For an Alternative Food Security and Price Control Policy

Mar 28, 2014

Each minute, five Indians die of hunger which makes 7000 each day and 2.5 million. This is the harsh truth of India’s growth story. ( The World Food Programme)

Neo liberal policies in India pursued by both the Congress led UPA as well as earlier during the regime of the BJP led NDA, have led to chronic food deficiency, hunger, and the burden of rising prices of food and other non-food essentials since the early nineties. This period has seen the planned dilution and then over the years, decimation of the universal public distribution system which existed till the early nineties. Hunger and inflation in India are today amongst the highest globally, much more than the very poor countries of sub-Saharan Africa. India has the dubious distinction of having the most number of malnourished people in the world.

Relentless and Spiraling Inflation

One of the most striking failures of the Congress-led UPA government has been its inability to check the unrelenting rise in prices of food and other essential commodities. For seven long years since 2007, India has lived with persistent double-digit food inflation, and as a consequence, high consumer price (CPI) and wholesale (WPI) inflation. In particular vegetable prices have been extremely high—the prices of onions once touching 100 rupees.

The consumer price index inflation has mostly remained above 9 per cent per annum, and food prices have risen in India even as global food prices fell in the past few months. Among the G-20 countries, India has the highest rate of consumer price inflation, including among other Asian countries. Among BRICS countries (Brazil, Russia, South Africa China and India), India has the highest price index.

Consumer Price Index BRICS Countries

Brazil

6.1

Russia

6.5

South Africa

6.4

China

2.6

India

10.7

G-20 Countries (ASIA)

Japan

0.9

Korea

1.5

China

2.6

Saudi Arabia

3.7

Indonesia

8.5

India

10.7

( IMF figures August 2013)

 

Thus the Government excuse that this is happening globally is totally false.

But for the poorer sections the impact of price rise on their lives is much more. The consumer price index for agricultural labourers (CPI-AL) has relentlessly increased. In the three years between 2010 and 2013 the increase is as much as is 34.08%.

Shamefully, the UPA government is now claiming great success in controlling inflation, at a time when the inflation in prices of food articles and foodgrains has continued unabated. The deceitful claim by the Government that inflation has fallen to 5.05% is based on wholesale price index (prices at which consumer can never procure goods) which is nothing but political jugglery to hide the actual price rise that affects the people, which is better captured by the consumer price index (which are the retail prices actually paid by the common person). In any case even as far as the wholesale price index is concerned, the rate of inflation may slow down but that only means that the prices rise more slowly not that prices have come down.

Wrongly blaming the people for rising prices! The UPA government tried to deceive the people and conceal its utter failure in checking the relentless price rise by claiming that excessive demand by the people is fuelling inflation. In a country where the expenditure of 77 per cent of the people is less than 20 rupees a day, this is a shameful assertion by the UPA which adds salt to the wounds.

In fact, the inflation is due to the faulty policies of the government like hike in prices of a range of goods and services such as petrol and diesel prices, fertilizers, other agricultural inputs, power tariffs, transport charges etc. Cuts in subsidies have resulted in cost push inflation and is having a cascading impact on food prices.

The decontrol of petrol and diesel prices, a decision aimed at increasing the "super-profit" of the oil companies, has led to continuous increase in their prices raising the cost of transport and every cost of production and retail. During UPA regime the price of petrol was raised 28 times. The decontrol of petrol and diesel prices, a decision aimed at increasing the "super-profit" of the oil companies, has led to continuous increase in their prices affecting the price of all commodities.

Diesel prices have almost tripled during the two terms of UPA, from Rs 20 in January 2004 to Rs 55 in December 2013 (Delhi prices). Petrol prices too have doubled, from Rs 35 in June 2004 to 70-plus in December 2013 (Delhi prices). The government has tried to spread the myth that the high prices are due to rising global prices, hiding the fact that there is a 40-66 per cent markup over the years on the basic price of petrol on account of customs duty, CENVANT, excise duty and various state and central taxes and 20 – 30 per cent mark up for diesel for the same reason.

The complacency on the sharp fall of the rupee vis-à-vis the dollar and other major currencies has added to inflationary pressures because India has to import oil and fertilizers for which it has to pay higher rates. The current account deficit was further accentuated by the permitted use of foreign exchange to meet the demand of the rich for luxury goods and gold imports. The Government did not heed the repeated warnings by the CPI(M) against liberalization of speculative capital by putting curbs, with the result that the Rupee depreciated principally on account of FIIs pulling out massive amounts of funds from the Indian capital market. But the Government is only catering to the speculators who make huge profits in volatile markets.

