. They argue that replacing food with direct cash transfers would greatly reduce corruption and leakages. 

2.Better targeting: It would enable the poor to access goods currently denied them by a PDS beset by corruption. 

3.More Choice for consumers: It would enable people to buy better quality food of their choice from the open market and not be restricted to items sold in the PDS, which are often inferior in quality and limited in range.

4.Will Reduce wastage: Providing subsidies directly to the poor, it is further argued, would both bypass brokers as well as reduce the waste and holding costs of storing grains in government silos. The amount of grain actually required for India’s buffer stock needs could be held in better-quality warehouses, eliminating waste and rotting. 

5.Will reduce the fiscal deficit: Cash transfers would help reduce the fiscal deficit by curbing expenditures earmarked for the PDS that is siphoned off through corruption, as well as avoiding substantially higher costs of transferring food rather than cash.

Arguments against substituting PDS grain transfers with cash?

  • Not leakage proof: it is problematic to assume that cash transfers would in themselves bring about drastic reductions in corruption and leakages in welfare programmes, as there is nothing intrinsic to cash transfers which renders them less vulnerable to leakages. 
  • Irregularities are empirically found to be high in existing cash transfer programmes. Cash transfers of old-age pensions are at least as notorious for corruption and leakages as the PDS.
  • PDS performing better: Studies confirm that many states have been able to reform PDS and significantly reduce leakages, as much as some states have reformed pension transfers. 
  • Clearly, the difference between the corruption or probity of delivery of welfare programmes is not dependent on whether cash or food is delivered, but on political and administrative will and capacities, and public vigilance and organization.
  • Misuse of Cash: It is also possible for people to spend cash transfers not on more nutritious food, as proponents suggest, but instead on non-food items, which would decrease the amount of household money left for buying food. 
  • There are significant gender differences of choice here. 
  • Research confirms that culturally decisions relating to cash in households tend to be made by men, who may or may not spend the money on food. 
  • Decisions relating to food are made by women in almost all cultures, and therefore food rather than cash in a household is more likely to end up as food in a child’s stomach.
  • Weak Banking Infrastructure: There are also worries about how genuinely inclusive of people in remote rural regions is India’s banking system. 
  • Fair price shops exist in three of every four villages, and are therefore generally accessible. 
  • According to one survey, the average distance to the nearest bank branch is between 6.5km to 10km. 
  • Distances would be much longer in remote regions, entailing high additional costs of transport and time.
  • PDS a shield against Inflation: Another advantage of PDS over cash transfers from the perspective of the poor is that PDS supplies rations at a constant price, irrespective of the fluctuations in market prices. This therefore provides a shield against inflation, a benefit that cash transfers cannot match.
  • PDS ensures stable income for Farmers:  it is a mistake to view PDS only as a means to transfer subsidies to poor households. 
  • PDS costs need to be measured against its other goals as well. PDS requires the government to procure food from farmers. 
  • The government builds up stocks of grains which are also useful for price stabilization. Indeed, the guarantee of minimum support price purchase by the government for wheat and rice is the most important instrument for the protection of farmers’ income in India, and this would become infeasible if the government could not offload a lot of this grain back through the PDS.
  • Cash Transfer leading to exclusion: In areas where pilot programmes has been launched There were issues in transfers, as results show as high as 50 per cent of those entitled did not receive the full or part cash transfer, especially due to issues in linking of bank accounts with Aadhaar and ration cards.

Way Forward

  • Certainly, DBT is a novel idea and it could certainly reduce leakages and corruption of PDS system has proven its record in LPG case where Government saved Rs. 14000 crore due to better targeting and elimination of ghost beneficiaries 
  • However, DBT in food subsidy is an idea which has many flaws as mentioned above. The PDS system itself is flawed and it needs to be eliminated. 
  • Therefore, instead of cash transfer, the Government should give food coupons as this will solve the problem of misuse of cash for buying non-food things and it will also give poor people the choice to buy food from the retailer of their choice. Food coupon amount should be periodically revised so that it takes into account the current inflation. Thus what we require is a system which is somewhere in between the present inefficient PDS system and the proposed DBT system.

 Probable Question

Q. Replacing PDS with cash transfers would, in effect, gradually erode and eventually dismantle this obligation of the government, with an adverse impact on already precarious agriculture and farmer protection. Critically comment 

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

‘One Nation, One Ration Card’ System

Note4Students

From UPSC perspective, the following things are important :

Prelims level : ONORC Scheme

Mains level : Assurance of Food Security with the ONORC Scheme

Finance Minister has announced the nationwide rollout of a ‘One Nation, One Ration Card (ONORC)’ system in all states and UTRs by March 2021. As of now, about 20 states have come on board to implement the inter-state ration card portability.

Practice question for mains:

Q. The  ‘One nation one ration card ‘scheme would bring perceptible changes to the lives of India’s internal migrant workers. Comment.

What is PDS?

  • The Public distribution system (PDS) is an Indian food Security System established under the Ministry of Consumer Affairs, Food, and Public Distribution.
  • PDS evolved as a system of management of scarcity through distribution of food grains at affordable prices.
  • PDS is operated under the joint responsibility of the Central and the State Governments. 
  • The Central Government, through Food Corporation of India (FCI), has assumed the responsibility for procurement, storage, transportation and bulk allocation of food grains to the State Governments.
  • The operational responsibilities including allocation within the State, identification of eligible families, issue of Ration Cards and supervision of the functioning of Fair Price Shops (FPSs) etc., rest with the State Governments.
  • Under the PDS, presently the commodities namely wheat, rice, sugar and kerosene are being allocated to the States/UTs for distribution. Some States/UTs also distribute additional items of mass consumption through the PDS outlets such as pulses, edible oils, iodized salt, spices, etc.

Evolution of PDS in India

  • PDS was introduced around World War II as a war-time rationing measure. Before the 1960s, distribution through PDS was generally dependant on imports of food grains.
  • It was expanded in the 1960s as a response to the food shortages of the time; subsequently, the government set up the Agriculture Prices Commission and the FCIto improve domestic procurement and storage of food grains for PDS.
  • By the 1970s, PDS had evolved into a universal scheme for the distribution of subsidised food
  • Till 1992, PDS was a general entitlement scheme for all consumers without any specific target.
  • The Revamped Public Distribution System (RPDS) was launched in June, 1992 with a view to strengthen and streamline the PDS as well as to improve its reach in the far-flung, hilly, remote and inaccessible areas where a substantial section of the underprivileged classes lives.
  • In June, 1997, the Government of India launched the Targeted Public Distribution System (TPDS) with a focus on the poor.
  • Under TPDS, beneficiaries were divided into two categories: Households below the poverty line or BPL; and Households above the poverty line or APL.
  • Antyodaya Anna Yojana (AAY): AAY was a step in the direction of making TPDS aim at reducing hunger among the poorest segments of the BPL population.
  • A National Sample Survey exercise pointed towards the fact that about 5% of the total population in the country sleeps without two square meals a day. In order to make TPDS more focused and targeted towards this category of population, the “Antyodaya Anna Yojana” (AAY) was launched in December, 2000 for one crore poorest of the poor families.
  • In September 2013, Parliament enacted the National Food Security Act, 2013. The Act relies largely on the existing TPDS to deliver food grains as legal entitlements to poor households. This marks a shift by making the right to food a justiciable right.

How does the PDS system function?

  • The Central and State Governments share responsibilities in order to provide food grains to the identified beneficiaries.
  • The centre procures food grains from farmers at a minimum support price (MSP)and sells it to states at central issue prices. It is responsible for transporting the grains to godowns in each state.
  • States bear the responsibility of transporting food grains from these godowns to each fair price shop (ration shop), where the beneficiary buys the food grains at the lower central issue price. Many states further subsidise the price of food grains before selling it to beneficiaries.

Importance of PDS

  • It helps in ensuring Food and Nutritional Security of the nation.
  • It has helped in stabilising food prices and making food available to the poor at affordable prices.
  • It maintains the buffer stock of food grains in the warehouse so that the flow of food remains active even during the period of less agricultural food production.
  • It has helped in the redistribution of grains by supplying food from surplus regions of the country to deficient regions.
  • The system of minimum support price and procurement has contributed to the increase in food grain production.

Issues Associated with PDS System in India

  • Identification of beneficiaries: Studies have shown that targeting mechanisms such as TPDS are prone to large inclusion and exclusion errors. This implies that entitled beneficiaries are not getting food grains while those that are ineligible are getting undue benefits.
  • According to the estimation of an expert group set up in 2009, PDS suffers from nearly 61% error of exclusion and 25% inclusion of beneficiaries, i.e. the misclassification of the poor as non-poor and vice versa.
  • Leakage of food grains: (Transportation leakages + Black Marketing by FPS owners) TPDS suffers from large leakages of food grains during transportation to and from ration shops into the open market. In an evaluation of TPDS, the erstwhile Planning Commission found 36% leakage of PDS rice and wheat at the all-India level.
  • Issue with procurement: Open-ended Procurement i.e., all incoming grains accepted even if buffer stock is filled, creates a shortage in the open market.
  • Issues with storage: A performance audit by the CAG has revealed a serious shortfall in the government’s storage capacity.
  • Given the increasing procurement and incidents of rotting food grains, the lack of adequate covered storage is bound to be a cause for concern.
  • The provision of minimum support price (MSP) has encouraged farmers to divert land from production of coarse grains that are consumed by the poor, to rice and wheat and thus, discourages crop diversification.
  • Environmental issues: The over-emphasis on attaining self-sufficiency and a surplus in food grains, which are water-intensive, has been found to be environmentally unsustainable.
  • Procuring states such as Punjab and Haryana are under environmental stress, including rapid groundwater depletion, deteriorating soil and water conditions from overuse of fertilisers.
  • It was found that due to the cultivation of rice in north-west India, the water table went down by 33 cm per year during 2002-08.

What is the one ‘One Nation, One Ration Card’ system?

  • Under the National Food Security Act, 2013, about 81 crore persons are entitled to buy subsidized foodgrain — rice at Rs 3/kg, wheat at Rs 2/kg, and coarse grains at Re 1/kg — from their designated Fair Price Shops (FPS) of the Targeted Public Distribution System (TPDS).
  • Currently, about 23 crore ration cards have been issued to nearly 80 crore beneficiaries of NFSA in all states and UTs.
  • In the present system, a ration cardholder can buy foodgrains only from an FPS that has been assigned to her in the locality in which she lives.
  • However, this will change once the ONORC system becomes operational nationally.

