Deliverance from Hunger

Deliverance from Hunger

The Public Distribution System in India

K.R. VENUGOPAL
Under the auspicies of the Centre far Policy Research

Sage Publications
New Delhi Newburv Park London

T-

fo the poor wherever

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Venugopal, K.R., 1937Deliverance from hunger:

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K.R. Venugopal. p. cm.

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Contents
Foreword by V.A. Pai Panandiker
Preface
7

I I
Introduction
11

Chapter

Chapter 2 Rural Poverty and Plan Strategies Chapter 3 Poverty and the Indian Public Distribution
System

14

80

Chapter 4 A Public Distribution-cum-Delivery System for India Chapter 5 Andhra Pradesh Rice Scheme Chapter 6 Conclusion

121 168

214

Foreword
The problem of poverty alleviation, which has remained intractable for nearly a hundred years in India, is one that rightly bothers all thinking Indians. Many thinkers have, however, pointed out that its resolution is not impossible. Shri K.R. Venugopal, who has distinguished himself as the Food Secretary of Andhra Pradesh, has devoted a great deal of thought to alleviating poverty by using India's public distribution system and its existing food stocks. This study is the sum of his work over two years, helped by a leave of absence from official duties. It contains a number of policy suggestions which in the present context of structural reforms

and their impact on the poor will undoubtedly prove useful to policy planners and makcrs both in and outside the government.
Centre

New Delhi

for Policy

Rcsearch

V.A. Px Paxlxptren
Director

Apfl

1992

Preface
Very early in my career-when I wm Sub.C-ollector, Rajahmundry, in the heartland of high agricultural productiorr-I came face-toface with the highly untenable paradox of the common man living in that prosperous city often going without rice. Women queued up before rice shops with children clinging to them only to be turned away on the ground of non-availability, with despair writ large on their faces. The organisation of a public distribution system guaranteeing a certain entitlement of rice'per family per week dramatically changed this situation. This was in late 1964 but the moral of the experience has remained with me till today and has kept validating itself, which is that for the common man, evn in a land of milk and honey, there is no assurance of deliverance from hunger unless those chhrged with the task of governing him take conscious and deliberate steps to channel that abundance in his direction so that he can absorb the little that he needs. This oft-repeating experience persuaded me to withdraw from day-to-day work in the govemment to study how food supplies were being managed in the country. I obtained two years of study leave from the Government of India in May 1985 and turned to my friend Mr T.L. Sankar, Director, Institute of Public Enterprises,
Hyderabad, for advice. He guided me to Dr V.A. Pai Panandiker, Director, Centre for Policy Research (CPR), New Delhi, before whom I placed my proposal for a study of the implications of a

public distribution system for poverty.

Dr Pai Panandiker put me through

a tough session of

inquisition

by the eminent members of the faculty and of the governing council of the CPR. I survived it to join the CPR as a Senior
Fellow and spent two memorable years of total intellectual freedom writing this book. No praise can be too high for, and no words can do adequate justice to, the intellectual support and guidance I received from Dr Pai Panandiker in my work. A staunch and open-minded liberal, he encouraged me to put across my point of

t0

Delivcrancc from llunger

view freely and without inhibitiop. I am grateful to him for all the support given by him in my enddavour. To Mr Nirmal Mukarji, formet Cabinet Secretary and presently Vislting Professor at the CPR, I pwe a great deal for not only did he read through the manuscript !f this book but has contributed to its manner of presentation in maity ways. The constant encouragement and help that I have receive$ from him have been of a quality that can be only described as I am grateful to Mr Kamal Jit Kumar, Librarian CPR, who the material I needed for mv spared no effort to provide me work. And I regerve a special of gratitude to Mr R. Krishnaof India. There are fcw whose swarny, Manager, Food can rival his and I practical knowlledge of food gratefully acknowledge the that he has made by going through this book at the draft stage in complete detail. I owe

similar thanks tq Mr P. Kamalafl<ar Rao, Deputy Director, Civil Supplies, Andhra Pradesh, for his assistance in the chapter on the Andhra Pradesh rice scheme. Mr M. Raju, Joint Manager, Food Corporation of India, gave me ;nany valuable hours of his time helping me check the data base. I am beholden to Mr A. Mohan Das Moses, Managing Director; Food Corporation of India, for permitting Mr R. Krishnaswamyi and Mr M. Raju to assist me in my effort. My labours to write this book took me to several states of India and into the villages where I recelived considerable assistance from officials and other people. To alf of them I am deeply grateful" A special word of thanks is due to Miss Roma Mazumdar, Secfetary in the Department of lVomen and Child Development, who not only read the Midistrv of Human Resource me to publish it. book at the draft stage but Aind lastly and most imp , I should record my gratitude to the Government of India for me study leave to work on the problem of hunger and to publish what I have written. I may add that the expressed in this book are my owl and do not reflect those of the Government of 'India or of any of lhe state governments. It is affirmation of the strength of Indian democracy that public are not onlv entitled to their views but may even publish
New Delhi

K.R. Venugopal

May

1992

Introduction
Poverty is normally understood to mean very much more than mere hunger. Given, however, the abject living conditions of the large masses in rural India, it is obvious that at the present stage of our development measuring poverty in terms other than hunger will be far-fetched. The Planning Commission has, therefore, rightly adopted certain caloric norms to determine the incidence of poverty in our country. It is the chronic, endemic hunger, widely prevalent in the country, which is defeating all efforts to fight the other dimensions of poverty such as education, employment and health. Strategies to generate incremental incomes at the household level, such as those through the Integrated Rural Development Programme (IRDP) schemes for the poorest of the poor, are faltering essentially because hunger disables the poor households from participating in these schemes successfully. Though it appears
theoretically logical to say that employment would eliminate poverty, self-employment efforts seem to be defeated by the same ever present hunger at the household level. This is indeed a vicious circle but it can be broken by building a support strategy or sub-strategy to eliminate this hunger or At least alleviate it to a considerable extent, even as the main strategy of generating additional incomes is worked over a period of two or three years to stabilise the incomes of households at levels which would bring them above the poverty line.. One such support strategy could be a well-managed rural, public distribution system, supervised by the people themselves with the involvement of voluntary organ-

isations, which, at least to begin with, would provide the rural poor households with a part of their cereal needs at prices they can afford.

Dcliveranco from Hungcr

Such a rural public distribution system could also provide the infrastructure which is essential to deliver the nutrition component of tho minimum wages payable t0 participants in the wage employrnent generation programmes for poverty alleviation.

(PDS) should therefore be one which would provide all the fdentified and sharply targeted hungry households a certain minitnum quantity of foodgrains to met at least a part of their minirdum caloric needs at affordable priceg to render their existence me{ningful. It would also provide a furthcr quantity of foodgrains tq the households identified as beneficiaries under schemes such as those under the IRDP, to thwart hunger from eroding the very assets provided to them undei those schemes, and the wage employment programmes. Tho first component could be ivaried to discourage drop-outs from primary schools. Depending bn, for example, the number of childlen of schoolgoing age in a hoirsehold, foodgrains can be used to provide the opportunity costs tO parents who would otherwise use those children as wage-arners for the household; or to provide for pfegnant and nursing motherg to ensure better nutrition for mothtr and child. A variant of lthis could be a mid-day meal progrFmme for schoolgoing childr4n provided at the school' How-

A rural public distribution syst{m

whicl would provide food security to the family

ever, fior obvious psycho-social re{sons, that system would be bst

as a whole' Tht second component is the corgumption finanoe required for the duradon of an asset-based scheme desigrcd to lift the poor households above the poverty line till it a4hieves its purpos. Consumption finar*e is, as a concept in this pontext, the equivalent of the

entrepreneur's remuneration that is universally acceptd as a regular part of any viablo project report df a modern, small-scale, industrial gntrepreneur, but which is tQtally ignored when it oomes to creating production capacities thiough the poor, as if a hungry, unskilled, poor man's needs are not the same as an educated

entrepreneur's. Part of this remdneration should be foodgrains and the balance, cash. In the codtext of wage employment Programmes, this component will forrir the nutrition component of the mini*rum wages payable to the p4rticipants in such programmes. This strategy c|n be supported iir any year-. be it normal or one of drought-at the levels of prod$ction presently reached by the

counfy through appropriate procu$ment and distribution measurcs. Thesd would involve adjusunents i[ the presently undifferentiated,

tnMuction

13

generalised, urban-oriented public distribution system, and an additional cost which the country can and should afford, given that the issue is one of life and lingering death for nearly 40 per cent of the country's population. 'Subsidy' is no longer a respectable word these days. Modernday economists often tend,to regard the conceBts of .subsidyt and 'dole' as being synonymous. I, therefore, admit to a oertain amount of nervousness in pleading for strong subsidy support both in the Public Distribution System and in the Wage Employment programmes in favour of the poor, while calling for its elimination for the non-poor. Nevertheless, I am convinced that in the present context of acute hunger, poverty and unemployment for millions of people in the country, such subsidies are both inevitable and essential. After all, if the country could forego its central revenues in the form of reduction in import duties and customs payments so that industries and businesses may import and compete better, a similar kind of logic for inducing higher levels of nutrition, health, literacy as also rural employment generation should not be faulted. This should be viewed not so much as a concession but as a necessary condition to help our people feel part of a nation that we are still building.

Bural Poverty and Plan Strategies

Povefty manifestb itself at the hou{ehold level when its memberrable-bodied adults who can and sh{uld work-are without adequate employment and/or earn low wales when employed, making it imposible for tho household to aoiess the.minimum nee& required for survival. Whlle specialists an{ expert groups have identified the ompenents that should con{ribute to levels of living, it is agrecd by erleryone that food, clothing and shelter are basic for the sustcnance of life. These are thb core needs for mere human
existcnce.

While without the iood, energy needs for thi person are not met and the prodtrctivity in the fields,
and learning, clothing is both a minimal level. Housing provides has implications for health and sense. Thus all the three health of people. Preventive and fourth most essential comDonel along with drinking water since it If th6e five needs are.met. then tions of work, social security,

of a certain minimum level of and mental well-being of a debiliw which results affcts
and schools in terms of output and social need, even at a from the elements and in the mmt fundamental needs are connected with the health care would be the

of a minimum level of living

once sustains life and health. else such as education, condiand human freedorn--the

additional components by the UN report on Internationd Dfinifron an& of l,evels of Living-An Interim Gui&' as indicalors of the level living, will follow. I Rlfeflcd to in thE paper'Index of th of Living', by T.N. Sinha. Sec,
Rcglotlal Dlmcnslotx of Indit's
Proceedings of the Seminar held at

Nliniol, Indi!, 22--X AP'il

U.P., Lucknow, 198f, p.

1982,

by thc Statc Planning C-ommiarion,

7E1.

Rural Poverty and Plan Stntcgies

15

Full employment to those who are capable ofwork at wages that are adequate enough to enable households attain access to the first three of these five minimum needs by their own effort, and provision of health care and drinking water by the state, is the key to ensuring a minimum level of living to the people. Households that do not have access to these minimum needs can be said to be beiow the poverty line. The difference between the lives of people who exist below the poverty line and the denizens of the forest is that the latter are better off for they can do without clothing and

of the jungle take care of their nutritional requirements. In India, there is no total count of such households; there is only one by the National Sample Survey Organisation (NSSO) of individuals who live below the poverty line. Minimum per day energy requirements of 2,400 calories per individual in the rural areas and 2,100 calories in the urban areas has been taken as the standard. The Planning Commission has put their number at 271 million persons as on 1 March 1984, or 37.4 per cent of the country's population, constituting 40.4 per cent of the rural and 28.1 per cent
housing and the natural laws
of the urban population of the country. These figures, however, do not reflect poverty in its entirety even in the limited sense ofthe fiv basic minimum needs, not to speak of the longer list of househoftl characteristics which experts believe should be legitimately considered in identifying the poor., Still, to the extent that rhe effort behind these figures is to try to reflect the concept of poverty in its most primary sense-in terms

of hunger-the

nurnbers of characteristics, such as whether the household reads newspapers to determine poverty-as one expert body has done_ is really missing the wood for the trees,r at least at the current stage of India's development. poverty--in particular, rural poverty_ cannot be understood without, quite simply, understanding its primary form: hunger. Table 2.1 gives the state-wise and all-India details of the population living below the poverty line for rural and urban areas and for : Tlrc 'Interim Report of the Working Group for Evolving an Acceptable Methodology for the ldentificatioo of the Poor'. with thc Director Gencral of ahe Central Statistical Organisarion as Chairman, scr up by the Standing Committee of thc Conference of Central and $ate Statistical Orgaoisations at its I lth meeting on 5 May 1982. suggested as maoy as 28 characteristics related to poverty . tbid.

approach is unexceptionable. Listing out large

rt a

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R|.tZ'l PovcrtY

tnd Pt.n

Strrtcgtos

l7

as estimated by the Planning Commission. I do not intend to discuss and analyse here how satisfactory and dependable the methodology employed by the NSSO or the planning

both aras taken together in 1977-78 and 198H4

Commission is in estimating the number of poor peopte living below the poverty line. Its several serious shortcomings have been thoroughly and elaborately discussed by a number of authorities.. It is, however, essential that the doubts these figures cast in the
minds of those who are day-to-day observers of the poverty scene, especially in the rural areas, and those who are actually charged with the responsibility of devising schemes and programmes to alleviate poverty at the household level, are stated and recognised. The 1981&l poverty figures on which have been based the Seventh Plan's anti-poverty stratcgies have troubled many minds. In a span of six years beginning 79'1718, poverty is shown to have come down by as many as 11 percentage points for the country as a whole, especially in the context of the country's prime anti-poverty programmes. The states where, according to the Planning Commission's figures, rural poverty has come down by more than the reduction in the national average of 10.8 per cent, are:
Percentage

Assam

24.7

Gujarat Himachal Pradesh Jammu & Kashmir Karnataka Kerala Madhya Pradesh
Maharashtra

15.5'
13.8 15.3 15.7
11.3

18.9

Manipur
Mcghalaya Orissa Tamil Nadu

t7.5
17.5

23.l
12.2 zo.1 14.5

Tripura
West Bengal

Nots In Rajasthan,

howevcr, rural poverty has been shown to have gon up from 33.5 to 36.3 per cent.

a Regional Dimerrsions of India's Economic Development, proceedings of the Sminar held at Nainital, 22-2.4 Aprit 1982, op. cil., pp. 258-84, 331-48, and

35y47.

poverty during 1985, within a4d outside the Parliament, was dominated by the realisation tfrat the country's premier antipoverty programme, the IRDP, frad run into serious problems in its irnplementation. While the fovernrnent claimed that it had in the rural areas cross the helped 15.6 million poor challenged by Nilakant Rath, povrty line, these figures have who is of the view that 'less thaq 10 per cent' of this number may the statistics, doubts about the have benefited from it.' strengthened by what the then of the IRDP were success saw during his visits in Prirre Minister Raiiv Gandhi 1985 to Madhya Pradesh, Orissa fnd Rajasthan. This was reflected
in the statement made by him in ltre t-ot< Sabha on 12 August 1985' that the IRDP was being 'recast' to enable the poorest of the poor measures were subsequentlY to cross the poverty line. ing 'repeat assistance to old announced in this direction beneficiaries'. It is thus obvious that despite efforts to fight it, acute poverty still persists in the rural areas pf the country. So acute is it in certain areas that the starving ttibals of drought-stricken Jhabua and Dhar districts of Madhya flradesh resorted to looting foodgrains from the weekly markets and from passing trucks (lndtan Express,8 Juty 1985). In Orissa, the famine-afflicted people of the Kalahandi, Koraput, Phulbani lnd Botangir districts were eating 'wild leaves. mahua flowers and bakes made out of tamarind seeds which have become their traditional famine food'. Prime Minister Rajiv Gandhi was shocked whe4, during his visit to Kalahandi on 26 and 27 July 1985, Phanas funji, a woman farm worker in Amlepalli village, told him that she had indeed sold her l4-yearold sister-in-law, Banita, for Rs.40 to fed her three starving children. Conditions of acute stafvation have been reported in this srate, in 1987 and 1988 and again 1991.
1 Nilakanr Rath. 'Garibi Hatao--Can IIRDP Do it?' 2 Jqnuary l9tl5.

T.A. Pai Memorial bcture,

p.

22.

nunl Poy.ttl tnd pttn St'{/togld6

t9

these.figures, if acrepted, as the poverty figures in the Seventh Plan document. The figures in question-peiain to rural poverty (see Table 2.2). The difference between the NSS and CSO figures is very high, qojng up to nearly 1l per cent in Assam, and to as high as about 8.5 per cent in heavily populated statej such as Uttar p-radesh and Bihar. The difference between the figures based on the CSO level of consumption and those of Ahluwalia is somewhat to*er in ttre case of a few states but high in many others. ilut Ahluwalia,s assessment is sigrificantly higher in the case of Bihar and, compared to the CSO figures, significantly lower in the case of Andhra Pradesh. The overall differerrce between NSS-based figures on the one hand and those based on CSO data and Montek Ahluwalia,s on the other, is8 per cent. Atthe 1973-j4level of population, that made a difference of 46.1 million people, depending upon how poverty was looked at. Obviously, thse affect planning for the poor and resource allocations. While this is the position relating to the computation of poverty -figures for various states and the country as estimated by differeni experts and expert bodies, what do the states think of these figures in their particular contexts, based on their own estimates of povirty?

about

various authorities such as the NSS consumer expenditure survey, the consumption estimates by the Central Statistical Organisation (CSO)6 and Montek Ahluwalia,? point to the same kind of problem

In this apparently contradictory situation of .declining poverty, projected in the Seventh plan document, and its acute prevalenc all over the country, the problem of statistics deserves mention. The differing estimates of poverty for the year lnT74 made by

Kerala Stete Ptanning Board Survey

The State Planning Board carried out a Hourchold Savings _Kerala and Investment Survey in 1977-78, the sarne year in which the NSS
^_6 277.
Rcgional Dimensiorrr of India,s Economic Dcvelopnan,op.

cii., pp. 225 and

,nent Srudi.s,1977, p. !OS-

7 Montek Ahluwafia, RurA povcrty end Agricuharal performancc in IMia, World Bark Reprint Scries; Number 62 (reprinied frcm Thc iourna! of Devctop_

20

Deliveiance from Hunger

FoYGrty

hofile

tul

Models Fixed

(l9l}7tl)
Aceording to

Ftxed cxpenditure

mod.el: NSS
case 6

model:

CSO case 6
54.0 40.1 40.7 40.9 50.6

expenditure

Monek
Ahluwalia 7
39.8 39.3 58.4 35.6 46.9
49.3

Andhra Pradesh
Assam

61.6 51.0
49.2 50.4

Bihar Guiarat Karnataka

Kergla Madhya Pradesh Maharashtra Orissa Haryana Puniab Rajasthan Tamil Nadu

58.2
55.1 61.1 55.4

47.6
54.3
47 .2

52.3

69.9
32.9

64.2

49.8 58.0
23.O

26.0
18.1

26.6
41.2

23.0 29.8
48.3

63.9
56.9

lJttar Pradesh
West Bengal

64.8
55.5

India

56.5 48.5 57 .4 4't .6

4.3
66.0
4't .6

also conducted the 32nd round

{f

ture survey. The Kerala holds, found that 68 per cent df the population in its rural areas

its household consumer expendi. which enumerated 7,880 house-

was adoPted. For the same yeir, the Planning Commission used the povJrty line of Rs. 65 per (apita per month at 1977-78 prices corr;sponaing to a minimum daily calorie requirement of 2'400

per p;rson in the rural areas. Table 2.3 gives the compararive figures for rural Kerala as derii'ed from these various surveys' -Just a year later, after obslrving about 18'000 households in rural Kerala, a survey by the tJnited Nations Research Institute for Social Development found {hat, on the basis of average household incomes, beiween 70 and B0 per cent of the households lived below the poverty tine, thus confirming the survey results of the
State Planning Board.*
Regionol Dimewions

of

India's Elonomic Development'

op cit ' pp

759-6O'

nural Poverty end nen Strategies

21

. TABLE 2.3 People Delow the Poverty Lina: Kerala

Seventh Plan

(Rurd)

(lyn-?t)

Planning Commission
bevlsed

documeht

figuret)

B oard.

Kerah Smte Plonning : H ouse ho ld S avings

qnd Investmenl Survey

47

.4

The position in the north was not very different. The 1981 Himachal Pradesh Government survey to identify families below the poverty line in the rural areas of the state adopted Rs.3,500 per year for a family of five as the norm. The. survey, which covered all the 69 development blocks of the state, revealed that according to the 1981 census, 42.78 per cent of households lived below the povrty line. This is 14.98 per cent higher than the 27.80 per cent shown in the 1977-78 Planning Commission figures based on NSS data. Here, one will also have to take into account the fact that the annual income per family adopted by Himachal Pradesh survey as the poverty norm in 1981 was Rs. 3,500, a figure actually applicable to the year ly77-:78, with implications of the intewerring
inflation.' A third and final illustration is that of India's most populous state, Uttar Pradesh. The Perspective Planning Division of that state estimated poverty figures relating to the year 1977-78 using the Planning Commission's norms but with a poverty line per , capita monthly requirement of Rs.67.75 at Lg76-77 prices (as against the all-India level of Rs.61.80), the difference being a result of the variations in the consumption basket and price levels. This estimate placed rural poverty at 57.A6 per cent in rural areas, against the Planning Commission's figures of only 49.8 per cent.'o According to the Planning Commission as on I March 1984, the percentage below the poverty line in the rural areas of Kerala was 26.1, while in the urban areas it was 30.1. The composite urbanrural figure was 26.8 per cent. Athiyannool Block, with its headquarters at Athiyannoor which is at a distance of about 35 km from Trivandrum, has a population of 1.78 lakhs (1981) with 34,707

'
'o

Ibid., pp. 801-02.

lbid..

D. 363.

Deliverance from Hungcl

households. Accordins to its Athiyannoor is not by any

Development Officer (BDO),

the poorest block in the state. In

accordins to the BDO and the President of the Kerala Villase Extension Officers Association. in 1986. there were 35 other Blocks that were more backward. Households below the povert5f line are identified in the block in order that a selection of the poodest 600 can be made each year for coverage under the Integrated Rural Development Programme (IRDP). This is done through a Base Line Survey which records in great detail each household's adsets, income through all sources, number of members, number of working members and their wage incomes based on the annual of days of employment available to them, and the rate of daily wages. This house-to-house survey is carried out by b officials and supplemented by

terms of relative

t! determine actual incomes. The Athiyannoor Block survev in Februarv-March 1985 showed the number of with annual incomes of below Rs. 3.500 (the official all-India line figure in use prior to 1986) to be 17,346. Providing fof the growth of households at the same rate as Kerala's , which is an annual compound growth rate of 1.77 per cent, the projected ho[seholds in the block would have been around 37,230 in mid-1985. Thus a house-tohouse enumeration based on a detailed survey conducted by the block staff showed the number of households falling below the poverty line to be 45.60 per cen! of the total population. Now this is not the whole story because, *hereas the block authorities were determining households living bbkrw the poverty line on the basis of an annual income of Rs.3,500, the Planning Commission's poverty line figures for 1981-841 were derived on the basis of an annual household expenditure of Rs. 6,ztoCr. The fietd agencies in the block had no knowledge abciut this latter figure. They did not know, even in mid-February 198$, what annual household expenditure or income currently constifuted the line that separated the poor from the non-poor. The resirlt was that household surveys for purposes of identifying benefigiaries for the Integrated Rural
enquiries among neighbours annual household income of Rd.3,500. Obviously, at Rs.6,4fi), the Athiyannoor Block figures fbr poverty would have been considerably more than 46 per centl Nevertheless. allowing for some
Development Programme were $eing conducted on the basis of an

Rural Poverty and Plan

Strutegies

2g

dent of the Village Level Extension Officers' Association of Kerala," an overwhelming majority of the blocks in Kerala w.ere
either at the same level of development as Athiyannoor or worse. Yet the Planning Commission's poverty figures for rural Kerala were only 26.1 per cent of the population.

degree of exaggeration . set off against the inflation factor from Rs. 3,500 to Rs. 6.400, a poverty figure of around 46 to 50 per cent is inescapable. According to the Athiyannoor BDO and the presi-

Chikballapur Block
Chikballapur Block in the Kolar district of Karnataka is classified by lyengar and Sudarshan as a 'developing' district and as being different from backward and very backward districts. Here, too, a similar household survey conducted by the block authorities in
1985-86 showed that as against a total number of 22,365 households, those with annual incomes of less than Rs. 3,500 numbered 10,973,

the percentage below the poverty line being 49. The Planning Commission's poverty figures for rural Karnataka, however, were 37.5 per cent of the population. Here again the households were surveyed against an unrealistic income figure of Rs. 3,500 when it should have been at least Rs.6,400. Field-level figures are not always exaggerated. For years now, the BDOs and their staff , wbo have to take knocks from the public at the field level, have known that such exaggeration cannot be to their advantage. Whatever the figure, beneficiary households in a block under the IRDP cannot exceed 600 per year. Thus it is actually disadvantageous for a BDO to inflate lists and invite the discontent and wrath of more and more people in the context of his severely limited resources. Obviously, then, there are serious gaps in the estimation of the extent of poverty as rneasured by the central agencies and those at the field level. The attempt here, however, is merely to highlight the differences that exist in understanding the sheer size and intensity of povertf in its primary form. Even at 271 million people, poverty is a gigantic problem. In understanding poverty,
rr They were interviewed
1986.

in the Block Office, Athinyannoor, on 22 February

'T

Deliverance from Hunger

it means to be poor nurnbers are less important than of our people in rural areas in real-life terms. For the nce. But it is equally import' povrty and hunger are facts of poverty can be when measured ant that others realise how ger is the cause of all other in terms of hunger and how manifestations of poverty. during field visits in 1985 This study is based on data and 1986 to selected villages in the states of Bihar, Uttar Pradesh, Kerala, Karnataka and Andhra fradesh. The villages visited were Hasanpur and Dakraphool Naptfrolia in Bihar, Bindawa in Uttar imalh-Tenmala and Modaravoval in Pradesh, Vizhinj am,

halli villages in Karnataka and Kerala, Kabbina Mahadevapatnam, Island Kolavennu, Valivartipadu, Pradesh. Polavaram, Manur and Varli in designed to elicit information The villagen were asked ting the main crops and the on, among other things, costs of produce; profitability of agriculprices at which farmerb sold ture; wages for agricultural laborlr; number of days employment in
a year; relationship between landlprds and the labour force; between

the farmprs and the traders and petween the farmers and government agencies and officials, and the relationship between the poverty groups and government pfficials and ageniies; thb state of comrption, its levels, modes and magnitude; migration; the implementation of antipoverty progr{mmes as seen from the viewpoint of the target groups: what, accqrding to them, were the defects and what did they consider to be fthe right way of implementing the system functions; what a poor rural household consumes by way of various items of food ion posed was, how often in a and what thev cost. A basic And under what circumstances? year do the rural poor go It would be fairly accurate toi describe the rural people as the they be landowning farmers or 'ruled' in this per cent of the rural labour in dispossessed rural labour. on the lands of the farmers: the this country eke out a living t though in the 'rural devellandowners are the primary

Rural Poverty and Plan

Stlategies

25

tackle

it, the relevance of a public distribution system to

rural

areas and its effectiveness in urban areas; and on how people could

be involved and made participants in decisions affecting them. The topic discussed with them most was the magnitude of the problem of hunger and the reasons for it (see Table 2.4).
T,{BI^E ?.4

Mrgnitude of Hunger for lnbour Househdds and lts Causs

Village

No. of days on which all or sone members of the labour households may go to bed. hungry in a year
60 to 90 days up to 90 days up to 150 days

Reason

Uttar Pradesh
Bihar

Bhindawa

Lack of employment in the rainy season Lack of employment Lack ofemployment

1. l{asanpur

2. Dakraphool
Naptholia
Kerala

1. Puravimalal nmala

Nil

(The tribals, while not working on the

land encroached upon by them or on wage employment, go idto the forest collecting honey
etc.

(tribal village)

2. Modaravoyal

90 days

3. Vizhinjam {fishing villagc)

up

to

180 days

Lack of,employment in June, July aod August being the ralny season. Because of uncertain weather in th sea and some times no catch resultiog, even when the sea is calm. Lack of mployment

Karnataka

l.

KabbinayanapalyaSeegehalli villages Kolavennu

60 to 70 days

Andhra Pradesh

l.

Negligible

.2. Valivartipadu

26
Table 2.4 (Conrinued)

Dellveranca f rom Hungor

Village
tnembers

of lhe

labour ho seholds
go to bed tn a yegr

3. Medapadu

4.
5.

Mahadevapatnam Island Polavararn (mostly among wornen)

30 days

Lack of employment

6. Marur 7. Varli
Noter: 1. In villages shown
as
a

80 days 100 days

Lack of employmnt Lack of employment

, the labour households reported going

in the drought-prone Anantapur diswent hungry up to 18{} days in

hungry for l0 to 15 days in 2. In Marur and Varli villages,

a year.

trict, in years of drought these

The Athiyannoor BDO in Kerdla felt that in his block, up to 40 per cent of the families probably go hungry for up to 100 days in a year and the fishermen householdq up to 150 days. The Chikballapur BDO, Karnataka, stated that in fris block, between 20 and 25 per cent of the people went hungry for up to 80 days in a year. On these occasions, they try to borrdw money from others; otherwise they just starve. The Tahsildar of Chikballapur, however, felt that this figure would be only 10 pet cent of the block's population. Whatever the figure, acute hunger and indebtedness amongst the poor was obvious. Rural labour holds lack of nt responsible for the households going hungry (Table 4). Table 2.5 gives the number of days of employment to most of the rural labour households-both within and the village-and the average daily wages in the villages The total annual earninss of the labour households, and for men, and children separately in each of the 14 villages are given Table 2.6. The total picture of employment in a year, its total

Poyerty and tha tndian Public Distribution

S'.stam

8:t

rural areas with special attention to remote and inaccessible areas, so that the public distibution system becomes supplemennry o the poverty alleviation programme' . As we have seen earlier in this study, a population ranging around 270 million has been going hungry continuously for the past several years because of unequal distribution. Given the.lack of puichasing powir, the stimulation of food consumption on the part of the poor or the equitable distribution of food between all can be achieved only .through the instrumentality of a PDS that is specifically geared to serve those who cannot compete for their food in the so-called open market. When people are so poor that the household wages of some of them are as low as Rs. 1,335 per
annum (see Table 6 in Chapter?),they arc automatically excluded from the purview of the'free' market. A very large percentage of such poor in India-54.1 per cent in t972-73, 51.2 per cent in 1977-:78 and 40.4 per cent in 1981-84 lived in rural areas, the very areas where all the country's production takes place. Dr Edward Saouma, Director General, Food and Agricultural Organisation (FAO), explains the FAO view on food security thus: 'the ultimate objective of world food security should be to ensure that all people at all times have both physical and economic access to the basic food they need.' What is true of world food security is also true of household level food security. And in order that the basic point about food security at the village and household level may not be missed, the Director General added that, 'Ironically food shortages are usually most acute in rural areas, where the majority of the world's population, and its farmers live." A few hundred million people in the country have been acknowledged in the Plan documents as not obtaining even their minimum nutritional requirements. The Plans also recognise that a PDS is a permanent feature of their development strategy. The Seventh Plan document outlined the objectives of the PDS in the development contexti

| 'Food Security for a Safer World' W.F.D./2:/83-World Food Day, Food and Agricultural Organisation of the United Nations, Rome. See background papers for the FAO/AFMA/FCI seminar, 23 to 25 April 1985, Vigyan Bhawan. New De lhi-

tbid.

u
The public distribution the strategy to mntrol pri an equitable distribution of public distribution system of action in the new 2G
this expansion will be in the remote and inaccesible
svstern becomes

Dcliverance from Hunger

will be a permanent feature of reduce fluctuations and achieve goods. Expansion of the beenmade an important point Programme, the main thrust of areas with special attention to
so that the public distribution to the poverty alleviation proGovernment will confine its namely wheat, rice, sugar, soft coke and controlled cloth, of the public distribution system distribution system will be periin consultation with the State ures taken from time to time,
essential commodities to the machinery has been created

gramme. To this end the responsibility to seven imported edible oil,

which would mnstitute the and the working of the pub odicallv reviewed bv the Governments and corrective to improve the supply of consumers, for which the at the Centre like the

council on PDS.3

These obiecflves make it that, like other major Plan objectives the planning, sustenance supervision of the PDS are essentially the respgnsibility the Central Government. This is not. however. to minimise the operational role of the governments of the states and territories in this task. Central to the objectives of distribution of essential goods, poverty alleviation and of prices are the poor people of the countrv. Fluctuations in conditions and mnsequently in prices too, affect the poor more than the rest of societv for. as seen earlier in our study, indebtedness renders them defenceless against hunger. A strategy for the country should include (a) a public system airhed at srving those identified as poor; and (b that it should necessarily span the rural areas, Inherent in these requirements is a third need, (c) that the essential goods needed the poor should bear a relationship to their purchasing . In other words, the prices fixed for the essential goods should such that they can be afforded by the poor pegple for whom are intended.

I For the role assigned to the PDS Chaptcr 20, Volume II, Sventh Five Commission. Ncw Delhi. October

the dcvelopment pftxcss, soc page 4O3, ear Plan, Government of India, Planning

Poyefty

tnd the tndian Public Dlstrtbdion

System

Es

A fourth need that is self-evident is (d) that the quantity of the commodities that are made available should be able to meet, if not the entire requirements, at least a part of the requirements of the needy households, so that the system is meaningful to the beneficiaries in terms of household satisfaction and the desired effect on prices. While there can be little doubt that in order to be meaningful, a PDS should make available to the consumers not only the seven comrnodities for which the centre has taken responsibility, but also other commodities like pulses as well as what are considered essential food ingredients such as chillies and tamarind, salt, tea and matchboxes, to mention a few. Given the current state of
development of the PDS in the country,

it would

be quite an

achievement if it starts supplying consumers all over the country their essential cereal needs such as rice, wheat, coarse grains and kerosene on a regular basis. At the moment the system is not performing even this limited job satisfactorily. Outside the metropolitan cities of Delhi, Bombay, Madras and Calcutta and a few others, neither in the urban nor in the rural areas are foodgrains like rice and wheat made available in a sustained manner to the consumers. The exceptions are the states of Kerala, Tamil Nadu, Andhra Pradesh and, to a certain extent, West Bengal. Gujarat and Karnataka have also recently initiated measures to distribute foodgrains in rural areas. These states will be discussed separately elsewhere; meanwhile, all discussion of the distribution system will refer to the PDS as it exists in the remaining states, which constitute the bulk of the nation. As far as regular supply of foodgrains is concerned, in states other than Kerala, Tamil Nadu, Andhra Pradesh and Bengal, and now Gujarat and Karnataka, the fair price shops in rural areas exist mostly on paper. The total number of fair price shops in the country is officially reported as being 337 ,684 at the beginning of 1987,n but most ofthose shown as existing in the rural areas are not really there, in the foodgrains context. While it is not possible to assess their precise number, it would not be very inaccurate to presume that perhaps around 200,000 of these fair price shops do

not exist in reality, in the sense that they do not distribute foodgrains. In India, the PDS today has reallv come to mean a system

I Government of India, Ministry of Food and Civil Suppties, Department of Civil Supplies, New Delhi.