The UPA government has also pandered to the speculation and hoarding by big traders and global and national agri-business through unregulated future trading, black-marketeering, open market procurement, etc which has put an upward pressure on food prices.

Persistent hunger and malnutrition

The International Food Policy Research Institute categorizes hunger in India as ‘alarming’. The latest NSS data shows continuing endemic and widespread hunger. There are also variations across expenditure groups, between the poorest and the least poor. There are inter-regional variations as well, and the most striking aspect is the widespread deprivation across states with both BJP and Congress-ruled states performing poorly.

ELIMINATING HUNGER OR THE HUNGRY?

  • 80 per cent rural and 64 per cent of all urban households consume less than the recommended calorie norm, 54 per cent rural and 75 per cent of all urban households consume less proteins than recommended

  • the 'poorest' consuming 60 per cent of the calories and 55 per cent of the protein intake of the 'least poor' in rural areas and 63 per cent of each in the urban areas.

  • the 'poorest' urban households are only able to meet 73 per cent of their calorie and 70 per cent of their protein requirement. It is a far worse 64 and 67 per cent for rural areas.

  • The high growth states of BJP-ruled Gujarat and Congress-ruled Maharashtra are amongst the worst

Despite the government’s claims to the contrary, the average consumption of calories has come down from 2246 per capita per day in rural areas in 1972-73 to 2020 in 2009-10. The corresponding figures for urban areas are 2107 and 1946, respectively. Endemic hunger continues to afflict a large proportion of the Indian population.

Malnutrition is extremely high for all sections, and especially pronounced for scheduled tribes, scheduled castes and women. Children have relatively high levels of undernutrition and poor health according to all three measures, namely height-for-age (stunting), weight-for-height (wasting) and weight-for-age (underweight). The prevalence of underweight in children was higher in India than in 40 other developing countries, worse than in Bangladesh and Nepal. The prevalence of underweight in children in India (48 percent) is about twice as high as the average for the 26 sub-Saharan African countries.

TRICKLE-DOWN OR HEALTH MELT DOWN?

  • Infant mortality rate is 48.9 and the under-five mortality rate is 59.2

  • Almost half of India’s children under age five years (48 percent) are chronically malnourished and are too short for their age or stunted

  • One out of every five children in India under age five years is wasted i.e. the child is too thin for his or her height..

  • Forty-three percent of children under age five years are underweight for their age.

  • Seven out of every 10 children age 6-59 months in India are anaemic.

  • Thirty-six percent of women and 34 percent of men are undernourished, with a BMI less than 18.5, indicating a high prevalence of nutritional deficiency.

  • Over half of women (55 percent) and almost one-quarter of men (24 percent) are anaemic.

Rising Cost Of Non-Food Essentials Eats Into Food Budgets

Even though people’s monthly per person real consumption expenditures have increased from Rs 158 in 1972-73 to Rs 220 in 2009-10, the average calorie intake has fallen. This is happening entirely due to the faulty policies of the government that are resulting in rising prices of both food and non-food essentials like health care, education, rent, transportation and other essential services. The privatization of these services is an important factor since the gradual retreat of the State from the public provisioning of education, health care, subsidized housing and transportation, and other social services has put a lot of pressure on family budgets. People are forced by these rising prices to cut down on nutrition and food, and falling access to PDS ration only adds to the misery of the people. The result is that non-food essentials constitute 25% of total expenditure in 2010 as compared to 17% in 1972-73.

In a country where a majority of its people live at sub-optimal levels of food consumption, the argument in favour of a universal system of affordable food security is so compelling that nobody, not even the most tight-fisted fiscal expert, can refute it. Endemic hunger continues to badly affect a large section of the Indian people. In the 2013 UNDP Human Development Index, India ranks 94th out of 199 countries in the Global Hunger Index. And yet the government says there cannot be a universal system of affordable Food Security because the country has inadequate food and finances to sustain a near-universal food security system offering food for all at the same subsidised price.

There can be no greater deception than this!!