How would that work?

  • Under the ONORC system, the beneficiary will be able to buy subsidised foodgrains from any FPS across the country.
  • The new system, based on a technological solution, will identify a beneficiary through biometric authentication on electronic Point of Sale (ePoS) devices installed at the FPSs.
  • This would enable that person to purchase the number of foodgrains to which she is entitled under the NFSA.

How will the system of ration card portability work?

  • Ration card portability is aimed at providing intra-state as well as inter-state portability of ration cards.
  • While the Integrated Management of PDS portal provides the technological platform for the inter-state portability of ration cards.
  • It enables a migrant worker to buy foodgrains from any FPS across the country.
  • The Annavitaran portal hosts the data of the distribution of foodgrains through E-PoS devices within a state.
  • The portal enables a migrant worker or his family to avail the benefits of PDS outside their district but within their state.
  • While a person can buy her share of foodgrains as per her entitlement under the NFSA, wherever she is based, the rest of her family members can purchase subsidised foodgrains from their ration dealer back home.

Revamping of the PDS

  • The PDS system was marred with inefficiency leading to leakages in the system. To plug the leakages and make the system better, the government started the reform process.
  • For, this purpose it used a technological solution involving the use of Aadhaar to identify beneficiaries. Under the scheme, the seeding of ration cards with Aadhaar is being done.
  • Simultaneously, PoS machines are being installed at all FPSs across the country.
  • Once 100 per cent of Aadhaar seeding and 100 per cent installation of PoS devices is achieved, the national portability of ration cards will become a reality.
  • It will enable migrant workers to buy foodgrains from any FPS by using their existing/same ration card.

How many states have come on board?

  • It was initially proposed to nationally roll out the ONORC scheme by June 1, 2020.
  • So far, 17 major states and UTs have come on board to roll out the inter-state portability of ration cards under the NFSA.
  • Three more states — Odisha, Mizoram, and Nagaland — are expected to come on board by June 1, taking the number of States and UTs to 20 under the One Nation, Once Ration Card System.

How has been the experience of Ration Card Portability so far?

  • The facility of inter-state ration card portability is available in 20 states as of now but the number of transactions done through using this facility has been low so far.
  • According to data available on the IMPDS portal, only 275 transactions have been done until May 14.
  • However, the number of transactions in the intra-state ration card portability is quite high.
  • The data available on the Annavitaran portal shows that about one crore transactions took place using the facility last month.
  • It means that usages of intra-state ration card portability are way higher than the inter-state portability.

Back2Basics: National Food Security Act, 2013

  • The NFS Act, 2013 (also Right to Food Act) aims to provide subsidized food grains to approximately two-thirds of India’s 1.2 billion people.
  • It was signed into law on 12 September 2013, retroactive to 5 July 2013.
  • The NFSA 2013 converted into legal entitlements for existing food security programmes.
  • It includes the Midday Meal Scheme, Integrated Child Development Services scheme and the Public Distribution System.
  • Further, the NFSA 2013 recognizes maternity entitlements.
  • The Midday Meal Scheme and the Integrated Child Development Services Scheme are universal in nature whereas the PDS will reach about two-thirds of the population (75% in rural areas and 50% in urban areas).
  • Pregnant women, lactating mothers, and certain categories of children are eligible for daily free cereals.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

FCI to the rescue

Note4Students

From UPSC perspective, the following things are important :

Prelims level : FCI.

Mains level : Paper 3- Role of the FCI.

FCI, indeed, has remained a crucial topic from the examination viewpoint. Mostly it is highlighted for its issues, corruption and wastages in the godowns. Be it MS Swaminathan or the latest Shanta Kumar committee all focus on how to revamp this giant institution. This article, however, points to the relevance of the FCI in the times of pandemic and suggests areas where there is scope for improvement in fulfilling its role. Stay tuned to find out what are the major concerns with FCI which needs consideration by the government.

A background check on FCI

  • The FCI was set up under the Food Corporations Act 1964.

  •  In its first decade, FCI was at the forefront of India’s quest of self-sufficiency in rice and wheat following the Green Revolution.

  • Its functions involved managing procurement and stocking grain that supported a vast Public Distribution System (PDS).

  • Over time it became a behemoth that had long outlived its purpose and Its operations were regarded as expensive and inefficient.

  • Even in the 1970s and 1980s, poor storage conditions meant a lot of grain was lost to pests, mainly rats; diversion of grain was widespread.

What role can FCI play amid Covid-19?

  • The FCI has consistently maintained the PDS, a lifeline for vulnerable millions across the country.

  • In the middle of the COVID-19 pandemic, it can play a major role in avoiding hunger and starvation.

  • Before the lockdown, with 77 million tonnes of grains in its godowns, the FCI was facing a serious storage problem.

  • This was worrying not just because of a shortage of modern storage facilities but also because the FCI lacked a “pro-active liquidation policy” for excess stocks.

  • Post-COVID: FCI has opened up the godowns to release food stocks to those affected by the lockdown.

  • The FCI has also enabled purchases by States and non-governmental organisations directly from FCI depots, doing away with e-auctions typically conducted for the Open Market Sale Scheme (OMSS).

  • With rabi procurement underway in many States, it seems that the country will secure ample food supplies to cope with the current crisis.

  • Given the extended lockdown, the FCI is uniquely positioned to move grain across State borders where private sector players continue to face formidable challenges of transport.

5 suggestions for the FCI to perform better

1. Using roads along with rails:

  • The FCI is overwhelmingly reliant on rail, which has several advantages over road transport.

  • In 2019-2020 (until February) only 24% of the grain moved was by road.

  • The FCI has long recognised that road movement is often better suited for emergencies and for remote areas.

  • Containerised movement too, which is not the dominant way of transporting grain, is more cost-effective and efficient.

  • Now, more than ever, it is imperative to move grain quickly and with the least cost and effort, to areas where the need is greatest.

2. Store grain near demand hotspot

  • The FCI already has a decentralised network of godowns.

  • In the current context, it would be useful for the State government and the FCI to maintain stocks at block headquarters or panchayats in food insecure or remote areas.

  • This would allow State governments to respond rapidly.

  •  It will also provide a sense of assurance and psychological comfort to vulnerable communities.

  • This is especially relevant for regions that are chronically underserved by markets or where markets have been severely disrupted.

3. Release stocks over and above existing allocation

  • The central government need to look beyond the PDS and the Pradhan Mantri Garib Kalyan Yojana and release stocks over and above existing allocations.

  • This would provide flexibility to local governments to access grains for appropriate interventions at short notice and to sell grain locally at pre-specified prices until supply is restored.

  • This would allow the state government to engage in feeding programmes, free distribution to vulnerable and marginalised sections, those who are excluded from the PDS, etc.

  • In many States, there is a vibrant network of self-help groups formed under the National Rural Livelihoods Mission (NRLM) which can be tasked with last mile distribution of food aid other than the PDS.

  • Consultative committees presumably exist already in each State to coordinate with the FCI on such arrangements.

4. Suspend FIFO principle

  • Typically, the FCI’s guidelines follow a first in, first out principle (FIFO).

  • FIFO mandates that grain that has been procured earlier needs to be distributed first to ensure that older stocks are liquidated, both across years and even within a particular year.

  • It is time for the FCI to suspend this strategy, that enables movement that costs least time, money and effort.

5. Support the farmers trying to reach out to consumers directly

  • In many places, farmer producer organisations (FPOs) have been at the forefront of rebuilding these broken supply chains.

  • The FCI along with the National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED), is well placed to rope in expertise to manage the logistics to support these efforts.

  • NAFED has already taken the initiative to procure and transport horticultural crops.

  • The FCI should similarly consider expanding its role to support FPOs and farmer groups, to move a wider range of commodities including agricultural inputs such as seeds and fertilizers, packing materials and so on.

Major concerns regarding FCI’s role

  • Cost of food subsidy: The first is a long-term concern regarding the costs of food subsidy.

  • An analysis of FCI costs spanning 2001-16 suggests that on average about 60% of the costs of acquisition, procurement, distribution and carrying stocks are in fact transfers to farmers.

  • Not all of what is counted as subsidy therefore represents a waste of resources.

  • The government needs to address the FCI’s mounting debts — an estimated ₹2.55 lakh crore in March 2020 in the form of National Small Saving Funds Loan alone.

  • Depressing food prices: A second concern is that extended food distribution of subsidised grain is akin to dumping and depresses food prices locally.

  • The depressed prices, in turn, affect farmers.

The Covid-19 pandemic has brought into sharp focus the relevance of the FCI. This makes PDS and Food security in prelims as well as in mains examination focus area. So, questions based on the topic are likely to be asked by the UPSC, for ex- “The FCI’s role in providing succour has been proved many times in the past and it lived up to its reputation amid Covid-19 pandemic as well. In the light of the above statement, discuss the relevance of the FCI and suggest the ways to improve its performance in the times of disasters”

Also consider a question asked by the UPSC in 2019, “What are the reformative steps taken by the Government to make the food grain distribution system more effective?”

Conclusion

In 2015, the Shanta Kumar report recommended repurposing the organisation as an “agency for innovations in Food Management System” and advocated shedding its dominant role in the procurement and distribution of grain. There is no doubt that the FCI needs to overhaul its operations and modernise its storage. At the same time, the relevance of an organisation such as the FCI or of public stockholding, common to most Asian countries, has never been more strongly established than now.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Three dimensions of food security amid Covid-19

Note4Students

From UPSC perspective, the following things are important :

Prelims level : National Food Security Act.

Mains level : Paper 3-Ensuring food security with all its dimension amid corona pandemic.

The article discusses the three dimensions of food security-1)Availability 2)Acces 3) Absorption. The first two are also dependent on job security. All these are now being threatened by the pandemic. Ways to safeguard food security along with its 3 dimensions are suggested at the end of the article.

1. Availability of food in the market

  • The first is the availability of food in the market, and this is seen as a function of production.
  • Fortunately, thanks to the Green Revolution, today we have enough food in the market and in government godowns.
  • This is a great accomplishment by Indian farmers who converted a “ship to mouth” situation to a “right to food” commitment.
  • Yet we cannot take farmers’ contributions in terms of sustaining production for granted.
  • Some special exemptions have been given to the agricultural sector, farmers are confronted at the moment with labour shortages.
  • But many of the inputs, including seeds, are expensive or unavailable, marketing arrangements including supply chains are not fully functional, pricing is not remunerative, and public procurement is also not adequate.
  • There is no room for complacency, as in the absence of demand, the lack of storage or value addition facilities, especially for perishable commodities, we do not yet know exactly what the impact of the current pandemic will be on the kharif sowing and food availability in the future.