Dollve?anc from Hunger

that distributes sugar rather thAn foodgrains, even though sugar has no relevanc to an overwh$lming majority of the rural poor. Even in the case of sugar, what happens geqerally is that the .fair
price shop dealer' only brings sulh quantities of sugar as the village pradhan or sarpanch or mukhija or the headman directs him to, and sells it to such consumers as lnay need them, on the instructions of these viltage leaders. In any qase, the transport margins and the retailers' margin that the Govefnment of India gives to the sugar retailer is so unrealistic and inldequate that no dealer can really transport small quantities of su$ar from the taluq headquarters or other central places where the g{downs of the FCI or state agencies are located, all the way to the villages and sell them equitably to all consumers at quantities and prides notified by the Government of India. It is now well known that lthe.sugar meant for distribution in the villages quite often gets sold in urban areas. No fair price shop in a village can exist viably on {he basis of the allotted quantities and profit margins that are perrhitted on sugar if it has to depend upon sugar sales alone. Aside from foodgrains, kermgne oil is by far the most important essential commodity for which lhe central government has taken the responsibility of supplying 1o the villages. However, it is not always available through fair prifre shops or retailers nominated by the government or even at pric{s notified by the authorities. This is because many districts in thp country do not have wholesale kerosene oil dealen at the block or taluq headquarters. Considering the small quantities of kerosend that are made available to rural households (normally about 2 per month per household), no private wholesaler finds it to invest large sums of money towards tankage at the or taluq headquarters level. So the retailers are forced to very long distances from their villages to secure the kerosene for their shops, which makes the business unviable. , they either indulge in malpractices such as charging high prices or they allow the kerosene trade to be plied by 'entrepreneurs' whose activ-

Povetty and tho tndtrn Public Disulbution

Systern

a7

in rural areas at prices notified by government: the difference is frequently as much as 30 to 50 paise per litre.'

As far as imported edible oil is concerned, its non-availability in rural areas is more the rule than the xception. The quantities allotted by the centre to the states are so small-it would never measure up to even 1 kg per capita, per year-that the balance of administrative convenience for the authorities in the states lies in these oils. being retained and distributed at the state headquarters or in a few important urban centres of the state. Sending them to the rural areas would actually be inviting trouble since there is so little to distribute. It is not unfair to say that a rural household may peihaps get one kilogram of cooking oil in the village fair price shop once in three or four months. There have been times when the situation has been a little more comfortable, but only very
occasionally.6 It is thus clear that the uncertainty of supplies induced by a total lack of relationship between people's actual needs and supplies'

coupled with the lack of infrastructure facilities and unrealistic rates of margins allowed to fair price shop dealers by central and

state governmnts, have rendered the public distribution of sugar, kerosene and edible oils in rural areas extremely ineffective.

It

should be stated at the outset that procurement is fundamental

t The basic ceiling selling pric of keroscne in bulk at storag points was mad uniform from the financial year 198H4. This pric, which was Rs' I '644.93 pcr kilolitre in that year, was revised to Rs. 1,E21.93 in March 1985' It was further revised on 5 February 1986 to Rs. 1,956.93 per kilolitre. Thc prices notified by the various state Sovernmnts for ihe sale of kcro6cne in the retail outlets vary, going up to Rs. 2.65 per litre in 1986. In truth' however, owiog to the problems of infrastructur, among others, keroscnc gets rold at riuch higher prices in rural areas. 6 Of lhe edit'le oils impond, govemment allocatcs roughly 50 pr cent to thc stat governmcnts for us through lhe PDS. The imPorts by the Strtc Trediry Corporation of India during the tirst threc years of the Sixth PIan pariod have bccn around a million tonnes, but incteased to 1.4 million tonnes Lr 1983-&4 and to 1.6 million tonns in 1984-85. Of this, the Vanaspati industry utiliscd betwceE 0'5 and 0.7 million tonnes while th states'PDSs received betwecn 0.4 and 0.7 minion tonnes during the samc period.' In this context, it must be pointed out that oftn thcrc can bc gaPc bctwcn whst the Civil Supplies Ministry allots to a state and what is actually madc availablc at the ports by the STC of lndia, bccause of problems of movcmcnt.

88

Deliverance from Hunger

to a PDS. A PDS does not merely the opening of fair price shops or running delivery To ensure equity in the distribution of essential goods, it is to plan for the procurement of a specific quantity of f and its distribution to a specific number of targeted households. This quantity will have to include a back-up buffer stock t( continuity of supply. This, in turn, would presuppose a level of agricultural production at the national level includine le surpluses. By far the most enligh policy that the government has pursued in the agricultural in recent years has been to assure the farmers cultivating rice and wheat a floor price or a support price. This has been done throulh the mechaniim of the Agricultural Prices Commission, which was set up in 1965 and which has now been redesignated as the dommi for Agricultural Costs and Prices. Tafting advantage oF this price assurance, the Indian farmer, whether in the north or the south, has. within the limits of the agro-climatic conditions avAilable to him. done his best to improve production. At degrees of efficieniy, the Food Corporation of India (set up in 1965), as also the other procure-

western UP and Haryana, as allo a combination of price support and procurement fforts by such as Andhra Pradesh and Tamil Nadu, have built up ial stocks over the yeats. In July 1985, they stood at a 29.1 million tonnes; on July 1986 they were 28.8 million Table 3.1 gives the production of cereals for all the major states of India from 1973-:74 to 98!84 while Table 3.2 gives the quantities procured foi the period. It can be seen from these two that out of a total production of 119.07 million tonnes of in Punjab during the years 1973-74 to 1983-84, the quantity was 61.90 million tonnes. This is as rtruch as 52 per cent of total production. In the case of Haryana, the procurement in these years taken together was 17.20 million tonnes against a of 53.26 million tonnes. which is 32.29 per cent of the . In Uttar Pradesh the quantities purchased by the agencies amounted to 18.78 million tonnes against an production of 21L.27 million tonnes. Here the proportion of t to production is only

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Povefty and the tndi.n Pubtic Distributlon

Sfstem

91

8.9 per cent. Basically, in all these three states the'procured'

quantities are really the quantities 'purchased' under 'price suPport' operations by the state agencies. The large marketable surpluses generated by the green revolution have flowed into the government kitty without any effort. On the other hand, the productian figures for Tamil Nadu and Andhra Pradesh, when examined in conjunction with their population figures, show that though their per capita production of foodgrains was less than these three states or only as much as certain other states, by efforls involving a certain amount of compulsion against the farmers and rice millers, these states too have procured substantial quantities of cereals either just for the central pool or for both the central pool and to meet the needs of their public distribution systems. A look at Table 3.3, which gives the production, population and per capita production of foodgrains in the 15 major states of the country for a cycle of three years-1981J2, 1982-83 and 198H4which includes a good production year (1981-82), a very bad

drought year (1982-83) and an excellent year of production (1983-84), shows the importance attached to procurement in certain states compared to others Despite a low per capita production of 147 kg,90 kg and 117 kg during these years, Tamil Nadu, which has always displayed a deep concern for the poor and recognised the need to channel
foodgrains through the PDS to all areas including the rural, did not abandon its procurement efforts even when production plunged during 1982-83 to a mere 90 kg. It was in a far more difficult position vis-d-vis the per capita availability of cereals than most other states in all these three years; yet its proc'urement was 1.729 million tonnes compared to the 1.267 million tonnes attempted by Madhya Pradesh. The latter lends itself to an even more educative comparison with Andhra Pradesh. Thes two states have approximately the same levels of cereal production and similar population levels and hence more or less the same per capita availability, though in terms of production, Madhya Pradesh was significantly better placed in

198!84. However, their efforts in procurement do not reflect

to 1983-&1, Andhra Pradesh procured 4.30 million tonnes for the central pool alone, while Madhya Pradesh procured 1.267 million tonnes. Further, Andhra Pradesh also made very substantial purchases in the open market at marginally higher prices than the levy prices fixed by the Government of India.
theSe similarities. In the period 1981-82

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Poverty and the tndian Pubtic Distribution

System

93

The percentage of procurement to production in the six major states of India that contributed to procurement in the period 1g7T'14 to 198!84 is given in Table 3.4.
TABLE 3.4

hoportion of Procurcment to Pmduction Dudng f97l'74 to

Production

1989

Procurement Percuttageof
(in

(in million
tonnes)

million tonnes)
61.90 1',l .20 10.60 18.78 3.98 4.05

procurement tb

production
52.00 32.29 10.30 8.89

Punjab Haryana

119.07

)J.

ZO

Andhra Pradesh

1V2.93

Ultar Pradesh
Tamil Nadu
Madhya Pradesh

ztt-27
70.56

5.&
3.96

to2.24

Apart from the differences emerging from a comparison of Andhra Pradesh and Tamil Nadu on the one hand and Madhya Pradesh on thC other, Table 3.4 also shows that over the years, Andhra Pradesh made greater efforts at, and achieved better results in procurement than even Uttar Pradesh. On the whole, however, India has been registering higher and higher procurement, whether through price support operations or through the procurement efforts of some of the states, with the result that a procurement of 10.69 million tonnes achieved in 1975-76, gradually rose to around 12 million tonnes in the following five years (the exception b eing 197718). The year 1981-82 saw a jump to L4.10 million tonnes, the next year to nearly 15 million tonnes and the year after that to a still higher figure of 16.17 million tonnes. A fall in the production of cereals in 1982-83 by as much as 4 million tonnes compared to 1981-82 not only did not
affect procurement, the procurement that year actually went up by a little less than a million tonnes. The year 1984-85 saw a sharp fall in the production of cereals compared to 198!84, the drop being a very substantial 5 million tonnes, but proqrement rose by 3 million tonnes compared to the previous year! Thus, regardless of substantial decline in cereal production in certain years, its procurement by the government has been constantly going up. In 1985-86 it went up by yet another million tonnes to 20.04 million tonnes. Details of the state-wise and all-India off-take of cereals fiom

the Central Pool tor the years I97T74 to 198H4 are given in Table 3.5.

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62

Poverty and the tndian Public Distribution SyEtam While thanks mamly to growtng production in Punjab, Haryana and Uttar Pradesh, and to some extent in other states like Andhra
Pradesh and Madhya Pradesh, arrivals in the hands of the government increased steadily and continuously, there was no significant increase in the cereals that went into the 'public distribution system' until the end of the 1970s. The 10 rnillion tonne mark in releases to the PDS from the central pool was not attained until 1979. Fiom 10 million tonnes in 1979, it made a big leap to 13.87 million tonnes in 1980 but subsided by 2 million to 11.85 million tonnes in 1981. It recovered somewhat to reach 13.06 million tonnes in 1982, and in the acute drought year of 1983 reached a peak of 14.65

million before registering a sharp fall by 2.47 million to 12.19 million tonnes in 1984. Not all these quantities, however, went directly to benefit consumers through fair price shops. A very sgbstantial part, 4s far as wheat was concerned, really went to roller flour mills. In other
words, these figures are a total of what went into fair price shops, to the defence services and other armed forces of the union, the roller flour mills and employment programmes such as the Food for Work Programme (FWP), the NREP and the RLEGP. Since a substantial part of it went to roller flour mills, it is essential to guage exactly how much of the central pool allotments went to them. This is important because wheat products such as maida and sooji made from the wheat allotted to roller flour mills from the central pool at subsidised prices, were hardly ever controlled by

the state governments and distributed through the PDS. Such control, where it did exist, was confined to very few states. As a result, the roller flour mills obtained wheat from the central pool at subsidised prices and sold the resulting wheat Products in the
free market to consumers and buyers like biscuit manufacturers at prices decided upon by the millowners. ln other words, to a very large extent the quantities of wheat sold at subsidised rates to

roller flour millers benefited businessmen rather than consumers in the price context. ft would therefore not be correct to include these quantities undei the head 'public distribution' as the Bulletin on Food Statrst cs does. Actual figures of distribution to the state governments from central pool stocks and allotments made to the roller flour mills between 1973 and 1984 are given in Table 3.6. It is clear from this table that since 1977, roller flour mills drew

96

Deliverance from Hunger

i
Ccntml Pool Atloarcnt lo Rollcr Flour

rnd Stcte GovernmenG (19L19t4) (in millinn tonnes)

Allotment
roller

Total

distibuion
Pool

from Cenrrol

to flour millt
2.11

Actual distribution lo stste government

from central pool

7.69

LC73

tn4 tn5
1976

9.80
8.51

r977

.1n8
1979 1980
1981

9.18 6.82 9.30 8.74

10.04 13.87 11.85 13.06

r.24 r.26
1.42

7.n
7.92
5.,10

2.76 3.30 3.47

6.54

5.44 6.97
10.23 8.77 9.79 11.65 9.03

3.U
3.14
3.27

1982
1983 1984

t4.&
t2.r7
Statistical Panoratna, Food
Statistics

2.9
3.14

Sources:

l.

2. Bulletin on Food

Statistics, Ministry of

tgu.

of India. New Delhi. 1984. Directorate of Economics and Govemment of India. New Delhi.

3. Thc Food

C-orporatiron

of

Ncw Delhi.

average a little over 3 tonnes of wheat a vear. bringing the distribution of to the PDS, including grains meant for the defence forces employment programmes, to a quantity ranging from 5.2[0 tonnes in 1976 to I 1.65 million tonnes in 1983. Table 3.6 with appropriate adjustments, that between 8 million and 11 tonnes of foodgrains have gone into fair price shops all over the muntry since 1980, as against 5 million to 7 million in the 1970s. . The state-wise and all-India from the central pool through fair price shops alone for the 1980 to 1983 can be sen in Table 3.7. During the Sixth Plan period ( 980-85) thdre were two years of high off-take: 1980 and 1983. year 1980 was also one of high off-take under the FWP, with to roller flour mills being the highest for any year between 1 and 1984 at 3.64 million tonnes. Despite such a high off-take the central pool, the actual quantity that went into the fair shops alone was only 7.888 million tonnes. The year 1983 described by the then Union

at an

Povarty and the tndian Pubtic Distribution

Sqstem
hcc
Sbops

97

rerI-s

3.7

Actual OIT-take of Cereds Throqh the Fdr

(f9gH3)
tonnes)

(h tho$and

t9w
Andhra Pradesh
Assanr
270.1 333.0 455.8 244.5 45.4

19E1
428.1

19E2

Bihar Gujarat
Haryana

342.0 323.9 298.1

22.7
21L.4 1,7L3.5
457 -2

Karnataka
Kerala Madhya Pradesh Maharashtra Orissa Punjab Rajasthan

52.'
819.0 779.4

En.9
205.4

t,lzt.4
63.3

6.6
165.2 84.3

93.8
178.7 340.7 573.2 1,508.5
572.O

Tamil Nadu

Uttar Pradesh
West Bengal

1,M3.7

l,@4.9
424.5 151.9 22.1

Delhi
Jammu and Kashmir

.743.9
36.1

Himachal Pradesh All-India including other

states and Uni,on

49E.2 1,184.4 358.0 414.0 5m.4 739.9 318.7 196.7 31.7 73.3 181.3 257.5 1,231.0 1,495.5 415.7 394-2 1,051.9 964.1 153.1 353.9 51.9 5Z.O 190.6 83.3 165.6 381.0 624.5 729.3 2,341.1 2,444.0 6{b.1 576.2 t76.1 232.2 53.3 57.4
9,378.6
t1,M7.2

Territories

7,888.7

8,1@.4

Sour,cc: Food Corporation of India, New Delhi.

Food Secretary as 'the drought year of the century'. This year saw the largest off-tak ever in the fair price shops at 11 million tonnes: an all-time record for drawals by fair price shops from the central

pool till 1985. Starting with the laudable promise of food for all. over time plannrs diluted the role of the PDS to one of mere interventionist containment of prices in the open market, a market that was largely irrelevant to the country's poor. At the beginning of the Sixth Plan, the planners made a positive move by way of a statement regarding 'equitable distribution' of essential commodities, 'especially in rural areas, where productivity and wages are low' by expanding the PDS 'than has been done so far'. Against the background of FAO's objectives of food security, the role assigned by planners to the PDS and the four touchstones identified for
evaluating it, the figures given in Table 3.8 make interesting reading.

Providing a picture of what the PDS did through central pool

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Poverty and the tndian Public Distribution

Slrstam

99

allotments during three years (1981, 1982 and 1983) of the Sixth Plan, Table 3.8 shows that it failed to achieve any of the objectives set for. it by the planners. At 11.91 kg of foodgrains distribution per year per capita, the monthly distribution in 1981 was less than one kilogram per individual. It was only slightly better at l -29 kg per month per person in the 'drought year of the century' (1983)' the year which witnessed the largest ever quantity of foodgrains to
be channelled through the PDS. The table also shows that in 1983' of the 15 major states, 10 provided even less than the national

average

of

1.29 kg per person per month, though

for obvious

reasons Punjab and Haryana should be excluded from them. Also to be excluded from this list is Tamil Nadu, since Table 3.8 does not fully reflect the total quantity of foodgrains channelled through fair price shops by the state through its own efforts. What is true of Tamil Nadu is also true of Andhra Pradesh, though in 1983, even

at the level of drawals from the central pool alone, the per capita distribution through fair price shops in this state stood above the

national average.
There are vast differences among the four states and the Union Territory of Delhi, which had a per capita off-take of more than the national average of 15.42 kg in 1983. Delhi, the metropolitan capital of India, leads the four states with a per capita off-take of 85.33 kg, a lead it maintained in the irrevious years as well at the even higher levels of 91.96 kg and 93.51 kg in 1981 and 1982 respctively. Way behind Delhi is Kerala with a per capita off-take of 56.73 kg. This is followed by Bengal with 42.95 kg, a level
almost the same as that of the previous year (1982), but substantially higher than the 27.62 kg that was distributed in 1981. It is not difficult to understand the high levels of distribution in those three areas. Metropolitan Delhi is where the seat of the central govern-

ment is. It is therefore a city dominated by the most articulate sections of our population-politicians, bureaucrats and industrial labour. Naturally, the PDS here is saturated with foodgrains, despite the fact that Delhi lies literally within a stone's throw of the country's green revolution belt-Punjab, Haryana and western UP-from where grains flow into the city without interruption. As for Bengal, it is a state dominated by Greater Calcutta and the
Asansol-Durgapur industrial area where a regular system of rationing is statutorily under enforcement since 1960, covering at least L0 millioh people. According to reports available in the Government

100

Delivarancc from Hungcr

of India's Ministry of Civil

the entire rice allotment made to

est Bengal.

10 million people are under entire population of 27 million Kerala has traditionally been a policy, acquiesced in by the
taken care of udder a system of that in 1983 had a per capita these three areas were Andhra a level of 21.21 kg the latter

Calcutta draws 35 per cent of If in Bengal at least tory rationing, in Kerala the been covered by it since 1964. state, and there has been a

of India itself. that it be

rationing. The only states level higher than that of rdesh and Assam, the former at 19.59 kg per capita. However, status for the first time in 1983. off-takes of 7.99 kg and 9.12 Assam, even in 1981 and 1982, kg.
'

Andhra Pradesh came to enjoy

having previously had low per

kg in 1981 and 1982 enjoyed an off-take of around I At this stage, a reference to is necessarv. At 14.70 kg per capita in 1983, 's off-take was only marginally lower than the oational average cif 15.42 kg. However, in 1981 and 1982, it had per capita averages of 18.33 kg and 16.39 kg respectively, which were substantially higher than the national averages of 11.91 and L3.39 for those tqro years. Again, Maharashtra is dominated by the city of Bombay. Information available with the Central Civil Supplies Ministry shows that of the total allotmeirts of wheat and rice made to the st4te, Bornbay alone benefits to the extent of 33 pet cent and 50 per cent respectively. Further, at an urban population level ofa little {bove 35 per cent, Maharashtra is the most urbanised state in India with a large industrial and organised labour force demanding attdntion. The point to remember, of co$rse,.is that in 1983, the'drought year of the century', when a rebord quantity of foodgrains was
distributed through the PDS, statFs dominated by the metrcpolitan urban areas were the main ben$ficiaries, though droughts are a rural phenomenon. All the states discussed abovel namely Bengal, Kerala, Assam and Maharashfia, make nq notible contribution to procurement efforts to build entral pool stocksl Nor do they make any sig ficant efforts to strengthen their PDSs by procuring or purchasiqg stocks on their own account and suppl$menting the grains they receive from the Government of India. They merely distribute ryhat they receive fronr the central pool. There are, however, certain slates that procure and filake purchases both for the central pool and for themselves. Apart from

Poverty and the lndian Public Distribution

System

101

.the Food Corporation of India, in the states of Punjab, Haryana and Uttar Pradesh, where the major part of the country's procurement for the central pool takes place, state government agencies also play a significant role in the procurement process. But none of these major procurement states operates a PDS of any significance. Given the low levels of poverty in Punjab and Haryana, it is understandable that in the context of the very large per capita availability of foodgrains, these two states do not need to run a PDS of the kind envisaged in the national Plan. However, of the country's total poverty population of 271 million in 1983$4, Uttar Pradesh and Madhya Pradesh alone accounted for 78.55 million. The per capita production of cereals in these two states was 227 kg and 226 kg respectively in that year. The per capita level of production was higher than for any other state in the country barring Punjab and Haryana. But it can be seen from Table 3.9 that in 198H4, while Uttar Pradesh procured only 8.39 per cent of its production, Madhya Pradesh procured an even lower 3.12 per cent. A comparison of the performance of Uttar Pradesh and Madhya
Pradesh

in 198!84 with Tamil Nadu, which had a per

capita

production of a mere 117 kg but procured 12.30 pet cent of its

production, highlights the radical difference in Tamil Nadu's approach on the one hand and that of [Jttar Pradesh and Madhya Pradesh on the other. 1982-83 reyeals a similar pattern. Whereas Madhya Pradesh made a negligible procurement of 2.59 per cent at a production per capita of ,181 kg, Tamil Nadu at half that per capita production procured 9.36 per cent of its production, a performance that was better than the 8.13 per cnt of Uttar Pra{esh which had a per capita production of 205 kg that year. The performance of Tamil Nadu in 1981-42 was again superior to that of Madhya Pradesh, which in that year shared a per capita production level of 194 kg with Uttar Pradesh. While procurement-wise Uttar Pradesh performed distinctly better than Madhya Pradesh (9.98 per cent to 5.94 per cent) and Tamil Nadu (9.98 per cent to 7.93 per cent), the important point is the absence of any difference in per capita production between Uttar Pradesh and Madhya Pradesh (19a kg) as against Tamil Nadu's per capita production of only 147
kg.

Andhra Pradesh of course, did better than all these states. However, comparing Andhra Pradesh with Madhya Pradesh and Uttar Pradesh would be more appropriate than comparing.it with

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Poyert| and the lndi',n Public Distribution

System

103

Tamil Nadu. Although in terrns of per capita production, it was only marginally better than Madhya Pradesh in 1981-82' more or less on even terms with it in 1982-83 and decidedly at a disadvantage in 198!84, by way of procurement Andhra Pradesh was far ahead of Madhya Pradesh in each of these years. Again, it had only a marginaliy better production level than Uttar Pradesh in 1981-82' and was decidedly at a disadvantage in 1982-83 and 198!84, but the achievements of Andhra Pradesh in the 'drought year of the century'and in 198!84 were respectively 14l per cent and 168 per cent higher than those of Uttar Pradesh. Not only this, when the Government of India discouraged higher levels of procurement at levy prices, Andhra Pradesh undertook purchases at prices above those notified by the Government of India to meet its PDS comrnitments. In 1982-83, these purchases amounted to 0.280 million tonnes, while in 198!84 nearly a million of the2.47 million tonnes it purchased were from the oPn market, of which 0.75 million tonnes were bought at a price of just Rs. 5 per quintal above the procurement levy prices fixed by the Government of India, and 0.237 million tonnes at Rs. 10 above the procurement levy prices. The remaining 1.48 million tonneswere purchased at Govelnment of India's notified procurement prices under levy. Even if one considers only the quantities purchased at the procurement prices, the percentages of procurement to production in 1982-83 and 1983-84 are 16.86 and 13.47 respectively--significantly higlier than thos of either Uttar Pradesh or Madhya Pradesh. However, it should be pointed out that neither wheat and paddy price support oprations nor the purchase of rice from millers at procurement Prices are conducted satisfactorily in Uttar Pradesh. Discussions with official agencies and the rice milling industry in 1986 showed that there were
large-scale distress sales of paddy and wheat as also refusal by various procurement agencies to receive all the rice offered by the millers under levy. On the other hand, because paddy prices invariably rule

well above the Government of India's support prices in Andhra Pradesh, procurement is done almost exclusively under levy involving serious measures of enforcement under the Essential Commodities Act, 1955. Alm, the state government considers it essential
to purchase rice over and above the proculement level permitted by the Govemment of India by way of levy operations, in order to make it available to consumers through fair price shops. In L982-83 and 198!84, the Government of India desired that the Andhra Pradesh

lOrl

Delivcrance from Hunger

government limit the

tonnes and also moderated the percntage of levy against the state government paying a for levy purposes, for the feed an expanded PDS covering the state. The expanded pDS,

of rice to around 1.5 million

's proposal for enhancing the millers. This resulted in the price than was officially notified quantities that it needed to entire rural and urban areas of effectively introduced for tne L983, making rice available to s. 2

first time in the state in

households identified as poor at

per household of five The details of this scheme are dealt with in a later chapter; at stage it will suffice to highlight the basic point that if there is for making the PDS relevant to the poor in terms of the strategy and objectives of the Plans, then it is essential to into existence in every state a credible PDS which will satisfu four criteria identified earlier in this chapter, backed up by procurement efforts. A PDS can only be creilible if it a certain minimum quantity of foodgrains to t}te households it to serve. While Table 3.8
shows how, barring a few Table 3.9 distinguishes the srates such systems from those that do

per kg to the extent of 25 kg

Indian PDSs lack this quality, show a concern for operating

by highlighting the massive

gaps in procurement efforts that

Despite a substantial per concentration of production in efforts of Uttar Pradesh are large-scale distress sales of
place. While wheat is purchased centres set up at thi village level

in their operations. production level and heavy western wing, the procurement weak (Table 3.9). In this state, wheat and rice-take
a price support measure through a multiplicity of agencies. such

as the Food Corporation of Pradesh, the Uttar Pradesh

Food and Essentlal Commodities

ia, the Government of Uttar Federation, the State

and the Uttar Pradesh Agro-Industries Corporation, of rice is on the basis of a levy on the rice millers. But all practical purposes, the mill levy is also a price support . Unlike in Tamil Nadu or Andhra Pradesh, no is needed for the rice millins industry in Utar Pradesh to the levy. rice to the procurement agencies, thanks to the low that are paid to the farmers for their produce. The millers traders would buy up the paddy and, as the author was informed 1986, make a profit of Rs. 2 to Rs. 3 per quintal even in Ievy rice to the state's agencies.

Poy&tl .nd the lndian Public Distributian

System

106

The result was that the rice milling industry wanted the percentage of levy enhanced from 60 to 90 per cent in 198tr-86. While this demand may be surprising, what is even more surprising is the Uttar Pradesh Government's reported refusal to accede to the request of its rice milling industry to deliver'3O per cent more of all the rice manufactured by it to the central pool. Obviously, this

would have meant still lower prices for the farmers of Uttar Pradesh, for if the state government did not accept a higher level

of procurement, the wheels of the rice milling industry would slow down with paddy suppty outstripping demand artificially and paddy prices getting depressed even further. In this situation, a procurement operation changes to a price support operation for the miller and goes on to finally become a no-support operation for everyone in the rice economy, particularly the primary producer. The state government, however, stands to gain. It gets more than handsomely paid for whatever level of operations as it cares to maintain. Unlike in certain states such as Andhra Pradesh, in

Uttar Pradesh, which has a rice levy system under which the state government enforces the Essential Commodities Act, an additional tier is added to the operations. Instead of the rice millers directly delivering the levy to the Food Corporation of India, it is the state government that first takes over the stocks from the rice millers and then hands it over to the FCI. For this needless operation, the state goverilment collects from the Government of India storage, administrative and interest charges--all of which add up to a sizeable amount each year. On the basis of transactions made in 1985-86, the amount so transferred was Rs.43.4 million. This is avoidable and unjustifiable expenditure. A detailed study of it may throw further light on what quantities of the rice levy handled
actudlly get moved to the state government godowns, whether the institutional finances employed for this purpose cannot be deployed more fruitfully elsewhere, and whether the large staff engaged in this activity is not redundant. In the mean time, both wheat and rice farmers continue to make distress sales of their produce to traders as has been acknowledged by the officials themselves. At the same time, millions of the rural poor continue to remain unfed, unable to purchase foodgrains even at the low prices at which the farmers have to part with their produce. A vigorous procurementcunrpublic distribution system which could rectify both these wrongs is thus long overdue.

l-

106

Deliverance from Hunger

A quick comparison between mighty Uttar pradesh and little Assam in the matter of productidn and distribution would give the country a telling lesson of certaih possibilities in the field of food administration. Against a per caflita cereal production in Aisam of only 115 kg, 128 kg and 122 kg if rhe years 198L-82, 1982-83 and 1983-84 respectively, which maldes availability very low, Assam,s per capita distribution of foodgralins through the PDS by obtaining foodgrains from the centre was 17.I9 kg, L7.46 kg and 19.59 kg respectively. Uttar Pradesh, on the other hand, with a high per capita production level of 194 k9,205 kg and 227 kg during the same period, and without bein$ dependent upon movement of foodgrains from elsewhere in Indla but having to alleviate constant hunger on a massive scale, mana[ed to distribute through its PDS less than one-third of the quantify rnade available by Assam. A word about West Bengal fvill not be out of place in this context either. While West Ben$al cannot be faulted as far as its operating a well-organised statutbry system of rationing in metropolitan Calcutta and the Asansol {rea is concerned, its procurement efforts have been less than flattpring. A comparison with Tamil Nadu makes this point clear (see Table 3.2 and 3.3). Compared to the two preceding years, West 's cereal production recorded a production in 198!84 was 8.91 massive upsurge in 1983-84. million tonnes as aqainst onlv 5.65 million tonnes in 1982-83. the increase being a whopping 3.26 rfrillion tonnes or 58 per cent. But its procurement that year barely 80,000 tonnes. Given the high level of production in that y$ar, this was a surprising response from a state which knows why thQ Bengal famine occurred and one that has the oldest and by far thd largest PDS in India in terms of the quantity of foodgrains ed through it. Large-scale arrival of into the hands of the governments or their agencies is by itself no guarantee that the grains will eventually be made available td those who are hungry or need them. Uttar Pradesh is once ag{in a telling example of this proposition. What Uttar Pradesh gdthers is by way of price support operations. Not only does it prbcure inadequately, it makes no effort to feed its poor either. As qan be seen from Table 3.8, its per capita per annum distribution wds 5.16 kg, 5.50 kg and 6.28 kg in the years 1981-42, 1982-83 and 198!84 respectively or less than narr Kuogram half a kilogram per person per igronth. Obviously the Jlate does rnonrn. uDvlously tne State ooes not have a meaningful rural PDS.] While it has 112,500 villages, the

Poverty and the lndian Public Distribution System

107

shops in 1985 in the rural areas was only 27 ,696.-elearly indicating the absence of a basic organisation for a rural PDS. The inadequacy of allotment and basic infrastructure in a state where 44 million rural poor do not have minimum nutrition only illustrates a lack of concm for the hungry. Similarly' Madhya Pradesh at an average distribution of a little less than 8 kg per annum per capita, where 21.8 million rural poor lived below the poverty line in 198H4, and whose per capita distribution was only slightly better during these three years than that of Uttar Pradesh, has no sigrificant rural distribution system either. Bihar, where the per capita off-take per annum has shown an increase from 4.63 kg in 1981-82 to 10.14 kg in 198!84, also does not have a rural PDS. The number of fair price shops reportedly serving 77,870 villages is 31,758. Studies of the Bihar villages show that distribution of foodgrains through village fair price shops is more or less non-existent' Foodgrains distribution, if any, is known to the rural Biharis as having occurred purely as a flood relief measure once in several years. In 198!84' according to the Ptanning Commission's poverty figures, 51.4 per cent or 32.94 million of Bihar's rural poor did not have enough to

number

of fair price

eat.

But this does not mean that there is a properly planned urban distribution system in these states either. Discussions with officials and fair price shop dealers concerned with urbair distribution in Uttar Pradesh and Bihar showed that supplies are both inadequate and erratic. And, since the PDS does not have the set purpose of serving identified and targeted groups with an assurance that they would be supplied with certain specified quantities of foodgrains during a specified period-a week, a fortnight or a month-the result is an unsystematic allotment of foodgrains to urban fair price shops without reference to specified needs. This leads to a firstcome first-served situation in which the Poor obviously have no preference. It would thus be somewhat of an exaggeration to say that any kind of credible PDS exists even in the urban areas. The number of urban poor in these states is not small, with Uttar Pradesh accounting for 9.06 million and Bihar 3.61 million' in 198H4. This analysis of the situation obtaining in states like Uttar Pradesh and Madhya Pradesh which have a per capita cereal production abuve or around 200 kg and hence a high procurement potential, and states like Bihar that have a much lower availability at an

108

Delivoranco from Hunger

this hunger is acute in the rural a historicallv inherited. for the benefit of the poor.

have endeavoured to expand

the Government of India as possible and also to procure cir purchase with their own and borrowed funds, the remainder of their assessed needs and channel the foodgrains so mobilised fair prici shops to those who need them. The most lotable among these states are Kerala. Tamil Nadu and Andhra Kerala, as stated earlier, has been a deficit state with a per capita production level of in the early 1980s hovering around a negligible 50 kg. It makes no effort to procure at levy prices on its own and entirely upon allotments from the central pool. Through I system of statutory rationing, it has endeavoured to assure its population a certain quantity of foodgrains at fixed prices of household incomes. Every household is and issued with a card which

urban PDS to th rural areas efforts have been to obtain from quantities of foodgrains as

pool, Kerala also makes open market purchases of rice from

neighbouring states to its PDS. This is done throueh a chain of 150 retail outlets called Stores in urban and semiurban areas operated by the State Civil Supplies Corporation and I ,lzlo Sahakarana Maveli s or cooperatives in the villages. The prices at which these are bought are higher than those

Povotty and tha lndlan Public Distribution Sfstem

109

at which the PDS sells them through the 12,605 fair price shops
spread all over the state. In addition, it tries to control the open market prices through the Maveli Stores, making its approach, a two-pronged one. Kerala's public distribution system, which is one of statutory rationing, has been in existence since 1964.

