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Experts advocate cash-transfer under India’s Food Security Bill

The government’s move to promulgate a ‘food security’ ordinance to give subsidized food to two thirds of India’s population has drawn a mixed reaction from experts.

While on the one hand, nearly all the experts agree that a form of food security is indeed required for the poor who cannot afford to eat, most are sceptical about whether the new bill will meet the requirement.

Instead, some believe the move, estimated to cost about Rs 7 lakh crores over the next three years, will create a huge liability that will drag down the country back to the slow-growth era of Nehruvian Socialism.

Food Security Bill would give 67% of India’s population the right to 5 kg of grain every month at Rs 1-3 per kg. It would nearly double India’s food subsidy bill from the current Rs 60,000 crore or so per year.

Most experts believe that pushing even more money into a corrupt apparatus like India’s Public Distribution System (PDS) is the wrong way to go.

Pradeep Mehta, head of consumer organization CUTS, points out that at present only a small fraction of the money reaches the intended beneficiary, with the rest being siphoned off by a racket of local politicians, corrupt officials and unscrupulous grain merchants.

He points out that according to a paper by the Asian Development Bank (ADB), only 15 per cent of the PDS benefits reach the beneficiaries.

“The Rajasthan Food Civil Supplies Minister speaking at a party workers meeting said that he will allot 500 FPS shops to party workers… All such schemes have a more important objective of running political patronage system to cater to the grassroot political satraps, and thus there is a national consensus among all political parties,” Mehta says in a group discussion on the Food Security ordinance on CUTS’ mailing list.

Payal Malik, economic advisor to India’s Competition Commission, also warns against creating vast, inefficient bureaucracies in the name of welfare.

She points out that trying to push benefits in the form of grains, instead of sending money to those who need it, amounts to not trusting people to know what is the best for them.

Many have claimed that beneficiaries may not use the money properly and their families may still go hungry under a cash transfer scheme.

“This is a very paternalistic view of the State and patronizing of the beneficiaries. It is this view that has lead to large welfare programmes by the Government with very little outcomes,” Malik points out, adding that she is speaking in her individual capacity, and not in her official capacity.

“Why not try cash transfers and work through its’ perceived problems than vouch for something that has not worked effectively for decades,” he asks.

Others, like Prasanna Srinivasan, points out that PDS reform is part of the Food Security Bill. He opposes mandating cash transfer as the method of distributing benefits.

“The Bill has provisions for ALL routes of distribution – PDS, private sector, NGO, airdrops, food stamps.. Each state has to come up with its plan and resources. It will create a market for innovative ideas. Imposing one idea on all will not work and will be like the “diktat” format we accuse govts off all the time,” he says, participating in the CUTS discussion.

He says the primary objective should be that food should reach target groups, efficiently and in a way that is amenable to public scrutiny.

However, Surendra Singh, who has served on government advisory panels, says an intermediary-based approach, such as the PDS, does not work in India.

“Expecting reform of PDS is a triumph of hope over experience. The vested interests involved in derailing any attempts at reform are too many and too powerful. We really need to operationalise the cash transfer scheme as expeditiously as possible.”

AP Sensharma, a senior officer with one of India’s biggest business groups, questions the whole logic behind giving out free food, and sees political calculations, rather than long-term planning, behind such moves.

“Why do not we take the initiative to teach fishing instead of distributing fish. Probably that could have been more sustainable. But it needs long term effort and does not yield any instantaneous political mileage,” he argues.

Pawan Chopra too says that people are not looking for a free meal, but instead for a way to earn a living.

“To my mind, MNREGA is a good idea and we should rely on it as the main safety net for the poor, and strengthen and streamline it as far as possible – so that people in need can earn and buy food at market prices, instead of being supplied food through ration shops, with attendant leakages,” he points out.

“The only exceptions to this will be 1) School going children and 2) the aged and infirm who cannot work even if they so desire. A minimalist approach with institutional simplicity will reduce corruption and lead to more efficient delivery. This is certainly not a case where any sort of legislation is justified,” he adds.

Sanjeev Ahluwalia, however, points out that combating hunger should be a priority, not just for altruistic reasons, but for practical ones.

“Hand outs for food are a fairly acceptable instrument for enhancing real incomes of those who are too poor to fend for themselves.

“There are good reasons for doing so. (1) Inadequate nutrition in the early stages of a child’s development has a permanent negative impact on an individuals capacity (2) Chronic hunger reduces the capacity to be productive. (3) As the Uttrakhand disaster illustrated, even mules turn dangerous when they are hungry, so preserving the social compact requires a minimum level of state action.

“There is no trade off between growth and food. Food is a near time need. This is a relief operation while growth is the outcome of development – a medium to long term concept.” he points out.

However, Ahluwalia concedes that such a hunger-battling scheme need not have covered 67% of the population, especially if government’s finances will be stretched by its implementation.

He too agrees with Sensharma and others that the government should trust the household to spend the money as they fit, instead of playing the father and overseeing what they spend their money on.

“It is puzzling why the government wants to distribute subsidized food rather than distribute cash via bank accounts or mobile money (do we need an Act for that also?) and let people choose how to spend it. The Ordinance identifies the eldest woman of the HH as the head for this purpose which is indeed very welcome. Cash transfer supervised by CSOs and NGOs would surely work better than the existing PDS system,” he says.

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