2. Access to food

  • The second dimension is the access to food, which is a function of purchasing power, as unless you are a farmer and grow your own food, others have to buy it.
  • Fortunately, the government, through the National Food Security Act (NFSA) and the PDS, has assured some additional food to every individual during this crisis.
  • Strengthening the food basket: This should be further strengthened and the food basket widened by including millets, pulses and oil.
  • Hidden hunger: Steps should also be taken to avoid hidden hunger caused by the deficiency of micronutrients in the diet.
  • In light of the closure of schools and anganwadi centres, and the consequent disruptions in the provision of midday meals or other nutritional inputs, it is important to pay attention to the life cycle approach advocated in the NFSA, particularly the first thousand days in a child’s life, when the cognitive abilities of the child are shaped.
  • We may otherwise see negative effects on nutritional security in the medium to longer term.

After reading the article you’ll be able to answer the question such as this one- “In the ongoing crisis, maintaining the level of food security has become one of the most essential need. In light of the above statement, critically examine the priority areas for maintaining food security in the country. Suggest measures to make accessibility and availability of food easier for all.”

Job security to ensure food security and access to food

  • Food security and access to nutritious, good quality food is also contingent on job security.
  • Today, a lot of people employed both on farms and in the non-farm sector are without jobs.
  • If job security is threatened, then so is food and nutrition security.
  • We have to ensure people do not lose their jobs, and one way of doing this will be to ensure value addition to primary products.
  • One example of such value addition is the Rice Biopark in Myanmar, wherein the straw, bran, and the entire biomass are utilised.
  • This would mean some attention to and investment in new technologies that can contribute to biomass utilisation.
  • The Amul model provides a good example from the dairy sector of improved incomes to milk producers through value addition.
  • Similar attention needs to be given to the horticulture sector on a priority basis.
  • Women farmers are at the forefront of horticulture and special attention needs to be given to both their technological and economic empowerment during this crisis.
  • A second pathway to livelihood security is strengthening the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
  • Need to cover skilled work: Given the lack of jobs and incomes during the COVID-19 crisis, it is imperative to expand the definition of work in MGNREGA to cover skilled work related to farmers and their farming activities.
  • This is particularly important for women farmers and workers, who should not just be given tasks of carrying stones or digging mud.
  • Apart from farming, they engage in a range of essential care tasks, including caring for children, the elderly and sick people.
  • These tasks, often invisible, need to be recognised as work and supported with appropriate education, including on nutrition.

3. Absorption of food in the body and its utilisation

  • The third dimension of food security is the absorption of food in the body or its utilisation.
  • Absorption and utilisation of food is dependent importantly on sanitation, drinking water and other non-food factors, including public health services.
  • Ensuring that these services are functional depends on the capacities of the local panchayats and their coordination with other local bodies.
  • The lack of adequate clean water, in particular, has come to the fore in both rural areas and urban slums in the context of COVID-19, where one of the key measures for stopping transmission relates to frequent hand-washing.

Food security threatened by pandemic

  • If we can ensure food availability, food access and food absorption, then we have a fairly robust system of food and nutrition security.
  • All the above dimensions are, however, now threatened by the novel coronavirus, as discussed earlier.
  • It is very critical to highlight the linkages between agriculture, nutrition and health.
  • The inability to harvest, transport and market perishable fruits and vegetables at remunerative prices during the current crisis has deprived farmers of incomes and livelihoods.
  • It has also deprived consumers of micronutrients in their diets.
  • Farmers making losses, and agriculture moving from being job-led to jobless, raise questions about the sustainability of the production cycle.
  • At the same time, this can have long-term consequences on nutrition and health security.

A question based on the dimension of the food security can be asked by the UPSC for ex- “Food security involved the security of food in all three dimensions, availability of food, access to food and absorption of food. How far the food security act is effective in ensuring security in all three dimensions?”

Conclusion

India avoided what could have been a big famine in the 1960s through the help of technology and public policy, which actively worked with and supported farmers to achieve significant increases in yield. Through a combination of farmers’ cooperation, technological upgrading and favourable public policies in procurement, pricing and distribution, we can deal with the fallouts of the pandemic.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Farmers are at their wits’ end

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- What will be the impact of the corona crisis on agriculture and food security?

Context

As global trade falls and supply disruptions persist, a prolonged lockdown will adversely affect food security.

Fears of food crisis and impact of COVID-19 on agriculture

  • The COVID-19 pandemic has led to global concerns on the state of agriculture and food security.
  • Warning of food crisis: On the one hand, the Food and Agriculture Organization (FAO) has warned of a “food crisis” if countries do not protect vulnerable people from hunger and malnourishment.
  • On the other, farmers face a stalemate as they are unable to work on their land, earn remunerative prices and gain access to markets.

We can try to understand the impact of COVID-19 on agriculture with three questions.

  • One, does the world have enough food to feed its people?
  • Two, is food available at affordable prices?
  • Three, how are farmers coping with the lockdown?

Food stocks and prices in the world

  • Cereal stock in the world: According to the FAO, as on April 2, 2020, the total stock of cereals in the world was about 861 million tonnes. This translates to a stocks-to-use ratio (SUR) — i.e., the proportion of consumption available as stocks — of 30.7%.
  • The FAO considers this “comfortable”. The SURs for wheat, rice and coarse grains were 35.3%, 35.1% and 26.9%, respectively.
  • Variation among nations: World stocks are different from national stocks. About 52% of the global wheat stocks is held by China, and about 20% of the global rice stocks is held by India.
  • Rice importers may suffer: If the major holders of global stocks decide to turn precautionary and stop exporting, and if the lockdown is prolonged, countries dependent on rice imports will suffer.
  • Restriction on wheat export: Kazakhstan, a major wheat exporter, has banned exports. Russia, the largest wheat exporter, is expected to restrict its exports.
  • Restriction on rice export: Vietnam, the third-largest rice exporter, has stopped its exports, which will reduce the global rice exports by 15%.
  • If India and Thailand too ban exports, the world supply of rice will sharply fall.
  • In March 2020, the Philippines and the European Union, major rice importers, had inventories of rice enough to feed their populations for about three months.
  • Others, however, had inventories to hold on for about one month only. If the lockdown continues beyond a month, these countries will face food shortages.

Stocks with India and output projections

  • India’s foodgrain output is projected to be about 292 MMT in 2019-20.
  • Stock with FCI: On March 1, 2020, the total stock of wheat and rice with the Food Corporation of India (FCI) was 77.5 MT.
  • Buffer stock norms: The buffer norms for foodgrain stocks — i.e., operational stock plus strategic reserves — is 21.04 MT.
  • Similarly, for pulses, India had a stock of 2.25 MT in mid-March 2020.
  • In both cases, the rabi harvest is slated to arrive in April 2020, and the situation is expected to ease further.

Price fluctuation of food in the world

  • Fall in demand and supply and price fluctuation: There is always an element of uncertainty on how prices will behave if both demand and supply fall together.
  • Prices in different markets fluctuate considerably given differences in the extent of production, stocks, arrivals and supply disruptions.
  • According to the FAO, the world food price index fell by 4.3% and world cereal price index fell by 1.9% between February and March 2020 due to the weakening demand for food and the sharp fall in maize prices owing to poor demand for biofuels.
  • Price rise in Western economies: Retail prices of rice and wheat have been rising in the Western economies in March 2020.
  • The major reasons identified are panic buying by households, export restrictions by countries and continuing supply chain disruptions.
  • Retail prices of beef and eggs have also been rising.

Demand and price fluctuation in India

  • WPI and CPI for food in India were rising from mid-2019 onwards, reflecting a rise in vegetable prices, especially onion prices.
  • January and February 2020 saw a moderate fall in these indices, but vegetable prices have remained high.
  • If food prices rise due to the lockdown, it will be on top of an already rising price curve.
  • However, unlike in the West, food prices in India have not risen after the lockdown.
  • While supplies have declined, demand has fallen too. This is because there has been a sharp fall in the consumption of foodgrains and vegetables. Similarly, the consumption of milk has fallen by 10-12%.

The crisis in the harvesting and marketing of the crops

Harvesting and marketing of crops are in crisis across India, because of-

  • Disruptions in the procurement of foodgrains by government agencies.
  • Disruptions in the collection of harvests from the farms by traders.
  • Shortage of workers to harvest the rabi crops.
  • Shortage of truck drivers.
  • Blockades in the transport of commodities.
  • Limited operations of APMC mandis; and
  • Shutdowns in the retail markets.

Conclusion

The world and India have adequate food stocks. But as global trade shrinks and supply disruptions persist, a prolonged lockdown will adversely affect food security in many countries. Concurrently, farmers face acute labour shortages, falling farmgate prices and lack of access to input/output markets. It is unclear who is benefiting, but farmers, workers and the poor are at their wits’ end.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

AMMA Canteen and its success

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Amma Canteen

Mains level : Food subsidization and its impact

The Amma Canteen, a delivery system to provide urban food security in Tamil Nadu, has become an effective mechanism in reaching the needy during the lockdown.

AMMA Canteen

  • Amma Unavagam better known as Amma Canteen is a food subsidization programme run by the Government of Tamil Nadu.
  • Under the scheme, municipal corporations of the state-run canteens serving subsidised food at low prices.
  • The dishes are offered at low prices: ₹1 for an idli, ₹5 for a plate of sambar rice, ₹5 for a plate of “Karuvapellai Satham” (Curry leaves rice) and ₹3 for a plate of curd rice.

Feeding the stranded

  • Migrants usually benefit from this canteen scheme.  It is not uncommon to see policemen, municipal workers and people from the media having their breakfast in these canteens.
  • The system, in short, has ensured urban food security and is a boon to migrants during lockdown. There are, thus, unexpected but pleasant benefits from this scheme.

Reasons for success

  • It is a delivery system with minimum leakages and has reached to its target group very effectively compared to the PDS system.
  • People realized the benefits of the scheme in due course of time and thus it emerged popularly.

A lesson for all

  • Welfare schemes are started with the intention to provide benefits to vulnerable sections of society.
  • The success of any welfare scheme depends on the seriousness of the people at the helm of affairs, the efficiency of the scheme’s functionaries and the involvement of the people.
  • During the process of implementation, some deserving people get excluded from the scheme, while some of those who were undeserving manage to enjoy its benefits.
  • Welfare schemes deliver unexpected but pleasant benefits sometimes.