Chronologically speaking, Tamil Nadu was the next state in India which attempted to ensure that its rural areas were also covered by the PDS. Unlike Kerala, the Tamil Nadu approach was to identify households falling within a certain income limit and provide them with a certain quantity of foodgrains at prices they could afford. The PDS in Tamil Nadu was extended to the rural areas for the first time in L977. lt caters to households with monthly incomes of Rs. 1,000 and below. The quantity of rice
sought to be distributed is 1 kg per week per adult and half that per

child, with an entitlement ceiling of 20 kg per household per month. In 1984, the number of households covered under the PDS in Tamil Nadu was 12 million, whereas the total number of households estimated was around 10.16 million. Since the Tamil Nadu
Government believes that a PDS should provide foodgrains to the identified target groups at affordable prices, rice sold to consumers was subsidised. In early 1987 these prices were:

Rice
Common Fine Superfine

Rs.lkg
1.75

2.r5
2.50

Tamil Nadu had 2f ,035 fair price shops, for 16,000 villages in 1987. Of these, 75 per cent of them were run by cooperatives and the remaining by the Tamil Nadu State Civil Supplies Corporation. It has no privately-owned fair price shops. Though the Andhra Pradesh public distribution system, introduced effectively from I April f9$, is similar in its approach to the Tamil Nadu scheme, there are some important differences. The objective of rhe Andhra Pradesh scheme is to target only
those living below the poverty line, which was defined by a monthly income of Rs. 500 per month per household or an annual income of Rs. 6,000 per household. It aims to assure every member of the target household 5 kg of rice per month, subject to a ceiling of 25

110

Deliveranca from Hunger

kg. The scheme does not discrilhinate between adult and child and in order to ensure inter-personfl equity, provides 5 kg of rice per member of the household. Since it believes in making rice available to the target households at affdrdable prices. it sells all the three varieties---<ommon, fine and Rs. 2 per kg. The target

ins urban areas such as the twin cities of Hyderabad and , Vijayawada and the industrial area of urban agglomeration which lies in a heavily deficit district, the hon-poor households in these cities were also assured a maximum df 25 kg per household at the rate of 5 kg per person-adult or childl-at rates ranging from Rs. 2.65 to Rs. 2.70 per kg. This measure rtas, however, discontinued in 1988. To keep the open market priceg in check, the government controls the flow of levy-free rice outsidF the state through a permit system provided for by the Andhra Pradesh Rice Procurement (Levy) Order, 1984 made under the E$sential Commodities Act, 195!--a
mechanism which makes domestic sales of levy-free rice by the rice milling industry a pre-conditiorl for moving rice outside the state. This mechanism, introduced in 1983, was challenged by the rice millers of Andhra Pradesh the Hish Court of Judicature judgement upheld the mechanism which. however. in a as good in law. Vigorous levy efforts and the manner in which movement of rice is from the mills and across

may be held in check in

the state's borders are the

on which the Andhra

Pradesh procurement system based, which in turn has made a large public distribution syst feasible. Procurement of rice for the central pool in the year 1990-91 stood at 3.3 million tonnes. In 1987 there were 35,193 fair priqe shops in Andhra Pradesh serving 27,221 villages and towns. As illustrated by Uttar Praddsh, the mere arrival of grains into the hands of the goverilment dQes not, ipso facto,lead to its being channelled to the needy or the poor. This was also true of Andhra Pradesh until 1983. For examplp, Andhra Pradesh procured 0.697 million tonnes in 198G-81 and 11.10 million tonnes in 1981-82. Yet in these two years only 0.261 million tonnes and 0.370 million tonnes respectively went into fdir price shops. However, with the government taking a decision i[ early 1983 to identify and target poor households and provide ihem with 25 kg of foodgrains per

Poyertr tlrd lhe lndian Pubtic Distribut on

Syatem

11

month on an assured basis, procurement and purchases were stepped

up sharply. The quantities channelled through fair price shops registered a quantuxr jtmp to 1.368 miltion tonnes in 1982-83' 1.831 million tonnes in 198H4 and 1.89 million tonnes in 19&l-{5' the per capita distribution per annum (taking the whole rather
than just target population identified into consideration) advancing

from 5.90 per kg in 1981-82 to 34.53 kg in 198'{-85. The essential points of difference between Kerala's PDS on the one hand and those of Tamil Nadu and Andhra Pradesh on the other are:

1. Kerala's is a comprehensive systern covering every household, whereas those of Tamil Nadu and Andhra Pradesh attempt to cover households indentified on the basis of
income.

2. The Tamil Nadu and Andhra Pradesh systems subsidise foodgrains sold to the identified households while Kerala's
does not.

3. In Tamil Nadu and Andhra Pradesh, the respective

state agencies, namely, the Tamil Nadu State Civil Su-pplies Cor-

poration and the Andhra Pradesh State Essential Commodities Corporation, as well as the cooperatives of Tamil Nadu are responsible for carrying foodgrains right up to the village fair price shops. In Kerala, on the other haird,, the private fair price shop deale r is responsible for moving grains from the wholesale depots situated at the taluq headquarters to the village fair price shops.
Price and transport subsidies cost the Tamil Nadu exchequer Rs- 1,000 million annually while to Andhra Pradesh, the cost was Rs. 1,760 million in the financial year 1985-86. The similarity among all the three systems lies in the measures

they take to maintain open market availability of foodgrains in order to keep prices under control. It may-also be argued that, given the very large coverage of targeted households by the Andhra Pradesh and Tamil Nadu schemes, especially with the latter keeping the household income limit as high as Rs. 1,000 per month, these two schemes are similar to that of Kerala. The commitment in these two schemes is to provide a certain quantity of foodgrains per month at fixed prices. This makes them akin to

112

Deliverance from Hunget

is also instructive to the efforts of Tamil Nadu with of some other states in the matter of procurement and disfribution of foodgrains. is chronically deficit and has necessarily to bd supported by allotment of foodgrains by the central government. Pradesh has more or less the right food-population balance in terms of effective demand. it is a'surplus' state even in a year. Tamil Nadu does not come under either the deficit or category, even though in a year of good monsoons it get to be 'surplus'. Given the significant fluctuations in production between the years, and its relatively low level of capita cereal production, it could well have, as certain other have done, relied entirely on central pool allotments to after its needs. Instead, it has maintained steadv levels of and purchases, mostly from its own production but to certain extent even from outside

It

those

its borders, in order to run

credible PDS.

appropriate that the allotments time from the centre, and the
maSle of its own accord, crtain other states to The Sixth Plan period will serve Tables 3.10 gives the state which is much better

it

It

is, therefore,

has received over a period of and purchases it has be placed in juxtaposition with the value and result of its efforts. a good period for this evaluation.

efforts made bv Orissa.

than Tamil Nadu in terms of per capita production of cereals; Pradesh. which is verv much better placed than Tamil Nadu terms of per capita production; and Bihar. which is onlv sli worse off than Tamil Nadu. The Uttar Pradesh data that during the Sixth Plan period it made no effort to make any on its own account. One can argue that since it was large quantities of grain for the central pool, it did not to procure anything on its own account. But then it also made effort to maximise the receipt of stoks from the centre, which have enabled it to provide through the PDS a per capita of foodgrains that could have at least matched, if not bettered, agriculturally far poorer Tamil Nadu. Bihar, like Uttar Pradesh, no effort either to procure or to obtain adequate central pool ion to make a PDS possible. Orissa, too. made no effort in last three years of the Sixth

Poverty and the tndian Public Distribution System

113

resle

3.10

Off-take in PDS (rg&I-tl to 1984-t5) (in millioa tonnes)

Year

In

State PDS

Quanttty
drawn

Quantity

cmtral

for

pool staE use government

for
rue

from procured by

Total off-uke

Per capilo off-take per year (in kg)

A.

Uttar Pmdesh
0.688 0.483 0.867 0.501 0.688 0.483 0.867 0.501 0.242

1980-81 1981-82 1982-83 1983-84

6.20
4.25 7 .47 1.99

198+85

0.242

B. Bihar
1980-81 1981-82 1982-83
0.52'.1

0.071

198184
198+85

0.335 0.587 0.701

0.048
0.019 0.055 0.073

0.391 0.368

5.59
5.15
8. 18

o.597 0.7u2
0.255

0.244

9.40 3.34

C. Orissr
t980-81
1981-82
t

0.87
0.103 0.277 0.229

0.t23 o.t29

0.t67
o.252
0.303

6.33

982-83

9.38 I1.08
E.47
7

198!84
1984-85

0.196 Nadu
o.20'7

o.236 0.206

.26

D. Tamil
1980-81

0.149

o.22'7

4.68
14.57 16.54

l98l-82
1982-83

o.449
0.0,61

0.44
0.595
0.82 t

0.'t r'l 0.827

1.087

198!84
198+85 Sources:

0.587 0.344

2r.q
20.E9

t.023

r.079

A.
D.

Department of Food. Covernment of Uttar Pradesh.

Bihar.

B. Secretary. Food and Civil Supplies. Covernment of C. Food and Civil Supplies. Government of Orissa.
Nadu.

Food and Consumer Proteaion Deoartment. Oovernment of Tamil

114

i.tireran"e from Hungcr

Plan period, though it did try id the previous two years to match, on its own, central allotments to the state. Compared to these
states, Tamil Nadu's consistent pprformance in more than matching central allotments, usuallv undef difficult conditions, stands out as an example of what the state goriernments can do if they have even a little concern for the hungry. A look at procurement of oefeals at the national level shows a steady increase in the flow of cefeals into the hands of the govern-

ment right up to 198!84. In tlrat year, when cereal production broke all records and reached 139.15 million tonnes, procurement reached a level of 16.17 million tonnes (see Table 3.2). In 1984-85, cereal production fell sharply by 5.15 million tonnes to 134 million tonnes compared {o 198}84. However, procurement went up from 16.17 million tofrnes to 19.12 million tonnes, an increase of 2.95 million tonnes. The production artd procurement trends in the 1980s have shown that regardless of the fluctuations in production, government agbncies were receiving increasing quantities of grain because of the low purchasing power of the masses. The price that the averflge poor Indian could pay for his foodgrains requirement, whereVer he lived outside of the PunjabHaryana belt, was less than even the support price that government had notified for the purchase of wheat and paddy. Otherwise, the wheat and rice produced in the lreen revolution belt would have, if classical economists are correft, found their way if not down to
the southern peninsula, at least to the neighbouring acute poverty belt of the Indian heartland, Mdharashtra and Gujarat. But what happened was that stdte agencles bought up whatever the poor could not afford, building up in fthe process maintains of food that literally overflowed from the government warehouses into the open. The year 198!86 only exaglerated this phenornenon. Therb was an increase in the country'q cereal production by 1.50 million tonnes to 135.5 million tonnes, hnd a further increase in procure-

ment by one million tonnes, (aking the level to 20.04 million tonnes. Table 3.l l gives the l98zt-85 and 198!-86 production and procurement figures for the six major states that contribute more than half the countqfs produttion of cereals and account for nearly all its procurement. Despite the increasing quantilies coming into government hands during the years 198!84, l9E-85 and 198${6, the foodgrains going into fair price shops showpd no increase either in 1984 or in
,

Poyerty end the lndian public Distribution

System

11S

rerle

3.11

Celeal Producdon and hocurement In the Slx Ststcs thrt Account for Procuremnt Stgnfftcsntty (f $+ES rnd f9$-E6)

(in million tonnes)

198'La5

1985-{,6

Prcduction Proculement Production Procurement

Punjab
1,4.97

9.2N
3.2@ 2.750
1.780 0.807

Uttar Pradesh
Haryana

n.51
6.48 9.10 6.84
10.75

16.76 28.49 6.93

10.330

3.zffi
3.000 1.550 0.850 0.605

Andhra Pradesh Tamil Nadu

Madhya Pradesh

8.@
7.26 13.00 135.50

0.M7
19.12

All-India including all

other states
134.0

20.M

Sourc!; Mioistry of Agriculture, Government of India, and the Food CorDoration of India. New Dlhi.

fair price shops actually came down in these years. Against a distribution of 11.04 million tonnes in 1983, the quantities distributed in 1984 and 1985 were only 8.49 and 9.01 million tonnes
respectively. This is less than the peak 11 million tonnes that went into fair price shops in 1983 by 2 to 2.5 million tonnes. Thus the quantity made available in 1984 and 1985 actually declined by 2 to 2.5 million tonnes, even though procurement went up by 3 to 4 million tonnes with a corresponding increase in stocks. An analysis of the distribution made in 1985 shows the emergence of certain new trends in the management of food stocks 6y government. With a view to liquidating accumulated stocks resulting from increased production and price support operations, in 1985 the governririint worked out a new scheme under which it decided to sell wheat stocks purchased from the farmers by public agencies to private traders. It did this through auctions and by calling for tFnders. This scheme, which was adopted in August 1985, was abandoned in October of the same year. and in November and December wheat was sold at a fixed price of Rs. 175 per quintal to private trade. (The issug price of wheat to the state governments or their agencies for use in the PDS was Rs. 172 per quintal during this period.) Table 3.12 shows how cereals from central pool stocks were managed during 1985. It can be seen from Table 3.12 that of the off-take of 15.31

1985. On the contrary, compared to 1983 public distribution through

Deliverance from Hunger

Pml Stocks (r9E5) (in million tonnes)

Fair price shope Rural employment programmcs (NREP RLEGP)
Defence services
9.01

Roller flour mills

Free sales to private trade

0.36 0.16 5.00

0.4
0.34

Exports
Others

0.02
15.31

Totd
Source: Food Corpomtion of India, Nev Delhi.

million tonnes from the centrai pool in 1985, a staggering 5.0 million tonnes were lifted by t$e roller flour mills' an all'time record for a single year and 2 mill]ion tonnes more than the average of 3 million in previous years, fl.nother 0.42 million tonnes were sold to private trade. As against this, the quantity utilised in fair price shops was 9.01 million torlnes. The quantity of foodgrains was 0.36 million tonnes. As used for employment procure{ at public cost by the much'as 27 per cent of the business, while 0.34 million Government of India went to distributed through fair price tonnes were exported. The higher by half-a-million shops at 9 million tonnes was year (1984) and 2 million tonnes tonnes compared to the . Table 3.13 gives details of the less than that distributed in in 1986. management of central pool Distribution in 1986 shows tulo significant departures as far as the rural poor are concerned. Irl December 1985, Government of India initiated a programme td distribute foodgrains to people Project (ITDP) areas. living in the Integrated Tribal It is therefore appropriate to adp this quantity to the distribution through fair price shops. Thus in 1986, a total of 11.28 million through fair price shops, a tonnes was distributed in the level which is approximately th{ same or a little higher than that year. The policy move to reached in 1983. the record
fair price shops is undoubtedlY distribute more foodsrains given the distribution level of 18.62 commendable but, was no need to restrict this programme million tonnes in 1986, thre since there was no shortage of to iust ITDP areas,

Poy.tty tnd th. tndi.n Publla Dktribtttion Systenr

117

rrllp

3.13

Mrnrgemcnt of Cchtrd Pool Grrlns (19t6)

fin million mwus)

Fair price shops

9.6

ITDP areas
Rural employmcnt programmes (NREP, RLEGP
and EGS) Defence services

t.a
r.91

0.27

Roller flour mills Free sales to private trade Exports

Others

2.40 2.49

0.?l
0.06 r8.62

Totrl
Source: Food Corporation of India, Nel' Delhi.

foodgrains in government stocks. This is borne out by the fact that during this year, the government also made available a quantity of 5 million tonnes to private business,2.40 million tonnes to roller flour mills and 2.49 million tonnes to private trade. The sales to private business in 1986 were only half-a-million tonnes less than in 1985. While the roller flour mills secured 2.zO million tonnes, a little less than the customary 3 million, private trade obtained 2.5 million tonnes. There appears to be no good reason why these 5 million tonnes could not also have been distributed through fair price shops in rural areas. It is the government's declared policy that the PDS should be taken to the rural areas, including those that are distant or remote. Though the ITDP sch'eme unquestionably seeks to distribute grains in remote areas, it is not clear why, when grains were available, other rural areas closer to storage points were excluded in favour of private trade. The country was disposing of an unprecedented 18.62 million tonnes of foodgrains against an arrival of about 20 million tonnes by way of procurement.

Yet the PDS was not preferred as a channel for distribution

despite the prevalance of acute hunger in rural areas. In view of this, the government's decision in Octobr 1986 to not sell any more wheat from the public agencies' stocks to roller flour mills, a! the expense of the taxPayr, was commendable. At the same time, however, disposal of grains-heavily subsidised at the farm level and.acquired, stored, quality-protected, and carried to distant parts of the country at heavy public expense-to private trade, defies logic. All that it would do is to encourage the roller

118

Dcllvrrancc fiom Hunge

flour mills to buy the grains froni the Food Corporation of India
in the form of 'free trade'. This is ofactly what happened and, what is more, sales to roller flour mills oflwheat at subsidised prices were

resumed by the government and fontinued in 1986 and 1987. During the financial year 1.98${6, the roller flour mills secured wheat from the Food Corporatiou of India at Rs. 172 per quintal while private trade acquired it at Rs. L75 per quintal. For roller flour mills, this price went up tp Rs. 190 and subsequently to Rs. 220 in 1986-87, then came dbwn to Rs. 205 (Rs. 200 for 'C' and 'D' categories) and to Rs. 195 for imported wheat (Rs. 190 for 'C' and 'D' categories). As for salfs to the trade, from Rs. 175 per quintal it rose to Rs. 193 in Febuiary 1986, going up ro Rs. 222 in July before being reduced to Rs. 2q5 per quintal in the same month. The issue price of wheat to fair price shops during 1985-86 was Rs. 172 per quintal up to 1 Febgrary 1986; subsequently, up to March 1987, it was Rs. 190 per qfrintal. After this, it was revised

upward to Rs. 195 per quintal. By selling wheat to the free tr{de at prices mentioned above, ' the subsidy that the governmen( incurred in the financial year 1985-86 was Rs. 67.94 pr quintal or Rs. 679.40 million per million tonnes. For sale to the roller flour mills, the corresponding subsidy was Rs. 65.57 per quintal or Rs. 655.70 million per million tonnes. Thus in 1985*86, the total burdeh on the taxpayer on these two accounts--at 0.42 million tonnes for private trade and 5 million tonnes for roller flour mills--was F+. 285.35 million and Rs. 3,278.50 million respectively, making a toraf subsidy of Rs. 3,563.85 million. The costs in 1.986-87 were estimdted at Rs.60.88 per quintal of wheat sold to pri\rate trade or Rs. 608.80 million for every million tonnes. The corresponding subsidy for roller flour mills was estimated at Rs.55.03 per quintal o{ Rs.550.30 per million tonnes. The burden on the taxpayer in Lp86 was Rs. 1,515.90 million on account of the sale of 2.49 tonnes to the private trade and Rs. 1,320.72 million on account sales to the roller flour mills of 2.40 million tonnes, totalling Rs. .63 million. All this is part of the funds which the of India provides for in its 'food subsidy'. About 4.09 non-plan budget, under what is of in 1987. million tonnes were similarlv

In 1986 there was a sharp rise rural employment generation tonnes of grains, was something the NREP and RLEGP durine

the allocation of foodgrains for

which, at 1.91 million

a record since the inception

of

Sixth Plan period. While this

Poverty and the tndian Pablic Distribution

System

119

was entirely in the right direction, its full and appropriate use and absorption in terms of real wages for the rural poor has to be judged against the matching cash resource that was allocated in the

plan budget of the Rural Development Department. Enough has been said about this in the first chapter, which also indicates the steps needed to rectify the cash-grains imbalance. In the absence of such a balance, the rural poor will not receive the benefits that a large allocation of foodgrains may apparently promise. To sum up, the approach to foodgrain management in 1985 and
1986, so far as it depended upon channelling 10.31 million tonnes to roller flour mills and private trade in order to deal with the

rising stocks of foodgrains in government hands, shows a serious flaw in the central government's food supply management policies given the levels of hunger prevalent in the country. The fndian Public Distribution System has thus failed to fulfil the role assigned to it by the planners in every crucial respect, thereby directly contributing to the continued existence of the kind and level of poverty that characterises the country today, particularly in rural areas. The exceptions are the states of Kerala, Andhra Pradesh and Tamil Nadu and, to a certain extent, West Bengal. Karnataka has also initiated a PDS modelled on the one in Andhra Pradesh, but on a much smaller scale. Likewise, Gujarat too has started a distribution scheme to help households identified as poor. It is therefore crucial to find out why the endeavour to design and operate a credible or near-credible PDS as a basic antipoverty measure is restricted to a few states. The Indian food security system has not recognised or accepted the position that for food security to be meaningful, it should be at the level of the household, both urban and rural. Notwithstanding all that is said to the contrary in the PIan documents, the PDS in India has remained a metropolitan, or at best, an urban phenomenon catering to the 'stability of prices' for better-off consumers in the metropolitan and a few, select urban cities of the country. This is because, despite the stated policies, we still seem to be dominated by the Bengal famine syndrome. The policy-makers look upon even the massive stocks built up in the mid-1980s as merely a guarantee against sudden fluctuations in foodgrains output caused by the vagaries of weather. This policy attitude, which is a combination of maintaining price stability for the urban consumer and insurance against a calamity, is the hangover of a past that is not relevant to the realities of current production and

Dellverence from

Hungr

distribution capability or the im{ge of India as a fast-developing and emerging agricultural powef. This mmbination of a lack of
awareness of the country's capabiuties and an over-defensive attitude

which ignores the basic needs of the poor, has given birth to an untenable theory in Indian,food rtanagement circles that the Indian PDS is designed to what, in metropolitan urban areas, is available in the 'free , thus negating the objectives proclaimed in the Plan of the PDS ensuring 'food for all' or of the Cquitable of available foodgrains amongst all. The result is that while the Commission has taken pains to identify the number of living below the poverty line. which is neallv the of those living in hunger, no efforts have been made to even a part of the foodgrains requirements of this hungry to them, by identifying it at the household level. Even whfn plenty of food has been availcontinue to go hungry. able in the country, masses of There is no policy directive the central sovernment to the states that they should identify living below the poverty line for the purpose of creating PDS based on either the income criterion adopted by the Commission or bv anv other appropriate melns. The result is that there is no responsibility on the part of the centre to available a specific quantity of
foodgrains to the states based on

provided to each poor situation for the central

certain minimum quantity to be per month. This is a convenient

make vague allotments of f reference to a socio--economic for which thev can be held are the state authorities for, by reference whatever to specific households. they are not pinned this branch 9f developmental

to be in, for then they

can

to various states without any jective based on people's needs . Equally delighttully placed allotments that bear no by way of reaching specific to a specific performance in ion. Since there is no expectation on the part of the bentre that the poor households alone should be the the states find it convenient to distribute foodgrains allotted to almost exclusively in urban areas. The result is that the subsidies' do not go to the really poor in any substantial manner. The Central Government has responsibility and a lead role in rectifying this situation, for, of hunger cannot be left to the States alone.

A Public Distribution-cumDelivery System for India

It has been generally accepted that in the war against poverty' the first battle is against hunger. The need for food security was underscored by ieading economists from India and abroad, parti

cularly from the World Bank and the Food and Agricultural Organisation (FAO) at a seminar held in Delhi in April 1985'' The onus of responsibility to ensure food security to the poorlay on society and governments everywhere. By far the most specific equation of poverty with hunger came from Shlomo Reutlinger's paper which irad earlier been presented at a World Bank symposium' Reutlinger recommends that 'the ultimate solution is obviously to provide the chronically food insecure with opPortunities to improve their

income...."

The Sixth and Seventh Plan documents bear testimony to this approach which has been adopted in the planing process' The two anti-poverty programmes-NREP and RLEGP-were part of the implementation measures adopted. There can be no objection to this approach. But as seen in an earlier chapter, three problems arise: one is that the segment of the poor for which self-employment opportunities are sought to be created through subsidy-cum-loanfinanced asset-based programmes is unable to operate these schemes because of that very chronic hunger which the schemes seek to abolish; the second is that, apart from being inadequate in terms of

' See Vol. I---+eminar papers-'seminar on the Role of Foodgrain Agencies in Food Security in Asia and the Pacific', sponsored by the FAO, AFMA and the Food Corftoration of India, Vigyan Bhavan' New Delhi' 23 to 25 April 1985'
,Ibid.

122

Deliverance from Hunger

efficient delivery system; the prices of foodgrains and erosion in such additional

outlays, wage employment progfammes for the rural poor lack an

is that the continuing rise in

essential commodities leads to

wages has been well by the Report of the Sub Committee of the Consultative Committee for the Ministry of Labour for Studying problems of ind Reporting on the Unorganised Workers in the Alricultuial SeCtor, released in late
L987.

poverty measures and by the growth process. The fact that the rural poor are unorganised {nd have no ielief from erosion of

as are generated by anti-

to all three anti-poverty. issues mentioned above, because onlv such a system can have the to deliver essential
commodities to meet the food requirements of hungry households, to control prices in tfre open market and to deliver the foodgrains required at the level on a day-to-day basis to those participants in the rural ment generation prograrnmes who are dependent on daily . As has already been said before, this kind of deliverv does not exist in most parts' of the country at present. To expeft a block's official agencies like, the engineering staff or village d{velopment officers to carry foodgrains to work spots in different jrarts of the block and ensure that they are actually deliveredto the workers, is to ask for the impossible. No technical officer consid$rs this to be his job. The village development officer who, in most areas, is essentialiv an agricultural

A public distribution system hfs obvious and intimate relevance

is already burdened with a multiilicity of responsibilities--from motivatin! candidates to observe family planning practices to T&V work in the villages under his jurisdiction. So in truth. the NREP and RLEGp, conceived strictly as 'departmental' programmes as {gainst programmes that .can be executed by contractors, came to be in fact executed by contractors
extension worker,
in most places, although under vafrying labels. The result is that the

contractor becomes the arbiter qf when and whether at all grains should be brought to the work spfts. He often finds it burdensome to take delivery of grains from fa{-off godowns and transport them to the work spot. And there has always persisted the feeling that oontractors have sold away the fciodgrains at taluq or sub-division levels. In short, the delivery of t[re nutrition component of these programmes is not legitimately fhe responsibility of any of the

A Pubtic Distribution'-cutn-Detivery System for

lndia

12?

prime actors in these prograxrmes. The essence of the nutrition component is that foodgrains be given to a worker as wages on each and every day that he participates in the programme' To the extent he does not get this component, a worker suffers wage erosion for he is forced to buy his foodgrains in the open market at a much higher price. He suffers equally if, on another day, under the guise of compensating him for the grain wages not paid to him' he is paid the equivalent of a few days' grain lvages all at one time, for hi may not need that much grain on that occasion. It might also pre-empt his cash wages with which he might want to buy other
essential goods. Thus in a rural employment generation prograrnme' the essence of the foodgrains component lies in its daily availability at

the concessional prices announced by the government, at daily scales that are neither inadequate nor excessive' All these conditions can be met by a regulaily-run fair price shop in the village where the employment programme is under implementation, the functioning of the fair price shop being appropriately kept under the voluntary vigil of the elders and other representatives of the public, including the target group, to ensure that the shop dealer does not behave in the same manner as the more powerful works contractor. The non-recogrrition of the absolutely essential need for a rural foodgrains delivery infrastructure in rural employment programmes is a serious defect in the very design of these programmes as seen in the NREP and RLEGP and had the potential to defeat the very objective of these programmes. However, as seen earlier, except in a few states, the PDS in India is not visible in the rural areas even though 261'519 fair price shops were shown to exist in the rural areas in 1987.3 Being essentially an urbarmetropolitan system, and an undifferentiated,
untargeted system, ostensibly serving everyone, and at a per capita level of release that can make no impact on the large rnajority of households in the country, it has little relevance to the rural poor as a food security system. That a PDS can, however, act as the all-important delivery system required to implement the rural employment programmes is obvious. The need to provide consumption finance that is crucial for the successful implementation of the IRDP has been pointed out earlier in this study. An important part of the consumption finance

Ministry of Civit Supplies, Government of India, New Delhi.

Ileliverance from Hunger

required by the beneficiary available in the .form of function as the conduit to

beneficiaries, whose number

can and should be made

live in rural areas.

Here, again, the PDS can foodgrains meant for IRDP into millions and all of whom

Perhaps the greatest of our development management process has been the lack of a eredible deliverv svstem at the beneficiarv level in rural only in the rural development programmes but in most of o$r programmes. A properly istab_ lished, well-run PDS in the areas, covering every village, and with its management under constant vigil of the village mmmunity, will remove this thus eliminating the delivery bottleneck in rural programmes. Can the country run such a composite fpod
system? Does it have

the quantities of foodgrains credible anti-poverty To answer these questions,

to operate such a svstem and ? What will be the cost of such a

system?

first need to pinpoint the following:

L. the total number of housQholds that woutd benefit from the

public distribution

2. the number of man days

rural wage employment 3. the number of food security of a based IRDP 4. the other sectors for

should be generated under the

that would need to be provided

level, covered under the assetsupplies of foodgrains have to be

5. the price at which

throush the delivery cost involved.

should be made available

system and the

Before we answer the questions, we must have a basic understanding of what it is an average household needs by way of its minimum nutritional so that we may judge our efforts and results by that In discussing nutrition the question of quality versus quantity always arises hnd advocates of balanced diets would recommend one that is bdth qualitatively and quantitatively adequate. Quality includes no{ only a balance between energy

A Pubtic Distributiorr'currtsDetivery System fot lndia

needs and nutrient needs, but also preferred tastes

1E in the con-

,u-ption of food. But while discussing poverty in the context in with which our rural poor live, we are' even now' concerned only to supply the minimum quantity, that too *ith th" -ini-.rm required Jn".gy'n""O"A to live and work. As Gopalan, Rama Sastri and Balasubramanian Point out:
Naturally, ensuring both is obviously the most desirable' But where a priority is inevitable, the question of enough food should take preiedence over quality and other considerations' It is comparatively easy to decide whether or not enough is being provided because in the absence of enough food' complaints of hunger can reasonably be expected''
From the 'complaints of hunger' recorded by us in Chapter f it is obvious that 'not enough is being provided'to the rural poor' What should this 'enough food' be? Gopalan and others point out that the body's total energy requirements ca! be divided into two components: the basal energy required for such vital functions as respiration and circulation; and the energy required for the actual physical activities of the individual, determined by his or her

o"",rp"iion (writing, shoe-making, woodtutting): while writing is light work, shoe-making is moderate work and wood-cutting is
heavy work.5 Aocording to the recommendation made by the Nutrition Expert Group of the ICMR in 1968, while a sedentary male worker needs 2,400 calories of energy per day, a moderate worker needs 2,800 catories, and heavy worker would require as much as 3,9(tr calories' The corresponding figures for females are 2,?-00 calories for a moderate worker and 3,000 for those engaged in heavy work'o Gopalan et al. have pointed out that 70 to 80 per cent of the calories in Indian diets come from cereals such as wheat, rice and coarse grains, which are the cheapest source of calories in the diets of the ;ajority of our population.'They have also pointed out that extensive
Indisn Foids, National lnstitute of Nukition' Indian Council of Mcdical Rcfcarch'
Hyderabad, 1974, P. 9.
1 lbid., p. 10. 6 lbid., p. 2?.
7

'

C. Gopalan,

B.V

Rama Sastri and S.C' Balasubramsnian, Nuritiuc-Volue

of

lbid.. p.

33.

126

Delivcranco from Hunger

diet surveys carried out inl our country over the last several years have shown that the diets of a good proportion of our populllion who belong to thd poor ioco-" groupu inadequate
according to-accepted

out that for every case with frank signs, there are several cases in the sub.clinical or .twililht' zone of malnutrition, in the community. Many may not pxhibit frank signs of malnutrition, but being far from the state of positive goo'O health. they may fall an easy prey to intercurr{nt ailments.ln addition to aillents directly attdbutable to ition, it is now known that malnutrition aggravates the course of many infectious diseases. Thus, directly or , malnutrition accounts for a considerable part of the among our population..

of the population even the basic caloric re!uir#"ot, no, met . . Results of nutrifion surveys havi indicated"r"high a incidence of frank nutritiohal deficiincy diseases, especially amongst the vulnerable sedtions of ihe population__pregnant women, infants, children an{ nursing mothers. It may be pointed

standalds

"re Among the poorer sections

maximum efficiency, namely 5Q per cent; at Z,SS0 calories at 32 per cent and at 3,200 calories a[.30 per cent.o For purposes of ptanning, in India has been measured in terms of the daily calorie intake pf a person. Experts have variously estimated the minimum calorie of a person in Indian conditions. Dandekar and accept as adequate an intake of

P-V. Sukhatme on Agiculrura! Statis,ici and Nutririon.