THE MYTH OF INADEQUATE FOODGRAINS

Government’s Lie # 1: Supply constraint: production and availability of grain is not enough to match the potential demand of a subsidized universal system

The ground reality is not of a supply-constrained system but excessive stock-holding! Though the agrarian sector is in crisis (growing indebtedness, rising suicides and flight from cultivation reflect this), there has been some production growth since the mid-2000s. As a result, production in agricultural year 2012-13 touched a record 255.4 million tonnes, with the estimate for the current year an even higher 263 million tonnes. Though far below India’s real potential, it is not by any means inadequate.

This translated in poor per capita terms of availability (after adjusting for net exports, seed, feed and wastage), at just 164.9 kgs in 2011, well below its 2008 peak of 171 kgs.

Overflowing granaries, empty stomachs! There has been high and rising procurement from 42 million tonnes in 2005-06 to 72.26 million tones in 2012-13 to a current level of 42.8 million tonnes (before Rabi procurement).The government has been burdened with a rising stock of food grain, well above the buffer norms, being unable to distribute the amount it procures. The current stock and supply situation is more than comfortable, set to improve after rabi. This offers a golden opportunity to argue for universalization by distributing a minimum quantum of food at affordable prices to larger numbers across the country, and in the process to expand the PDS. This has caused immense discomfort and invited ridicule for the Government, since even as the grain rots and wastes and is eaten by rats due to inadequate warehousing facilities to store the grains millions go hungry everyday.

Current stockholding is about 42.7 million tonnes, down from 77 million tonnes in June 2013 (and a record 82 million tonnes in June 2012). Offtake is 55.8 million tonnes in 2012-13, from an allocation of 56.36 million tonnes. So how have stocks declined despite a stagnant offtake and allocation?

After Indian rats, foreign cattle & pigs top government priority! The government, instead of feeding its teeming millions, or supporting farmers through procurement, brazenly exported and auctioned 10 million tonnes in one year alone (2012-13), and 3 million tonnes in 8 months of 2013-14, totaling a staggering 13 million tonnes over a 20 month period! What is this foodgrain used for? It is used by developed countries as cattle feed. Thus, instead of increasing foodgrain allocations through the public distribution system to meet its food security objectives, the government has exported grains to feed the cattle of the developed countries. Procurement too has come down substantially.

THE MYTH OF INADEQUATE FINANCES

Government’s Lie # 2: Financial constraint: a universal scheme with subsidized grain is too expensive and unaffordable since the Government does not have enough money

Empty coffers for the hungry, sops distributed to the rich! In order to increase offtake, keeping the price of foodgrain and essential items under the PDS low is crucial. In order to eliminate hunger, a universal PDS that covers every Indian and provides all essential commodities is central. The government, however, is mindlessly pursuing the reduction in food subsidy. The targeted PDS (TPDS) system, which divided the population into a small minority of households below the poverty line (BPL) and the greater majority above that line (APL) was the first step in this direction; huge reduction in subsidy for sale to the APL population by raising prices, making it exorbitant for the poor who have deemed APL by the faulty methodology that unfairly and arbitrarily segregates the hungry was the second step, and restriction of allocations to the states of subsidy-linked quotas which particularly harmed the states with a strong and near universal PDS with inclusion of the APL population as well was the third step. The three combined to reduce the food subsidy bill which did not keep pace with rising prices or growing GDP. It also resulted in the illogical and unjust exclusion of a vast multitude of the hungry and malnourished from the PDS because of targeting.

The most shocking part is that the BPL line was kept so low, that is 26 rupees a day in rural India and 32 rupees a day in urban India that in these years a vast majority of poor people were excluded from the BPL category.

The actual motivation behind targeting and high price of food in the PDS is to cut costs and reduce the fiscal deficit. Even if we were to accept the ridiculous notion that there is some sacred threshold level of fiscal deficit, there are obviously two ways of doing this, namely, mobilizing more resources through increased taxation and reduced tax concessions to finance crucial expenditures. But this strategy is inconceivable for a Government hell bent on giving so called incentives to investors, particularly foreign investors, rather than mobilising resources for meeting the basic needs of the masses.

Compared to many advanced countries, India’s tax-GDP ratio is very low (around 15% compared to 26% for South Africa, 23% Russia, 25.4% Brazil , 18.9% China, 28% USA and around 45-50% for Scandinavian countries). To hide their utter failure to mobilise required resources the government cites absolute numbers of the subsidies in current price terms without accounting for inflation. It also ignores the need to refer to the GDP growth rate.