Way forward

  • For such a welfare scheme to be successful, it must be launched in letter and spirit.
  • The benefits of the schemes cannot be realized at pan India level in the absence of a good delivery system.
  • These states should explore the possibility of utilising available infrastructure in existing private canteens and hotels (closed during lockdown).
  • This measure would not only help migrant workers but also provide employment to workers who remained unemployed since the lockdown came into effect.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

A smarter supply line

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- Ensuring the food supply lines are not disrupted in the lockdown and suggestions to ensure it.

Context

The government must ensure that people don’t go hungry and take measures to make sure that people don’t crowd a few outlets, increasing the chances of the virus spreading.

Need for the package to compensate losses

  • Welfare package: The government has announced relief measures. Last week, the Finance Minister announced a welfare package of Rs 1.7 lakh crore.
  • This is too small to cope with the onslaught of the virus.
  • How much a comprehensive package would cost? A package to compensate all losses, including business losses, should amount to at least Rs 5 to 6 lakh crore, if not more.
  • How will the government find funds for this package?
  • Funds accrued as a result of oil price crash: The windfall gains that have accrued to it as a result of the crash in crude oil prices could come in handy.
  • Diver all the subsidies and development funds: The government could divert all subsidies and some development funds to fund this package and ask the country’s corporate leaders to help with funds.
  • Issue clarion call for voluntary donation: The prime minister could even issue a clarion call to those with a fixed income (say above Rs 50,000/month) to voluntarily donate at least 10 per cent of their salaries to fund the battle against the virus.

Focus on supply lines of food and ways to achieve it

  • Why good food supply line matters? The government must do to ensure that people don’t go hungry and the measures it must take to make sure people don’t crowd a few outlets, increasing the chances of the virus spreading.
  • The government has announced that the beneficiaries of the public distribution system can avail three months’ ration at one go.
  • The challenge of delivery: The challenge is to ensure that fair price shops deliver the provisions in an orderly manner and their supply lines remain intact.
  • Home delivery option: Home (street) delivery of these provisions, to avoid crowding, is a good option.
  • Roping in civil society: This is also an occasion to rope in civil society. NGOs, resident welfare associations, religious organisations and paramilitary forces can be engaged for orderly and safe distribution of food — both pre-cooked and fresh.
  • NGOs with experience in food preparation and distribution, such as Akshaya Patra, could guide local authorities.
  • People involved in this endeavour should be provided with safety gears.
  • The challenge of supplying perishables:  These perishables-like fruits, vegetables and milk- must be sold in a packaged form in mobile vans. The weekly markets need to be temporarily suspended lest they spread the virus.
  • Vegetable vendors can work with civil society organisations as well as e-commerce players to do this job in a safe manner.
  • Retail distribution lines: Retail distribution lines need to be seamlessly linked to wholesale supply lines.
  • Buffer stocks: The government godowns are overflowing with wheat and rice — about 77 million metric tonnes (MMT) on March 1, against a buffer stock norm of 21.4 MMT on April 1.
  • How to manage rabi season procurement? Procurement operations for rabi crops are around the corner.
  • Training and safety measures: The FCI and other procuring agencies need to be trained about safety measures and supplied safety gear.
  • Providing incentives to farmers for staggered selling: Farmers could be given Rs 50/quintal per month as an incentive to stagger bringing their produce to the market — say after May 10.
  • They will also need to be screened, given training and equipped with safety gear.

Challenge of mandi operations for fresh produce in large mandis

  • This pertains to mandi operations for fresh produce in large APMC mandis like Azadpur in Delhi and Vashi near Mumbai.
  • These mandis are usually overflowing with fruits and vegetables and the labour force at these centres usually handles the produce without safety gears.
  • The challenge of screening and providing safety kits to these workers is doubly daunting. The country is not fully prepared in this respect.
  • The safety of workers in mandis — and other workers who handle agricultural produce — should be accorded as much priority as the safety of frontline health warriors.
  • Suspend the APMC Act: We should also use this opportunity to suspend the APMC Act and encourage NGOs, civil society and corporate houses to directly procure from farmers.

Issue of poultry and maize farmers

  • Sharp fall in poultry items: In such times, prices of essential food items are known to shoot up. But in India, prices of food items like chicken meat and eggs have registered a sharp fall.
  • In Delhi’s Gazipur Mandi, for example, the price of broiler chicken has fallen from Rs 55/kg in January 2020 to Rs 24/kg in March.
  • This has also pushed the maize prices down as poultry is largely fed packaged maize.
  • The government may have to think of compensating poultry and maize farmers in due course.

Conclusion

When things settle, it will be worth knowing how the virus spread from Wuhan to Iran, Italy, Washington, India and other parts of the world. Which organisation or nation failed to blow the whistle and alert the world in time? Was it China’s failure? Or that of WHO? Or was it the failure of all governments around the world to respond quickly to the outbreak? We need better global governance for pandemics to avert the next crisis.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Ahead: bumper crop, multiple challenges

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not Much

Mains level : Ensuring food supplies amidst COVID-19 crisis

This is perhaps the first time ever that India is facing a national disaster or a war-like situation amidst plentiful supplies of food even as a bumper Rabi crop beckons.

Bumper yield in crisis

  • Farmers are currently about to harvest —if they haven’t already.
  • Given the surplus and extended monsoon rains, which helped recharge ground water and fill up reservoirs, superabundant produce is round the corner.
  • This comes even as there is demand destruction from the shutting down of HORECA (hotels, restaurants and catering) and other institutional segment businesses following the nationwide lockdown.
  • It raises the possibility of a crisis similar to the one three years ago that followed demonetization. But the scale, it is feared, could be bigger.
  • The post-demonetization rabi crop, also a bumper one, was at least harvested and marketed even if it didn’t fetch a good price.

The real challenge

  • The food and civil supplies departments in states will ultimately ensure that the terminal markets in these centres major cities receive their required daily flow of produce anyhow.
  • The problem will be in the remote towns and the rural hinterlands that are serviced through upcountry APMCs.
  • The grocers there are at the greatest risk of running out of stocks if the lockdown continues without inter-state movement restrictions in agricultural commodities being removed.

How to transport produce

  • This time, there are doubts being raised even on that.
  • The simple reason for it is: Will farmers, labourers and machines (combines, threshers and tractor trolleys) be able to move freely to harvest the produce and take it to the mandis?
  • The UP government has issued a direction to all district administrations and law-enforcement authorities to exempt all services, including labour, that are involved in agricultural production, processing and marketing from the current lockdown provisions.
  • Other states, too, may follow. But the question remains of the directives being implemented on the ground.

Will there be workers?

  • At the second stage comes the mandis, where marketing of the crop would happen.
  • Here again, there is a possibility of shortage of labour (the people who do unloading, cleaning, bagging and reloading of the grain that is auctioned or sold) and even gunny bags.
  • Further, it would be necessary to prevent crowding, and maintain social distancing.

Possible alternatives

  • One way out could be to allow entry only to a limited number of farmers, who may be issued SMS alerts informing them about the date and time to bring their crop.
  • Each farmer can also be given a maximum quantity — say, one tractor-trolley load of 30-40 quintals — that may be brought in a single day.
  • The permission for the next trolley load will be only after other farmers have got their turn to sell.
  • All this will obviously delay the process of marketing, raising the prospect of panic sales.
  • This could be avoided if the government were to give a clear-cut assurance — at least in respect of crop where there is MSP-based procurement — that it will continue buying till the last grain is offered.

Safer places than APMC

  • Besides, the marketing of produce needn’t be limited to the APMC (agricultural produce market committee) mandi yard.
  • Any flour or dal mill, and even primary school premises can be designated as an APMC marketing area.
  • The objective should be to ensure that the farmer’s produce gets marketed without resulting in overcrowding.

Way forward

  • The risk of shortages today is really not in the metros or state capitals.
  • Once marketing is done, the crop has to move beyond the mandi.
  • This is probably the right time to dismantle all inter-state and intra-state movement restrictions in farm produce.
  • Free movement is necessary for the context of both a bumper crop and the ongoing lockdown.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Essential Commodities

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Essential Commodities Act, PSF

Mains level : Read the attached story

The Price Monitoring Division (PMD) in the Department of Consumer Affairs is monitoring the retail and wholesale prices of 22 essential food commodities due to increased panic buying by customers.

Essential Commodities Act

  • The ECA is an act which was established to ensure the delivery of certain commodities or products, the supply of which if obstructed owing to hoarding or black-marketing would affect the normal life of the people.
  • The ECA was enacted in 1955. This includes foodstuff, drugs, fuel (petroleum products) etc.
  • It has since been used by the Government to regulate the production, supply and distribution of a whole host of commodities it declares ‘essential’ in order to make them available to consumers at fair prices.
  • Additionally, the government can also fix the maximum retail price (MRP) of any packaged product that it declares an “essential commodity”.
  • The list of items under the Act includes drugs, fertilizers, pulses and edible oils, and petroleum and petroleum products.
  • The Centre can include new commodities as and when the need arises, and takes them off the list once the situation improves.

How ECA works?

  • If the Centre finds that a certain commodity is in short supply and its price is spiking, it can notify stock-holding limits on it for a specified period.
  • The States act on this notification to specify limits and take steps to ensure that these are adhered to.
  • Anybody trading or dealing in the commodity, be it wholesalers, retailers or even importers are prevented from stockpiling it beyond a certain quantity.
  • A State can, however, choose not to impose any restrictions. But once it does, traders have to immediately sell into the market any stocks held beyond the mandated quantity.
  • This improves supplies and brings down prices. As not all shopkeepers and traders comply, State agencies conduct raids to get everyone to toe the line and the errant are punished.
  • The excess stocks are auctioned or sold through fair price shops.

Ex: The Union Government has brought masks and hand-sanitisers under the ECA to make sure that these products, key for preventing the spread of Covid-19 infection, are available to people at the right price and in the right quality.

What about Food Items?

  • The items covered include rice, wheat, atta, gram dal, arhar dal, moong dal, urad dal, masoor, dal, tea, sugar, salt, Vanaspati, groundnut oil, mustard oil, milk, soya oil, palm oil, sunflower oil, gur, potato, onion and tomato.
  • Based on the deliberations, Government takes various measures from time to time to stabilize prices of essential food items which, inter-alia, include appropriately utilizing trade and fiscal policy instruments like import duty.
  • The govt. can impose stock limits and advise State for effective action against hoarders & black marketers etc. to regulate domestic availability and moderate prices.
  • The government utilizes the buffer of agri-horticultural commodities like pulses, onion, etc. built under Price Stabilization Fund (PSF) to help moderate the volatility in prices.