' '

lbid., pp. 42 and 43. K.C. Sal and A.R. Rao, .Nuritiod Statistics in lodia', reprint Irom lmpoct of

A Pubtic DistribidiorrcutttsItelivety System for

lndia

127

2,250 calories per caPita per day in both urban and rural areas''o

Sukhatme favours a minimum 'requirement of calorie intake as against an average requirement, his minimum being the level bilow which an individual can be treated as undernourished' The Nutrition Expert Group of 1968, however, recognised that age' sex and nature of activity determined calorie needs and provided for them accordingly. But on the average' the daily calorie requirements per person have worked out to 2,400 in rural and 2'100 in urban ireai. Based on this norm, the poverty line is defined by the Planning C.ommission as the midpoint of the monthly per capita expenditure class having a calorie intake of this magnitude. Th"r" *n be much debate about what is 'enough food' in the context of the calorie needs abcepted by the Planning Commission' V.K.R.V. Rao, who has examined the enitre gamut of the calorie approach to nutrition spanning the FAO, Sukhatme and the Planning Commission, has pointed out the fallacies involved in deter-

mining distribution policies based on nutrition norms related to caloriis. He and many other writers on the subject have pointed out, inter alia, the enormous differences in climatic conditions between various parts of India and questioned the soundness of adopting an average caloric norm for Indians. Rao concludes that we do not as yet have .authoritative findings on the relation between food and nutrition and has stated that unless
nutritionists consider whether it is not desirable to examine the relation between food and nutrition on an inter-regional and inter-state basis, instead of on a national basis as they seem to be doing at present . " . it is doubtful if we can make effective use of nutritional criteria in framing long-range policies for linking food with nutrition . . . or solving the nutritional problems . . . especially ofthe weaker sections with their low level of both
education and purchasing Power. "
as this argument is, planners and decision-makers have

Valid

to

start somewhere. An examination of the caloric criterion adopted

r0 V.M. Dandekar and Nilakantha R^th, Poverty in India' lndian School of Political Economy, Poona, 1g7l p. 6. r) V.K.R.V. Rao, Food, Nutition on l Povedy in india, pP. 13E-45: addendum on 'Some Nutritional Puzdes"

128

Delivcrance from Hunger

caloric norms adopted by the Commission and the findings of the National Sample Survey Organisation on the consumption of cereals and cereal approximate to the reality on the ground. Given this, it seems to go by the Planning Commission's caloric norms we consider a proposal for the country as a whole. this is not to say that further refinements depending on needs should not be attempted once the implernentation of a gets under. way. Therefore, when we discuss tlie performance ofor the need for a PDS in the context of , we have to keep in mind the minimum nutrltional of the household. The startins point, is thus an individual's need of 2.400 calories in rural areas, where the nature work is admittedly heavy and where a little over 82 per cent of the entire country's poor live. Another point to bear in is that given the lackadaisical manner in which the PDS has operating, it will be necessary to reorganise the distribution if one is to successfully supply the poor with at least the basic beginning with cereals. The 38th round of the Sample Survey, 1983, shows that 59.74 per cent of the household consumer expenditure on food in rural areas, as far as the that lives below the poverty line is concerned, is taken up b[ cereals. In the urban areas it is 54.56 per cent. Taking the in rural areas as the guideline, we find that 59.74 per cent <[r about 1,434 calories will have to be secured from cereals which \ fill be the equivalent of about 414 gm per person per day at a of. 2,4N calories. In urban areas, 54.56 pr cent or 1,146 calories will have to be secured from cereals which will be the equivalent of 331 gm per person per day at a minimum o[ 2,100 calories. Since the size of the average rural household is 5.b0, its average cereal requiriment will be 2.32 kg, while it will !e 1.81 kg for an average urban househoid, househoid. which comprises 5.{6 persons. It would therefore he 5.46 oersons. be appropriate to assume a cereal of 2 kg per day per household which would to about 60 kg per month.

by the Planning Commission in fhe context of information gathered through enctairies at the house[old level confirm that at least to the extent of an average s cereal consumption, the

A Public Distributiorr-cut tsOdtv'ry

Sy gten

for

lndia

129

off-take in fair price shops since the inception of the PDS in India, we find that a release of that magnitude would provide 17.5 kg of cereals per month per poor household to all the poor households in the country, if the poor households alone, as reckoned at the 198H4 poverty level by the Planning Commission, are the beneficiaries of the PDS, say, in the year L986. For an average poor household, at 17.5 kg of cereals, a little above 29 per cent or between one-third and one-fourth of its minimum cereal needs will

the quantity is admittedly modest. Considering, however, the very low purchasing power of the rural poor and considering that precious little by way of foodgrains has been channelled to the rural areas until now, and that what we are aiming to do is to bridge the energy gap, 17.5 kg per month per poor household will indeed be a good beginning in a reformed PDS. At this level, the daily calories provided per household of five members through the PDS will be 2,018.34 or a daily per capita of 4(X calories. Therefore, if we decide to utilise this level of foodgrains exclusively for the poor in rural and urban areas, the result will be a positive relief to the poor wherever they are in the country. As many as 51.67 million poor households will receive a guaranteed supply of about 29 per cent of their cereal needs each month at
be met at the present consumption levels.

fixed prices-a comfort that only their better-off brethren in the metropolitan areas have hitherto enjoyed. By the same token, the well-to-do classes who have so far been the beneficiaries of the subsidised PDS in metropolitan urban areas, will be denied access
to the subsidised supply of grains. The ones denied access, however, will be those who are non-poor as judged by the Planning Commission. What such non-poor need in terms of their legitimate rights is not the supply of foodgrains at subsidised prices, but the availability of foodgrains. The govemrnent, thereforc, slrould assure the states with the three metropolitan cities of Calcutta, Bombay and Madras and the Union Territory of Delhi the allocation required to meet half the cereal needs of the non-poor households, to ensure availability at the economic cost of the Govemment of India. Since the justification in favour of catering to the needs of the states with metropolitan cities is based on availability, it must be acknowledged that the urban poor in these cities are the most vulnerable in the foodgrains market. Hence the households living below the poverty line in Calcutta, Bombay, Madras and Delhi

130

Deliverance from Hungor

should be provided a quantity than the poor households elsewhere in the country. The poor households should thus set half their total or 30 kg of cereals per month. Since the problem of is more special to Kerala than to any other state in India, the pdr capita production in that state
being less than 50 ki per annum, the poor in Kerala should also be treated on par with the poor in the four metropolitan cities. The emerging picture can bd seen in Table 4.1, which takes 1986-87 as the model year for costs, adopting the 1986 population and reckoning poverty ratios at [he 198]-84 level. The off-take data have been based on that of the financial year 198H4 keeping in mind the costs and budget provisions required. It will be noticed that the differenbe between the off-take particulars for the calendar year 1983 showri in Table 14 of Chapter 2 are not

materially different from those for the financial year 1983-84. While column 3 of Table 4.1 gives the off-take in 19838t, the highest for any financial year, column 12 projects the needs at 17.5 kg per poor household for all ther rural and urban poor households in 1986, the proportion of poverg households having been reckoned at the Planning Commission's 19E!84 poverty line percentages for each state. This, however, is not a satisfactory way of meeting the needs of special areas like Kerala] which, as seen from Tables I and 3 of Chapter 3, is chronically an{ irreversibly deficit in foodgrains production. As already pointed out. not only would the needs of the poor in Kerala be more acutf than those in other states, even the non-poor would. face a probfiem, despite purchasing capacity due to the nonavailability of graihs. The requirements of the poor are ensured (see column 13 of T{ble 4.1) by the Kerala PDS being
provided cereals at 30 kg per polr household. Column 15 of Table 4.1 shows the roquirement of Kdrala's non-poor households to be 30 kg per household or 1.212 miflion tonnes, which must be made available to them. Thus, while 0f 1166 million tonnes of foodgrains sold to the poor households woirld be at subsidise d rates, 1.272 million tonnes meant for the no$-ppor would be at the economic cost of the Government of Indid. column 13 in Table 4.1 shows similar additional provisions fol Maharashtra, Tamil Nadu and Bengal to meet the higher nee{s of the poor households of the metropolitan cites of Calcutta, Bombay and Madras, at 30 kg per household per month. The diffefence in allocations against these three states as shown in columns !2 nd 14 reprcsents the additional

A Public Distrihttiohcun-Detiyerr System for

lndia

131

allotments to the poor households of the cities of Calcutta, Bombay and Madras only. Similarly, for Delhi's poor households an additional 12.5 kg per household (to provide 30 kg per household per month) is provided in column 13. However, with the enhanced rate of 30 kg per poor household, the total allocations for Maharashtra,

and Tamil Nadu are higher than in 1983-84. For Maharashtia

the increased allocation stands at 1.026 million tonnes, and it may be argued that no further provision need be made under column 15. Since, however, availability of foodgrains to the non-poor has to be ensured at the same level as the allocation for the poor, though not at subsidised prices, Maharashtra is provided an additional quantity of 0.527 million tonnes per annum at 30 kg per month per non-poor household. Based on the pame principle, the poor and the non-poor households needs at 30 kg per household per month is provided for Madras, Calcutta and Delhi and included in the overall allocation to the states concerned. Taking into account the additional quantity of 3.017 million tonnes required to ensure availability in Kerala and the four metropolitan cities, the total quantity of foodgrains needed to meet the demands of the PDS will thus be 14.29 million tonnes. There is another area which needs the government's attention: the territories on the geographical periphery of the country which are politically and strategically sensitive. These are Assam, Arunachal Pradesh, Himachal Pradesh, Jammu and Kashmir, Manipur, Meghalaya, Nagaland, Tripura, Mizoram, Sikkim, Andaman and Nicobar Islands and Lakshadweep. The total allocation of foodgrains to all these areas together amounted to around 1.152 million tonnes in 1983-84, though the per household allotments varied from area to area. Since separate poverty figures for these areas are not available individually, distritrution in these areas will have to be on a liberal basis rather than bound by any rigid allocations. Since the poor in these areas need to have their requirements guaranteed, it is of paramount imponance that the allocations at the 198184 level are maintained for these areas. This is shown in column 16. The total needs of the PDS then amount to 15 million tonnes of foodgrains a year, of which about 12 million tonnes would be at subsidised rates. If a PDS of the kind envisaged in this chapter is implemented, we shall be changing the character of a disorderly, metropolitan-

urban oriented, undifferentiated, untargeted, free-for-all system

ncqdrenent of Ceredf ln

l9t6{l

for

Llvhg Llor thc Poycrty Llnc in Mc6opotr.r Cltlcs of D.lhl,

Ptojca h for (nilti<n)

S.

.rvo. Srrtd

Off-uke
through
PDS

h latbn IW-E4 tgUt

Popu-

IW

Hotlschol
bclow poverty

line Hoatcholds

6
Urban

ceraut

Rurol

Rwdl
Urbarl

--

l Aodhra Pradcsh 2. Assim 3. Bihar 4. C'uisrrr 5. Hsryana 6. Himachal Pradesh 7. Jamrnu and Kashmir 8. Kimatak. 9. Kral. 10. Madhya Pradesh ll. M.harashtra 12. Manipur 13. Mcghalaya 14. Nag.l&nd 15. O.is6a i6. Punj.b 17. Raiasthan 18. Sikkim 19. Tamil N.du 20. Tripur. 21. Uttrr Pr.desh 22. W6l Beng.l 23. Andaman & Nicobar 2t. Aruna<ial Piadcah 25. Chrndigsrh 26. Dadra Nagsr Haveli 2?. Dclhi 28. Goa Dam.n .l Diu 29. lakhadweep 30. Mizoram 31. Pondichesy
Toa.l
I

1,316 448 1f3 l$ 96 52 n5 3{ll l,s.f,l 3n 918 35 94 48

53.5y)
19.W7 69.915
34.086

12.292

4.28r 5.9A
37.136

8.454
52.tT) 62.1U
1.121 1.336

542 1t0.862 2,113 54.58t

58 30 ,lO 6n 99

3m

0.n5
2.63m

y2n2
0.316

16.789

4E.{d
2.053

l0 31 5 I 565 52 4 59 13

0.1s)
0.632
0.451

0.104

6.m
1.087

0.&o
0.494

0.6(x
585.185

.414 9.350 2.7n 3.619 0.804 161 3.452 0.433 0.A22 0.09.1 .837 11.2 1.595 5.W7 0.5q) 490 4.561 2.140 t259 0.370 .656 1.686 0.5n 0.256 0.098 .76t 0.786 0.086 0.110 0.0()7 o.uz 0.22s 0.138 0.036 .791 s.n8 2.0n 1.923 0.$7 .788 3.965 0.864 1.035 0.2il 433 8.284 2.t53 4.tO 0.670 8.,fo4 4.63't 3.488 1.080 .6y o.rn 0.069 0.023 0.fi}9 .534 0.241 0.053 0.081 0.m2 0.152 0.030 0.073 0.m5 901 4.806 0.680 2.153 0.199 2.t54 0.905 0.235 0.190 .469 5.262 1.449 t.y26 0.378 0.060 0.013 0.029 0.002 ,f84 7.635 3.512 3.367 1.085 0.386 0.050 0.091 0.010 .t5t t7.7n 3.783 4.249 |.525 7.W2 3.014 3.417 0.799 I o.o37 0.015 0.01E 0.003 7y 0.t34 0.011 0.063 0.002 0.00/ 0.t24 0.m3 0.022 .t23 0.ml 0.flI2 0.0t0 Neg .674 0.fi8 1.4{b o.uz 0.249 ,'ra 0.159 0.078 0.0?5 0.014 0.m4 0.m3 0.002 N.g .60f 0.(}?4 0.45 0.035 0.m4 .6E3 0.(b3 0.(b7 0.030 0.012
193 104.778 32.m3 42.5,16
e.126

t.t23

Rurd rnd Urbrtr hdb, rnd for the Non-poor Cdcult , Dombcy .rd MrdrB
Annual r.qtirenEit at 17.5 kg
per poor householdlmonth

lloucehoH.s

in Neralr ond the Four (N0 tonnes)

Additionol Country's

irt

1986

Urbon

annual onnuol rcquift- requirc- lotal feguife- require- nEnts of ,ne4tt of cercal nwnt for ment for the house- the ser|li- require,rvtro- poor hol^ tive statat rnent politan house- above to moin- from cities holds povefly tain the PDS and Kerala lin h I9B-44 the m.to- supply @ 12.s ks politan level
household cilias and Kerola ol 3O kg./ ho4tehotd

Addition^l Total Annuol

1l

7ffi
173

169

929

X
124 78

9D
193

|,2r9 2U
54 23
,lO4

t93 |,343
342
74 24
531

| 1Al
342
24
531

I
E

74-

255 28 189 2A
71

929
,148

1,343 342 52

226
531

r27
55
141

217 875 133 5

n2
1,016 9 7

ric

ffi
1,016

r,272
527

227
2

1,u26 716494 89

1,738 1,016
35

Neg

t7

l5
452 49
,105

I
40 79 224 2

l6

&

494 89

4U
n,

6 707

935
21

l9
|,732
?18

6980
2,O52

Ul
52t

3m
t68

2,O52 886
5

; ;

I I

l4
J 2

I
2 9

965 514l0r 19lE. 9I

-)
449

,18 32 494 -89 _ 484 ,t0 |,221 7894 2,O5? t aal 510 23 31

6l
t9 I I
8

t6 I
7 6

34 51 -9
3.01?

550
19

59

t,916

10.85t

t.216

134

Deliverance from Hunger

which largely patronises the not..lso-poor consumers at the cost of the taxpayer, into a Pl)S that is orderly in the sense that its beneficiaries would be sharply ipentified and targeted, and that they would know what their entitbment is on a regular, guaranteed basis. In a system of specific {nd guaranteed entitlement, the consumer, rather than the indiffdrent bureaucrat or the dishonest dealer, is the master. Once an entftlement is guaranteed, it becomes the responsibility of the governfnent to ensure that it places in every fair price shop a specific quantity of foodgrains for use within a specific time-frame-a wqek, a fortnight or a monttr--Sased on the number of households to be served by that particular fair price shop and the entitlement of each household. The entire administration would thus becor{re public, with the various hierarchies of the government, the cpnsumers, the representatives of the consumers such as consumer bodies, people's representatives
such as the legislators, and non-g$vernmental, voluntary and social service organisations fully aware of the quantities that are by law expected to be received and distributed on a verifiable basis through fair price shops. There will be no cause for action against transgressions such as those that charadterise the public distribution operations at present. A fair price shop dealer will no longer be ablc to tell the public that he has receive{ short supplies, and if he did and the public found this to be true, [hen the political costs of such a breach of promise to the governmpnt of the day could be extremely

heavy. Conversely, the political gains to a government which promises a certain entitlement to needy consumers and ensures its
discharge can be very handsome lndeed. Thus, guaranteed supply of essentials to the poor households by way of assured food security is also good political policy. In this system there is no gap between promise and performance unless it be the result of administrative

breakdowns or breakdowns whigh are beyond the government's control. In such a situation the cohsumers can always be taken into confidence and the reasons for fallure shared with them. The only losers in this system would be coirupt and indifferent government officials and traders who thrive on pretended shortages, caused by unspecified and therefore artificially created uncertainty in supplies" The first step, therefore, is to change the direction of public distribution, the flow in the reformpd system running in the direction of the targeted rural and urban peor who will clearly know exactly what their rights are in the supply system.

A Pubtic Distributiott-cuntDeiivery System lor tndia

135

subsidised areas where wage levels are such that even at the presently

We have seen, however, the acute poverty prevailing in rural

prices the pooi cannot afford to buy foodgrains' The centrally is",re pricei in operation between February 1986 and October 1986 are given in Table 4.2TARLr- 4.2

Exdepot Issue Prices of Wheat and Rice Per Quint{l Rchssd by tbe FCI for th PDS from I Feubsry l9t6 effctive till I (hober l9E6
Wheat

Common rice Fine rice

Superfine rice

Rs. 190 Rs.231 Rs.243 Rs.258

These were ex-depot prices. By the time foodgrains reach fair price shops in urban and rural areas, to the small extent that thev do, the costs of transport, handling, intermediate storage and the shop dealer's margins are all added to the consumer price' There

have been cases where certain state governments have added further charges called 'administrative charges'to these costs before delivering foodgrains to the consumer and made them a source or their general revenues at the expense of the consumers in the PD$-a taxation without consent! This means that by the time the foodgrains reach the consumer, in some cases at least, another 40 to 45 paise per kg could get added to the price. This in spite of the government's instruction that such margins should not exceed 15 paise. Obviously, such a price would be completely beyond the purchasing power of the poorest consumers. In Orissa, an amount of Rs.44 per quintal of common rice, Rs.42 per quintal of fine and Rs.47 per quintal of superfine rice was added in 1986 to the FCI's issue price. before the rice was delivered to the consumer in
the PDS. Thus in mid-1986, the PDS consumer prices fixed by the Orissa government for the three varieties of rice per kilogram were Rs.2.75, Rs.2.85 and Rs.3.05 respectively' In Bihar, the prices

varied from Rs.2.65 to Rs.2.67 per kg for common, Rs.2.78 to Rs. 2.80 for fine and Rs. 2.95 to Rs. 2.97 for superfine rice in the same period. lf rice was distributed at a place beyond 20 km from the Bihar State Food and Civil Supplies Corporation's depots' it wculd cost more, depending upon the transport rates to be fixed

r:16

Deliverance from Hunger

gJns were available market. In Bengal, t{e price fixedtrrt ot *t "'oL "ut j..-,|-"-l?: **Rs. 2._19 per kg w[riie for the three varieties of rice, it ranged from Rs. 2.62 io Rs. 2.190 per tg. Th" p.; ;f wheat in the Bengal PDS in 1986 was trighei thai ttre tbSS prtces by 19 paise, while the price of rice was
ln llre :p^e:r
paise higher in Orissa for the cor{rmon and superfine varieties and 15 paise in the case of fine rice. The increase in

These prices were above those at which tfrese

by the Collector or Deputy Corilmissioner. In mid_19g6, the con_ sumer price for wheat in the Blhar pDS consumer was fixed between Rs.2.16 and Rs.2.lg $er kg. In Uttar prua"rf, the rate fixed for wheat was Rs. 2.10 peikg *-hil" fo, ttr" it.""i".,"ti". ot rice, the rates fixed were Rs. Z.{:, ns 2.65 and n..i.aO p", tg.

the incidence of sales tax was Rs. 7.60, with a market fee Rs. 1.90 per quintal. All these were borne by the ,beneficiary,of the pDS. From I October 1986, the Govefnment of India revised the issue prices of rice by Rs.8 per quintal upwards to the levels given below:

the price of rice from 1985 to 1986 was around 6 per cent in all these states. The difference between the Governfiient of lndia,s issue prices and the consumer price ultimatety filred by the state gou".nrn"nt. i, accounted for by the states' sales tax and market f"-" I",*ri"., t."nr_ portltion.a1g landling charges, administrative charges of rhe State Food and Civil Supplies Corporalion. interest charies and the fair p:t^.-" r-hgp dealer's margins. Thd administrative Jharges in mid_ 1986 of the Bihar State Food and Civil Supplies Corpoiations, for exa_mple, were Rs. 4 per quintal df tooAgrains, whili the sales tax and market fee accounted for bet*een ns. t t.SS and Rs. l2.gg per quintal,.depending upon the varioty of rice. In the case ofwheat,

Common rice Fine rice

Superfine

rice

Ss. 239 per quintal Rs. 251 per quintal Rs. 266 per quintat

Since taxes are ad valorem, the cohsumer price of rice at fair price shops went up further, and after October 19g6, were even higher than those in mid-1986. It is, ther(fore, not surprising if, on some occasions, the prices of rice and u{,heat in .fair price;shops, were

nearly as high as those in the open market. When asied why

A Pudic Dietributlon-cum-Delivery System for

India

137

foodgrains were not distributed by state governments in rural areas, the most common answer one got from the officials of the Orissa, Uttar Pradesh and Bihar state governments in 1986 and, prior to 1983, in Andhra Pradesh as well, was that in rural areas there was'no demand'for foodgrains. The officials either did not know or did not want to admit that the employment opportunities, wage levels and the consequent earnings of the rural poor over the years are so low that they cannot afford to buy foodgrains even at prices available through the PDS, notwithstanding the fact that even at the ex-depot issue price of central pool foodgrains there was a subsidy of Rs.66.30 per quintal of foodgrains (wheat and
rice pooled together) at the 1986 issue prices, borne by the Government of India. This central subsidy is the equivalent of the cost of procurement operations such as the labour, movement, storage, interest, gunny, administrative charges, purchase tax, mandicharges and the costs of distribution under similar heads. The need to price foodgrains at affordable levels was acknowledged by the government in another context-that of the foodgrains component of the wages payable in the rural wage employment

equal to the costs of transportation, other handling charges and the margins payable to the village and urban fair price shops, which constitute the centrepiece of the delivery system. The basis and details of the costs that the centre will have to

programmes like the NREP and RLEGP, with foodgrains being priced at levels which would ensure to a certain degree the principle of 'real wages'. In 1986 these levels were Rs. 1.50perkgof wheat, and Rs. 1.85 for common, Rs. 1.95 for fine and Rs.2.10 for the superfine varieties of rice. While it is arguable whether the poorest people can satisfy their needs even at that price at existing levels of employment, the prices at which foodgrains are made available in the employment programmes can serve as a guideline for pricing foodgrains meant for the poor in the PDS. If this strategy were adopted, the central issue price would have to be lowered in such a way as to ensure that these foodgrains are sold at these prices in urban and village fair price shops as welt. This would mean that in addition to lowering the ex-depot issue prices, as in the case of the rural employment programmes, the costs of transportation and other incidntals involved in the distribution of fooderains uD to the time the grains actually reach the beneficiary have-to be borne by the central government. In terms of the PDS these would be

138

Deliveranco from Hunger

incur on account of this PDS which would supply 17.5 kg of foodgrains to all the living below the poverty line in rural and urban Indi at Rs. 16.332.20 million in 1986-87, ttie quantity so being 12 million tonnes per year, at the costs and prices during the financial year 1986-87, are given in Table 4 The costs of transportation handling. including shortages and taxes, are assumed at Rs. 17 per quintal on an average for foodgrains that will have to be moved from the FCI godowns to villages, and Rs. 7 for to urban areas. An amount of Rs. 8 is provided as the fair shopkeeper's margin or profit per quintal, in both rural and areas. In other words, the per quintal cost of delivering to the consumer in the urban and rural areas would be Rs. 15 hnd Rs. 25 respectively, in addition
prices the basis of the proportion of distribution between wheat dce in the stocks held by the government in 1987, which is i4 a ratio of 7:5, the entire costs of this reformed PDS have been out. At a distribution level of 12 million tonnes of 7 million tonnes of wheat and 5 million tonnes of rice would bd channelled under this scheme to the urban and rural fair price all over the country. The cost of transport and thp margins for the fair price shop dealer should be borne by the and the movement of grains effected to the villages the FCI godown points should be under the supervision of agencies, as otherwise these valuable fooderains would regularly reach the villages. Also, to keep malpractices and temptations donwn, the margins for the fair price shop dealers should bg fair and reasonable. Since on an average, around 350 to 400 houSeholds would be attached to a fair price shop, a margin of Rs. 8 p{r quintal would ensure a monthly income to the dealer of Rs. 400 on account of cereal sales alone. With commodities such as cloth, soap, tea, iodised salt, and matchboxes also being sold in these shops, in addition to other essential commodities like kerosene, editlle oil and sugar being provided by the government" the fair price shop dealer will have an income that will keep him well above the pbverty line. Assuming an average off-take of 5 tonnes of foodgraips per month in a fair price shop, around 250,000 jobs can be crlated and stabilised in the service sector through an expanded PD$ spanning the country. The'subsidies'that are shown in Table 4f 3 will thus create employment for

to the central issue

a
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1lo

Deliverance from Hunga?

a few hundred thousand unedlployed youth in the counrry, an overwhelming majority of who{n are in rural areas. The spin_offs that would be generated in the transport sector and the handling (loading and unloading) sector Sill lead to further employment, as loodgrains are carried by all means of transport to villages all over India. All this will be generated by the costs shown in table +.3. ln other words, food subsidy is nQt just a.free lunch'; it is at once a
human resource development afrd employment generation invest_

ment, benefiting several milliori households. The proposal for a reformed f,DS made here would mean that at an actual off-take of 15 million t[nnes, about 3 million would go to the urban non-poor and the nbn-poor of Kerala. This quantity should be non-subsidised. Therp is no danger of the open market prices flaring up unduly because the quantity going into the pDS in the urban areas would still be df the order of 4.3 million tonnes. poor and non-poor taken together, as against an estimated 7 million tonnes at The latter figure is arrived at by taking into account the I level of distribution at which about a million tonnes each in Pradesh, Kerala and Bengal, and around a million tonnes in Tamil Nadu and elsewhere were being distributed in the rural (The level of distribution in rural Andhra Pradesh in years was higher by another 0.4 million tonnes.) The also means that the roller flour mills that had been drawing 3 tonnes of wheat annually till 1984 from the central pool at rates will no longer get these allotments. Thus. to the that the roller flour rnills will have to purchase wheat from the market, and the urban non-poor will have to pay prices for their cereal needs, the farmers will get a higher ich is bound to stimulate production. Such market ptoduction is essential, especially when the strategy from the Seventh Plan onwards is sought to be based On decentralised production, on a
broader geographic basis than at A combination of support prices and demand-based will be an ideal incentive for better prbduction and in the years to come. The nonpoor in the metropolitan cities fnd Kerala will be paying, at the 1986 prices, approximately Rs. ?.85 per kg. of wheat and Rs. 3.40 per kg. of rice in the PDS and a higher price in the open market. At this stage it should also be that while we have discussed only rice and wheat and their subsidised

Pu ic Di.tribution-curn-Dalivery Sfttcm for

lndh

t.ll

distribution to the poor through the fair price shops, wherever coarse grains are consumed and are available for procurement, their procurement (especially through price support) should be taken up and their distribution ensured through fair price shops. This is essential because they are cheap and are the poor man's staple. Since the focus of the PDS is the poor man, there is little merit in imposing on such rural poor as are accustomed to coarse grains, expensive grains like rice. Rice subsidised and made available at Rs.2 per kg. which was the average price of the three varieties of rice in the rural employment programmes, would still
be beyond the reach of the coarse grain consuming rural poor. The right thing to do, therefore, is to procire and distribute at subsidised rates Qoarse grains in areas where they are the staple. This would give a great fillip to coarse grain cultivators-mostly dry land and

small and marginal farmers-who can then aspire to get better prices for their produce. This would also fit in with the curent

Plan strategy of broad-basing food production with particular

emphasis on dry land farming. The Food Corporation of India has fought shy of procuring coarse grains on the ground that they are dif6cult to store beyond a certain period. We thus have a somewhat

contradictory picture of the Government of India fixing support prices for coarse grains and the FCI refusing to undertake price support operations. While it is true that, relatively speaking, storing coarse grains is more difficult than storing wheat or rice, under proper conditions, coarse grains can certainly be stored for at least one full year. It should also be pointed out that wheat or rice stored for more than a year (partially in the open as at present) is not particularly healthy for the consumer either. The healthiest thing to do in procurement, storage and distribution-in the financial, quality and management senses of the ternr-is to ensure a quick turnover of the grains. This would, among other things, cut down on cornrption and wastage. To ensure this, states like Maharashtra, Gujarat, Madhya Pradesh and Karnataka which consume coarse grains on a large scale, and those like Andhra Pradesh and Tamil Nadu where they are consumed in certain areas, should be assisted by the Government of India with concessional finance from the Reserve Bank of India to make their procurement locally and distribute the coarse grains to the poor through fair price shops. Having said this, one can anticipate a few
problems that this might throw up. For instance, in Andhra Pradesh,

142

Deliverance from Hungol

jowar and ragi are consumed i{ certain areas, but their procurelowar ment is difficult due to low av{ilability of marketable surpluses.
The high-yieldtng varieties of jo]war which are produced on a large scale in Madhya Pradesh and tlierefore available for procurement ar, however, not acceptable tp the Andhra Pradesh consumer, whereas the white Raichur jow{r of the Karnataka area has wide consumer acceptance. This is a{ important pointer to the need for all these states to coordinate tlieir purchases and distribution so that the necessary levels of dem{nd-based procurement are worked out and inter-state supplies effec{ed. The Civil Supplies Corporation of the concerned states will thus have to complement each other in areas affecting the poor and in fdodgrains distribution across several states. To this extent, the poligy of the centre in fixing support prices for coar$e grains will assufne the credibility that is presently missing, which in turn will promfte dry land farming. The pressure on an expensive and scarce graid like rice will also be eased and its surplus availability used for intervention or to boost foreign trade. In this context, the made in 198!84 by the Andhra Pradesh Government of rice through the rural fair price shops in certain districts of the where people are accustomed to consuming it at Rs. 1.60 per (as against Rs. 2 per kg of rice) deserves attention. About 21 tonnes of broken rice were distributed in that year through PDS in these areas. Apart from the availability of a grain that i cheaper than rice for the poor, it

meant a lower volume of r for the Andhra Pradesh Government since the per unit of broken rice at Rs. 160 per quintal was lower by at least Rs. 80 compared to whole rice. Consequently, interest charges were also lower. In addition. it gave the government an to remind Andhra's powerful rice milling industry that it an obligation to supply not only
whole rice but also broken rice t the state's PDS at prices fixed by the State Government. Where milling industry was concerned, it helped them to quickly clear ir godowns of the accumulated by-product and proceed with further manufacture of rice, which not only kept the of industry moving and labour employed, but also ensured that farmer was constantly pursued by the millers for his produce. kind of 'trigger-ofF effect is engineered not just by broken consumption but by an active PDS which creates the for foodgrains by widening the

A Public Distributiortscun-Deliyery System for lndia

market to include the poor in it, which in turn means procurement throughout the year. This induces awareness among the farmers that there will always be a demand for their produce, which in turn would stimulate production. The principle is the same whether we distribute wheat or rice or coarse grains or broken rice. It is necessary, however, that this cyclical movement is ensured on a sustained basis so that, over a period, per acre productivity itself is increased to such levels that agriculture no longer remains a high cost industry. In our proposal, Andhra Pradesh and West Bengal will have their allotments substantially reduced compared to the 198!&t level. This is, however, fair since the national resources in terms of subsidy and allocation of foodgrains should be equitably distributed based on the incidence of poverty. A lower allotment will also help these states to more sharply target their distribution to the really poor. Certain states, particularly in north India, such as Uttar

Pradesh, Bihar, Madhya pradesh and Rajasthan, where acute poverty stalks the countryside, will find their subsidised foodgrains allotments dramatically raised. Maharashtra and Gujarat in the
west will also benefit substantially. However, in these two western states and in Madhya Pradesh, where coarse grains procurement is possible, the states should be made accountable for such procurement with credit assistance from the Reserve Bank of India, and the rnaximum possible quantities procured and channelled into the PDS fully subsidised by the centre. In other words, coarse grains should be made available at rates cheaper than wheat. This Jould be done in Kamataka as well, where procurement of ragi is feasible. Nutritionally, coarse grains have the same.caloric values as rice or wheat; in terms of quality they are in some respects even superior to these more expensive grains. The wheat and rice saved by the use of coarse grains should be chanelled for mnsumption elsewhere,

especially in the urban areas for market intervention. Since it would take some time for the northern states to create the infrastructure needed to absorb the large quantities of foodgrains that would become available, during the interregnum grains that are not immediately used by them could be made available to states like Bengal and Andhra Pradesh, warning them, however, that there would soon be a reduction in allotments to them. This would be fair to all concerned. While Kerala, Tamil Nadu and Karnataka will also benefit by higher allocations, Delhi will continue to enjoy

Dcllvcrence from Hunger

the status quo. There will thus be a radical reorganisation of the distribution pattern of central and foodgrains which will enthuse the various states to a new system of food security. At this stage, a cautionary about West Bengal and Andhra Pradesh is appropriate. Andhra is an important contributor of ric to the central pool, its current level of contribution being a little over 1.5 million Any reduction of central pool allotment of rice to it from tlre present level of around a million tonnes mav become a ive to the procurement efforts of that state. On the other hand, dn its own, Andhra Pradesh has in
efforts in procuring nearly a to the procurement it does for the its procurement from outside the central pool, because of tfte centre's refusal to receive the procured stocks into its pool on the ground that the state, in turn, would expect a higher for its PDS. It is high time that
the centre--state efforts are in the national needs and the on a more rational basis, grounded ial of Andhra Pradesh as a

recent years been making million tonnes of rice in central pool. Yet, it has had to

surplus rice producer. An under whici Andhra Pradesh is ment to the central pool

should be worked out to deliver all its procureappropriate monetary incentives

and, in return, accept a PDS of foodgrains which is lower than the 1.98H4 levels. Tlris would help the centre persuade Andhra Pradesh to streamline its PDS in a manner that would target and serve only the of the poor. Bengal, too, should be given appropriate incentives]to undertake procurement efforts for the central pool. For one , it should be encouraged to make up the entire gap the 1983-&4 allotment and the proposed 1986 allotment its own procurement efforts for the central pool against a incentive. Uttar Pradesh, Madhya Pradesh and Bihar will also have to substantially step up their procurement efforts. However, to put the of the PDS itself in perspective, we should take a look at the s policy of buffer stocking which has a significant on costs. The policy of support prices for paddy and wheat has an important part in sustaining production in the green belt and elsewhere in the country. Sustaining production has meant sustaining the farmer and the farm economy of the n4tion. It would be no exaggeration say that the agricultural elonomy of Punjab, Haryana and
^to

A PuHb Dt ribttdoln--.annVDr/rvcy Sfltem for India

western Uttar hadesh is sustained on this basis. That the price srpport provided by the Food Corporation of India in even Andhra Pradesh, w$ch is not a heavily surplus state in the sense in which Punjab and f.Iaryana are, has been responsible for sustaining production was dramatically illustrated in 1975-76 and a fbw years subsequently when large-scale purchases of paddy were made . directly from the farmers at paddy purchase centres set up in the villages. In 1976 the then Chief Minister of Andhra pradesh, J. Vengala Rao publicly acknowledged that but for such support, the farmers would have been in dire straits. Agricultural pricing and a price support mechanism will thus play a very vital part in.the new decentralised strategy we are contemplating to boost food production in the country. As in the
would be idle to pretend that private trade can take up a challenge ofthis size, for they have neither the financial nor the warehousins capacity for a task of this magnitude. In any case, if the governmeni withdrew from the price support scene, it would be gambling with the country's economy.which is still overwhelmingly agricultural. It would again be foolish to think that all stockJ that are being purchased from farmers are on behalf of the pDS. The temptation, therefore, to club the cost of maintaining buffer stocks with the cost of distribution and describe them as ,food subsidy' in our budget documents should be avoided. Such claims needlessly detract from the merit of government's efforts to support the farmer and the nation's agricultural economy and to promote the country's independence in the matter of food. At the same time, they give a misleading impression that 'food subsidies' go entirely to support the onsumers. On the other hand, we should squarely acknowiedge that 'buffer' stocks build up because of the price $upport extended to the farmers. That there is no direct nexus between the built-up stocks and the PDS is evident by the government's reluctance to dyanamise the PDS by giving it a new direction, even when the opportunity presented itself in 1984-85 and 1985-gd. The large stocks that were built up in these years were not considered as providing an opportunity to feed the poor, but as an embarrassment to be liquidated by any means. Hence such measures : i the unprecedented volume of sales to roller flour mills and private trade by auction of foodgrains purchased and stocked with public

productivity will therefore continue to be a necessary policy. It

past, the purchase of foodgrains to sustain production and encourage

It|.
finances.