The fact is that in most years subsidies have remained below 1 % of GDP except a single year. Moreover, during the 2000s, when corporate profits and taxable incomes were soaring, tax concessions were many multiples of this. Tax concessions to corporate profits alone have exceeded the food subsidy bill in most years. The tax sops have totaled between 4 to 6 lakh crores or between 5 and 8% of the GDP. Thus the sum estimated to support a universal PDS that is affordable and adequate is about one-third of the taxes foregone. The problem is not the availability of money, but warped social priorities and no will to mobilise the surplus and allocate it to where it is needed most.

In Modi run Gujarat

In Gujarat, the Narendra Modi Government has an equally shameful record as far as warped social priorities and in particular on issues of food security are concerned. He talks about vibrant Gujarat. He boasts about the huge investments in Gujarat. But none of those benefits were passed on to the poor. Whereas many States including Left led States had used scarce resosurce of the State to expand food security Gujarat under Modi took no such initiative. In Kerala under the LDF a much larger section of people could get grain at rupees two a kilo. But in Gujarat under Modi, BPL are denied this benefit even though Gujarat is claimed as the richest State. For 25 kgs of wheat only 13kg is given for two rupees and 12 kgs at Rs. 5.40 p. For rice ten kgs are given of which only three kgs are given at 3 rupees and 7 kgs for seven rupees. Thus for 35 kgs of wheat and rice a BPL card holder has to pay almost 150 rupees. Whereas under the Left led Governments BPL card holders have to pay only two rupees per kg for the entire allocation. What a shameful policy for a State like Gujarat .

There are higher malnutrition levels in Gujarat compared to other States including Uttar Pradesh. Child malnutrition levels in Gujarat are the same as in Chattisgarh and Orissa. A recent UNICEF report states that “almost every second child in Gujarat is malnourished and three of four are anemic. One mother in three in Gujarat struggles with acute under-nutrition”. According to the Government of India’s Children in India report (2012) infant mortality rates considered one of the basic indicators for social advance, is high in Gujarat at 44 per every 1000, giving it a low rank of 11 among States. The Chief Minister’s insensitive statement that this is because women in Gujarat diet, reflects contempt for the poor and the working classes in “Vibrant Gujarat”.

National Food ‘In’-Security Act: An Opportunity Missed

Four years after expiry of the ‘100 day’ promise, the National Food Security Act was finally passed by both Houses of Parliament, at a time when 70 million tonnes of foodgrains were being held as stock by the government, four times in excess of the buffer norms. It was indeed a historic opportunity with excess stockholding and thus no supply constraint. The Act however falls far short of the requirement, and guarantees only 5 kg of food grain per month to 67 per cent of Indian households, 75 in rural areas and 50 in urban areas. This is well below the ICMR’s 14 kg requirement. This cereals only approach is inadequate and does not ensure availability of sugar, pulses, oil and other essential items. The exclusion of a third of Indians is unjustifiable in the light of the widespread malnutrition, but the demand that only taxpayers be excluded made by the CPI(M) was ignored. Instead of a legal guarantee for a universalised right to food security there are irrational exclusions of populations who are equally food insecure and targeting remains intact but through a new mechanism which is as yet unclear though it is related to the Socio-Economic Caste Census and the Planning Commission estimates.

The UPA government is adamant about further burdening the people who are already suffering from ever increasing price rise of all essential commodities and endemic hunger and malnutrition. Given this dismal record of the Congress-led government on the food security and price front, the CPI(M) notes that the UPA Government repeatedly ignored its demands to

  • Rollback fuel price hikes, reduce indirect taxes on petro-products, reverse decontrol

  • Control fertilizer prices by enhancing subsidy

  • Universalize and expand a more affordable PDS by increasing food subsidy

  • Prohibit futures trading in sugar, wheat and other essential commodities and act strictly against hoarders

  • Undertake stringent and effective measures to control capital flow volatility and stabilize the Rupee

The CPI(M) states that only an alternate set of economic policies can ensure price stability and food security for the millions of malnourished people, particularly women and children.

Neither the BJP nor the Congress can provide such an alternative.

The CPI(M) and Left Parties are committed to give paramount importance to the issue of food security, increase food subsidy, universalizing and strengthening the PDS, controlling price rise and ensuring an end to hunger and malnutrition.

Vote CPI(M)

Strengthen the Left and Democratic Forces to ensure an alternative Secular Government at the centre.

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