Back2Basics

Price Stabilization Fund (PSF)

  • The PSF was set up in 2014-15 under the Department of Agriculture, Cooperation & Famers Welfare (DAC&FW) to help regulate the price volatility of important agri-horticultural commodities like onion, potatoes and pulses were also added subsequently.
  • Procurement of these commodities will be undertaken directly from farmers or farmers’ organizations at farm gate/mandi and made available at a more reasonable price to the consumers.
  • Losses incurred, if any, in the operations will be shared between the Centre and the States.
  • PSF provides for advancing interest-free loans to State Governments/ UTs and Central agencies to support their working capital and other expenses they might incur on procurement and distribution interventions for such commodities.
  • The scheme provides for maintaining a strategic buffer of the commodities for subsequent calibrated release to moderate price volatility and discourages hoarding and unscrupulous speculation.
  • The PSF is managed centrally by a Price Stabilization Fund Management Committee (PSFMC) which will approve all proposals from State Governments and Central Agencies.
  • The PSF is maintained as a Central Corpus Fund by Small Farmers Agribusiness Consortium (SFAC), a society promoted by the Ministry of Agriculture for linking agriculture to private businesses and investments and technology.

With inputs from: http://www.arthapedia.in/index.php?title=Price_Stabilisation_Fund_(PSF)

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

A crisis deferred

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3-Reforms in foodgrain management, the PDS and the fertiliser subsidy.

Context

Union budget missed the opportunity to undertake reforms in the grain management system and food security act.

The massive reduction in food subsidy and its implications

  • Subsidy slashed by 75,552 crores: The revised estimates (RE) for food subsidy for 2019-20 have been slashed by a whopping Rs 75,552 crore -from the budgeted estimate (BE) of Rs 1,84,220 crore to Rs 1,08,668 crore (RE).
    • For the next fiscal year, the budget estimate has been kept at Rs 1,15,570 crore.
  • No major reforms in grain management system: One wonders whether any major reforms have been undertaken in the grain management system or in the National Food Security Act such that this massive reduction in budget estimates is feasible. But no such reforms are undertaken.
    • The Food Corporation of India (FCI) has been asked to borrow more from myriad sources, but most importantly from the National Small Savings Fund (NSSF).
    • An item that should have been in the budget, is now getting reflected as outstanding dues of FCI.
  • Implications of the movepostponing of the crisis:  In order to gauge how much is the effective food subsidy in the country, the budget numbers are becoming totally irrelevant.
    • One needs to add the actual subsidy numbers reflected in the budget to the outstanding dues of FCI.
    • Effective food subsidy: If one adds the due, the effective food subsidy turns out to be Rs 3,57,688 crore.
    • By not provisioning for it fully in the budget, and not undertaking any reforms in the foodgrain management system or the NFSA, the government is only postponing the crisis.

Need to bring down the coverage: The Economic Survey

  • Bringing down the coverage at 20 %: While the Economic Survey clearly states that the coverage under NFSA needs to be revisited, and brought down to say 20 per cent of the population.
    • The budget did not bite this bullet.
    • Cost of procurement to go up: The expected cost of rice to FCI in 2020-21 is going to be about Rs 37/kg, and for wheat it will be Rs 27/kg.
    • The issue price, that covers 67 per cent of the population, is just Rs 3/kg and Rs 2/kg respectively.

Excessive stock with the FCI

  • Actual stock in excess of buffer stocks: Compared to a buffer stock norm of 4 million tonnes, actual stocks with FCI (including unmilled paddy) were 3.5 times higher.
    • It speaks of a colossal waste of scarce resources, especially when tax revenues have been sluggish.
  • Stocks likely to increase further: Given that Skymet has predicted that the coming wheat crop is going to be one of the best in many years-the stocks is likely to touch 113 million tonnes.
    • With procurement prices being above global prices, the chances of wheat exports are bleak unless there is a subsidy for exports.
    • And that will be challenged in the WTO.
    • The FCI may run out of stock capacity: So, one should expect a piling up of grains stocks with a record procurement of wheat.
    • FCI may run out of storage capacity. Stock levels may touch 85-90 million tonnes, or even more, by July 1, 2020.

Fundamental questions

  • First: Is the government ignorant of the impending crisis of plenty?
  • Second: Does it realise that the policy of procurement prices (50 per cent above cost A2+FL), without looking at the demand side, is likely to create more troubles for the government?
  • Third: Does the government have any plan to reform the public distribution system under NFSA?

Way forward

  • Reforms in foodgrain management: Reforms in foodgrain management have to start with reforming the PDS system.
    • With moving gradually moving away from grains to cash transfers.
    • Think over implementing the Shanta Kumar Committee reports recommendations.
  • Stop open-ended procurement in Punjab-Haryana belt: The policy of procurement prices, with open-ended procurement in the Punjab-Haryana belt, is doing more damage by depleting the water table and not letting crop diversification take place.
    • This is very unfortunate as the “dead loss” in grain management runs to more than Rs 1,00,000 crore.
  • Rationalise the fertiliser subsidy: The other part related to this is the fertiliser subsidy, which is largely used in wheat and rice.
    • The budget estimates for 2020-21 show a reduction in the subsidy, while dues of the fertiliser industry keep on piling.
    • The fertiliser industry estimates that by April 2020, the dues will be roughly Rs 60,000 crore.
    • Demoralised fertiliser industry: While FCI has been asked to borrow, the fertiliser industry does not have that type of window.
    • It is feeling totally demoralised.
    • No private player wants to come and invest in this sector.

Conclusion

Instead of postponing the crisis by compelling the FCI to borrow, the government need to reform the foodgrain management system, rationalise the fertiliser subsidy and limit the coverage under the NFSA.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Thalinomics: the Economics of a plate of food in India

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Thalinomics

Mains level : Read the attached story

 

  • The Economic Survey 2019-20 states that affordability of vegetarian Thalis improved 29 per cent from 2006-07 to 2019-20 while that for non-vegetarian Thalis by 18 per cent.
  • Affordability of Thalis vis-à-vis a day’s pay of a worker has improved over time, indicating improved welfare of the common person.
  • The Survey says that food is not just an end in itself but also an essential ingredient in the growth human capital and therefore important for national wealth creation.

The term ‘Thalinomics’

  • The conclusion has been drawn on the basis of “Thalinomics: the Economics of a plate of food in India” – an attempt to quantify what a common person pays for a Thali across India.
  • Price data from the Consumer Price Index for industrial workers for around 80 centers in 25 States and UTs from April 2006 to October 2019 has been used for the study.
  • Using the dietary guidelines for Indians, the price of Thalis is constructed.
  • The Survey states that across India and also the 4 regions- North, South, East and West- it is found that the absolute prices of a vegetarian Thali have decreased significantly since 2015-16 though the price has increased in 2019.
  • This is owing to the sharp downward trend in the prices of vegetables and dal in contrast to the previous trend of increasing prices.
  • As a result, an average household of 5 individuals that eats two vegetarian Thalis a day, gained around Rupees 10887, on average per year, while a non-vegetarian household gained Rupees 11787, on average per year.

Shift in Thali dynamics

  • The Survey states that 2015-16 can be considered as a year when there was a shift in the dynamics of Thali prices.
  • Many reform measures were introduced since 2014-15 to enhance the productivity of the agricultural sector as well as efficiency and effectiveness of agricultural markets for better and more transparent price discovery.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

[op-ed of the day] Food for Expediency

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- PDS and issue of excess food stock with FCI.

Context

A substantial rise in consumer food price inflation to 14.12% in December 2019, the highest ever in the past six years, has driven the retail price inflation in this country.

Discrepancies in the fiscal deficit

  • Policy dilemma for the RBI: Though the CPI was at 14.12% in December but with the core inflation rate still not overshooting the Reserve Bank of India’s (RBI) medium-term target of 4(+/- 2)%.
    • Speculations hover as to whether the RBI monetary policy committee will go for another rate cut in the coming month.
    • This is a policy dilemma for the central bank
    • Why is the dilemma? The dilemma is because the moot issues regarding the government’s key economic estimates, such as the fiscal deficit, largely remain unresolved.
  • Discrepancies flagged by the CAG: The CAG has stated that the current figures on deficit have been kept at a 1.5% to 2% low by not including the government’s off-budget borrowings from public accounts, such as the National Small Savings Fund (NSSF).
    • According to media reports, such off-budget expenditure of the current government stands at ₹1.5 lakh crore in 2019–20.
    • The major portion of off budged expenditure on food subsidy: About three-fourths of the incremental off-budget expenditure is on account of under-recoveries in food subsidies of the Food Corporation of India (FCI).
  • Low allocation but high expenditure on food subsidy: For instance, the 2019–20 Union Budget had provisioned food subsidy at₹1.84 lakh crore.
    • While the overdue of the FCI is already at₹1.86 lakh crore.
    • For these burgeoning overdue, FCI’s ­off-budget borrowings from the NSSF have been on the rise.

Excessive stock by the government and rising inflation

  • Issue of supply management: The issues of agricultural supply management are relegated to the background by the standard causality argument of “crop damages” caused by excessive rains and that the inflation will ease out once the new harvest comes in.
    • This argument can hold some water for horticulture crops like onions that saw an almost 200% rise in price in November and December.
    • Unable to explain inflation in wheat and other cereals: This argument may not find traction in explaining the price inflation of wheat and other cereals.
  • holding the excessive cereal stock: With the government currently stocking much higher quantities of cereals at the FCI than the buffer norms.
    • 45.8 million tonnes of wheat as against the buffer norm of 27.5 million tonnes and nearly double the amount of rice vis-à-vis the buffer norm of 13.5 million tonnes.
    • India is now a cereal surplus economy.
    • Why then the inflation in cereal prices? Is this artificially created by the government through its irrational stocking practice?
    • Some fundamental concerns are triggered at this juncture.
  • Concerns with excess stocks
    • First-Higher stock means higher subsidy bill-With the economic costs of the FCI being 12 times or more than the allocation cost of the grains through the public distribution system-higher stocks would imply higher subsidy bills.
    • SecondNo benefit of the stock: In tandem with the first, ad hoc releasing of the stocks will not bring about any major changes in the situation.
    • ThirdHiding fiscal deficit from the public: In this context, off-budget borrowing can serve various politically expedient purposes.
    • It has enabled the government to showcase a consistently low share (below 1%) of subsidies in national income.
    • Thereby diverted the public attention from two critical facts: the FCI’s tipping financials and the country’s (grossly) underestimated fiscal deficit.