D.llvranca from ]lung.r

It would therefore be incurred in acquiring foodgrains

incorrect to dePict the costs support operations and in . The allocations nrade in maintaining suclr stocks as 'food the budget under the head 'Food Subsidies'. are oot futrds exclus' consumers. Such b.descriPtion ively spent to Provide food to these subsidies in their entiretY gives the misleading imPreseiort go to serve the beneficiaries of the PDS, particularly the Poor are unwarranted, among them. Slnce both these the buffer stocking space to we should devote some time how little relevance the policy of the government and poor. the so-called 'food subsidies' have certain characteristics that To do this, it is essential to the demand for foodgrains are typical of the food trade. itself is restricted to persists throughout the Year, and about 90 days in the case of about 4O davs in the case of requirements have to be rice. This means that the total throughout the Year for collected in a short sPell, but cost of Rs. 226.20 Per quintal at distribution. At a Pooled alone on this forced stocking 198ffi7 costs, the interest for a period of nine months' work out to Rs. 23.75 Per even at the concessional interdst te of 1.4 per cent Per annum' the

rate at which the FCI Reserve Bank of India' It is oprates under such maintain a certain order level
usually comprise a month's

its operational funds from thc that any other industry While every industrY has to . stocks to meet demand, they
However, since the foodSrains to be built uP beYond the as a securitY against Possible

trade is sensitive, stocks are annual distribution shortfalls in Production. In March 1984 th of the recommendations of the chairmanshiP of the Secretary'
1.

of India decided,l'? on the basis group set up under the . Government of India' that

the size of buffer stock

agencies ln the country ing 5 million tonnes of

be maintained bY the Public

be 10 million tonnes, comPris-

and 5 million tonnes of rice;

and
u Oflice memotandum of thc
of Food and Civil SuPPlies'
of India No. 9-IE4-B'P.I.' Ministry

of Food, datd 7 Msrch

1984.

P|,tbric

Disaibutft/tFtt lF.0clfucty System for

ldla

2. the buffer

stock of 10 million tonnes will be in addition to the operational stocks ranging from 6.5 to 11.4 million tonnes on different dates of the year, as shown in Table 4.4.

TABLE 4,4 Slze of

Opcntbnd Stodc

ac

lrm

Down by tbc Govcrnmcnt of Indla

Rice

Wheot
lst April
1sr July 2.1

lst October
lst January

8.4 6.3 4.2

4.4 3.0
1.5

6.5

tt.4
7.8
10.1

5.9

This wduld mean that the total stocks would, normally go up to

21.4 million tonnes in a year. It is necessary to examine to what extent such a high level of food stocks as held, say, in 1986 can be attributed to a PDS meant for the good of the poor. With food production levels reaching an annual average of 135 million tonnes and above, any scheme to build up a buffer stock of a marginal l0 million tonnes as laid down by the Government of India's Technical Comrnittee has no relevance. The production levels themselves should serve as an insurance for such contingencies as production shortfalls. Right up to 1985-86, including the corresponding distribution year 1986 (which covers the period January to December 1985), issues of foodgrains in 1985, including those made to fair price shops as well as those to the roller flour mills, employnent prognunmes, defence services and private trade, did not exceed 13.74 per cent of total cereal production and 15.72 per cent of total cereal availability, after providing for 12.5 per cent towards seeds, feed and wastages (see Table.4.5). This being the case, a buffer at l0 million tonnes. during the period 1982-83 to 198H6, represented between 7.17 and 8.49 per cent of the total production of cereals and between 8.19 and 9.17 per cent of the total availability of-cereals. While whether such a proportion gf stocks as buffer to distribution is necessary in the context of the rising levets of production is itself open to questibn, if ,the nation'holds a briffer in excess of these l0 million tonnes, then it can do so only on a diffcrcnt policy footing and cahnot

ttlE

Crop year

Production

Total

Percentagc

Paccntage

of cereals

dbtibution

of distibutbn to prodtt tion

of diiti'availability
14.29 9.97 13.05 15.72

budon to

1982-83

117.6
139.,18

rg2s5

198H4

rn.u
tt1.2:7
118.56

t4.72
12.17 15.31 18.62

12.51 8.73

l9&H5
1985-86

134.42 135.50

1r.a
13.74

Nots: The distribution year is the calenCar year, the corresponding years being: Distribution yeor Crcp year
1982-83

198H4
198/Fa5

r983 19E/
1965

1985-&

19M

attribute it to the needs of

such excess holdings cannot be

Consequently, the costs of charged to food subsidy

in the countrv's financial no logic in holding 10 million Secondly, there appears to as on I November, when it is tonnes of buffor on 1 MaY as 10 million tonnes in a month or obvious that the arrival of buffer of 10 million tonnes two is inevitable. Holding a thus has no justification. and charging the costs to the has been an accidental build-uP Thirdly, any buffer that we procurement is a commitment rather than a planned one. the government has no choice or born of a policy of price control over arrivals. And with , PDS of the kind needed to serve consumersi are not ln any way the masses, stocks pile uP. But responsible for this. policy to maintain such a Fourthly, it is not prudent cost of Rs. 23.000 million high level of inventory at a (at 1985-87 prices), borrorred an interest rate of 14 per cent per is Rs. 3,220 miltion a year to the annum. The cost of credit nation. at 1986-$7 rates. buffer stock is needed for It is therefore clear that no
sustaining the PDS. Whatever
does exist is actually produc-

costs incurred for its maintention-oriented. and therefore all as agricultural snDsidy. Its role is ance should be properly incrrrred to augment Production. the same as the fertiliser

A Publlc Dlstribtrtio'D..',/'/>Oclrytl SVtt

for

lndta

t{9

While we have argued that public distribution did not require

even a buffer of 10 million tonnes, the total stocks in July 1985 and in July 1986 exceeded the limit of 21.4 million tonnes by about 8

million tonnes, in the context of a continuing procurement level of L9 to 20 million tonnes. The least this should have done was to
signal the use of additional quantities of foodgrains over and above the 11 million tonnes distributed through fair price shops in 198H4. This. however, was not the case. Two points emerge from these arguments:
1

. It is not appropriate

to assign the entire cost of stocking

21 . 4

million tonnes to the public distribution system; and 2. any stockholding beyond 21.4 million tonnes cannot be ascribed to the needs of the PDS.
Considering the crucial role that price support operations play in sustaining foodgrains produclion and the resultant foodgains stocks in the hands of the government agencies, and at the same recoglising that buffer stocks are needed to baik up a PDS, it would be

relevant to determine the buffer required to back an appropriate level of public distribution. In the financial year 1985-86, 9.85 million tonnes of grains were r distributed through fair price shops alone-9.43 rnillion in the nonITDP and 0.42 million in the ITDP areas. At the same time. tlie government disposed of 18.96 million lonnes, which was the cornbined total of fair price shops, roller flour mills, employment programmes, defence needs, sales to the traders and exports. This meaps that a quantity of 9.11 million tonnes over and above the fair price shops allotment was disposed of in 1985-86. This was obviously because the levels of procurement in the country had steadi$ increased, not only in that year but over the entire Sixth Plan period, and this, in turn, had improved stock levels to a degree that they could be maintained at a level in excess of that required by fair price shops. Since the annual procurement inflow matched the distribution level, the stocks suffered no depletion: on both 1 April 1985 and 1 April 1986 they stood at a little abqve t 21 million tonnes. The sigrificance of the amount of stock disposed, i.e., 18.96 million tonnes in the year f985-86 is that the government felt confident enough to dispose of L9 million tonnes of foodgrains, even if the stock level reached at the beginning of the financial year was 21 million tonnes.

foodgrains or an average of 19.$ million tonnes. If, of these, 15 the consumers. the balance million tonnes are earmarked
-available is 4.5 rnillion tonnes. The employrtrent generation these foodgrains. Of the two granrmes around which we have namely, the IRDP and the JRY ( the IRDP should have the ability of that programme to

will naturallv claim employment generation Proour poverty alleviation efforts,

erstwhile NREP and RLEGP),

properly implemented than programmes which can at best

operation till the other strategies, in providing assured incomes

claim considering the greater : incomes over a period, if of the purely wage employment only as a kind of a holding
and industrial. succeed

stable and sustained

yeaI.

the poor households based on opportunities throughout the

Earlier in this study

rve

the need for providing

of the subsidy-+um-loan programmes under the must expand its advances under
of the target households as met from the food stocks of the

consumption finance to the

supported asset-based, seH IRDP. While the Reserve I

consumption finance, the far as food is concerned should

countrv. The gestation periods of the thev are assisted bv medium

months, but the schemes assistance. however. much earlier. The criterion for the asset has started genershould not be determined bv ating an income but whether 'it has started generating an income above the poverty level and sufficient to maintain the
even after the loan instalment whether such an income level owed to the financing institution has been paid. All the evaluation ones undertaken since October studies, includihg the at the Govemment of India's 1985 by various independent are not being generated. clear that such instance. make it It is, therefore, obvious that the fonsumption finance contemplated in the form of foodgrains would have to be made available till the repayment stabilises during the layback period. This can be estimated as betwen one and two ypars. The exact number of months

differ. Normally loans that are repayable in 36 start generating incomes

schemes

Publtc

Dlstriffir>ann-Dcllvery $Wtclr, lor tndt.

t6t

for or at which particular period of the scheme's implementation such assistance ihould be made available to the beneficiaries will have to be judged by the local authorities at the development

block level. But a maximum provision of up to 24 months, during

which period a mediuin-term loan assisted scheme can be expected to stabilise in terms of income and repayment, is reasonable. This provision could be of the order of L5 kg per household per month' and it should be in addition to the 17'5 kg that the same Poor household would be entitled to at the village fair price shop under the PDS. Thus every IRDP beneficiary household will obtain in all 32.5 kg of foodgrains during the best Part of the loan repayment p.eriod, when it needs it most to successfully work the scheme provided for it. The price and delivery costs of the additional 15 kg of foodgrains should also be subsidised in the same way as the 17.5 kg of grains through the PDS. By this method, half the total needs of an average rural poor IRDP beneficiary household will be provided at affordable prices. At the end of the. scheme period' subsidised foodgrains assistance, both under the IRDP and thc PDS. should be withdrawn since the family concerned will have crossed the poverty line. We would thus phase out families from both the PDS and the IRDP through a constant review so that subridies do not turn out to be open-ended doles, but are sharply targeted to assist only the needy and the deserving. A subsidised FDS thus becomes a support strategy to the government's anti-

poverty strategies. Since 3 million households are assisted under the IRDP each year, the foodgrains requirement for these households under consumption assistance will be 3 x 0.18 = 0.54 million tonnes of foodgrains in the first year. Since this assistance will continue for another yedr for ihe same families, the requirement of foodgrains in the second year would be 1.08 million tonnes, which will cover the new batch of 3 million households that would bc brought into the programme. In the third and strbsequgnt years it would still be 1.08 million or rounded off to a rhillion tonnes per annum since every year 3 million old beneficiaries will leave the programmehaving crossed the poverty line-while a fresh batch of 3 million will join the programmg. In other words, one million tonnes of foodgrains would be needed every year for this programme fron the second year onwards. Although the costs of distribution' that is, of carrying graim to the villages and subsidising the price differential, will be the same as those under the PDS, they will

152

Ddlvorance from Hungcr

have to be charged not under head in the Union Budget. The

subeidy'but under the IRDP at 198G87 prices on price

level for this million tomcs

differential and deliverv at the

will be Rs. 1378.74 million the cost of the grains at issue price will be Rs. 1708.50 million. Since.the grains would be made
available to the target group as
recoverable. Their cost should

loans, they would be be borne by the central government. But in keeping with the pattern of IRDP subsidy funding, the delivery costs shou be shared by the centre and the states on a 50:50 basis. Details of costs of this million tonnes of grain, in terms of price, delivery and the cost of the grain at issue prices are given in Tabb 4.6.

However, the significance of this proposal would lie in the utilisation of the infrastructure through a rural PDS. The
4.6
Otre

M lb[ Toun.s of foodSr:h.

Yerr
(in

Pr

mi

ion torrrrfilrrrpc8)

0.417

Consumer subsidy (at

R.E.

1986-87

rates) on foodgrains already borne by

Govemment of

India

69.8E Nl.N

66.30

662.98

Carrying charges to villagbs (delivery

costs)
Futher subsidy
towards price

25.n

A5.75

25.00

rM.25

25.m
46.58

250.00

(whcat:
Total

(Rie;255.7-200.m)

differential /t0.00 190.00 - 150.00) subsidies

foodgraiG
134.88

A3.m

55.n
142.6

23256

465.76

592.39 137.87

1378.74 170E.50

Cost of

150.0

874.50

834.00 170.85

A Pubtb Dtstrituttlottt''-JD.ttvqy Sftttm lor lndia

15:'

deliverj system created for making foodgrains available to all the households identified as poor in a village will be the very system .which will ensure that the food requirement component of the entire consumption finance is delivered to the IRDP beneficiary household which, as a poor household, would already have an identity or ration card. An endorsement could be made on this identity card indicating the additional allotment. The card would go out of circulation at the end of the programqre period when the household will hav crossed the poverty line. A delivery system of this kind wil make for a constant review and evaluatidn of both the programmes-the PDS and the IRDP-which will compel the governmnt and its field agencies to think about the actual results that are being achieved against the stated aims, since field-level programmes tend to overlap and the implbmentation of one part of the overall programme shows up the deficiencies in the implementation of the other parts. The foodgrains needs of the defence services and the armed forces such as the BSF and CRPF and of Modern Bakeries, taken together, would amount to 0.4 million tonnes. This brings the total requirement of foodgrains to the PDS, the IRDP and the defence and other forces to.16.5 million tonnes. With the stability already achieved on tlre foodgrain production front, a procurement of around 19.5 million tonnes on an average-it could be a little more or a little less in a given year--in the comingyears appears certain if all the states put their shoulders to the wheel. Therefore, the use of up to 3 million tonnes of foodgrains for the rural wage employment generation programmis is always possible. It was earlier pointed out that the daily wage component of foodgrains in rural employment programmes should not exceed 2 kg per household since a proportion beyond that would actually limit the choices open to a Poor worker in acquiring his other food
.and non-food needs. We have also seen that a household's minimum

need of cereals would be around 2 kg per day. It is therefore appropriate to work out the costs of using 3 million tonnes of foodgrains in the rural employment programmes assuming, as we did, a minimum wage of Rs. 10 per day, and a grain wage component of 2 kg per man day. The number of man days that will be generated with 3 million tonnes is 1,500 million. The costs of implementing a rural wage employment programme of this size are given in Table 4.7. The outflow of grains for all the various

t5{

Midmum wage per day C.ost of 2 kg foodgrains at the r.at of li33 kg of wheat and 0.67 kg of lice as per the existin{ guidelines of the cntral govcmment on the retib of wheat and rice releases for the employment programmes, at Rs. 1.50 per kg for wheat and Rs. 2 per kg for
nce
3.34

of the wages per man day (10 - 3.34) Matrials component of a man day's crlployment Total cash component of a man day's eFployment
Cash component

6.6
10.m
16.66 24,990.00

generated
Cash cost of generaring 1,500

million

of employment (3,000,fiX) tonncs 3,000,000,000 kg which will generate

rn days qual to

million
(1500

mi[ion
rar.66)

15fi),000,000 mdn days at 2 kg pr day) million Cost of 3 million tonnes of foodgrains tonnes of wheat and 1 million of rice at a pooled cost of Rs. 1,900 per of wheat and Rs. 2,557.70 per tonne of ) Carrying cost of 3 million tonnes of to the viuages and the margins fair price shop dealer (the same rate Rs. 250 per tonne adopted for the

6,357 .70

million (wheat: 3&n.00) (rice:2557.70)

public distribution system) Total cost of the programme

750.0 million
32,097.70 million

programmes taken together arb summed up in Table 4.8. It is ar( important to note that the deployment of foodgrains can vary, 'depending upon actual procureinent in any given year.

Considering the fact that

development

of a distribution

systgm level that matches the level is perfectly feasible. we have to determine thel level of buffer stocks needed to period of three months will be back the system. Since a

needed to position the stocks, { buffer of three months' requirement, i.e., 5 million tonnes will pe appropriate. A break-up of the monthly needs of the system is given in Table 4.9, while the requirements of stocks are shown in Table
4.10.

Given the required levels of

(Table 4.10), any accumulation

Pubtic

Dlstributio*can>Dfirty 9r'frtr lor t di.

resr-E 4.8 Yearly Outtlow of Foodgrrhs on

t55

AI

Courts

fin miAion to',,'r,s)

Fair price shops (subsidised)

the benemefio- ftciaries pol an (subst etties and. dised)

to
Kerala (non-poor, non-subsi
dised)

Releases

IRDP

Rural Defence ond oher ntent pro- forces grnmn es M.B.I. (subsi- etc.
employdisedt.

Sensitive Totll
border
sla.zs

11.30

3.O2

1.00

3.00

0.,tO

0.82

t9.52

regle
M|xlmi|m Needs ln Any Glvcn

4.9

Mo

h of the SupPly Sysiem (in million tonnes)

1.00

Fair price sbops' needs Metropolitao and defence needs IRDP consumption finance needs Rural employment wage needs

0.29 0.08

o.E
1.62

Total per month Neds for three months

4.86 or 5 million tonnes

TABLE 4.10 Size of Opcratlond Stod(s ao Met Demrnd

(in million mrnes) Tot^l

lst April
lst July
l

2.9
11.6

st Oclober

lst January

8.7 ).6

6.0 4.0 7.9 8.0

8.9
15.6 10.7

r3.8

beyond 20.6 million tonnes, inctuding a buffer of 5 million tonnes' shoutd encourage discussions at th policy levels as to whether more foodgrains should be channelled through the PDS or used for the generation of rural emPloyment or gxported, depending upon policy priorities and resource constraints, As for costing'

156

Dclivsance from Hunger

of buffer stock required to back
on the rest should legitimately be

excepting for the 5 million the distribution system, the ascribed to what mav be called expenditure shown under the The procurement and support

an 'agricultural subsidy' and the of Agriculture's budget.

prices announced by the governthe case of wheat it is higher this policy is not to be criticised

ities they help create, and are better-off surplus-generating have large surpluses and from whom these surpluses are by the Government of India benefit even more by the tive charges they are paid by the centre. Oi the other hand. state which aims at distributine foodgrains to the identified poor like to levy or collect sales tax on the distribution of For example, Tamil Nadu abolished the levy of sales tax foodgrains long ago. Therefore,
there can be no iustification for tax and market fee in the showing them as 'food subsidy'. I would need a separate study by here because, while discussing a absolutely essential to point India provided Rs. 20,000 mi million in the 1987-88 budget or budget towards 'food subsidyr, it to feed the PDS, as is large subsidy covers production policy-<um-policy failure of the PDS can be identified bv
elements such as purchase

ment are production-oriented. than the intemational price. since self-reliance in food is being shown as a'food subsidy' apply whichever price is calculating food subsidy. price of wheat is Rs. 180 per Rs. 22.38 per quintal (the ment of India in 198G87 beine appropriately charged fo an agri to do with the'consumer in the such as purchase tax and duction areas. These levies are terms of the infrastructural generally taken advantage of by farmers. Further, states which

the price incentive offered is However, the golden rule is to price or market price-in , if the international landed

the pric differential of

ion eost of wheat to the Govem202.38 per quintal), should be
subsidy, as it has nothing rDS. The same is true of levies fee imposed in the surplus proto augment production in

of foodgrains acquisition and

is true that a subject of this

kind . However, it bears mention iable PDS for the country, it is that when the Government of

in the 1986-87 or Rs.22,0d

23,000 million in the 1988-89 certainly not meant exclusively understood and believed. This bsidy and, what may be called In view of all this. the real costs following method:

Publlc Distribution-cun-Dalivery System for

lndia

157

1.

buffer requirement of 5 million tonnes of foodgrains

should be assumed:

2.

expenses on market levies, purchase tax and state admin-

istrative charges should not be reckoned while computing

subsidies; and

3. the effect of price subsidy on wheat, at least to the extent of Rs. 22.38 per quintal, amounting to Rs. 2238 million at
1986-87 prices on 10 million tonnes of procurement should be assumed.

A food budgeting of the kind advocated here will provide at affordable prices, every year, about 29 per cent of the caloric needs of poor households estimated at 51.67 million, in the country' It will provide a little more than one-half of the total caloric needs of 6 million rural poor households who are the beneficiaries of the IRDP schemes, will help provide for one member each in 15 million rural poor households 100 days of wage employment at a minimum wage of Rs. l0perday,partof which will be paid in the form of 2 kg of foodgrains at Rs. 1.50 for wheat and an average of Rs. 2.00 for the three varieties of rice. It will also meet the needs of the defence and other armed forces of the union and of Modern Bakeries and of the sensitive border states; and finally, it will make available for 9 million households of Keiala and metropolitan non-poor to the extent of 50 per cent of their total requirements to moderate the foodgrains prices. The cost, at 1986-87 prices, of all these put together to the central exchequer will be as shown in Table 4.1I . The subsidies required to support the PDS designed for the poor are only Rs. 16,332.20 million, which will include Rs. 1,200 million towards the emoluments of 250,O00 fair price shop dealers calculated at an allotment of 5 tonnes a month per shop or 60 tonnes a year, which alone would provide each shopkeeper an annual income of Rs. 4,800. Coupled with other essential commodities and the sale of other domestic requirements, the shopkeeper's income will keep him above the poverty line. As for the buffer of 5 million tonnes, the maintehance cost of which is Rs. 2,536.50 million per year, it would support not only the PDS meant for the poor but also all other needs, i.e., of the metropolitan non-poor, IRDP, JRY, etc. (Table 4.8). To summarise, the cost of the reformed PDS which will look

158

Dcliverancc from Hungcr

r
Ccir

Er.lE 4.11

to Ce$nl Erchcqucr

(in million rupecs)

Coct of ensuritrg aoc$s (physical economic) of 12 million tonncs of foodgrains to the poor thc PDS as envisaged io TsUc 4.1 (rce Tablc 4.3 for of costing), i.e., thc pria dificrcntial plus delivery 2(a) Cort of providing a million ronncs foodgrains as comumption ffnance for the IRDP by way of ensuring aocess (physical and ) of grains to thc benefraiaries which will be a 2(a) (i) of (s) above, cntre's share of costs, being the total price differential and half transportation
costs 8s per tht IRDP pattem (b) by wsy of cosr of grains which will

l.

16,332.20

7,378.74

1,253,74

loan and hence rccoverable from (Table 4.6) 3(a) Crst of utilising 3 million tonnes

a consumption beneficiaries
1,708.50

.rural wage employment million man days of employmenr thc cost of gr'ains, price differential dclivery cosls, and cash wage and matrial (for dclails se Tablc 4.7) (b) Consumcr subsidy to be bome by Govemment of India (see Table 4.3 for details) 4. Cost of maintaining 5 millior torines buffer stock lo $rpport the above programmes the buffer crrying charges calculstd at Rs. .30 per tonne as per tlre FCI's revised for l9E6-87 Total co6ts excluding the consumption componnt (i.., the total of itms I + 2a(i) + 3+4'

foodgrains in the for genrating 1 ,500 will include

32,491.70

2,412.@

2,536.50 54,632.74

after th.,fural and urban poor a$ well as the urban non-poor, will amount to Rs. 18,868.70 milliori, which will include the carrying costs of a buffer of 5 million tonnfs at 19ffi7 prices (Rs. 16,332.2fr + 2536.50 = 18,868.70 mitlion). .lp against this, 'food subsidfes' for the supply management
system in India as at present aonqived and operated, were estimated

by the FCI at Rs. 807.60 milliroh more for the year 198G87, at Rs. 19,676.30 million, whictr included storage cosrs of Rs. 5,190 million fot a buffer stock of 10.2p million ronnes. It is essential to clarify here that this buffer stoc! of 10.23 mitlion tonnes does not accurately reflect the actual buffer quantities hetd in the country on central pool account but reprpsents only the FCI buffer, while

A Public D/is,tributior>cutr>Ddtttty SY*qtt for lndia

actually a few million tonnes are hetd by the agencies of certain state governments which may not have been physically taken over by the FCI. Since this taking over is a continuous process' at a particular iroint in time the actual quantity of buffer stocks held in the country's central pool is really more than that reflected in the FCI's accounts. The quantity thus held by the agencies of the state governments and not taken over by the FCI as on 31 March 1987
was 3.29 million tonnes, as estimated by the FCI. In other words, with no additional expenditure, we can operate a reformed PDS

that will serve the poor without sacrificing the interests of the metropolitan non-poor who are the primary beneficiaries of the
present PDS.

A word of caution here about the problems in the use of foodgrains in rural employment programmes: Against a plan touse 2 million tonnes of foodgrains at a wage rate of Rs. L0 per man day' which should cost Rs. 21,2100.66 million (see Table 2.17 in Chapter 2) towards the cost of grain, cash wage component, delivery and price differential costs, and the materials component, the budget provision in 1987-88 was only Rs. 14,6fi) million. The step'up in 1988-89 by the centre for these programmes only amounted to Rl 544.3 million. There are limits beyond which foodgrains cannot be imposed on target groups to their benefit. A short provision in the cash component results in non-payment of even a bare minimum wage, the construction of poor quality assets and irrelevant and therefore wasteful use of the foodgrains component. This is why the 1986 guideline of the Government of India that foodgrains should form 50 per cent of the wage component imposes more foodgrains on the individual beneficiary than actually needed by him. This only leads to his having to sell those grains again' probably at a Iower rate, leading to leakages on the one hand, and erosion of real wages for the beneficiary on the other. In fact, one state in India went to the extraordinary extent of paying 7.3 kg of wheat as the daily wage in the employment programmes to cover the entire daily wage of Rs. 11. A wage employment programme should not providb more than 2 kg of grain wages per man day, wlile ensuring only one person in a household is provided guaranteed employment in the programme. If these basic realities are built in to the desigit of the wage employment programmes, the need for providing ap,propriately larger .cash outlays for these programmes will become obvious. Howcver, if these cash outlays cannot be provided in the central budget,'thed it would be more appropriate

t60

Deliverlnee from Hunger

foodgrains.

. where it costs much less to the poor than it does through a wage employment programme. we have a problem in maintaining a cash-grain balance utilising foodgrains for wage employment, a correct mix of distribution and rural wage employment strategies has to adopted depending upon the availability of cash resources. the appropriateness of using around 3 million tonnes of a year in the rural wage employment programme. To up, the slogan 'food grains only for productive employment' and comfortable feeling it generates of the availability of an resource in foodgrains for generating rural employment, to be regarded with a great deal
distribute the same quantity
the liquidation of the accumulated whenever this occurs it has no the limits that the central with rupee resources. asked by the critics of the PDSs Andhra Pradesh is whether a quantity it provides in these to the poor household and why it baecessary to organise an PDS with a[ the attendanr problems to deliver such a ' quantity. While this question has been answered in Chapter 5, it needs to be mentioned here that according to the proposal we made, while all the poor households will get one-fourth to of their requirements through the PDS, the poorest among who are identified as deserving of assistance under the s employment generation programmes will get a little half their total household needs by way of foodgrains. If the initiatives that are so necessary in such programmes, not to be lost entirely, and if support to.the poor is seen not a dole but as a catalyst, motivating them to achieve a better living andard, then meeting their needs up to the half-ivay mark is more appropriate. Our research also shows that after a certain nutritional level. the poor household looks for of other needs like better clothing, shelter and A modest PDS effort therefore has critical relevance to the of a poor household. Finally, it is essential to add through the use of media and .through nutrition workers, if a nutrition education and health education is imparted to targetedJ)aor households, the of caution. Even as a strategy stocks in govemment relevance beyond a point, treasury has in matching One question that is like the ones in Tamil Nadu quanrrty of about 15 kg (the states) per month makes any

to use these

in the

A Public Distrlbutiotu cunr-D.titcrY System for lndia

161

effect that the additional foodgrains will have on these households would be dramatic in bringing down the levels of malnutrition, infant mortality and maternal mortality rates. One goal we should aim to achieve through a PDS of the kind advocated here is to enhance the decision-making power of women in tlle country by making the wife rather than the husband the owner of the entitlement or'ration'card. Also, as in Andhra Pradesh, there should be no discrimination between adult and child in indicating the scales of eligibility in the household cards. The nutrition education accompanying a reformed PDS should stress the needs of maternal nutrition in (he context of pregnant and nursing women and the rights of women and girl children to their legitimate share of food with the rest of the household. Nutrition and health education can make even a little additional food go a long way in achieving dramatic socio-economic results. In organisational terms, a PDS is the base, the foundation ancl infrastructure on which alone can a delivery system needed to provide the essential nutritional component of the employment programmes be built. Even at a modest level, the PDS as a base provides for and assures a higher level of delivery to others who are poorer than the base level target groups. However, even at that modest base level, the PDS in Andhra Pradesh, with atl its limitations, has acted as a catalyst in ushering in important benefits to the poor at a soci(Fpsychological level. What is certain, then, is the country's ability to distribute about 19.5 million tonnes of foodgrains a year, earmarking up to 4.0 million tonnes for rural development programmes alone. Can we sustain a procurement of this magnitude given the level of cereal production reached by the country so far and the procurement efforts made by us in the past several years? And can we operate a PDS of this size? The answer is definitely in the affirmative, despite the 1987 drought. India's cereal production has kept pace with its population in the 1970s and in the 1980s. Its growth rate was 2.31 per cent ;gainst the 2.25 per cent registered by the gr.owth of the population during 1971-81, as shown by the Report of the Regional Commission of Food Security for Asia and the Pacific, Bangkok (August 1983).''

I' Background papers presented at the FAO/AFMA/FCI seminar held from 23 to 25 April 1985, Vigyan Bhavan, Nerv Delhi: 'Review of existing food security situation and medium-term prospects in Asia and the Pacific-l'.

r6:2

Dellverence from Hunger

According to this report, while thb production of rice in this period rose by 1.8 per cent, wheat showed a remarkable growth rate of 5.2 per cent per annum. India als[ increased its wheat arca by Z.B per cent during this period. In a llater study made by the FAO for the decade 1973-83, referred rq by Dr S.S. Puri, Assistant Director General, in the second Jauiaharlal Nehru Memorial IFFCO Lecture at New Delhi in 1984, India's cereal growth rate was assessed at 2.90 per cent..!4 The dereal that has caused concern is rice at a per hectare paddy yield df 2.2 tonnes in 1983. The overall yields of cereals at 1.6 tonnes per hectare are also very low. Despite this and a very large proportion of the area under cereals being unirrigated, the annual rate of 2.90 per cent in the decade 197!83 has been the of yield improvements. At a low per hectare consumption of 30 kg of fertiliser nutrients, which is the main reason for low ity, there is a scope for a much higher level of fertiliser use and for much higher per hectare
yields. An imaginative price policir for paddy in the south has been long overdue and such a step can lryetl bring about high per hectare yields of rice based on a higher rfse of inputs and employment of appropriate post-harvest Andhra Pradesh, for instance, grows much of its rice cfop in extremely adverse agroclimatic conditions and would need to be given a higher .price for its paddy if yields are to be su$ained and increased, but even though such a differential suppoit price was suggested for paddy grown in the southern, westerh and north eastern states by Chaudhari Randhir Singh, Meripber, Agricultural Prices Commission, in 1983, on the ground ttlat the farmers in these states are 'handicapped by comparatively liigher production costs and risk element', the recommendation hab not been taken seriously by the Government of India. The shift irf production away from common varieties toward$ fine and superfine high yielding varieties of rice appears to be the result of price ifferentials between these three varieties and is an indicator of positive role pricing plays in increasing production, which in can support better technological inputs for still higher India's foodgrains production ential has been well presented

''' Background papers presented at the to 25 April 1985, Vigyan Bhavan. New De Devlopment and Agricultural

AO/AFMA/FCI seminar held from in Asia-Pacific region (extracts).

23

. S.S. Puri, Nxus betwen Cooperativc

A Public Dlstributior'-cufiF.DaltY.cry Syttern for lndia

163

by G.R. Saini in a paper given by him at the FAO seminar in 1985.'5 Even more interestingly an analysis of what V.M. Dandekar forecast

for India's.food production potential in the paper 'Achieving

Balance between Population and Food: The Indian Case', presented in August 1976 at the Nairobi seminar which was jointly sponsored by the IAAE, the FAO and UNFPA, sholvs that what
the country has actually achieved in the foodgrains sector subsequent to 1974 should alleviate all anxiety in this regard.'6 .In 1975 Dandekar had taken the view that a balance between

food and population was nowhere in sight, as far as India was concerned. However, he conceded that even in the period 196&-74, the per capita foodgrains consumption increase of 3.13 kg was almost entirely due to increased domestic production. He also conceded that the increase by 6.20 kg in per capita consumption in the period 1,96U74 compared to 1952t-58, was supported to the extent of 5.59 kg by increased domestic production. On the basis that an output of 200 kg per capita would be adequate to achieve a balance between food and population, even if in very bad years food production fell, Dandekar projected a growth rate of foodgrains output at 2.08 per cent based on production trends between 1954 and 1974;he also forecast a trend output for 1981 and 1986 at 183.84 kg and 189.93 kg respectively, and concluded that the required food-population balance was not likely to be achieved in the near future by India. ln the event, however, the foodgrains production in 1981 at 129.59 million tonnes turned out to be higher by about 9 million tonnes than the 120.84 million tonnes projected by Dandekar. At a per capita output of 189.57 kg, it was higher by
5.73 kg than the 183.84 kg projected for the same year by Dandekar. Dandekar's foodgrains production projection for 1986 was 133.94

million tonnes, whereas this level of production was achieved in 1982 itself (133.30 million tonnes) and was far eiceeded in 1984 with production reaching 152.37 mitlion tonnes. Even a lower production in 198,{-85 of 145.54 million in 1984-85 exceeded Dandekar's projection for 1986. Production in 1985-86 was 150.5

"
'6

Volume

I of the background

papers presented at the FAO/AFMA,/FCI

seminar held from 23 to25 April 1985, Vigyan Bhavan, New Delhi. G.R. Saini, 'Foodgrains Production and Potential: the Indian Experience'.

T.Dams, K.E. Hunt, G.L Tyler (eds.), Food and popul.ttion: p/,orities in

Decision Making, Saxon House,

UK,

1978, pp. l19-30.

Dcliveranco from Hunger

million and production was lzl4.07 million in L986-82.'? Dandekar's food-population balance of a per capita output at 200 kg was reached in l9M (206.94 kg) ev0n if the estimared population for that year is taken as 732.27 million (at a compound growth rate of 2.25 per cent over the l98l cehsus figures of 685.1 million), as against only 705.20 million projpcted for L986 by Dandekar. It must, however, be recogniped that in the period 1964-65 to 1982-83, foodgrains production ln the country rose in L0 years and fell in eight years. In this periQd, production rose sharply in six years, and fell sharply in four yeprs. The country has, therefore, to guard against situations of this kind that have occurred on four occasions in a period of 18 yeaps-in 1965-{6, 1972-:13, 1976-77 and 1979-80. However, as Bhatia has pointed out in an analysis of the food production trends in tge period 1970-71to 198H4:

. . . the trough of f979-80 w{s not only higher than the earlier two troughs since 1970-71, hut about the same as the peak of l97V7l. Since the beginnin[ of the green revolution, while there have been wide fluctuptions in agricultural production, the production trend has beep upward so that each succeqding trough or peak has been higlrer than the preceding trough or
peak.

