Stronger implementation mechanism, not Food Security Bill, can better feed hungry India

Sunday, August 1, 2010

There is no dearth of talent in Indian bureaucracy, since the selection process is highly competitive, but the problem lies elsewhere. We have some innovative food security schemes like Antyodaya Anna yojana (AAY), Integrated Child Development Scheme (ICDS), Mid Day Meal Scheme (MDMS), Targeted Public Distribution System (TPDS), etc.. But the real problem is at the implementation stage. No matter how innovative the scheme is, if it is not able to deliver it’s benefits to targeted people, due to the hurdles in implementation, it’s of no use. The intentions of proposed Food Security Bill, no doubt, are novel and guided by principles of equality and justice, but if this becomes another scheme placed under the existing implementation mechanism, it will be a disaster for BPL families.

The Food Security Bill has proposed to,
  1.  Provide 25kg of rice/wheat at Rs.3 per month. 
  2. Benefit approximately 260 million Below Poverty Line (BPL) people.
  3. Benefit the households headed by single women, HIV infected and mentally ill people, bonded labors, destitute etc..
  4. Also, Senior citizen, single women and physically challenged can eat at ICDS centers or at Mid Day Meal in schools.
  5. And policy makers have suggested that the construction workers, street vendors, rickshaw pullers, domestic workers, and all covered by Antyodaya Anna yojana (AAY) are also included.
It all sounds good and beneficial to common man. But there are hidden shortcomings under the scheme which we might end up realizing only when it fails to deliver to targeted people, as it happened in many good schemes before.
  1. It proposes to provide only 25kg of rice/wheat per month which is 10kg less than the present 35kg of foodgrains provided under exising Public Distribution System.
  2. More over, the bill, unlike what the Congress president had suggested in her note, limits itself to distribution of wheat and rice and does not take a wider view of nutritional security.
  3. While the states have already distributed more than 10 crore BPL cards, the Centre's estimate of BPL families is way smaller, at 6.52 crore. And states have to bear the burden,  if they decide to pass on the benefits to all the poor.
  4. This bill, if passed, would replace the existing food security schemes [?] and this may put thousands of BPL families in a difficult situation. (Ex: Coverage, both population wise and the variety of foodgrains provided).
  5. There are possibilities of increased food subsidies amounting to Rs. 70,000 crore per annum if the Bill becomes a law.
On the other hand, It is important to realize that, we need a law to bring the benefits like those enshrined in the Food security bill to the common man. What we need at this point of time is strengthening of existing schemes and our public distribution system. Instead of better implementation of the already existing schemes such as TPDS, AAY, ICDS, MDMS, etc the Food Security law might make things unduly worse and unnecessarily complicated.

The core problems arising out of all the shortcomings of Food security bill are,
  1. Identification of “actual” poor,
  2. Inefficient Public Distribution System,
  3. Corruption (middlemen),
  4. Widening the food basket.
Most of these core problems are faced during the implementation stages. As Economic Survey articulates, “To assume that all those entrusted with the task of administering the programme will do so flawlessly and then to blame them when the system fails, is not the mark of good strategist. For effective policy, what is needed is to take people to be the way they are and then create ‘incentive-compatible interventions’”.

There are many ways overcome the implementation hurdles, some of them can be noted here. These alternative mechanisms were suggested in many policy discussions and the Economic Survey 2009-10.

The Coupon System:
The two planks of this system are,
  1. The subsidy should be handed over directly to the households, instead of giving it to the PDS store-keeper in the form of cheap grain and then have him deliver it to the needy households.
  2. The household should be given the freedom to choose which store it buys the food from.
Suppose, the BPL household gets the subsidy of Rs.X for wheat each month. Instead of giving this by charging the household less than the market price of wheat, it should be given coupons worth Rs.X which can be used at PDS stores in lieu of money when buying wheat. And the poor consumer should be allowed to exchange the coupons with foodgrains at any PDS store rather than at a pre-allocated store.

Such a system will be more impervious to corruption. Since the store owners will get the same price for grain from all buyers, poor and rich, he will have no incentive, to turn the poor buyers away, as happens currently.

The UID Scheme:
For the full success of this “coupons system” what is needed is an effective method of identifying the poor. This is where the unique identification (UID) system, an initiative already launched, comes into play. Since UID system will come into effect in 2012, it is possible to plan on a switch to a coupons system by 2012.

The way forward
Thus, the core problems of identifying the poor, corruption (middlemen) and hurdles in public distribution system can be checkmated by such alternative system. Under this alternative  implementation mechanism, even if the government substantially cuts back total size of the subsidy, we should still see more households getting more benefits than they currently do!

The proposed food security bill, if passed, without having foolproof implementation framework would be a disaster. The need of the hour is to strengthen the existing implementation mechanism before the Food Security Bill is enacted.

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This work by Manjunath Singe is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 2.5 India License. The views and opinions expressed in this work are strictly those of the author and do not represent his employer's views in anyway.