Conclusion

The government must recall that the “illusion” of this acceptable limit of inflation potentially rests upon the savings of the common consumers, which is being unduly misemployed by the government.

 

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

[op-ed snap]Lifting growth, containing inflation

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3-Issues related to direct and indirect farm subsidies and minimum support prices, Public Distribution System- Objectives, functioning, limitations,revamping, issues of buffer stocks, and food security, Technology missions, economics of animal rearing.

Context

There is a large scope for  the improvement in the efficiency of grain management system under the National Food Security Act (NFSA).

Declining Agri-sector growth rate

  • India’s growth rate plummeted to 4.5 per cent in the second quarter of this fiscal.
  • The quarterly growth in GDPA (agri-GDP) is hovering at around 2 percent, it is a cause for great concern.
  • Agriculture still engages about 44 per cent of India’s workforce, which has serious consequences for the overall economy of the country.

The bleak picture of the economy

  • Recently inflation has started to surge after a long time.
  • Inflation is led by the different components of the food segment- cereals, pulses, and vegetables.
  • There is a challenge of containing inflation and increasing the demand at the same time.
  • At the same time, there is also the challenge of maintaining the fiscal deficit by 3.3 %.
  • Recently Finance minister has launched an investment package of 102 lakh crores.
  • So, there is a need to take a look at the inefficiencies in food grain management.

Inefficiencies in NFSA

  • It supplies a certain quantity of wheat and rice to 67 percent population.
  • It gives wheat at Rs. 2/kg and rice at Rs. 3/kg.
  • While the cost of these grains to FCI is at Rs. 25/kg and Rs. 35/kg respectively.
  • This led to the provision of Rs 1.84 lakh crores for food subsidy.
  • The buffer stocks with the FCI is far more than double the buffer stock norms as on January 1 every year.
  • This excess stock is the result of an inefficient strategy for food management.
  • The strategy where the procurement of these grains is open-ended while the disbursement is restricted.
  • The money locked in these excess stock is about 1 lakh crores.
  • If the rabi season procurement is good FCI may run out of storage space to accommodate.

Suggestions for improvement

  • The open market operation should be increased.
  • Even if the government liquidate half of the excess stock it would fetch Rs.50,000 crores.
  • The Shanta Kumar panel had submitted the blueprint for the improvement in the grain management system.
  • Only three reiterations are needed.
  • First-while the Antyodaya category should keep getting the maximum food subsidy, the issue price should be fixed at 50% of the procurement for the rest.
  • Second- restrict the percentage of population covered under the scheme to 40 % from the present 67%
  • Third-stop the procurement of rice in the north-western states of Punjab and Haryana where the water table is depleting.

Conclusion

  • If the government implements these three points it can save the country another Rs. 50,000 crores annually. On top of this, it will help the government to reduce its fiscal deficit.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

[pib] International Seed Treaty

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Seed Treaty

Mains level : Intellectual property rights of farmers


A session of the Governing Body of International Treaty of Plant Genetic Resources for Food and Agriculture (ITPGRFA) better known as Seed Treaty is recently held.

About the Seed Treaty

  • ITPGRFA also known as Seed Treaty is a comprehensive international agreement for ensuring food security through the conservation, exchange and sustainable use of the world’s plant genetic resources.
  • It aims for food and agriculture (PGRFA), as well as the fair and equitable benefit sharing arising from its use.
  • The governing body meets biennially and India is a signatory to the treaty.

Objectives

  • Farmers’ Contribution: To recognize the contribution of farmers to the diversity of crops,
  • Access and Benefit Sharing: Establish a global system to provide farmers, plant breeders and scientists with access to plant genetic materials,
  • Sustainability: To conserve and sustainably use plant genetic resources for food and agriculture, and fair and equitable sharing of the benefits arising out of their use, in harmony with the Convention on Biological Diversity.

Back2Basics

Protection of Plant Varieties and Farmers’ Rights (PPV&FR) Act

  • The PPV&FR Act, 2001 was enacted to grant intellectual property rights to plant breeders, researchers and farmers who have developed any new or extant plant varieties.
  • The rights granted under this Act are exclusive right to produce, sell, market, distribute, import and export the variety.
  • According to the act, a farmer is entitled to save, use, sow, resow, exchange, share or sell his farm produce including seed of a variety protected under the PPV&FR Act, 2001 except the brand name.
  • The Act is compliant to Article-9 of the Seed Treaty.
  • A few months back in April 2019, PepsiCo sued Gujarati farmers by invoking the provisions of the act.
  • The PPV&FR Authority has registered about 3631 plant varieties out of which 1597 (44%) belong to the farmers.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Explained: Ration card portability

Note4Students

From UPSC perspective, the following things are important :

Prelims level : About the scheme

Mains level : Need for ONORC


Context

  • The government is showcasing the rollout of the ‘One Nation One Ration Card’ scheme as one of the biggest achievements of its first 100 days in power.
  • The launch of the nationwide food security net is scheduled for June 2020, but several challenges remain before migrants can take advantage of full portability.

Food Security in India

  • India runs the world’s largest food security programme, distributing more than 600 lakh tonnes of subsidised food grain to more than 81 crore beneficiaries every year.
  • This is done through a vast network of more than five lakh ration or fair price shops.
  • Under the National Food Security Act (NFSA), each beneficiary is eligible for five kg of subsidised grains per month at the rate of ₹3/kg for rice, ₹2/kg for wheat and ₹1/kg of coarse cereals.

Ration Card

  • A ration card is issued to the head of the family, depending on the number of members in a family and the financial status of the applicant.
  • It is used by households to get essential food grains at subsidised prices from designated ration shops (also called fair price shops) under the Targeted Public Distribution System (TPDS).
  • Over the years, different types of ration cards were issued depending on the level of deprivation.
  • Later, in 2013, when the National Food Security Bill was passed, different ration cards were compressed to just two — priority and Antyodaya (for the most poor).
  • The responsibility of identifying eligible families and issuing ration cards to them rests with the state/UT government.

One Nation One Ration Card scheme

  • Until recently, this has been a location-linked benefit, leaving crores of migrant workers and families out of the food safety net.
  • Each household’s ration card is linked to a specific fair price shop and can only be used to buy rations in that particular shop.
  • Over the last few years, 10 States (partially in one) have implemented the Integrated Management of Public Distribution System, which allows beneficiaries to buy rations from any fair price shop within that State.
  • The Centre is now in the process of expanding these efforts into a nationwide portability network which is called the ‘One Nation One Ration Card’ scheme.
  • It is scheduled to come into full effect by June 2020, after which a ration card holder can buy subsidised grain at any fair price shop in the country.

Beneficiaries of the scheme

  • The main beneficiaries of the scheme are the country’s migrant workers.
  • According to data from the Census 2011, there are more than 45 crore internal migrants in India, of whom more than half have not completed primary education, while 80% have not completed secondary education.
  • Registering for ration cards at their new location is an arduous process, especially if some members of the household still remain in their original home.
  • Apart from this, field studies estimate that four crore to ten crore people are short-term migrants, often working in cities, but not moving there permanently.
  • Women who change locations after marriage also find it difficult to start accessing ration benefits using a new household’s card.

Benefits

  • Lower levels of education are linked to lower income, which would make a large percentage of these migrants eligible for NFSA benefits.
  • The Centre hopes that allowing ration card portability will also curb corruption and improve access and service quality by removing monopolies.
  • Under the old system, beneficiaries were dependent on a single fair price shop and subject to the whims of its dealer.
  • Under the new system, if they are denied service or face corruption or poor quality in one shop, they are free to head to a different shop.
  • The scheme is also driving the faster implementation of initiatives to digitise and integrate the food storage and public distribution system.

What is needed to make it work?

  • The scheme involves the creation of a central repository of NFSA beneficiaries and ration cards, which will integrate the existing databases maintained by States, UTs and the Centre.
  • Aadhaar seeding is also important as the unique biometric ID will be used to authenticate and track the usage of ration by beneficiaries anywhere in the country.
  • Currently, it is estimated that around 85% of ration cards are linked to Aadhaar numbers.
  • For the scheme to work, it is critical that all fair price shops are equipped with electronic point-of-sale machines (ePoS), replacing the old method of manual record-keeping of transactions with a digital real-time record.
  • On the back-end, the Food Corporation of India’s Depot Online System is integrating all warehouses and godowns storing subsidised grain in an attempt to create a seamless flow of online information from procurement until distribution.

Progress so far

  • Two pairs of States — Andhra Pradesh-Telangana and Maharashtra-Gujarat — became the first to begin implementing portability between their States last month.
  • From October 1, two more pairs — Kerala-Karnataka and Rajasthan-Haryana — will join the experiment.
  • By January, all eight States and at least three others which already implement intra-State portability will form the first national grid for the ‘ONORC’ scheme.

Difficulties ahead

Lack of infrastructure

  • There are only 4.32 lakh ePoS machines which have been installed in more than 5.3 lakh fair price shops.
  • Apart from much of Northeast India, much of that gap comes from three States: Bihar, West Bengal and Uttarakhand.
  • Given that they are major source States for migrants, Bihar (only 15% coverage) and West Bengal (70% coverage) must speed up ePoS installation for the system to work smoothly.
  • In some rural and remote areas, ePoS connectivity also remains erratic, jeopardising smooth functioning.
  • In Jharkhand, a State which was an early adopter of digitisation and Aadhaar-based biometric authentication in 2016, there have been widespread complaints of denial of food due to system failures.

Different ration benefits

  • In other States, the challenge comes from the difference between ration benefits offered by the State in comparison to the Central entitlement.
  • Tamil Nadu, for example, offers 20 kg of free rice per month to almost 2 crore ration card holders, as well as subsidised sugar, pulses and oil, over and above the NFSA benefits.
  • The State government has made it clear that it will not be offering these benefits to migrant workers, as the Centre will cover the costs of NFSA benefits only.

Household issue

  • Another issue could arise if the members of a single household are split between two different locations.
  • The scheme’s guidelines only permit purchase of half the subsidised grain at one time in an effort to prevent one member of the household taking the entire ration for the month, leaving family members in a different location stranded without food.