''

Bhatia also makes the point thaf 'the gains in agricultural production in the country since the miiJ-1960s have been made possible
largely by increase in crop yields'.'n Therefore, to provide a minimum standard of nutrition to the pedple living below the poverty line and to hold the prices of foodgfains in check in years when ptgduction falls through interventio,n in the market, it is essential that the central and state governments should step up procurement to levels higher than those presently achieved. The stocks held by the centre, as already mentioned, are not so much the result of mnscious efforts at procurement as of the price support mechanisms coming into play in the face of high leveljs of production in select areas. We have already analysed at some ldngth the scope for better procurement in certain states. It is offipially acknowledged that in Uttar Pradesh and Bihar, not all of the fair average quality grains offered
t1 Economic Survey, 1987-8E.

.'r B.M. Bhatia,

Food Security in Soulh Asia,

p.

" Ibid..

D. 37.

Puhtic Dittfibutioltscun-DellnerY Sptem

lor lndia

165

are purchased by public agencies. Considerable distress sales take place in these states and in Orissa. All these grains should properly be procured by the state agencies so that the farmers get the

support needed for not only maintaining the present levels of pro<luction and productivity but to increase productivity as well. This will also improve procurement. While the country's achievements in cereal production are noteworthy, this is no time to relax' as was advocated in 1986 in certain quarters. There was considerable pressure then to reduce the area under cereals so that 'more pulses and oil seeds' could be produced. Unfortunately, this line of argument reflects our failure to create the vital infrastructure needed, especially in the area of proper storage and rapid movement of the cereals produced in the green revolution belt of the country, and purchased by the public agencies. Up to 60 per cent of a poor man's caloric needs are met by thc cereals component in his daily food consumption while the more expensive pulses and edible oils are not yet relevant to him in his quest for his energy needs, as any survey of the food consumption habits of the rural Indian poor will show. Such a shift can only mean that the better off will eat more and the poor will eat even less than at present' The need of the hour, therefore, is to produce more cereals to ensure that they are adequately available, including with the government, while stepping up simultaneous efforts to produce more pulses and oil seeds. Oil seeds and sugarcane should not triumph at the expense of wheat and rice. The position, then, is that the production trends are such that we can sustain and even improve upon our present levels of production and procurement. It is, however, necessary to step up investment in agriculture and create the infrastructure needed to support the farmer and ensure the quality of the foodgrains coming into the hands of public agencies. In a PDS, the most important task is the organisation of the delivery system. kgitimate costs as well as leakages render a subsidised delivery system suspect in thg eyes of the taxpayer, and rightly so. In a growing economy like ours, given the escalation of costs because of inflation, a subsidised PDS can be looked upon as a wasteful exercise that is open-ended. There is need therefore to devise means to cut down even the legitimate costs, while relentlessly eliminating leakages caused by malpractices. The starting point in this exercise is the identification of the

166

Deliverance from Hungar

beneficiaries of the PDS. The elrd point is the distribution of the

essential commodities at the faii price shop level. In between lies the conveyance of the from storage points to the fair price shops. Leakages are at all these points. Identification is a matter of laying down clear-qut guidelines as to who the target groups should be and the i agencies being trained and

motivated

for the job.

The

of identification are not

peculiar to a PDS alone. They are also present in the implementation of the IRDP where, therefore, thi: Gaon Sabha is now sought to be

involved'in the identification of lhe beneficiaries to elimitate malpractices. Non-governmental ions or voluntary agencies and the village community itself ban play a very significant role in
eliminating bureaucratic and political partisan pressures.

which are the chief causes of the ineligible joining the target
lands held and nature of crops can always be laid down. the

decision as to who amons the be included to receive subsr

village community itself, like assisted in making shortlists of

agencies, wherever such credibility over a period.

in a village should legitimately grains will best be made by the Gaon Sabhas. These can be
by non-governmental exist and have functioned with such agencies do not exist, res-

ponsibility will have to be giveh to official agencies subject to oonsensus in the Gaon Sabha. Similarly, over a period, the delivery system itself should be tal<en over and managed by the community, including decentralided local procurement and distribution through farmers'and con$umers' cooperatives. This would drastically bring down state subsldies. Evey sit.. the rural PDS becar{re a reality in Andhra Pradesh, it has been-noticed that the villagrb fair price shop has become as important an institution as the vlllage school. The non-arrival of rice evokes strong resentment qmong the beneficiaries and the community leadership. Since the village fair price shop provides a basic benefit, it has become the focal point around which the poor as also those who depend upon tlr,eir electoral good will, rally. In a situation of this kind, it should bp easy to organise, through nongovernmental agencies, a viable d{ivery system which woutd include transportation of essential commgdities from storage points to the village and their distribution to the beneficiaries in the villaee. Official arrangements are always procedure-bound, leading to

A Pubtic Dixributlot>c1{tn>Oclful Syxtcm lor lndla

higher operational costs. Community efforts, on the other hand, can enable the community itself to take responsibility for it, and use its own resources such as carts, tractors and even animals where necessary, to transport essential commodities to the village and distribute them, without having to formally employ paid manpower at the fair price shop level. Costs can thus be cut over a period and altogether eliminated at some future date. Also, the costs of price subsidy which depend upon the quantities supplied are bound to come down as households climb above the poverty line. In other words, apart from a regular daily vigil
against ghost cards, the target households should be reviewed once every two or three years to ensure the elimination oJ the ineligible.

This kind of a review can help provide an additional supply of foodgrains to households which may, at a given time, have in their midst pregnant and nursing mothers. While organising a PDS, the central and state governments should therefore make monitoring of costs an essential aspect of programme implementation.

5 The Andhra PradEsh Rice Scheme

While discussing the reorientation of the existing public distribution system in favour of the poor, and its extension to rural areas, it would be useful to draw lessons from a study of a system with similar goals in order that the ndtional PDS could guard against the pitfalls such an attempt could encounter. Among the PDSS that have tried to cover rural areas, are those of Kerala, Tamil Nadu and Artdhra Pradesh. Of these states, Kerala is always deficit, while Tafnil Nadu is marginally deficit in years of bad rainfall. Andhra Pfadesh, on the other hand, is a surplus state, encompassing larg@ surplus as well as deficit tracts within its area. While Kerala and Tamil Nadu are essentially 'distribution' states (though Tarlril Nadu's Tanjore District is a surplus district where procurement takes place on a scale comparable to that in some of the districts of Andhra Pradesh), Andhra Pradesh is both a 'procurementl and 'distribution' state. It has several districts that are heavily surplus in rice such as West Godavari,.East Godavari, Krishna, Guntur, Nalgonda and Karimnagar; on the other hand there ale also chronically drought-prone
and heavily deficit districts such as Anantapur, Chittoor, Cuddapah, Kurnool, Adilabad, Visakapatnafir and Vijayanagaram. It also has a large tribal population with as many as eight districts covered

under the ITDP. It would, therBfore, be of value to study the public distribution efforts in this state at some length. In a way, Andhra Pradesh reflects the cotditions obtaining in India as a whole at the macro-level, with ldrge stocks of surplus foodgrains and vast masses of population goihg hungry-a situation crying out for a solution by which the surplup stocks could be used to feed the
hungry.

Andhra Pradesh Riae Scheme

1982-83 witnessed the prevalence

t69

of acute drought conditions

throughout the country, and Andhra Pradesh was no exception' The siate was to go to the polls in the first week of January 1983 to elect its represntatives to the state legislature. Ever since. it came into existence, the Telugu Desam Party (TDP)' which was trying to
wrest power from the ruling Congress-I, had been repeatedly prornising that it would make rice available to the people at Rs. 2 per kg if it

came to power. In November 1982, the Congress Govemment announced that in order to ensure that the price of rice did not rise in the open market as a consequence of drought conditiols, it would subsidise the rice distributed through the PDS from Decem' ber 1982 and make the three varieties of rice available at the prices given below:
Rice varities Rs.lkg.
1.90

Common Fine Superfine

2.10 2.15

The election'manifesto of the Telugu Desam Party (TDP) which was released just before the January 1983 elections, stressed the need for streamlining the PDS so that essential commodities could reach the villages and be sold at reasonable prices, making the sale of rice at Rs.2 per kg the central objective of this larger policy. The manifesto also stated that rice would be made available to the poorest of the poor. Table 5.1 gives an indication of the relative benefits that the consumers were promised as a consequence of the price policy announced by the Congress Government and the TDP in November
1982.

Andhra Pradesh is predominantly agricultural and has a large rural population. According to th 1981 census the rural population of Andhra Pradesh constituted 76.68 per cent of its total population' which is practically the same as the all-lndia figure at 76.69 per cent. Thus, of a total population of 53.55 million' the rural population of Andhra Pradesh accounted for 41.06 million; and of a total number of 10.88 million households,8.43 million were rural. The 8.32 million agricultural labourers in Andhra Pradesh constituted as much as 36.76 per cent of the total 22.63 million workers, as against nnly 24.94 per cent for all-lndia. At the same time, the

170

DCivoranco from Hunger

Rtcc hcea.end

Rlcr Scheme TDP's

promised
State

FCI

issue

price

Price at Subsidised which pice *'as being announced sold in by the stste the PDS government in Novembar from 1 December

avefage

price

retqil
prrces

in

19E2

12.
2.@
2.21

1982

Common Fine
Superline

1.88

2.N
2.15

1.90'r. 2.10
2.15

2.@

2.52 2.79

2.36

3$]

Notc:

'

"

Tliese prics could be slightly l[rore or less depending upon distances over which rice was transported. The actual production of comdron varieties of rice in Andhra pradesh was around 10-12 per cent of the total rice production.

ture, was 43.89.' Although the level of rural poverty in Andhra pradesh was quite high, prior to 1983 its PDS, like those in the rest of India (barring Tamil Nadu and Kerala), was oriented mainly towards urba; areas: very little rice, if at all, wjas distributed through the system in rural areas. For example, in 1982, the Government of India allotted Andhra Pradesh 36,410 tonnes of grains per month. Of this,12,865 tonnes or a little ovei 35 per cent was re-allotted by the state govemment to two districts;lhe urban city_dlstrict of Hydera_ bad, and Visakhapatnam, which included the ihdustrial City of Visakhapatnam. This left a balance of only 23.545 tonnes for distributlon through the PDS in the remaining 2l districts. which had their own u,rban areas to prof,ide for. In Hyderabad city itself, the entitlEment of rice per housfhold per month was 50 kg.

proportion of cultivators to tota[ workers was only 32.73 per cent as against 41.57 per cent for all India. According to the planning Commission, as on I March 1978, the percentage of Andhra Pradbsh's rural population living lbelow the poverty line in lg7-7g, based on the 32nd NSS round oir Household Consumer Expendi-

' The revised figures published in l98j for 1977-28 by the planning Commission show the pcrccntagc of rural popularion living below the poverty lini at 45.4. The provisional figure for 1983-84 is 38.7 pet cenr.

Andhn Pradesh Elca Scheme

171

While the PDS was thus catering essentially to the urban areas, almost all households in the state, urban as well as rural, had been issued with identity cards. In addition to the ones in urban areas, a large number of fair price shops had also been opened in the rural areas of the state. However, the households had not been identified on the basis of either a firm or uniform economic criterion. In some districts the Collectors had divided the population into four categories; in others into three, and in yet others only into two. The economic definition of these categories also differed from district to district. In any case, the family identity cards applied to sugar and not rice, since no worthwhile quantities of rice were reaching the viltages through the PDS whereas, in accordance with
the guidelines set by the Government of India, sugar had necessarily to be distributed in the villages. In December 1982, 12.60 million

identity cards were in circulation; these were attached to about 29,095 shops all over the state, including non-urban areas. Most of the shops in the rural areas, however, did not really serve any
useful purpose since rice was hardly ever distributed there through the PDS. Palmolein oil came to the villages only once in three months; wheat hardly ever did. A substantial portion of the poor villagers did not buy sugar. While kerosene was bought regularly by all villagers, it was not always retailed through fair price shops. These shops thus had very little relevance to rural Andhra Pradesh from the point of view of food supplies, though about 80 per cent of the 29,905 then in existence were in rural areas. Most of them were in fact dormant. Prior to 1983 the PDS in Andhra Pradesh was handicapped by two factors: the low quantities of rice released for use in the PDS; and the non-utilisation in full of even those quantities by the state. Table 5.2 shows the allocation of the central pool rice to the state's distribution system between 1980 and 1982 and the off-take during those years. In keeping with its poll promises, the new government in 1983 tried to rectify this situation. The new government's objective was to make rice available at Rs. 2 per kg to all the poor, both in urban and rural areas. It therefore became necessary to identify poor households using a verifiable economic criterion that could be uniformly applied all over the state. The Planning Commission had adopted an income criterion of Rs. 75 per capita per month in urban areas and Rs.65 per capita per month in rural areas to

172

Dollverance from Hunger

r^Br.lE 5.2 Allocedon rnd Ofr-tsle of Centrsl

pml

Rice

in million tonnes
Rice allotment Quantity not
utilised.

from the central pool

1980
19E1

0.368 0.416
0.437 Statistics

0.222 0.35s

-0.146
-0.061

1982

0.416

0.021

Sotlr(fr Bulletin of Food

and Statistics, Ministry of

Supplies, Andhra Pradesh

published by the Director of Economics and the Commissioner of Civil

indicate p<iverty levels based on a minimum daily calorie requirement of 2,100 in the urban and 2,400 in the rural areas. This meant

that an annual income of beloriv Rs.4,800 and Rs.3,600 for

household of five persons in the rlrban and rural areas respectively constituted the poverty level. The state government also noted

that against a poverty level of Rs.3,600 per annum for rural

families adopted by the Planninl Commission, the Rural Development Department of the Government of India adopted a level of Rs.3,500 per annum to assist them cross the poverty line. In

of the combined rural and urban population living below

1978, the Planning Commission'd estimates placed the percentage

the

poverty line in Andhra Pradesh dt 42.18.In 1983, this was revised to 43.6 per cent or 24.33 million feople or 4.95 million households, calculated at 4.92 persons per hpusehold. A study of the figures representing agricultural labou{ers, marginal farmer holdings,
workers engaged in household industries and the urban slum popu-

Iation as obtained from the 198f census data, the l97G-77 Agricultural Census of Andhra Pradesh and the state's Directorate of Town Planning, persuaded the stdte government that the incidence of poverty in Andhra Pradesh was probably higher than that indicated by the Planning Commission figures. The state government also felt that an income letel of Rs. 3,,500 or Rs. 3,600 per annum did not adequately indicdte the actual level of poverty in 1983, considering the rapid erosibn of real wages that was taking place due to rising inflation. A scheme whose objective was to provide the poor with an essential need, should not just be confined

Andhra Prad*h Rice Scheme

173

to the poorest deciles of the population but should also encompass groups that are only slightly better off but who are liable to slide down to the status of the Poorest in adverse conditions, such as those induced by the failure of monsoons. In view of this, the state government felt that an annual income level of Rs.6,000 per household would reflect poverty more accurately. Therefore, though the original intention was to make rice available at Rs' 2 per kg only to househotds with annual incomes up to Rs. 3,6fi), the scheme warmodified aud broad-based to include households with incomes up to Rs. 6,000 per annum. The next step was to plan for the procurement of rice to support what would be a vastly expanded PDS. To do this, the state government had to make certain estimates of the probable number of households that had to be served through the scheme. Since the object was to help the poor, the natural beneficiaries of the programme would be agricultural labourers, marginal farmers, rural artisans and slum dwellers in urban areas. Based on the 1981 census provisional figure for agricultural labourers at 8.29 million or 3.7 million households, calculated at 2.24 persons per household, taking the household-industries workers population of the 1981 census and the marginal holdings figures of the 7976-77 Agricultural Census as proxies for the artisan and marginal farmer households respectively, and based on the urban slum population figures gathered by the Director of Town Planning in 1982 which placed the slum population at 2.5 million, projections were made as to the number of households needing coverage under the rice scheme (see Table 5.3). It was recognised that this was at best a rough projection in which there was a lot of overlap, but it was deemed to be a safe figure on which to base the prgcurement requirements. Having decided to identify the poor households and provide
TAaLE 5.3 Projcted Number of Housholds for Rice Schnrc

(million) Agricultural labour

households
3.70

Maryinal farmer
households

Arlisan
households

Urban-slum
dweller
households

Total

0.50

174

Delivcrancc from Hungcr state government had to decide household should be entitled to of the poor households and would naturally involve assuring of foodgrains. In any case, this ion the level of procurein the previous year l98l-82,

them with rice at Rs. 2 per kg, upon the quantlty of rice that get per month. A clear providing them with identity them a certain minimum was the objective. Taking into ment (1.10 million tonnes)

the quantity of rice to be 1.5 million tonnes. The total procurement level would be around 3 million tonnes. It should be mentioned here the reversal of the two vital decisions regarding income ceilings for eligibility under the scheme and the quantitative rice entitlemdnt of households, after important administrative arrangements ha{ been set in motion pursuant to the original decisions, were laterlto cause serious problems in the
implementation of the rice schemp. The reversal of the decision on

and the fact that the state, as obligation to make a certain central pool for use in deficit that initially, 10 kg of rice per every month to every maximum of 8 million requirements would be about a of half-a-million tonnes to the ments would be around 1.5 procure this quantity from the India also agreed to this arran state government felt that 10 kg quantity' comparrcd to the household and decided that this kg per household per month, procured from the millers by an

surplus rice producer, had an of rice available to the

, the state goyernment decided

should be made available poor household. Given that a ; had be provided for, their tonnes. With a Contribution , the procurement requiretonnes. It was decided to millers. The Government of

of foodgrains was .too small

. Subsequently, however, the a ion requirements of an average

should be raised to 25

the income ceiling was commuriicated to the enumerating field staff after the work of enumeratipn was already in full swing. The drastic revision of the income ceiling from Rs. 3,600 to Rs. 6,000 caused considerable problems fo!' the district collectors and led to a loosening of the very strict contfols needed in an enumeration of this kind" Since the needs had been worked out on the basis of an income limit, of Rs. 3,6ffi, the projection of beneficiaries was kept high so that the government would be in a position to provide more than ttie 10 kg promised after the enumeration results came in and the could be placed on a

Adhrt

tur,drch

Bb *hmra

t75

firm footing on the basis of actual results. The decision to procure 1.5 million tonnes of rice was based on this higher projection of beneficiaries, in the expectation that some elbow room would be available to provide more rice to the actually identified poor households. The amount of rice to be procured was unprecedented, but the rice milling industry was persuaded to deliver this large quantity under levy though the major crop of 1982, the kharif rice crop, had been significantly affected by a severe drought. This agreement with the rice milling industry was essential because, unlike in Punjab, Haryana or western Uttar Pradesh, Andhra Pradesh is not a'green revolution' state nor is rice a'commercial' crop in the sense it is in the north-west. In Punjab and Haryana, the consumption of rice is minimal; their entire production is thus more or less a marketable surplus, and hence reaches the procurement agencies with little effort required on the part of the latter. On the other hand, in Andhra Pradesh, where rice is the staple, its procurement always requires tough enforcement measures. The state government enforces these measures and the Food Corporation of India buys and stores the resultant deliveries. While under the levy laws, a rice miller certainly ftas to deliver a portion of the rice he manufactures in his mill, there is, however, no law in the
country under which he can be compelled by the centre or the state

to buy a particular quantlty of paddy and manufacture rice. With no

grains coming to the public agencies under a price support scheme, their procurement in Andhra Pradesh is no easy task. In view of this, an agteement with the millers which persuaded them to buy enough paddy so as to deliver an unprecedented levy of 1.5 million tonnes of rice in a drought year to the central pool was a very ggod augury for the scheme. The Government of India approved the entire package, under which a million tonnes of central pool rice procured through the enforcement efforts of the Andhra Pradesh government would be released to the state's PDS and 0.5 million tonnes would be used by the central government for distribution in the other needy parts of the country. However, after alt these policy measures were finalised, the Andhra pradesh Government announced that instead of the original 10 kg, 25 kg of rice would be

provided for each identified household. This meant procuring twice the quantity originally planned and agreed upon. The strain that this decision put upon the state's civil supplieS administration
was considerable.

t76

Dcllvcrance from Hunger

Serious problems arose whpn the results of the enumeration emerged in April 1983. Againqt the maximum projection of about 8 million h'useholds that werq expected to be the beneficiaries of the rice scheme, the numbe4 that actually emerged was 10.85 million, which is almost the nulmber of the total households in the state (11.35 million in 1983). A drive had therefore to be launched to eliminate the ineligible houpeholds and in subsequent months, nearly 1.2 million green cards rfreant for the identified poor households for the issue of subsidised rice were either cancelled or converted into yellow cards, rReant for the non-poor households. Table 5.4 gives a breakdowq of the total number-of green cards citculating in the rural and urban areas of the state in 1985.
TAIBLE 5.4

Grccn Crtds IF Clrculrdon (f9E6) (mitlion)

Projected populaNo. of households Urban
9.35

No. tif green cards

iion of Andhn
Pradesh

in

1966

59.4t4

2.73

12.08

8.t7

10.43

Sourcr: Commissioner of Civil Supplips, Andhra Pradcsh. Note: According to the 1981 ce[sus the average number of membcrs in a household in Andbra Pradesh was 4.9p (10.88 million households for a population of 53.54 million).

10i43 million households in a total of million households in thq state which works out to a percentage of 86.34 is certainly on the high side for an anti-poverty scheme, however broad-based it is in conception. Considering that a total of 13.90 million familf cards (including the yellow ones issued to non-poor householdf to enable them to draw essential commodities like sugar and epible oils but not subsidised rice), were in circulation in 1986, the excess cards or 'ghost' cards circulating in the state acco.unted fior 1.82 million since the number of households projected for 1986, based on the 1981 census was 12.08 mitlion. In view of the benefis fihey conferred on the holden in the form of subsidised rice, it would not be incorrect te assume that a major portion of thes-e ghost cards were green. Even the state government's projection of thq poor households, overlapping and broad-based as it was. had estirfated them at 8 million in 1983. It is
12.08

A beneficiary number of

Andhn Pradesh Rice Scheme

177
'

thus obvious that there were a few million ineligible households benefiting from the scheme. Concerted effort was thus required to eliminate these and the ghost cards from the purview of the scheme.

As mentioned earlier, such an effort was indeed launched in

198!84 and nearly 1.20 million green cards were either eliminated or converted into yellow cards. But the political instability which overtook the state in late 1.984 rendered the continuance of this effort impracticable, with the result that the drive not only came to a halt, but the situation reversed itself and demands were made to

to

restore the cancelled cards. This sent the number of green cards up 10.43 million, a spurt of 0.8 million from 1984. A situation of

political instability gives rise to a demand for more and more benefits for the ineligible, and the political will so necessary to resist it becomes conspicuous by its absence. It is to be hoped that the drive to eliminate the ineligible households from the purview of this poor man's scheme will be re-started and taken to its finish. This is an area of the highest priority calting for the immediate attention of the state's political leadership. If this is not done, there is danger of the most deserving being elbowed out of the scheme by the least deserving, and of the scheme itself, conceived as an anti-poverty measure, becoming discredited. The elimination of every million cards means a savings to the state's exchequer of Rs. 162 million each year, at 1986 prices. This problem is riot unique to Andhra pradesh, but dogs all country-wide programmes designed to help the poor. The result is that the better-off always manage to corner the cream. Even Tamil Nadu, which has been operating a well-organised PDS, had a total of 11.94 million household cards circulating in 1986, whereas the total number of households in that state must have been around 11.17 million only. Of these, those who were entitled to subsidised rice were 11.36 million or 95 per cent of all card holders, or 0.19 million households more than the actual number households in that state. In Delhi, for an estimated l 5 million households, 1.7 million cards were in circulation in 1986. Thus, for the first time in Andhra Pradesh an attempt was made to identify the poor, including those in rural areas, with a view to providing them direct succour by assuring them a certain minimum level of nutrition at affordable prices. To achieve this, the state government had to undertake a massive programme of procurement from rice millers and traders. A procurement policy based on

174
a 50 per cent levy on millers

Dollv.ance flom Hunger

an{ traders combined with restrictions on the movement of their bala{ce production outside the state to areas with better purchasing p{wers till after the requirements of the qnlarged PDS were met, as also those needed to ensure availability within the state in order to hold the open market prices in check, was intnoduced. The ainf of this comprehensive policy was to compel a section of the rich fo support tfe poor by maximising the levy. This policy was challeriged by the millers, but the Andhra Pradesh High Court of Judicatule in a land-mark Judgement upheld the state government's powers [o regulate the movement of levyfree rice outside the state. While it is not intended here to go into the formulation and execution of the procurement policy of the Government of Andhra Prad{sh in 1983, which then was and continues to be the backbone !f the PDS in that state, its success can be measuted from the fact that rice procurement, which had touched a level of 1.10 million tonnes in the crop iear 1981-82, a year of high production not only in Andhra Pradesh but all over India, was stepped up in 1982-{3, a year of acute drought and low production, and a quantity of 1.62 million tonnes of rice was procured through the Food Corgoration of India. Since 0.57 million
tonnes of rice out of this quantity was to be used by the centre and the balance of 1.05 million tonfes was not adequate to meet the requirements of the PDS, the sfate government had to undertake further procurement on its own dccount, both at levy and negotiated prices, to the extent of 0.38 miflion tonnes during that year. The total quantity thus procured arld purchased during the crop year 1982-83 through the central ahd state agencies amounted to 2 million tonnes. This was in a ydar of severe drought and the stepup was from 1.10 million tonneF procured in a year of higher rice production (7.87 million tonnesD to 2 million tonnes, procured in a

year of drought and a lower level of production (7.67 million tonnes). The percentage of propurement and purchase to production of rice in the crop year 198{-83 was 26.07 as against 13.98 per cent irt 1981-82. With the Go\4ernment of India stepping up the central pool releases to 1.10 mil]lion tonnes (it had never exceeded 0.44 million tonnes in any previpus calendar year) and the Andhra Pradesh State Civil Supplies Cqrporation procuring rice at prices notified by the central governnlent and at negotiated prices to the extent of 0.38 million tonnes, fhe total quantity of rice that was made available through the PD$ to the identified target groups, 79

Andhra Pradesh Rice Schome

179

per cent of whom were in rural areas, amounted to 1.51 million tonnes in 1983 as against 0.41 million tonnes distributed in 1982. In the crop year 198H4 the quantity procured through the FCI was 1.48 million tonnes and that purchased in the open market by the Andhra Pradesh State Civil Supplies Corporation was 0.99 million tonnes, making a total of 2.47 million tonnes or 28.82 per cent of
the total rice production in that year. The quantity of rice distributed in 1984 through the PDS rose to 1.73 million tonnes.

Apart from the sound,ness of the procurement policies pursued

and the fact that Andhra Pradesh is a rice surplus state, what made such large-scale procurement under levy and otherwise possible was the uncompromising commitment to the programme of making rice available at Rs. 2 per kg to the poor on the part of the state's

political leadership at the highest level. In the crop year.198,1-85, while the FCI procured 1.78 million tonnes of rice, the Andhra Pradesh State Civil Supplies Corporation purchased 0,97 million tonnes, bringing the total procurement and purchases to 2.75 million tonnes. The quantity of rice distributed in 1985 was 1.8 million tonnes. Table 5.5 and 5.6 summarise the details of procurement and offtake of rice through the PDS during the Sixth Plan period and in the first year of the Seventh Plan period. The sharp rise in both procurement and offltake from the year 1983 was the direct result of the PDS being exppnded to serve the rural poor. With the enumeration of households in the entire state and the procurement policy reshaped to support a massive foodgrains distribution systCm which was expanded to include all the rural areas, the Rs. 2 per kg rice scheme finally brought the rural poor households into the ambit of the PDS. For the first time, as many as 27,221 villages saw the actual arrival of rice into their fair price shops, for distribution to the poor at near-affordable prices. The village fair price shops, which hitherto wefe essentially sugar or kerosene shops, could now hope to operate as viable small busi- , nesses because of an a$sured average allotment of about 50 quintals
of rice every month, wifh a margin of Rs. 7.38 per quintal guaranteed to the shopowners by the state government. Rice began reaching the remotest corners of the state, previously not served by the PDS. Table 5.4 shows that of the 10.43 million green cards in circulation, 8.17 million or 78.33 per cent were in the rural areas. The number of fair price shops which was 29,025 in mid-1982,

Delivcrance lrom Hunger

for PDS: Sirth Plen

(in million tonnes)
Crop year Procurement of levy rice Purchates

by

Total

thlough FCI

,he Stote Civil Supplies

Corporation

198{Hl
1981-42 1982-83

0.415

1.o32
1.6i26 1.,l84

198!84
r98,t-85 1985-86

1.708

r.571

0.189 0.044 0.378 0.987 0. 5 0.897

0.697

t.wl

2.W
2.47r
2.754

7.M

Soorce: Sradra'cal Pcnorama Delhi, a d the Commissionr Noter 1. In 1980-81, the Food farmers, of which 0.133 In 1981-82, the FCI also the farmers.

by the Food Corporation of India, New Civil Supplies, Andhra Pradesh. of India and the State Civil Supplie$
tonnes was purchased by the FCI. 0.032 million tonnes of paddy from

Corporation also puchasd 0.138 million tonnes of paddy from the

2.

Rice Ofi-trkc

PDS: Sixih Plen

(in million tonnes)

Year
Rice

allotment Pool

Difference

(Jar-Dec)

flom cenfiql
0.368 o.222 0.35s

in quantity
utilised

1980

l98t
\942
1983

-0.746
-o.061

0.416
o.437 1.103 1.010
0.0,16

o.416 1.582
1.8,1{)

-o.o2l
+o.479
+0.730 +0.874 +0.945

1984
1985

r.920
2.185

1986

t.2Q
Statistics

Surce: Bulletin on Food

nomics and Statistics. Civil supplies, Andhra Notc: The gap bdtween the off-take

published by the Directorate of Ecoof Agriculture, and the Commissioner of

allotment in the years 1980 to 1982 shows non-utilisation of rice allotted the cerltre, whereas the gap between th years 198H6 shows the quantity of rice off-take and allotment during additionally put into the public system by the state govrnment through its purchase undertaken via the Andhra Pradesb State Civil Supplies Corporation.

Andhra Prlded, Bicc sc,'6'me

stood at 34,030 in March 1986, of which 27,764 or 81-59 per cent were in the rural areas, duly activated. In rural areas, the basic problem faced by the poor, who subsist on daily wages and earnings, is the inability to purchase essential mmmodities even at prices offered bi the PDS. It was in recognition of this that the Andhra Pradesh Government introduced the subsidised rice scheme. The state governmen! also recognised that in the context of a lack of purchasing power on the part of the rural poor, it was essential to make rice available in as many instalments as was financially and physically possible for the poor to buy. Instguctions were therefore issued by the govemment to the district authorities in May 1983 to ensure that ric could be drawn by the beneficiaries in upto fjve instalments a month. At the time of writing, the government of Andhra Pradesh has been implementing this subsidised rice scheme for the sixth consecutive year. Under it, an average of about 180,000 tonnes of rice are distributed every month. In August 1983, the actual off-take through the PDS was as high x 213,452 metric tonnes. The scheme was estimated to cost the state's exchequer around Rs. 1,710 million in 1985-86. Taking a consumption of 1.98 rnillion tonnes and an estimated expenditure of Rs. 1,710 million in 198F86, the subsidy per tonne of rice added up to Rs.903 or about 90 paise per kilogram. With 1.89 million tonnes of rice consumed by 10.43 million households, the average per household consumption through the fair price shops in L985-86 amounted to 181.5 kg per annum or about 1.5 kg per month. The annual subsidy expended on the average beneficiary household was therefore about Rs. 163.95 per annum. In order to understand how the rice scheme in Andhra Pradesh was functioning in June 1985, the author undertook a study of seven villages in four districts of Andhra Pradesh. The villages concerned were seleqed from among the most affluent in the coastal delta districts as well as from a district that is chronically drought-prone and considered to be the most backward in the Rayalaseema region. These villages are the same as those discussed

in Chapter 2.
The study revealed certain serious drawbacks in the scheme. Fint, already been mentioned, the presence of ineligible households and 'ghost' cards is a serious threat to the basic objective of the
as has

lg2

Dsliverance from Hunger

progr:rmme. Although a drive *las launched and about 1.20 million ineligible households were elimi]nated from the scheme in 1983-84, the pressures for allowing such households to continue to benefit from the scherne still persist. lwith the scheme having been in operation for six years now, a fresh enumeration using the latest poverty figures of the Plannin$ Commission for 1983-84 as the guideline needs to be undertakfn. While it is quite probable that these figures understate povert$, they will answer the criterion of enumerating tlle poorest of the poor who alone should be eligible for the benefits of this scheme. [he guidelines issued for identifying the poor upto an annual inbome level of Rs. 4,800 under the

The gap between this figure been used as the basis for 1983-84, could act as a enumerations of this kind

4,800) and Rs. 6,,1fi), which has

at the poverty figures for for errors that may occur'in field level. In the event, the

emerging figures will to the 198H4 poverty percentage levels, which would reflect the number of the poorest of the poor at the piesent time. enumerating households, care should be taken to exclude all owning above 1.50 acres of irrigated land under assured ; above 2.00 acres of irrigated land under other sources of tion such as wells and tanks: above 2.00 acres of dry land cullivated with commercial crops such as chillies and cottoni and 5.00 acres of all other types of dry land. This would be justified, that the average yield of rice rn Andhra Prade$h during the Plan period was about 2,000 kg per hectare; of coarse grains as jowar, bajra, ragi and maize from 600 kg to 1,600 kg a ; and of chillies around 1,100 kg a hectare. However, an annual of Rs. 4,800 should be used as a touchstone while exclusions. All other poor should be included in the rice scheme. Secondly, while the'ration'ripe or'quota'rice, as it has come to be known in the villages, does e]ventually reach the village, it does not become available to the heneficiaries on the first of every month or in the first week of month or on any specified date within a month. Invariably, thd position is that rice reaches the villages whenever, in the of the beneficiaries, 'the dealer is

it to the villag$'. In four out of the six villageN, including the two villages of the chronically drought-affected dlstrict, it was found that the fair
pleased to bring

AndhrE Pradesh Rica Scheme

18il

price shop dealers insisted that the total monthly entitlement of

rice, amounting to 25 kg per family and costing Rs. 50' be purchased by the beneficiaries in one single instalment, that is, all at one time. In these villages, the dealers brought in the rice when it suited their convenience and kept it on sale for short periods-in one village for as short a period as four days and in another village for a week. The result was that a very substantial percentage of the beneficiaries who were daily wage earners were unable to buy their entire monthly entitleuent since they could not mobilise Rs. 50 within a short span of four to seven days. Sometimes they lost upto 10 kg of rice in a month, especially in the lean season' or they were forced to bonow money from the village moneylendersusually the big farmers in the village-in order to buy the entire entitlement. And in no village is such a loan available at a rate of interest that is less than 24 per cent. This position obtained not only in the four villages where the 'ration' rice was brought and offered all at one time by the fair price shop dealer but also in one of ihe other two villages. Here, when the dealer brought rice to the village in two instatments, he did not do so for the benefit of the consumers. The cardholders had to buy their entitlement in one

go. In this village, which is agriculturally very prosperous, the beneficiariei reported that 75 per cent of them were unable to buy their entire entitlement, since only 25 per cent among them had the financial capability to do so. Those who could buy only L0 or 15 kg at a time were not entertained by the fair price shop dealer if they returned after a few days with money to buy the balance. The rest of their entitlement was thus lost to them. In the other village, where rice could be drawn in two instalments, many beneficiaries still did not get their entire quota because rice was distributed 'whenever it was available' and if, at the time rice was available in the shop, the beneficiary did not have the money to buy his entitlement or the balance of his entitlement, he went without his entitlement to that extent. A visit to the fair price shop in one of the villages in the chronically drought-prone district and discussions with the fair price shop dealer showed that though three weeks had gone by in the month, he had not yet remitted the amount required to move the rice into the village. Conversation with the villagers revealed that this was a regular practice with him. In the previous month, that too on the 2lst, he had remitted an amount required to buy

184

Deliverance from Hunger

only 65 quintals of rice, rwhile 88 quintals. These 65 quintals month and according to his bill quantity irr just six days. Most 4s having bought 25 kg of rice bought less than l0 kg. During
any money to cause the Enquiries revealed that he businessman. fle reportedly also ran a fertiliser business in very high incidence of poverty drought-prone district: 85 per the youth of this village, only cardholders among the poorer rice at one time. Yet the fair a sale of 65 quintals of rice in a purchases having been made at one-time sale had also been prosperous village in a delta shops---one run by a who owned five acres of land. In were told to buy their entire do so were subsequently denied this prosperous village, a holders cannot buy 25 kg of rice arises: what happens to the beneficiaries? The green reported that their fair price

quota allotted to the village was on the first of the following , he had disposed of the entire cardholders had been shown him in one go; no one had next L5 days he did not remit

of further rice into his shoo. both a big agriculturist and a

40 acres of land and his family district he,adquarters. There is a this village situated, as it is, in a of the land is dry. According to about 25 per cent of the green

of this village can buy 25 kg shop dealer's bill book recorded ce of six days. with most of the rate of 25 kg. This kind of a

earlier in an extremelv ict. This delta villaee has two and the other by an agriculturist
th shops, the green cardholders at one go. Those who failed to ir balance entitlement. Even in

ial percentage of green cardone lot. The question therefore

'quota rice' at higher prices

where he sells other me ficiaries dared to complain to selling rice at prices higher than he retaliated by altogether re essential commodities such as four months at a stretch. village and both are owned by of the shops is shown in the

that is left unclaimed by the lders of another delta villaee dealer sells such unclaimed a private shop of his own, as well. Once, when the beneauthorities that the dealer was
t stipulated by the government, from bringing rice and other and kerosene to the villase for are two fair price shops in this same person, even though one

owner of the two shops is, landlord who owns 15 acres of own cultivation than in running

of a dummy dealer. The real to the green cardholders, a and is more interested in his
shops and that his brother was

Andhn Pradesh nice Sct eme

185

handling the fair price shops on his behalf. That the rice not lifted by beneficiaries leaks into the private trade channels to the benefit of the traders is a safe guess. It was noticed that in some districts rice was not being distributed in the villages because the fair price shop dealerships had been cancelled on account of disciplinary action taken against the dealers uxder the Essential Commodities Act, 1955. This is a ticklish problem for the district administration, considering the simultaneous need for swift action against malpractices and making substitute arrangemerits for the uninterrupted supply of rice to the beireficiaries.

The biggest snag in the successful implementation of the rice scheme was thus seen to be the village fair price shop. The PDS must ensure that cardholders can buy their entitlement whenever they wish to during the course of a month, in whatever quantities
they want within the entitlement ceiling. In order to do this, the state government had issued instructions in May 1983 to the effect that a green cardholder had the right to draw his rice entitlement in five instalments during a month. However, the rural fair price shop dealer 'brings' in the rice allotted to him as and when it suits him, causing great inconvenience to the daily wage earning beneficiaries.

It needs to be pointed out that we sliould use the expression 'bringing rice to the village' with great care, for it is the state government's policy to transport rice to the village fair price shops at its own cost, which it does through the Andhra Pradesh State Essential Commodities Corporation. It is essential to do this for otherwise there is no certainty that the fair price shop dealer who, when authorised to take delivery of rice at the godowns of the FCI or of the Andhra Pradesh State Civil Supplies Corporation, would actually take the ricg to the village and distribute it. Experience shows that in such circumstances essential commodities more often than not do not reach the villages. However, the assumption of responsibility by state government of carrying rice to the village does not by itself guarantee that the rice will reach the villages in time. There are several reasons for this. Chief among them is that almost the entire fair price shop trade in both rural and urban areas is in the hands of the private sector. Of the 34,030 shops in Andhra Pradesh in 1985, 30,970 were in private hands while 3,060

186

Deliverance from Hunger

the private sector, there are two businessman who had been in the trade for a long time; the other is the self-employed kind. usuallv the educated assisted under the government's anti-poverty schemes as the IRDP or that of the Andhra Pradesh State Castes, Tribes and Women's Finance Corpoiations. In 1985, 6.158 of the 30,970 privatelyowned fair price shops in An Pradesh were in the hands of Scheduled Caste or Scheduled entrepreneurs (See Table 5.7r.
T

were in the cooperative sector, types of owners. One is the

h:ivatly-Owned Frir
Classilication of Shops Cooperatives Privately-owned thops (a) Scheduled Castes (b) Scheduled Tribes

Shop6

in AP (1965)
No. of Shops
3.060 a

)\1
901

(c) Othe6
Total Total (1 + 2)

24,812"
30,970 34,030

3. Urban 4. Rural
Sorrce: Commissiolrer of Civil Supplies,
Note: The total number of fat orice
Pradesh.

6,26
27 ,764

in Andhra Pradesh subsequently rose to

35,193, of whlch 28.335 were in areas. This would include a substantial of the educated, unemployed belonBing to the backward and other poor who require loan assistance from banks, iust like Scbeduled Caste and Scheduled ribe entreDreneurs do.

The success of entrepreneurs society in running their fair price loan assistance extended to them

to lhe weaker section of

)ps depends entirely upon the

the commercial banks around

which revolve all the indivi under the IRDF and similar anti Even though it is the transport rice to the fair price
state's Essential Commodities

beneficiary oriented schemes

programmes.

ation cannot start the ' remits the cost of the rice to the rice allotted by the state from

ty of the state government to through the agency of the poration, obviously the Corport'.of rice until the shop dealer
. which itself buvs. the

FCI on credit. In a system of

Andhra Pradesh Rice Scheme

147

private ownership, the fair price shop dealer is the owner of the rice that comes into the PDS. He therefore first needs to buy the rice from the state's agency (the Essential Commodities Corporation or the Civil Supplies Corporation) before he can move it to his shop in the village. So, if the dealer does not have ready cash to buythe rice allotted to him in time, either the rice does not reach the village in the course of a month, or it moves to the village at erratic intervals. The consequence is that the cardholder either does not get his quota at all or he loses a portion of his entitlement if rice arrives late in the village. In the latter case, if rice arrives say, on the 20th of the month, the cardholder is forced to buy his entire entitlement within the limited span of the remaining 10 days of the month. This is usually beyond his means, especially in the off-season, even in irrigated delta tracts. If this occurs in dry, upland tracts or other agriculturally poor areas like the droughtprone and tribal areas, it is almost certain that the cardholders lose most of their entitlement for that month. It should also be noted that whenever the shop dealer brings in rice during the murse of a month, it is not as if he brings in the entire entitlement quantity of the village. Thanks to the manifold restrictions placed upon him' the dealer hardly ever manages to obtain a loan that would cover

the entire cost of the commodity. The loans invariably take care of less than half the cost required to purchase the full entitlement of a village. The result is that once the vicious circle of delayed arrival starts in a village, it becomes difficult to break it. It will no doubt be argued by bankers and other financial experts that it is sound economic sense to use one-third or one-half of the total requirement of credit at a time and to keep 'rotating' it. It is, however, not possible to apply this rotation theory to the maiority of fair price shops in the state which are located in about 27,000 villages. Most of the agriculturally backward districts have very poor banking facilities. Shop dealers thus have to travel long distances to visit banks. The prospect of undertaking two or more such trips can be daunting for the price shop dealer, both in terms of time and money. Since eight of the 22 rural districts in Andhra Pradesh have large tribal tracts, the task becomes even more formidable. In addition, since the shop dealer has to visit not only the bank office where he credits the collections realised from the sale of essential commodities in order to draw fresh authorisation, but also the office of the Civil Supplies Deputy Tahsildar who has

188

Deliverlnce fiom Hungor recovering its cost, the plight who depend upon him for their solution, therefore. is for the equivalent to the cost of the of the cardholders poor fair price shop dealer the interest on such a large invest-

to authorise the release of rice

of the dealer and the rice can be easily imagined.
banks to advance shop dealers

total entitlement of

essential

attached to their shops. But for problem here will be the mounti ment. This problem is only slightly by the guidelines of the Reserve Bank of India which t an individual a maximum loan limit of Rs. 6.000 without . This Rs. 5.000. even when given in full, is not enough to an average fair price shop. But if the fair price shop dealer a higher loan, he has to produce security, It would be to pretend that young men and women who belong to the sections of our society can afford to show agricultural lands and other assets as security to bank managers. Since the objective of the IRDP is to help the poor who have no of their own to set out of poverty, expecting such persons produce assets as security to obtain loans and then excluding from earnins a livelihood because they have no such assets is, of course, a problem faced not only by the fair price shop in Andhra Pradesh but by all

can be seen from the fact that in 1985. of the 6.666 fair shops which required bank credit in the four districts where sample villages were studied, only 3,034 (45 per cent) received from the banks. The total amount of finances by these 3,034 fair price shops was Rs. 20.41 million at an of Rs.6,727 per shop. The available data on loan finances available to dealers belonging to the weaker sections of society in three of these four districts showed that 614 Scheduled Caste and Scheduled Tribe fair price shop dealers received Rs, 2,620 ion in all, the average credit received being Rs. 4,267 per . In the fourth district on the other hand. where bank adv to fair price shops were the highest at Rs. 8,414 per shop, an verage fair price shop required around Rs. 14.500 for rice alone. there are other commodities such as sugar. palmolein and which a fair price shop dealer is supposed to provide, the requirement of an average

those who are eligible to pz country. The inadequacy of the loaning

te in the IRDP all over the

Arrdhra Prudesh Rice

Scheme

189

shop will be between Rs. 18,000 to Rs. 20,000. According to the Commissioner of Civil Supplies, Andhra Pradesh, an average fair price shop in the state needs to handle essential commodities worth at least Rs. 17,000 a month. The inadequacy of credit extended by banks is thus quite obvious given the constraints. One solution would be for the Reserve Bank to permit the state government to use the credit given to it for wholesale rice trade for the purposes of retail trade as well. In this dispensation, the state government or the Essential Commodities Corporation becomes the owner of the rice stocks purchased from the FCI right up to the village fair price shop level and rotates the limit sanctioned by the RBI against the same government guarantee offered by it for the original credit line. Similarly, the RBI pan also permit the credit extended to the State Civil Supplies Corporation for financing procurement operations at open market prices to be used to the extent necessary to carry such stocks to the village fair price shops, with an appropriate increase in the credit limit. By this arrangement, it can be ensured that essential commodities, especially rice, reach the rural fair price shops in time and are made available throughout the month to daily wage earners. It will also prevent the poorer among the cardholders from turning over their cards to non-beneficiaries, thus preventing the misuse of the public distribution system by the well-to-do. What is more important, it will reduce the opportunities for fair price shop dealers to divert 'raticin' rice to the open market since the state government, as the owner ofthe rice, can keep feeding the fair price shops in the villages in instalments on a continuing basis, depending upon actual needs, without allowing the shops to dry up at any time in the course of the month. This would be a better solution than burdening the fair price shop dealers with large, high-interest carrying loans. A solution suggested by the programme beneficiaries themselves is that the element of private trade be altogether eliminated from the PDS and the state government take over the running of fair price shops through its Civil Supplies Corporation. This is being done in Tamil Nadu where the Tamil Nadu State Civil Supplies Corporation and the cooperatives run the entire network of fair price shops. The main problems here lie in the finances required by way of government investment, including rent for the premises and other infiastructural expenses, and a burgeoning bureaucracy with all its attendant consequences extending right down to the village shop

190

Dollverancg from Hunger

level. The Andhta Pradesh Goverfrment did consider adopting this solution and in 1984 actually orde6ed its implementation as a pilot measure in three districts, but thp scheme was deferred possibly due to resource constraints.
The most practical solution woul{ be to opgrate the PDS through a mix of cooperatives and private, educated, self-employed entrepreneurs, with the RBI financing fhe State Essential Commodities Corporation's purchase and morlement of rice to the fair price shops. This will ensure that rice redches the villages on a continuous and controlled basis. At the same time, it will help provide employment to the rural youth who have to locate premises for housing fair price shops in the and provide other business infrastructure such as gunnies, and measures and a trade deposit to the government. things would require an investment of not more than Rs. 5, The banks can easily advance this amount to the entrepreneur, t expecting security. The entrepreneur can also be to sell in the fair price shop other everyday requirements of villagers such as match boxes, tea and soap. This would help to base his entrepreneurship, motivate self-reliance and also him a further profit. Those who have other avocations like their own business or asricultural interests, should be summarily from operating as fair price shop dealers. An of this kind may well see the beginnings of a new and small entrepreneur class in the rural areas, satisfying t needs to a certain degree. Obviously, this would call for cooperative endeavour on the part of the Government of India and the state sovernment. The former would have to issue te suidelines to the RBI regarding its credit policy on food see that i{ is enforced, while the latter would have to safegu4rd the public finance involved

through appropriate linkages and shop entrepreneurs especially by

Meanwhile. it rnav be seen that

factors thwarts the state able effectively at the village level support from the banking system others who belong to the weaker

supervision of the fair price 's groups. at present a combination of two s intention to make rice avail the poor. Fint, the inadequate the educated unemployed and of society and who are

inducted into the fair price s other anti-poverty programmes. entrepreneurs to run the fair

trade throueh the IRDP and makes it impossible for such shops properly, denying both

Atldrhra Pradadt FIcp Schcmc

19t

the entrepreneurs and the beneficiaries dependent on their shops

the benefit meant for them. There is not much that the state government can do here except to try and persuade the bankers to improve their support measure. Secondly, the private element in this trade, which is either the village landlord or the traditional businessman (or a badly run cooperative society), by adopting practices like bringing 'ration' rice to the village only once or at the most twice a month and selling it for a short period of four to seven days, pre-empt the poor from buying their entire entitlement, deny them.their legitimate due and divert such rice for their own
benefit.

These two factors are actually interconnected. The state's administration at the district level cannot be blamed for the second

type of situation, for it is really caught in a cleft stick. Since, despite its best efforts, the district administration is unable to mobilise adequate credit for the educated, unemployed entrepreneurs, it is forced to rely on the landlords and traders to distribute rice in the villages. We have already seen what the traditional trader can do with the PDS. The instinctive popular reaction to this situation is that the errant private fair price shop dealers should be replaced by the district collector. But who does the c.ollector induct as the dealer in the place of this man? A poor, educated, unemployed entrepreneur, as part of the government's
employment programme and we know what problems this involves.

The collector's dilemma is thus complete. Which is why we need bold and radical reforms in the policies regarding the loaning of public funds to poor entrepreneurs, especially in rural areas. An even better solution would be for the RBI to provide government agencies with all the finance they need to successfully deliver the intended benefits of the PDS to the rural poor. Equally important is the need for the state govemment to display the political will required to exclude ineligible households from the scheme and eliminate ghost cards. Yet, in spite of all these problems, the district collectors and their officers in Andhra Pradesh do manage to move an average of not less than 180,000 metric tonnes of rice evbry month to all corners of the state. Poor families in villages, both in the agriculturally prosperous coastal districts and in the chronically droughtprone districts, have welcomed the provision of rice at Rs.2 per kilogram. They are unanimbus in their opinion that the scheme

r92

Dollvcrancg from Hungcr

should be continued. In the villages of the more prosperous coastal districts, the poor stated that whereas before the scheme was introduced thev ften went to bed hungry, this was not happening any more. of the rice scheme, the savings that were accruing to them month ranged ftom around at least Rs. 12.50 to Rs. even more. When asked whether a saving of this size any difference to the wage earners whose average daily ings in the agricultural season rn the delta area ntas about Rs. 10 day, tho response was positive. The agricultuial labourers, constitute the rnijority of the poor, pointed out that while thc wage in the delta area for a male could be Rs. 10, it was for women. Also, since thev have to face unemployment for intervals, lasting months on end. the availabilitv of rice at affordable price and a4 overall savingj of up to Rs. 25 or more a month on the whole, were a great help. The savings that accrue to are being put to various uses. Some families reported that were less indebted than before. While previously they had to Rs. 2.75 to Rs. 3.25 for a kilo of rice, they now paid only Rs. 2 a significant part of their requirements. This made their Iess burdensome. Others used their savings either to buy more and vegetables for consump-oil, clothes and stainless steel tion, or spent it on items like
utensils.

The beneficiaries of the

open market was being held in

felt that the price of rice in the

because the green cardholder's

dependence on private trade been reduced. The dominint feelins was that but for this they would not have had access to rice to the extent they By far the most interesting of information that emerced prosperous villages during the study came from two situated in one of the coastal districts irrigated by the River or th attached farm servant Codavari. It was that the - svstem was on its wav out as a uence of the rice scheme. In one village this was reported by farmers and in the other by the agricultural labourers themse es. A paleru is an agricultural

. partly in kind and partly

labourer who zittaches himself in However. detailed discussion in in one case and the agricultural

a landlord for a yearly wageworks exclusively for him.

two villages with the.farmers

in the other. showed that

Andhra Pradesh Rice Scheme

this was neither the main nor the only reason for the easing out of the paleru system. What was really happening was that with the

recently constructed Godavari barrage, the command area has been stabilised. This also helped, coupled with the early transplanting of paddy in the second crop seaso , to provide water for almost 70 per cent of the entire Godavari delta for the rasing of a second crop. A few years ago, only one-half of the first crop paddy area was .rsed in the second crop season.; but now, over two-thirds of the entire first crop area is receiving water for a second paddy crop also. Because of the higher availability of water, the area under second crop paddy in the Godavari delta, comprising two disticts. increased from 0.236 million hectares in 1980 to 0.348 million hectares in 1984. This has stabilised higher levels of employment for both male and female agricultural labourers. With employment rising, the agricultural labourer has a relatively higher level of security and therefore chooses to work as an independent, daily wage labourer rather than as a paleru. Thus, better irrigation facilities for the farmer has simultaneously brought for the agricultural labourers a sense of relative freedom. While this phenomenon was emerging, the rice scheme was introduced, providing about 40 per cent of an agricultural labour family's requirement at Rs. 2 per kilogram. This is a price which the delta agricultural labourer can

affor'd, aided by the fact that his wife also earns wages alongside him and, not infrequently, one and sometimes two of his children as well. The agricultural labour iamilies in the prosperous delta villages of the coastal districts of Andhra Pradesh have been able to buy. mosl of the time if not always, their entire quota of ration rice, notwithstanding all the obitacles placed in their way by the fair price shop dealers, including by saving their wages for a few days to be able to buy the one or two instalment sale of rice by the dealers. Deplorable as the tactics of the latter are in forcing the worlting class to buy their full entitlement all at one time, it has encouraged the habit of saving amongst the poor. All these in combination have made the rural labour independent of the village landlords. Such, however, has been its catalytic impact that both farmers and agricultural labourers tend to believe,, and even state with conviction. that it is the rice scheme alone that has been responsible for the weakening of the age-old palera system. Yct another development in the delta villages is the increasing demand on the part of the agricultural labour for wages in cash

194
wages in

Deliyor.nce from Hunger

rather than in kind. This is beca[se, with the cash equivalent of his kind-normally paddj-the agricultural labourer is able to buy more rice than what thp paddy equivalent of cash wages would yield. In one delta villa$e the landowners mentioned that the agricultural labourers, after the introduction of the rice scheme, began demanding cash wages lvhen the paddy prices came down and wages in kind (paddy) whef the prices went up. For the same daily wages expressed in term$ of so many rupees per day, it is advantageous to have wages in kind when the paddy prices go up and wages in cash when the pdddy prices go down. This is again because of the better bargaining power resulting from a combination of improved employment and gfeater value for the wages induced by rice becoming available at dffordable prices. The rice scheme has thus imparted an edge to tle bargaining power of the agricultural labourers in the delta This is a sisnificant accretion to the strength of the agri labour class in the villages, and thev have become conscious It is not as thoush this is confined to the villaees studied in the agriculturally rous coastal delta districts. Farmers reported that a situation obtained in one of the two villaees visited in the drought-prone district-a village that was relatively the prosperous of the two studied. It was the unanimous of the ereen cardholders in all the

villases studied--deltaic or distributed in the PDS was sidering that the FCI and the Corporation accept from the quality and that the relaxation in specifications pool in Andhra Pradesh. the quick turnover of rice storage periods. This is backed by affordable prices, which otherwise would be deteriorating in quality with scheme. certain mvths about Andhra Pradesh have also strongly-held belief is that in the second crop varieties of ri grown in the l rarif season.

the quality of rice

good. This is not surprising conPradesh State Civil Supplies

only rice that is of fair average of India does not agree to any procuring rice for the central , the more important reason is stocks being subjected to long the result of an expanded PDS the consumption of rice in godowns and in the open, passing day. Thanks to the rice

eating habits of the people of n exploded. For example, one

Pradesh people do not eat at ali: they consume only the rice , however, applies only to the rice

Andhra Predesh nice Scheme producers and the middle claqses who have the wherewithal to pick and choose the variety of rice they want. Since rice distribution through the PDS in the past had in any case been confined strictly to the urban areas and catered essentially to the urban middle classes, this preference of the middle classes was treated as something sacred and considered as being universally applicable to the

entire Andhra Pradesh population, including the rural poor. This myth was exploded when the state government put through the fair price shops, even those in the agriculturally advanced coastal delta Andhra districts like West Godavari and East Godavari, a second crop variety of rice called BPT 1235-a variety grown extensively in the delta districts during the rabi season-and IR
new second crop variety-and the consumers gladly accepted them. The same thing happened with Hamsa, a variety of rice that was put through the fair price shops in the Telengana area. This is an example of how the articulate few can spread myths that have no application to the vast masses of the people and how important pricing is for the poor. Thus the advantages accruing frorn the rice scheme-because of the affordable or nearly affordable prices at which rice is made available, its availability at the village itself, its good quality and that extra bit of bargaining power it gives the beneficiaries-have made it a popular measure among the poor, especially in the rural areas. The strength it has imparted to the agricultural labourers makes the rural landowners somewhat nervous. Some of them

50-a

have even said that the labourers have become lazy and less
productive because of the rice scheme. But this is not based on any hard evidence. All that has happened is that the increased bargaining power for wages--for which the rice scheme is only partially but certainly responsible-has shifted the balance somewhat in favour of the working class. From the point of view of the farmers thiF makes it appear as though the apiricultural labour force has become less productive just because it demands more. There is also a lurking resentment among the landholding class that the rice scheme has to a certain extent reducgd the dependence of the agricgltural labourers and other workers on them. Our study of the rice scheme in seven viliages of four districts in Andhra Pradesh shows that the stated objective of the Andhra Pradesh Government in introducing it, namely, helping the poor by extending the PDS to the villages, has been achieved. However,

Deliverance from Hungel because of this achievement, the general objective of streamlining the PDS has assumed greater urbency. To do this, there are three main steps that need to be takedr:

Non-poor households shodld be eliminated from the coverage of the scheme through a fresh enumeration based on the principles mentioned earliQr in this chapter. 2. The RBI should permit thd use of the credit it extends to the
state govemment both for the wholbsale purchase of central

l.

pool rice from the FCI and for purchasing rice in the open market, for retail purpose! as well, namely, for carrying the rice to the village fair pricd shops as the owner of such rice,
J.

against a single state govet'nment guarantee. In order to combat leaka$es, the state govemment should strengthen the government and non-government supervisory machinery to oversee the working of the rural PDS at the village and taluq levels, whdre large stocks are held for rnovement to the villases. At the level the community, particularly women, should be in the distribution work.

The study also shows that in objective of providing rice to which as an anti-poverty
the scheme has alSo changed the PDS and has achieved certain agricultural labour class and can be listed as follows:
1.

tion to achieving the original poor at ,an affordable price, is in itself, a desirable objective, of the Andhra Pradesh unanticipated gains for the poor in the rural areas. These

In the agriculturally prospjerous coastal delta villages, in a context of improving daily lvage ernployment, the rice scheme
is acting as a catalyst to bnd the age-old paleru or semibondage $ystem among agficultural labour.

2. The scheme has also resulted

in savings in the beneficiary households. This has not only helped to reduce the traditional indebtedness of the agricultural labour class to some extent but has also enco{raged a greater consumption of rice, vegetables and the usd of other domestic essentials such as clothes. hair-oil and utdnsils. J. The price of rice in the op$n market has been held in check because the dependence o[ the poorer sections on the free market has been correspoddingly reduced.

Andhn Pradesh

Rice Scheme

197

4. The bargaining power of agricultural labourers in thr matter of wages has been enhanced by the rice scheme. Their
dependence on the landlords has been reduced. They now demand cash wages when the price of paddy is low and wages in kind when the price of paddy is high. 5. There is an awareness that an expanded PDS helps quicker tumover of stocks and therefore provides better quality of foodgrains to the consumers, questioning the validity of the frequently touted criticism of state intervention in the foodgrains trade that a PDS invariably implies the supply of poor quality foodgrains to the consumers. 6. There is also an awareness that unlike the middle classes, the poor people find the lack of choice in variety of rice less important than the price at which fair average quality rice is made available. 7. Around 34,030 fair price shops in rural and urban areas are rendered financially viable by the scheme, thus providing the educated youth potential for staLrle self-employment in their

own or neighbouring villages, as well as for jobs in the service sector. It also prornises the emergence of a new small-entrepreneur class in the rural areas. 8. Other spin-offs in rural areas are stable employment for hamals and the gains accruing to and from the transport industry as it reaches out to the rural areas regularly.' 9. Above all, in a number of villages, households which went hungry prior to the introduction ef ths rice scheme, do not do so any longer. In a vast country like India, problems differ from state to state. But crucial issues such as those pertaining to identification, the
study would be needed to quantify these spin-offs, it is interesting to note that in order to reduce leakages in the transportation of rice and at the same time utilise the rice scheme to provide employment to the rural educated unemployed, the Andhra Pradesh Government has identified beneficiaries from the weaker sections and assisted them with bank finances to buy and operate trucks, tractors, cabstars, and Hippohaulers so that they may find employment in the area of transporting essential commodities. According to the figures furnished by the slat government, as part of these effo s, entrepreneurs from the weaker sections of society were, in early 1987, operating six trucks, 66 tractors, 199 cabstars, and 100 Hippohaulers. The potential for rural spin-offs of this kind through a public distribution sysrem is obvious.

I While a sparate

Dolivorance from Hunger

need for a delivery system that $upplies foodgrains to village fair price shops through the state's ofvn agencies, and the need for the RBI to eliminqte credit bottlenSks so that the delivery system is not clogged are common to the dntire country. Decisions on these issues have to be taken at the ndtional level to ensure the smooth functioning of the PDS with a rdinimurn amount of leakages. On these vital issues a certain degree of uniformity is desirable and it is

the responsibility of the Governinent of India to ensure this. For instance, the level of poverty that should form the indicator for
eligrbility in a subsidised national PDS should be determined by the central government and assistadce uniformly made available on
that basis to all the states, so that { strategic, anti-poverty programme of this type does not degenerate into a political ploy with different states.adopting different poverqy norms and different scales of foodgrains entitlement. In other words, there should be a national consensus on this vital subject df foodgrains for the poor so that

of the philosophies Sf different political parties, the poor are assured of their basid nutritional needs leading as in Andhra Pradesh, to other strenlths that they would derive as a result of this sort of food securi(y.
regardless

The Andhra Pradesh rice schlme, which was conceived to help the poor, ran into a number of pfoblems in its implementation. In addition to subsidising the pric$ of rice provided to households identified as poor and issued green cards, and providing such green cardholding households wilth rice at Rs. 2 per kg, during the years 1983 to 1988, the Govetnment of Andhra Pradesh also subsidised the price of rice draWn by households other than the green cardholders, in the cities of Hyderabad, Visakhapatnam and Vijayawada. Non-poor householps also obtained rice at the rate of 5 kg per peison (subject to a c{iling of 25 kg per household) in these three cities. These non-po$r households were provided with yellow identity cards. However, only yellow cardholdets living in Hyderabad, Visakhapatnam an{ Vijayawada were provided with rice at subsidised prices. Those living elsewhere in the state are not entitled to rice in the fair price shops. They are, however, entitled to other essential commodities s[rch as sugar and kerosene. When the subsidised rice schefne was introduced in April 1983, the rates fixed for rice to be issrled to yellow cardholders in these three cities were:

Andhra Pradesh Ricc Scheme City Hyderabad Visakhapatnam

Rs.lkg 2.65 2.70

199

Vijayawada

2.ffi

The price of rice in Vijayawada was revised to Rs' 2'70 per kg in 1985; bringing it on par with Visakhapatnam' The price at Hyderabad remained unchanged till 1988, when subsidised rate for yellow cardholders in all these three towns was discontinued. Table.5.8 shows the state's total budget and the provision of subsidy made for the rice scheme as a whole-the Rs' 2 per kg
scheme and the yellow card scheme combine&-for

the

years

198H4 to

1986-87.

Andhrs pradstr

ni* s.r,"^"[ii$18. leEH?) sobsidv *?liil,".],

^".,,
Budget
Stete's

Financial yesr

Percenlage

provition for subsidy

annual
budget

of column 3 to column 4

for entire rice scheme

1983-84 1984-85

tl20
t370
16m 17@

29299.Q
30864.41 37881.19 50234.20

1985-86 198G87

3.82 4.44 4.22 3.50

Sourcer Commission of Civil SuPplies' Andhra Pradesh.

However, what we really need to be concerned with is the actual expenditure on this scheme rather than the budget provision' While these figures had not been audited at the time of writing, the estimated figures of expenditure for these four years on the scheme are given in Table 5.9. Since our first concern is with the expenditure on green cards, we should determine what the subsidy expenditure likely to be incurred on the green cardholders will be, per kilogram and per beneficiary. Table 5.10 gives the subsidy estimated to be incurred per kilogram of rice distributed on green cards alone. It is nicessary to recall that the Andhra Pradesh rice scheme is

200

Delivorance from Hunger

Estlmatc3 of

on Rlce Schcne

(million Rs.)

Estimalcd aapenditute Green

cards

Perce uge Percentage

Ycllow
cords in

T'

of col. 5 col. 6

of col. 3 to col. 6

aloie
1983-84

three cities

198.f85
1965-86 1986-87

1,065 1,600

45
45

I,l
1

D,299.ffi
30,86/..41 37,880.19 50,234.20

r,7lo

2,W

50 50

1,

3.79 5.33 4.65 4.08

3.63

5.r8
4.51
-?.98

Source: Commissioner of Civil

Andhra Pradesh.
5.10 Scheme

Estfunsted Subsidy On

for Green Cards

(per kg)

FiMncicl
year

Subsidy
estimated

ftn million
rupees)

million

per tonne per kg (in rupees) (in paise)

6fJ9.27 61

Subsidy

Subsidy

)
.748 .716
.893 932.40 93

198!84
198.1--85

1,065 1,600
1,71O

1985-86

m332

q)

Sourc: Commissioner of Civil Supplies, Andhra pradesh. Note: 1. Figures for quantities distributed in col. 4 are actrial figures. 2. An amount of Rs. 50 million wolJd need to b deducted from the subsidy estimates. This is the administiative surcharge providd on the central
pool drawals which does not act+ally get spent on subsidies. For example, the subsidy in 1985-86 would thdrefore onty be Rs. 876.91 per tonne or 88 paise per kilogram

supported not only by the rice feceived by the Govemment of Andhra Pradesh from the central pool but also through purchases made from the rice milling induglry in the open market through the Andhra Pradesh State Civil Sirpplies Corporation (Table 5.5). Since there is an element of subsifly in the FCI's issue price for the central pool rice sold to the statq government, which is borne by the Government of India as its cofsumer Subsidy, the subsidy costs borne by the Government of An{hra Pradesh for makins the rice

Andhn Prad*h nica Scheme

m1

drawn from the central pool available to the consumer at Rs. 2 per kilogram are somewhat lower than those expended to distribute at the same price the rice procured by the Andhra Pradesh State Civil Supplies Corporation. This is because the very purchase price of the State Civil Supplies Corporations rice is higher than the levy prices notified by the Government of India and the movement of that rice is effectod totally at the state govemment's cost. Tables 5.11A and 5.11B give the details of the respective costs in 1985-86.
TABLE 5.1lA Cocts of Distributing Centrat Pool

Rlct
(Rs.lquintol)

Prior to
9.10.1985

From
10-10.19E5 236.50 1.30 2.31

From r.2.1986
250.50 1.30 2.31

Average cost of rice 2n.50 Hamali and shortage 1.30 1.. Taluk level stockist margin 2.37 2. The State Essential Commodities Corporation's margin 2.73 .State administrative surcharge 5.00

2.73

2.73 5.00
261.84

5.m

u7.u
Average transport charges
Fair price shop dealer's margin
10.97 10.97

r0.97
7

7.38
25"t

Totrl
Release price 1o the consumer

.r9

/.J6 266.r9

"38

280.19

200.00
57

2ffi.ffi
66.19

2m.m
80.19

Subsidy

.t9

The average expenditure on rice, based on the expenditure of Rs. 1,710.million for the distribution of 1.893 million tonnes, is an estimated 90 paise for the financial year 1985-86. Table 5.12 attempts to present the details of the estimated subsidy. There is obviously scope for economy in the storage and delivery procedures. State corporations can transport rice both from the FCI godowns and the rice mills, directly to the fair price shops, thus avoiding double handling, intermediate storage and incidental

202

Deliverance from Hunger

Rh Purchssd
Supplie3 Corporrtion

(tulquintal)
From 1.10.198s
256.90 8.30

Pfior to 30.9.1985
Purchase price of rice Gunny cost
250.00 8.30

Transport charges
Storage charges for 3 months Incidental charges to millers Driage at 1 per cent Handling and Transit loss at 0.5 per cent Destacking, weighring, lo_ading etc_ State Civil Suppli6s Corporation's administration surcharte Storage shortage at 0.5 pr cnt Interest at 17.5 per cent for 3 months Fair price shop dealer's margin

16.m
2.40 1.35

16.m
2.40
1.35

2.50

2.56

r.25
1.00

t.?8
1.00 5.00 1.25

5.00
1.25 12.70 7.38

t2-75 7.38
316.1,7

Total
Release price to the consumer Subsidy

3(B.13
200.00
109.