Lack of data and inventory management

  • The biggest challenge may lie in the lack of any concrete data on inter-State migration trends, especially short-term migration.
  • The allocation of food grains to States will have to be dynamic to allow for quick additional delivery to cover any shortfalls in States with large migrant populations.
  • Currently, Food Corporation of India godowns stock grains up to three months in advance.
  • Food Ministry officials acknowledged that there is a “steep learning curve” ahead to ensure that movement of grain matches migration flows.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

One Nation, One Ration Card scheme: a boon for poor migrants

Note4Students

From UPSC perspective, the following things are important :

Prelims level : ONORC Scheme

Mains level : Benefits of ONORC


  • Recently the government has launched the pilot project for the inter-state portability of ration cards between Telangana and Andhra Pradesh, and between Maharashtra and Gujarat, as part of its ‘One Nation, One Ration Card’ scheme.

What is a ration card?

  • A ration card is issued to the head of the family, depending on the number of members in a family and the financial status of the applicant.
  • It is used by households to get essential food grains at subsidised prices from designated ratio shops (also called fair price shops) under the Targeted Public Distribution System (TPDS).
  • Over the years, different types of ration cards were issued depending on the level of deprivation.
  • Later, in 2013, when the National Food Security Bill (NFSA) was passed, different ration cards were compressed to just two — priority and Antyodaya (for the most poor).
  • The responsibility of identifying eligible families and issuing ration cards to them rests with the state/UT government.

What is a ration shop?

  • Ration shops can be privately owned or owned by cooperative societies or by the government.
  • Ownership licenses are issued by the concerned state government.
  • Presently, commodities including wheat, sugar, rice and kerosene are being allocated as part of the TPDS.
  • State governments have the discretion to provide additional commodities.

 ‘One Nation, One Ration card’ scheme

  • Since ration cards are issued by state governments, this implied that beneficiaries could procure food grains only from the designated ration shops within the concerned state.
  • If a beneficiary were to shift to another state, he/she would need to apply for a new ration card in the second state. There were other complications.
  • For instance, after marriage, a woman needed to get her name removed from the ration card issued to her parents, and get it added to the ration card issued to her husband’s family.
  • The ONORC scheme attempts to address this gap in TPDS delivery.
  • Essentially, the scheme has been launched keeping in mind the internal migration of our country, since people keep moving to different states in search of better job opportunities and higher standards of living.
  • As per Census 2011, 4.1 crore people were inter-state migrants and 1.4 crore people migrated (inter- and intra-state) for employment.

Good signs of implementation

  • With the ONORC scheme being implemented in Telangana and Andhra Pradesh, the beneficiary can buy food grains from ration shops located in either of the states.
  • The same is the case with Maharashtra and Gujarat.
  • The government hopes to implement the scheme across India by June 1, 2020.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

One nation, one ration card: Govt launches pilot project

Note4Students

From UPSC perspective, the following things are important :

Prelims level : One Nation One Ration card

Mains level : Nothing much

The government launched inter-state portability of ration cards between Telangana-Andhra Pradesh and Maharashtra-Gujarat as a pilot project to implement ‘One Nation, One Ration Card’.

In detail

  1. Beneficiaries in Telangana and Andhra Pradesh, Maharasthra and Gujarat, can now buy their quota of ration from ration shops in either state.
  2. Government is planning to roll out ‘One Nation, One Ration Card’ across the country by June 1, 2020.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

[op-ed of the day] The Malaise of malnutrition

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : Malnutrition is the biggest challenge before India which needs attention

Note- Op-ed of the day is the most important editorial of the day. Aspirants should try to cover at least this editorial on a daily basis to have command over most important issues in news. It will help in enhancing and enriching the content in mains answers. Please do not miss at any cost.

CONTEXT

A new report, ‘Food and Nutrition Security Analysis, India, 2019’, authored by the Government of India and the United Nations World Food Programme, paints a picture of hunger and malnutrition amongst children in large pockets of India.

Poor Conditions

  • This punctures the image of a nation marching towards prosperity. It raises moral and ethical questions about the nature of a state and society that, after 70 years of independence, still condemns hundreds of millions of its poorest and vulnerable citizens to lives of hunger and desperation.
  • And it once again forces us to ask why despite rapid economic growth, declining levels of poverty, enough food to export, and a multiplicity of government programmes, malnutrition amongst the poorest remains high.

A trap of poverty, malnutrition

Intergenerational poverty

The report shows the poorest sections of society caught in a trap of poverty and malnutrition, which is being passed on from generation to generation.

Mothers who are hungry and malnourished produce children who are stunted, underweight and unlikely to develop to achieve their full human potential.

Effects of malnourishment

Poor Cognitive Development

  • The effects of malnourishment in a small child are not merely physical. A developing brain that is deprived of nutrients does not reach its full mental potential.
  • A study in the Lancet notes, “Undernutrition can affect cognitive development by causing direct structural damage to the brain and by impairing infant motor development.”
  • This, in turn, affects the child’s ability to learn at school, leading to a lifetime of poverty and lack of opportunity.
  • Another study in the Lancet observes, “These disadvantaged children are likely to do poorly in school and subsequently have low incomes, high fertility, and provide poor care for their children, thus contributing to the intergenerational transmission of poverty.”
  • In other words, today’s poor hungry children are likely to be tomorrow’s hungry, unemployed and undereducated adults.

Extent of malnutrition

  • India has long been home to the largest number of malnourished children in the world.
  • The proportion of children with chronic malnutrition decreased from 48% percent in 2005-06 to 38.4% in 2015-16.
  • The percentage of underweight children decreased from 42.5% to 35.7% over the same period.
  • Anaemia in young children decreased from 69.5% to 58.5% during this period. But this progress is small.

An ambitious target

National Nutrition Mission –

  • (The government’s National Nutrition Mission (renamed as Poshan Abhiyaan) aims to reduce stunting (a measure of malnutrition that is defined as height that is significantly below the norm for age) by 2% a year, bringing down the proportion of stunted children in the population to 25% by 2022.
  • But even this modest target will require doubling the current annual rate of reduction in stunting.

Ineffective implementation

  • A year after it was launched, State and Union Territory governments have only used 16% of the funds allocated to them.
  • Fortified rice and milk were to be introduced in one district per State by March this year.
  • But the minutes of a March 29 meeting showed that this had not been done, and officials in charge of public distribution had not yet got their act together.
  • Anganwadis are key to the distribution of services to mothers and children.
  • But many States, including Bihar and Odisha, which have large vulnerable populations, are struggling to set up functioning anganwadis, and recruit staff.

The problem is access to food

  • As Amartya Sen noted, famines are caused not by shortages of food, but by inadequate access to food.
  • And for the poor and marginalised, access to food is impeded by social, administrative and economic barriers.
  • In the case of children and their mothers, this could be anything from non-functioning or neglectful governments at the State, district and local levels to entrenched social attitudes that see the poor and marginalised as less than equal citizens who are meant to be an underclass and are undeserving of government efforts to provide them food and lift them out of poverty.

Conclusion

A lot of attention has focussed on the government’s aim of turning India into a $5 trillion economy in the next five years. Whether this will achieved is a matter for debate. But these declarations only serve to obscure a larger reality. There is a large section of society, the poorest two-fifths of the country’s population, that is still largely untouched by the modern economy which the rest of the country inhabits. As one part of the country lives in a 21st century economy, ordering exotic cuisines over apps, another part struggles with the most ancient of realities: finding enough to eat to tide them over till the next day.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

‘One Nation One Ration Card’ Scheme

Note4Students

From UPSC perspective, the following things are important :

Prelims level : One Nation One Ration Card Scheme

Mains level : Read the attached story

One Nation One Ration Card” scheme

  • The union govt. is working on a plan to launch a “One Nation One Ration Card” scheme for beneficiaries to access to any PDS shop across the country.
  • The scheme is aimed at providing freedom to beneficiaries, as they will not be tied to one PDS shop.
  • It aims to reduce their dependence on shop owners and curtail corruption.
  • The biggest beneficiaries will be migrant workers who move to other states to seek better job opportunities.

Plan of action

  • PoS machines are available at all PDS shops in various states, like Andhra Pradesh, Haryana and a few other others, but 100 per cent availability is required to provide the benefit across the country.
  • The availability of PoS (Point of Sale) machines needs to be ensured at all PDS shops to implement the scheme.

Implementation

  • The Ministry of Consumer Affairs, Food and Public Distribution will implement the scheme.
  • It will be subsumed under the Integrated Management of PDS (IMPDS), under which beneficiaries can avail their share of food grain from any district.
  • Such a scheme is operational in Andhra Pradesh, Gujarat, Haryana, Jharkhand, Karnataka, Kerala, Maharashtra, Rajasthan, Telangana and Tripura.

Importance of the scheme

  • The work done by the PDS  fair price shops is a lifeline for 81 crore beneficiaries across the country.
  • There is 612 lakh tonnes of food grains stored in warehouses of FCI, CWC, SWCs and private godowns for distribution annually.
  • Around 78 per cent of Fair Price Shops in India have so far been automated by installing electronic PoS devices.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

[op-ed snap] If food prices rise

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Inflation

Mains level : Low inflation in food prices is affecting well being of farmers and trend might revers soon.

CONTEXT

For 32 months running (from September 2016 to April 2019), consumer food inflation has been trailing general retail inflation.

Background

  • To understand its significance, rewind to the preceding 32 months (from January 2014 to August 2019), when in as many as 25 months the annual increase in food prices exceeded overall consumer inflation.
  • Food prices aren’t pinching as before and have also not been a hot-button issue in the current Lok Sabha elections — unlike in 2014, when they were one of the key reasons for the then Congress-led ruling alliance’s rout.
  • Bringing down retail food inflation from near double-digit to low single digit levels — even negative in many months — has, indeed, been a signal achievement of the government.

Impact of Low inflation

  • However, it hasn’t been an unmixed blessing.
  • While consumers have benefitted, the same cannot be said about farmers, for whom flat or falling prices of food and other agri produce have spelled disaster.

Reversal of trend  –

  • Meanwhile, there are also signs of a trend reversal.
  • The last couple of months have seen prices of a host of farm commodities — from coarse grains, cattlefeed ingredients and cotton to tomatoes and seasonal vegetables — going up significantly.
  • Even milk and sugar are beginning to shake off a prolonged bear phase.

Reasons for reversal

  • The immediate trigger for this seems to be drought in large parts of Maharashtra, Gujarat, Karnataka, Andhra Pradesh and Telangana.
  • But there could be structural reasons as well.