200.00

r3

t16.17

losses. Appropriate buffer

at decentralised warehouses is a

sine qua non for the smooth because of the need to complete frame and to always function

tackle unforeseen threats to

appropriate balance needs to be area for economising lies in administrative surcharge. Since and paid for by the government, to further charge the

Considering that foodgrains interest charged by the RBI revision from the high 17.5 details of the subsidy per per beneficary per annum for rice scheme in Andhra average quantities of rice and per month during thes

ion of the rice scheme. both within a limited time a position of safety in order to programme, like strikes. An in these oprations. Another away with the so-called state entire operation is subsidised is no need for state agencies an administrative surcharge. the common man's need, the
calls for a substantial downward cent charged. Table 5.13 gives household as also the subsidv first three financial years of the

, i.e. 198!84 to

1985-{6. The per household per annum years is given in Table 5.14

Andhra Pradesh Rice Scheme rrnvr. 5.12 Components of tbc Suboldy ln tlrc Andhra Prrdsll Rtc Scheme ln 196${6 (esdnatcd)
Price subsidy (the differential bctween actual cost and Rs. 2 Gunny cost

203

(in paise)

47

Transport charges
Storage charges

tz
1

Incidental charges to millers

Driage

Handling and transit lo*s I Storage losq ) Stacking an{ dBtacking (handling charges) Administratlve charges Interest Fair price shpp dealer's margn

't
4

o
7

Notc: As pointed out arlier, the actual subsidy should be around 88 paise per kilogram if we deduct the administrative surcharge of Rs.50 lrcr tonne provided in the budget for the scheme.
rABLE 5.13

Srbcldy for Bneltct{ry Households Financial year

(l9t}E6)
Subsidy

Subsidy No. of estimahd beneficiary (million Rs.) househoWs

(milliotts)
I,065
1,600 1,710 10.85 10.10 10.43

per

Subsidy per

beneficiary
(Rr.

househoW
)
98.15
158.41

beneftciary (Rs.)

198184
1984-45

19.95 32.20
'J.JZ

198ffi

163.95

Notc: 1. The beneficiary households could vary during a year because of elimination or additions, brt only marginally. 2. Accdrding to the 1981 Census, the average size of a bousehold in Andhra Pradesh was 4.92 persons.

One of the most important changes effected by rice scheme in Andhra Pradesh is that it transformed the PDS from being a more or less exclusiv urban system to one that serves the urban and rural areas equitably. Table 5.15 gives the quantity of rice that was distributed in the rural and urban areas as also the proportion of the green cards in these areas to the total number of green cards

Deliverance from Hunger

(198ffi)
(Rs.lquintol)

Quantity
distfibuted

Totol households

Qutntity Distributcd ( kg)

(million
1.7,18

Per month

Per annum
32.74 34.53 36.89

(millions)

householdl ben$ciaryl

tonnes)

198!84
198+85
1985-86

1.716
1.893

10.85 10.10 10.43

161.10 169.90 181.50

13.43 14.16 15.13

TABL; 5.15
Percentrge of Rice Golng to the Rural rnd Urbsn Ar{s

Fituncial Year
196,H5
1985-{6
1.893 7.477

Total quantity distdbured (in million tonnes)

1.748
1.381

1,.716
1.338

In rural

arcas alone

(in million tonnes) Percentage distributed in

in rural areas
Quantity dist.ibuted in urban
areas (in million tonnes) Percentage distributed in

7e.06 o.367

78.00 0.378

78.00 0.416

urban areas Rural Population as percentage of total population (1981 census) Percentage of green cards in ntral areas to totdl green cards Percentage of grcen cards in urban areas to total gren cards Percentage of rural fair pric shops to total fair price shops Percentage of fair price shops in urban areas to total fair price shops

2t.w
76.78 78.33 21.67 81.59
18.41

22.W

22.W

circulating in the state, and the broportion of fair price shops in these areas to their total number i]n the state, for the years 1983-84 to 1985-86. It can be seen from this table that in all these essentials,
the scheme in its implementation iq tilted in favour of the rural areas.

Andhra Pradesh Rice

Scheme

205

Based on the respective quantities of rice distributed ip the rural areas and urban areas under the scheme, the subsidies that reached

the rural areas during these three years are estimated in Table
5.16.
rABLE 5.16 Amounts Going to Rural and Urban Areas as Subsidy on Account of Ricc Scheme

(million Rs.)
Financial
yeatf

Eslimated subsidy
1,065 1,600
1,,7tO

To lurol afelE
841.35 1,248.00 1,333.80

To urban
oreqa

198!84
198,1-85

223.65

352.ffi
376.20

1985-86

On the other hand, Table 5.17 shows the estimated subsidy per kilogram of rice incurred by the state government in the financial years 1983-84 to 1985-86 on account of the rice distributed to the non-poor yellow cardholders of Hyderabad, Visakhapatnam and
Vijayawada. renre
5.17

Subsidy for Yellow Cards in Hyderabad, Vishakhapatnam and Vijayawada

Financial
Yeqr

Estinnted
subsidy expenditure

Quslity dktributed (million

tonnes)

Subsidy per

kg of rice
@aise)

(million rupecsl

198!84
198+85

45 45

198H6

50

0.108 0.110 0.115

4l
43

Green cardholders were at an advantage, receiving about 15 kg of

rice or about one-fourth the cereal reqirirements of the average household at Rs. 2 per kilogram of fair.average quality rice. This was mostly either the fine or superfine variety of rice, given that about 90 per cent of all the rice distributed through the PDS in Andhra Pradesh belongs to these two varieties. It must also be clarified that it is not as if the poor households always receive only

206

Deliveranco f rom Hungor

15 kg of rice. Our study encountered, many labour households received kgl-possibly also because not or yellow cardholder in the patnam and Vijayawada drew
even in part, from the fair

that despite all the difficulties including the poor agricultural entire monthlv entitlement of 25
green cardholder in the state

cities of Hyderabad, Visakha-

entitlement, either entirely or

shop..

The green cardholders were at an advantage where'price when we examine the average is concerned. This becomes prices for the entire state i the years 1980 to 1986 as also the retail city, which is an urban, average prices obtaining in town. situated in the heart non-producing area, and in

of the heavilv

deficit,

drought-prone Rayalaseema

region during these years. It can be seen from Table 5

that, except for Sort II rice tn Pradesh available, either was rice in f 980. in no Year the of the rice scheme in 1983, at less before or after ranged from a minimum of than Rs. 2 per kg- In fact, the I rice to a maximum of Rs. 3.52 Rs. 2.31 per kg in 1981 for 3.92 pet kilogram. While it can per kg in 1984. In 1986 it was to better than the fair average these prices be argued that the PDS. it must be remembered quality rice channelled
that superior qluality rice of these average prices in the Sort II rice, which compared varieties was not available at

either. In anv event. even the with the rice sold through at all times, ranged from the PDS in Andhra Pradesh Rs. 2.34 per kg in 1981 to Rs. 86 in 1985 and to Rs. 3.11 in 1986.

I When in Januarv 1983. th state kg of ricg per month to all poor th entitlement ofeach member of the a single member household would care had been taken as part of th households once the scheme settled the household identity cards, the Subsequently, with 25 kg being
was decided to ratiooalise eligibility government, thereforc, ordered in

originally decided to provide 10 it was not thought necssary to sPecify

household, since obviously, even
10 kg

of foodgrains per month. However,

identified household would be

household ceiling of 25 kg pr month.

quity within the household, no

Every membir of the identified kg of rice per month.

of providing more foodgrains to th Poor to its appropriate rythm, to irdicate in of members in each famlly and their age' at subsidisd rates to every household, it met inter-household equity. The state 1983 that each membcr of the to 5 kg of rice, subject to a ma mum , in order to cnsur interpcrronal was madc btween adult and child. whether adult or child, was provided 5

Andhra Pradesh Bice Scheme

rABLE 5.18

207

Strle AYerrge
1980

Retr

Ptlcca

(per kg.)

1981 1982 1983

2.79 2.52

19U

Rice Sort I Rice

Sort

II

2-31 2"69 r.92 Z.v

3.25 2.74

3.52 2.79

3.47

3.v2

2.86

3.tl

Source: Bureau of Economic and Statistics, Govemment of Andhra Pradesh.

The price advantage to the green cardholders is quite obvious, depending on whether they purchased Sort I or Sort II rice. To put it another way, the price at which rice was sold in the public distribution system from 1983 onwards, restored the price levels of 1981 for atldast the Sort II rice, for part of the needs of the green
cardholders. Table 5.19 which gives the price of rice prevailing in Anantapur, shows the even greater price benefit that the green cardholders who live in rice-deficit areas, have derived through this scheme. The price differential in this area is greater than that for the state average retail prices in each of the first six years in.the eishties:
TABLE 5.19

Retril Price of Rice in Anantrpor Msrkl

(per kg)

IgN
Sort I Sort II

t98t
3.20 2.70

t2
3.00

1983 194
4.m
3.30

t985 4.20
3.30

2.6 2.20

2.Q

3.94 2.U

Source: Bureau of Economics and Statistacs, Govemment of Andhra Pradesh.

The same position obtained for Hvderabad city, details of which are given in Table 5.20. It might be useful to try and quantify the extent to which the poor in Andhra Pradesh have benefited from this scheme. There are several ways of estimating households that live below the poverty line. The Andhra Pradesh administration made a prdection of the likely number of households that would have to be covered under the scheme (Table 5"3). That number came to 8.29 million

Deliverance from Hunger

Retsil hlce of Rlce

Hyderabad

Mrrket

1980
Sort Sort

1981

1983

1984

19E5

I II

2.90 3.21 3.47 3.60 3.98 2.38 2.52 2.67 2.6't 2.W

4.23

3.00

households. If we take the prolvisional figures of the population living below the poverty line aS estimated by the Planning Commission based on the 38th NSS round in 1983. it would be 20.40 million or 4.16 million . But the Plannins Commission's poverty percentage of 36.4 for Pradesh for 198!84, which is nearly the same as for allthe percentage (37.4) does not reflect the figures thrown up by the NSS, which shows the countrywide percentage of households less than Rs. 106.25 per month to be 55.6 per cent in the rural and 25 per cent in the urban areas. At that level, the households in 1983 in Andhra Pradesh would be 4.88 million ln the rural areas alone. Another 0.64 million households would to be added to this from the urban areas making the total 5.52 million households, with each household in Andhra Pradesh cpmprising 4.92 persons according to the 1981 census. While in 1988. the Andhra Pradesh authorities took marginal holdings as a for marginal farmer households, a re-analysis of the figures in TAble 5.3 can be made based on the results of the Second Survey on Employment and Unemployment based on the round of the NSS. This provides reliable data as the survey conducted on the basis of the distribution of households by $ize, class of land possessed and household type. Taking the proportions of the agricultural labour households, marginal and smal]l .farmer households, and 'other labour households' to the total r{ral households of that survey and applyrng them to the 1983 andl 1986 rural household level, the poverty households could be estlmated as they have been in Table 5.21. As far as the smali farmer households are concerned, only 67 per cent of their number is taked, since 33 per cent of all net sown areas in the state have one forr$ of irrigation or another, though not all of it is dssured irrigation under canals and tubewells. The 'other'labour households f,an be divided into two categories

Andhn Pndcsh Ricc Scheme

rABLE 5.21

2rx)

Estlmfd Poyerty Houscholds ln the Rural Areos ln l9t3 end

Percentage of total Rursl hou.seholds

1986

Number of households

(million)

in 1977-78
1963

1986

Agricultural labour houscholds Marginal farmer

households Small farmer
houschol<,s

41.46 8.29

3.9
o.73

3.87

0.78 0.58 0.49

5.72

9.22 5.24

0.54 0.46
5.37

Othr labour
households

Toral

in the Andhra Pradesh context: the artisan and the non-artisan. non-agricultural labour groups, in the sense that they derive a major portion of their income through labour other than agricultural-for example as toddy tappers or earth workers. In 1968, the
population of the artisan class alone was estimated at 5.9 million in Andhra Pradesh by the Anantaraman Commission on Backward Classes. In 1982-83, after 14 years, this population can be estimated

to be, based on the growth rate of population in the decade

197 l-81, of 22 .7 6 per cent , 7 . 89 million or 1 60 million households , taking the average size of a rural household in Andhra Pradesh to be 4.92 according to the 1981 census. The figure assumed in Table 5.21 as being 0.46 million for artisans is therefore lower than the actual figure of 1.60 million by a big margin. Making allowances for exceptions, the urban slum population can be broadly accepted as living below the poverty line. For example, excluding an urban rickshaw plier living in the urban slums from the poverty group only on th ground that he may sometimes earn more than Rs. 500 . a month would be far-fetched. The categories that could thus be broadly grouped under the poverty class in 1983 are shown in
.

Table 5.22. The total poor households in 1983 in Andhra Pradesh therefore
approximate to 7 million households. The Andhra Pradesh Government did not consider the small

210
rABLq 5.22
PoYerty

Deliveranca from Hunger

CbS Crtcgorles
(in milliotts)

Agricultural labour households

Marginal farmer households Small farmer housdholds Othcr rural labour households Urban stum dwellefs

3.4
o.73 0.54
1.60

0.50

Totd

7.0r

in the Andhra Pradesh rice

really poor among the be a hazardou$ one: any

Any attempt to quantify the

of the rice scheme will therefore

on the ground that it purview may not be entirely includes too many non-poor warranted, either. to answer this question against We shall. nevertheless. the background of this discussign. As has been seen, the total number of cards that emerged in lhe l983.enumeration were about 1.82 million rnore than the adtual households. Obviously, an overwhelming majority of them *ere bound to be green cards that needed eliminating. If we refer tp the 1983 estimates made by the Andhra Pradesh Government anid compare them with the figures emerging from the re-analysis, a figure of around 7 million housethe programme. This would be the figure if we understand the programme to help not only rhQse who would are the poorest of the poor but also those who woulp be marginally above the poverty line only in good years of agricullural production. However, if the scheme is expected to assist orily the hard core poor, it would probatrly serve only the 5.52 million or so households estimated by
holds seems to represent the poof Thus at the 1983 level, nearly 3 million households should have feen ineligible for the benefits of

Andhn Pradcsh Rice Sdtame

211

the NSS in 1983-84. Thus the ineligible households could range from 3 to 4.5 million, dependihg upon how we view poverty. It is obvious, however, that given what we have disussed about the costs of the scheme, a political decision to the effect that the scheme should serve only the poorest of the poor needs to be taken, making the pcrcentage of poor emerging in the 1983-84 Planning Commission estimates as the reference point. It would be interesting to compare the benefits of a programme like the one implemented in Andhra Pradesh with the NREP and RLEGP in the context of the criticism that a subsidised distribution system pel re is pdpslist'afid that the us of the foodgrains for employment generation is intrinsically superior to it. We have seen in an earlier chapter that around 2 kg of cereals per household per day would meet the average minimum caloric needs, normally derived from cereals and cereal substitutes, of a five-member household. Since the government objective is to provide a maximum of 100 days employment to a beneficiary from
a household, the quantity that may be provided in this programme,

if

properly implemented, will be 200 kg of rice per annum per household. Using a wage component of 2 kg of rice per day, distributed at Rs. 2 per kg, and assuring a daily wage of Rs. 10, the c4sh component of generating a man day's employment will be Rs. 16. The subsidy expenditure in 1985-86 on the green card holders being Rs. 1,710 million for distributing 1.893 million tonnes of rice, the number of man days that can be generated would be 107 million, which would mean providing employment for L.07 million households for 100 days at Rs. 1O per person per day. This would also result in the construction of assets. As against this, the number of households benefiting by receiving about the same quantity of rice in a year, i.e. 20O kg, through the PDS would be 9.47 million. In other words, at the same expenditure, nearly 8.85 times the number of households that would benefit from an emptoyment generation programme, would benefit from the PDS. At a level of 1.07 million households, around 4 million other hardcori poor households would obviously be left without any of the benefits that our study shows they received from the rice,scheme. This, therefore, brings us back to the conclusion that what we need to do is provide a certain basic caloric satisfaction of the nutritional needs of all the poor on a broad base through a PDS of the kind that Andhra Pradesh is operating, eliminating all its

212
weaknesses as identified

Dellvcrencc from Hungcr.

by the qtudy and, as discussed earlier, utilise that base as the essential delivery infrastructure for the employment tene ration schemes.l An integrated systern of this kind will provido, at graded levlls, satisfaction to the different levels of the population living bglow the poverty line. lt must, however, he poinSed out that the $sets resulting from employment generation programmes should be such as to also provide productive employment in the future to lhe target groups themselves, as otherwise these programmes woufd be merely wage-slavery programmes.

To conclude, the Andhra rice scheme highlights the benefits that the poor can derivc a subsidised rural PDS in terms of the secufity and it generates among the broad masses of the people. It has, to the beneficiaries, brought them relief and a sense of from dependency and added to their bargaining power. Above else, it has diminished hunger. While household surveys of the P.S. George has conducted of the Kerala rationing system, may to be undertaken to establish the details of thi$ benefit. the of the scheme on the rural poor households is obviously felt by the beneficiaries themselves. One of tho major of the scheme is the transfer of resources, through intensive and distribution of rice. in favour of the rural benefiting the farmer and the consumer. The farmer has because of the constant need for the rice milling industry to its wheels moving to satisfy the demand for procurement, which turn has to seek out the farmer to buy his produce. However, presence of an insupportable number of households that are above the poverty line in the rice scheme brings discredit to it as a purely anti-poverty measure and diverts resources in of those who have no right to the subsidised distribution of . The elimination of the inehgible households should be withctut any delay, and along the lines sqggested. The Andhra Pradesh is already taking steps to utilise the PDS as the deliverv relevant to the wage employment programmes. This has to be further streamlined in terms of procedures and the and use of wheat, which is a cheaper grain than rice, in the . Also needed will be a sustained adminibtrative effort non-government agencies and the media to disseminate and health educati,on so

Andhn Pndah

Eb

sg/lcnrc

213

participation having also been generated in the pople, that receptivity has to be capitalised upon to improve the delivery of nation-building programme packages. If such motivation is not systematically built up and the opportunity to fight poverty on various fronts is mined, a scheme of this kind woutd degenerate into a mere populist ploy. Andhra Pradesh has to guard against this risk while utilising the limitless opportunities for nationbuilding that this scheme has generated in terms of the good will of the poor. PDS, in Andhra Pradesh can serve as a potent entry point for mobilising the people to deal with many of their own problems that have a bearing on the country's effort at eradicating poverty on a broad socio-economic front.

that vulnerable groups within poor households suclr as girl children, pregnant women and nuning mothers benefit from the programrne. This can also lead to the involvement of the beneficiaries in national programmes such as family planning and promotion of literacy and elementary education. Social progress for the poor will not reglrlt automatically from schemes that create a purchasing power among the poor. The power so generated also needs to be channelised by organised education and motivation. With the bonafides of the government established through a scheme that touches a vast mass of households, and with the necessary receptivity and sense of

Conclusion
It
is difficult to avoid repetition while writing a conclusion. It is tautological to say that Indian pofverty or rather, India's hunger, is staggering in its size and frightening in its intensity. In our attempt to fight it, we have adopted a fumber of strategies-industrial, agricultural as well as a direct pttack approach. All these have taken time and will continue tO do so before they reduce the intensity of people's hunger. In a mixed bag of strategies, there will be competing claims for respurces. While a periodic conventional rise in re$ource allocation [o programmes that have a direct bearing on poverty reduction haq been managed, given the size of the problem, the inadequacles fre transparent. The spectacular rise in cereals production in recbnt years and the quantities that have been flowing into governmdnt hands generated the hope that they would result in a substarltial reduction of hunger at the household level. Also that they Would trigger off the generation of employment in the self-employmQnt and wage employment sectors. Actually, however, the off-takq in the PDS through fair price shops in rural areas, which should be a good indicator of whether or not the poor are eating better, is not registering a sustained rise. The cause for this lies in the verj absence of a system where it has urgent reason to exist, namely, in the rural areas. The so-called 'food subsidies' really go, in mbre than substantial measure, to support tlie surplus farmer and lrban consumers rather than the the poor, the vast majority of wliom live in rural areas without the minimum nourishment needed t4 live and lea.d a productive life. It is therefore crucial to reform thd PDS and shift its focus from the undifferentiated to the targeted $oor, from a predominantly urban
.

Conduslon

215

to a predominantly rural target with the poor as the centre of the effort. It is also essential to ensure that it guarantees the poor their basic right to food at costs they can afford, and that it also acts as the delivery base for the consumption and real wage inputs needed to give content to the self-employment and wage employment
programmes, -

This is not to suggest that a PDS is an end in itself. What is suggested is that it fights hunger and also that it helps those who want to fight hunger, by other means, to fight it better. Since the conventional measures that have been advocated so far have not by themselves been successful, a PDS can supplement these measures in a crucial way. All experts on poverty and food management acknowledge that there is mounting hunger and also that
there are stocks of foodgrains available' What is not dcknowledged is that there is a resource constraint that is limiting employment possibilities. We, therefore need to go beyond just talking about how employment can bridge the gap between hunger and the available food, and recognise the need to convey foodgrains to those who are unemployed and underemployed so that their needs are met and to those for whom employment is sought to be created so that such employment can be rendered viable in terms of actual generation of incremental incomes. The concretisation of this recognition will result in a PDS that will bridge the gap between available food and the existing hunger, and that will also make the realisation of the employment objective more feasible. However, even as a subordinate strategy to the employment strategy, the PDS will not by itself guarantee income generation. In the IRDP

for instance, the initial per capita outl4ys are so low that it

is

doubtful whether they can generate the returns necessary to take the target households beyond the poverty line. But a combination of higher per capita outlays supported by the kind of publicdistribution--cum-delivery system envisaged here, has a far greater chance of achieving the desired result than a mere enhancement of the per unit outlays. In other words, tl|e outlays and institutional finances have necessarily to go up to support the IRD programmes, but they also need to b supported by a PDS. It will be {utile to indicate with any precision what such per capita outlays should be. For instance , there is no use demanding that the subsidy level should go up from Rs. 3,000 to Rs. 7,000-for one cannot be dosmatic about the minimum or maximum level of per capita

216

Deliverancc from Hungcr

investment needed to take a line. That would depend upon beneficiary's level of skills, the

household beyond the poverty number of factors such as the material supply-<urn-marketing

only for providing individual infrastructure relevant to All in all, then, these are may provide no permanent household level to a vast mass

specific scheme designed for the household, the back-up services and above all the beneficiary's full involvement in th scheme. All that can be said. therefore, is a vastly greater ion of resources is needed, not

infrastructure built to support

idies but also for building the

iented anti-poverty schemes. allev iation programmes which

time to come. This is the stark It is this grim picture that brings provides, at affordable prices, different target groups in the all the poor households about a needs and to the IRDP and the target groups, about half their guaranteed to its poor, the to fight poverty including massive waste lands. Thai the pitfalls

to the issue of poverty at the the rural poor for quite some
, given the size of the problem. the relevance of a PDS that

kinds of suppon to the

strategy. It provides for ird or a fourth of their cereal Employment Generation . With this minimum nutrition has to devise further stratesies mation and development of in the PDS as it is presently as in schemes which attempt as the Andhra Pradesh rice
a PDS can be restructured to

implemented in the country, as to reach specific target groups

scheme should be guarded The foregoing chapters show

serve the poor without much ground of existing production

and 1986-87 would have been effort. This leads us to the for the governmnt to advocated, in 1987-88, in spite of adverse production situation which the country faced in the year 1987. Without an examination of this question, this cannot be concluded. The agricultural scenario in I was quite dismal. Even though the 1987 rabi harvest of wheat was Itlsfactory, unseasonal rains in April 1987 caused beavy damage the wheat crop in Punjab and Haryana. This adverselv affected arrival into government hands of wheat by about 2.5 million compared to the normal arrivals by way of proc.urement f about 10.5 million tonnes.

cost against the backand how the years 1985--86 ideal time to undertake this of whether it was still possibtre a reformed PDS of the kind

,,(

Conclusion

However, these 2.5 million tonnes were purchased by the roller flour mills and the private trade. With a severe drought following, there was a shortfall in the production of rice and the procurement by government agencies was significantly lower. In Punjab and
Haryana, where a developed marketing system exists, the arrivals

of paddy were around 8.20 million tonnes by the middle of

December 1987, as against 9.30 million tonnes during the corresponding period in 1986. Thus, there was a drop of about a million tonnes in paddy arrivals in these two surplus states alone. It was estimated that the government would procure around 6.5 million tonnes of rice as against 8.5 million tonnes procured in 1986-87. In other words, a drop of around 2 million tonnes of rice was anticipated in procurement. Thus, as against a normal procurement of 19 million tonnes, procurement during 1987--88 was 14.3 million
tonnes.

The position on the sto'ck front also changed adversely. As of 1 October 1987 the level of foodgrains stock was 15.86 million tonnes as against a level of 23.61 million tonnes reached on 1 October 1986. According to the guidelines of the Government of India, the stock as on 1 October should have been 17.80 million tonnes, including a buffer of 10 million tonnes. The stock on 1 October 1987 was thus about 2 million tonnes less than what was technically needed to be held by the government. As against this, a surplus of around 6 million tonoes was held by the government on the same date in 1986. The stock position dipped to 14.05 million tonnes by I January 1988 as against the technical norm of 20.10 million tonnes. This was the result of the releases from the central pool registering a substantial increase during the year 1987 in comparison to the corresponding period in 1986. Table 6.1 gives the breakdorvn of releases made from central pool food stocks during the year 1987. It also provides comparative data for 1985 and 1985. Distribution in the year 1987 showed a clear departure in orientation towards the people through fair price shops and other employment programmes. It is, however, significant that there was no let up in the sales to roller flour mills and to private trade, even though 1987 ryas a drought year. The roller flour mills and private trade were provided as much as 4 million tonnes of wheat or roughly around 30 per cent of the total wheat disposals during the year. At this point, it ma-v be reiterated that the roller flour

2ra
Dels[s of

Dallv.?enco from Hunger

Mrnqlo3nt
1S5,

Cenlrd Pool Foodgrelns ln

.nd l9B7
(in million ronnesl

1 7
Fair price shops

1986
9.6
1.82
1_91

1985

ITDP areas
Rural employment programmes
Defence services

11.14 2.13
J. -.f 0.30

9.01

o.27

0.16

Rollr flour mills and open market sales to private trade Exports
Others

4.09

4.E9

5.42
0.34 o.g2
15.31

0.30

o.2l
0.06

21.31

18.62

Not: The 1987 figures are

mills and private trade on theh o\ryn procured around 2 million tonnes of inferior quality wheatr in Punjab, which the government agencies could not procure. Thus what the roller flour mills and private trade obtained amountN to a total of 6 million tonnes, a figure which is much the same as that obtained by them in 1985 and 1986. In 1986, also, private Sade is estimated to have purchased about a million tonnes in the Plrnjab market. We have already seen that a rlestructured PDS of the kind advocated in this paper, would reqlrire a grain flow of around 19.52 million tonnes in a year on all cpunts. The fact that releases made in 1987 were of the order of 21.31 million tonnes, especially against the background of dwi]ndling stock levels, demonstrates that the reforrned PDS could h{ve been implemented even during this drought year. A reformed FDS would have ensured that the foodgrains released really did feach the targeted group of poor, particularly thp rural poor, whd needed all the assistance that the
government could provide them during rhis critical drought period. Also, in the absence of a regtllarly established PDS that would facilitate accurate monitoring, rie hane to date, no authentic data to indicate how much of the fclodgrains presently stated to have been distributed through fair pri$ shops and the other programmes, have really reached the poor iir the far-flung rural areas of the

eonctuaion

219

country. The problem is illustrated in Table 6'2, with reference to the four poorest states of the country.
IAB]-E 6.2 MsnoSemnt of Centrrl Pool Stodks In l98t rYlth Rcferencc to the Four Poorcst Ststs of lndir (JanuerY-SePtember 1967)

(n million

tonncs)

Fair price
shops including those in the

ITDP

oreas

Distribution through all fair price shops including . those in ITDP

areas, employment

Issu6 to
the roller

flour mills
and oPen

markt

sales

& other relief

pfogrammes o.7'I o;72
0.61 o.29

Uttar Pradesh . Madhya Pradesh

Orissa

Bihar

0.34 0.40 0.32

o.t7
0.06

o.t2
1.18 9.25 12.75

0.20

0.fi
0.59 2.89 20.41

Total All-India
Percentage of

2.N
12.22 18.82

total to all-India

Four states-Utiar Pradesh, Bihar, Madhya Pradesh and Orrisa-' account fot 47 per cent clf the total population living below the poverty line in this country. These states were issued 1'18 million iottn"s of cereals duiing the first nine months of 1987' for use in the PDS including in the ITDP areas. This quantity represents \2.75 pet cent of ihe total issues made to fair price shops in the entire country against the requirement projected by us earlier of 4.9 million tonnes per annum (or 3.7 million tonnes for 9 months) at a modcst 17.5 kg per household per month intended only for the poor (see Table I in Chapter 4). So not only is it a bare one-third of the modest requirement projected by us, but also there is no basis to presume that even this quantity reached the needy under the present undifferentiated, untargeted and generalised PDS with an urban bias. Even if we take into account the central pool releases to these four poverty-stricken states for use in fair price shops, employment programmes and other relief programmes' the

ZN
total amounts to 2.3 million the total releass made to the It is paradoxical that we wheat to roller flour mills
growing states when there was

Doliverancc lrom Hunger

which is only 18.82 per cent of country for these programmes. have sold 0.46 rnillion tonnes of the private trade in the wheatneed to conserve stocks so as

states under the various rural enfployment programmes during the first nine months of 1987. It is pbvious tnat in the absence Jf an appropriate delivery system, {he chances of these foodsrains reaching the villages or the rurlal poor were remote. Had there been a PDS, based on proper iddntification and enumeration, and backed by a well-planned deliv$ry machinery, there would have been no such apprehension. We have already seen that rFral labour goes hungry even in irrigated areas. In periods of d{ought, the plight of rinorganised labour is compounded into one of utter misery. bn the other hand, the urban middle classes and in{ustrial labour are not affected to the same extent, as they have grfaranteed compensatory measures like dearness allowances. It is thfrefore paradoiical thai we should want to channel more stocks i4to the cities sometimes through private trade in the name of crlrbing prices in order to protect these sectors.

to deliver them to the poor with the acute poveny prevalent in thse states, and wheat productf sold nearly ut 0""6t" the cost of wheat, a luxury that the poor pedple in these states coukl ill afford. About a million tonnes of w[reat were released to these four

in 1987 is therefore which might have helped in the reduction of stocks. these releases continued to preserve the several historical [istortions in grain distribution which could have been had a reformed PDS been disigned and brought into in 1985-86. This would also have helped to generate an data base, with which to monitor the rational use of foodgrains. This situation also highlights lhe weakness in the concept of 'buffer' stocks in our food securi{y system. A notional limit of 10 million tonnes encouraged the go{,ernment to continuously release around 5 million tonnes of whdat to roller flour mills and the private trade during 1985, 1986 anp l9g7 on the ground of reducing 'surplus' stocks. In 1987, a yeat !f drought. or even in a normal year, these stocks, had they beef conserved, would have served

The picture one has of food one of stepped up releases of

condwbn

2!27

the needs of the poor in a reforrpd PDS. The argument, sometimes advanced, that in the context of the 1987 drought, implementation

of a reformed PDS would have been possible only by resort to

imports, should therefore be viewed against this background. We thus need to examine the concept of 'food surplules' as our agricultural production situation is presently interpreted by certain circles in the country. India has achieved a food-population balance or food security at the national level but not food security at the household level. What were regarded as'food surpluses'in 1985 and 1986 were, in reality, the absence of food security at the household level. Therefore, to determine a 'surplus' it would be nece$gary to have, at any given time, a medium-range perspective of at least five to seven years, allowing for fluctuations in production for at least two seasons in between. and to see if there would be any surplus left over and above what would be needed during these five to sven years. Any other penpective could only lead to the kind of stock maragement witnessed in 1985, 1986 and 1987. In short, a well-organised PDS of the kind advocated here would have been the propr tool with which the government could have tackled the drought of 1987. The later part of 1987 and early 1988 saw the rise of discussion in
Indian food management circles of imports to tide over the crisis of the 1987 drought. Since imports and buffer holdings are interrelated in a context of this kind, we should take a look at the stocks held by government agencies in 1987 and early 1988. Table 6.3 gives the central pool stock position during 1987 and early 1988.
rasl-E 6.3

C6lrd

Pool Sfocfs

thc

It

rdE of Govcrnmcna Agncle.

lgtrt-{t
(in million tonnes)
Stocks held

Requirement

per the

as Technical

Excess

or

shortfalls

Committee norms

I April
1

l9E7

18.39

16.50

+ 1.89

July 1987 1 October l9&7

23.n
r5.E6
14.05 10.50

2r.N
17.E0

+2.50

I
1

January 1988

1.94

April

1988

20.10 16.50

(projected)

-6.05 -6.00

,:

-I

D.llv.r.nc. trom tfungo?

That the rains had failed unknown when the policy of liquidation of stocks

to a serious drougbt was not year started in July 1987. Yet the sales to roller flour mills and higl point of shortfall in the the private rbde continued. rn by the Technical Committee, buffer stocks to be held as laid in January 1988 or April 1988, to the extent of 6 million this contxt. Of this deficit of 6 should therefore be viewed a little above 4 million tonnes million tonnes. in Januarv I fave been contributed by sales roller flour mills and the private trade, at subsidised costs. , if the monsoons failed again holdings had to be restored to l0 in 1988. and if the buffer the Technical Committee, then, million tonnes as laid down be imperative in 1988. If, on the surely, resort to imports not fail, and a good rabi wheat other hand, the monsoons procurement resulted from winter crop of 1987-88 at around do without resorting to imports. 10 million tonnes, the country This only goes to show three

l.
2.

that the country was preppred to draw, and indeed did draw, the buffer stocks down to a 4 million tonne level as against a technica,lly laid down 10 fnillion tonne level; that this could have beeri done to support the kind of PDS

proposed in this study rfther than to support roller flour mills and private trade; lnd 3. that if imports have to bd resorted to, that would not be on
account of a PDS.

At a distribution level of 21.01 million tonnes in 1987, a year of severe drought, the releases r{ere nearly 2 million tonnes more than the proposed of 19.5 millipn tonnes. Obviously then, even in the second 'drought year of thl century', we could have brought into existence a PDS to cover all the poor in the country, as has been argued in this study. Thi! is the message that comes to us in the context of India's agricultUral production attainments and its
distribution needs.
The conclusion, then, is that any time---surplus or drought-is a good time to re-orient the PDS in favour of the poor, wherever they are. making sure that avallability (not lower prices) is simultaneously ensured for the metrppolitan and urban non-poor. And

Conclusion

tB

in doing this, procurement in a projected cycle of 5 years should fbrm the basis for determining allocations for the PDS, rural development and employment progrirmmes, nutrition progranrmes and the non-poor, so that spectres of droughts and imports do not deter a policy in favour of the poor. Affordability for the poor and availability for the non-poor should govem Indian food management.

--T