Disastrous for farmers –

  1. Cutting down crop acreages – It is not difficult to believe that sustained low produce realisations have broken the backs of many farmers, leading them to cut down crop acreages or underfeed their cattle.

2. Impact on yields – These are bound to impact yields and supply at some point. In that case, a normal monsoon alone, as forecast by the Met Department, may not be enough.

3. Long time to overcome the decline in productivity – Farmers aren’t going to ramp up output overnight, just as insufficiently nourished bovines will take time to calve and produce close to their genetic potential.

4. Return of food inflation – If structural supply constraints combine with a not-so-great monsoon, the result may well be a return of food inflation.

Way forward

  • That, on the face of it, may not be good news for the next government.
  • The mistake it should avoid is to clamp the usual restrictions on exports, internal trade and stocking, even while allowing unlimited imports at zero duty.
  • On the contrary, this is the time to scrap the Essential Commodities Act and laws allowing agricultural produce trade only in government-controlled wholesale mandis.
  • The current food inflation, if at all, is a necessary price correction that will help restore farmer confidence.
  • Improved price realisations would also create an environment to phase out wasteful government spending, whether through market-distorting minimum support price procurement operations or under-pricing of fertilisers, water and electricity.
  • Farmers deserve remunerative prices, not handouts.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Odisha to launch State Food Security Scheme

Note4students

Mains Paper 3: Agriculture | Public Distribution System – objectives, functioning, limitations, revamping; issues of buffer stocks and food security

From UPSC perspective, the following things are important:

Prelims level: SFSS

Mains level: Food Security in India


News

Odisha Scheme for NFSA Left-outs

  1. The Odisha will launch its own State Food Security Scheme (SFSS) which would be totally funded by the state government.
  2. Over 18 lakh poor and eligible people left out under National Food Security Act, 2013 (NFSA) will receive their quota of 5 kg of rice at the rate of Rupee 1 per kg .

State Food Security Scheme (SFSS)

  1. The state government decided to launch its own food security scheme after the Centre did not respond to Odisha government’s request to add additional 25 lakh poor people under the NFSA.
  2. 25 lakh beneficiaries will be provided with cheap rice under the SFSS.
  3. A total of 3,26,41,800 beneficiaries were included in the NFSA as per the 2011 census.
  4. Over 73 per cent of the target for SFSS has been achieved by September 30 and rest will be covered by the second week of October.
  5. The state government on October 2, 2008 had launched the cheap rice scheme in Odisha where beneficiaries were given rice at the rate of Rs 2 per kg.
  6. Later in 2013, the price of cheap rice was reduced to Rupee 1 a kg for people living below poverty line.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

[op-ed snap] Steps to stop the rot: on dangers of storing foodgrains in the open

Note4students

Mains Paper 3: Agriculture | Public Distribution System – objectives, functioning, limitations, revamping; issues of buffer stocks & food security

From UPSC perspective, the following things are important:

Prelims level: PDS system, Food Corporation of India

Mains level: Foodgrain storage practices in India & how it leads to huge wastage of foodgrains


Context

Storage of foodgrains inefficient

  1. Most grain in India, which is procured from farmers by the government, is stored using the CAP, or cover and plinth method
  2. The agencies build a cement plinth and pile up foodgrains in bags and then cover all this with a tarpaulin
  3. India stores about 30.52 million tonnes of rice, wheat, maize, gram and sorghum in such structures at the Food Corporation of India godowns and hired spaces
  4. It is estimated that there is a 10% loss of harvested grain, of which 6% (around 1,800,000 tonnes) is lost in storage
  5. This means that the grain is so damp and fungus-ridden that it cannot be ground and passed on to the public for consumption

Effects of eating mouldy grains

  1. Eating mouldy grain causes a variety of illnesses
  2. According to a World Health Organisation paper, mycotoxins, which are found in mouldy grain/foods, are associated with human disease and produce aflatoxins (cancer-causing), trichothecenes, ochratoxins, citrinin and other toxins
  3. Aflatoxicosis causes abdominal pain, vomiting, hepatitis and (sometimes) death after acute exposure to high concentrations in food
  4. Chronic low dose exposure to aflatoxin can result in impaired growth in children

International storage practices

  1. In other parts of the world, grain is stored in silos
  2. Here, stored grain is kept dry and aired so as to prevent fungal and insect attacks
  3. The U.S. has a permanent storage capacity nearly equivalent to its annual grain production

Status of storage in India

  1. In India, the government has considered only four silos to be sufficient for the nation’s needs — one each in Kolkata, Chennai, Mumbai and Hapur-Ghaziabad
  2. The remainder of government-procured grain is stored in shoddy conditions
  3. In order to export basmati rice, Punjab has, in a public-private partnership, built modern, temperature-controlled grain silos with a storage capacity of 50,000 tonnes — but this is not for the Indian market

Way Forward

  1. Even though foodgrain production has been encouraged and increased, there need to be efforts to ensure that grain being procured annually is stored properly
  2. There is now an abundance of steel, cement and other building materials, money and the technological know-how
  3. The government should move on a war footing to store food grains in the proper manner

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

[op-ed snap] For nutrition security: On undernourishment

 Note4students

Mains Paper 1: Social issues | Poverty & development issues

From UPSC perspective, the following things are important:

Prelims level: State of Food Security and Nutrition in the World report, National Food Security Act

Mains level: State of undernourishment in India & Government interventions for same


News

Report on food security

  1. The UN’s State of Food Security and Nutrition in the World report for 2017 has important pointers to achieve nutrition policy reform
  2. India remains lacking in the commitment to tackle undernourishment
  3. At the global level, the five agencies that together produced the assessment found that the gains achieved on food security and better nutrition since the turn of the century may be at risk

Deprivation on the rise

  1. The estimate of 815 million people enduring chronic food deprivation in 2016, compared to 775 million in 2014, is depressing in itself
  2. The deprivation is even greater among people who live in regions affected by conflict and the extreme effects of climate change
  3. The report says that child under-nutrition rates continue to drop, although one in four children is still affected by stunting

Reasons for food scarcity

  1. The impact of the economic downturn
  2. Many violent conflicts
  3. Fall in commodity export revenues
  4. Failure of agriculture owing to drought and floods

India’s efforts

  1. India’s efforts at improving access to food and good nutrition are led by the National Food Security Act
  2. There are special nutritional schemes for women and children operated through the States
  3. In spite of such interventions, 14.5% of the population suffers from undernourishment, going by the UN’s assessment for 2014-16. At the national level, 53% of women are anemic.

Way Forward

  1. The report on nutritional deficiency should serve as an opportunity to evaluate the role played by the PDS in bringing about dietary diversity for those relying on subsidized food
  2. The NITI Aayog found that families below the poverty line consumed more cereals and less milk compared to the affluent
  3. Complementing rice and wheat with more nutritious food items should be the goal

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

[op-ed snap] Nutrition security has a much wider connotation than food security

  1. Context: Only five States, Punjab, Haryana, Chhattisgarh, Maharashtra and Rajasthan, have fully executed National Food Security Act
  2. Aim of NFSA: likely to benefit 720 million people through availability of 5 kg/capita/month of subsidised foodgrains at a much lower rate than in open market
  3. Free daily meals for children, maternity benefits, including cash for pregnant women, to combat undernutrition and malnutrition
  4. Administrative steps needed: Abolition of private procurement and storage system, controlling diversion of foodgrain from godown to the millers
  5. Proper recording of procurement, storage and distribution of grains across the departments
  6. Distribution through self-help groups and gram panchayats, regular monitoring at block and ward levels
  7. Positive outcomes in the 5 states: significant increase in number of households having ration cards, improvement in distribution and consumption of food
  8. Nutrition Security: encompasses a biological approach- adequate and safe intake of protein, energy, vitamin and minerals
  9. Under PDS, poor quality of food, lacking essential micronutrients and no diet diversity, and unhygienic conditions of storage come in the way of providing adequate nutrition
  10. Measure to increase nutrition: NFSA to provide one additional coarse cereal, viz., millet along with wheat and rice

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Food Security Act implemented: Paswan

  1. Source: Food Minister Ram Vilas Paswan
  2. What: The National Food Security Act (NFSA), which envisages supply of subsidised foodgrains, has been implemented across the country
  3. Why: Kerala and Tamil Nadu have also rolled out the NFSA from November. With this, the Act now has been implemented in all the States and Union Territories
  4. 81.34 crore persons will get wheat at Rs. 2 per kg and rice at Rs. 3 per kg

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Govt to announce NFSA with Rs 1,30,000 crore outlay

  1. The planned commitment is greater than the entire allocation towards food subsidy in this year’s Budget — Rs 124,419 crore and the full-fledged rollout of the Act will begin from April 1.
  2. Some 1.8 lakh fair price shops across the country will have electronic point of sale devices to authenticate beneficiaries at the time of distribution.
  3. The quantum of grains distributed to each family will be electronically captured.
  4. The number of these shops, at 70,000 now, will increase to 5.52 lakh by March 2017.

Govt is gearing up to announce a mammoth rollout of NFSA with an outlay at Rs 130,000 crore, which will be double the number earmarked in this year’s Budget.

  1. The planned commitment is greater than the entire allocation towards food subsidy in this year’s Budget — Rs 124,419 crore and the full-fledged rollout of the Act will begin from April 1.
  2. Some 1.8 lakh fair price shops across the country will have electronic point of sale devices to authenticate beneficiaries at the time of distribution.
  3. The quantum of grains distributed to each family will be electronically captured.
  4. The number of these shops, at 70,000 now, will increase to 5.52 lakh by March 2017.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Gujarat got four extensions on Food Security Act

  1. The Gujarat govt has not yet implemented the National Food Security Act (NFSA).
  2. Instead, it had obtained 4 consecutive extensions from the Centre.
  3. The govt. has said that the list of beneficiaries has been prepared according to provisions of the Act.
  4. As per the latest extension, the State will implement it from the next financial year i.e. April 2016.
  5. Recently, a PIL petition was filed in the High Court demanding compensation from the State for its failure to implement the law.
  1. Gujarat has not yet implemented the National Food Security Act (NFSA).
  2. It received four consecutive extensions from the Centre.
  3. The govt. says it has prepared the list of beneficiaries according to provisions of the Act.
  4. As per the latest extension, the State will implement NFSA from April 2016.
  5. A PIL petition was filed in the High Court demanding compensation from the State for its failure to implement the law.
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