The Shanta Kumar Committee’s recommendations to unbundle the Food Corporation of India are in tune with U.S.-led demands raised in the World Trade Organization
The Shanta Kumar Committee report, released last week, on a range of issues relating to procurement, storage and distribution of food grains is not only deeply flawed in its reading of the situation on food security, but also short on facts. It was prepared under the guidance of the Prime Minister’s Office.
For example, the report asserts that only six per cent of all farmers have benefited from Minimum Support Price (MSP) through sale of food grains to an official procurement agency, according to data of the National Sample Survey Organisation’s 70th round. But analysts have found discrepancies between the survey’s estimates of the food grains sold to official procurement agencies and the actual amount of grains procured by official agencies for that year.
For kharif, the NSSO survey estimates that 13 million tonnes were sold to a procurement agency while the actual procurement that year by government agencies was 34 million tonnes. For rabi, the gap is even larger: 10 million tonnes estimated in the survey while the actual amount procured by an official agency was 38 million tonnes.
Selling at distress prices
Why did the Shanta Kumar Committee overlook these possible underestimates? Was it just to arrive at the sensational figure of six per cent and then argue that since only six per cent of farmers get the benefit of MSP and procurement, why have the Food Corporation of India (FCI) at all?
But there is another way of looking at it. It is true that large numbers of farmers are deprived of the benefits of MSP. It is not because they do not want to sell to the procurement agencies but because they do not have access to official procurement centre, which are set up only in selective States and regions. The majority of farmers sell at distress prices which push them deeper into debt. For this large section of rural India, reforming the system would mean a substantial increase in the number of procurement centres and easier access, so as to enable it to benefit from MSP.
As soon as the Bharatiya Janata Party (BJP) assumed office, the first thing it did was to bring down the rate of increase of MSP to just about three per cent over the previous year — this when the prices of farm inputs have increased phenomenally.
Some States under pressure from Kisan movements decided to give a bonus over and above the MSP to help farmers. The Modi government stepped in to “punish” such States. It decreed that it would not procure any food grains over and above the requirement for the Public Distribution System (PDS) from such States which gave the farmers a bonus.
Confronted with the Central government’s policy, the Chhattisgarh government, for example, which had given such a bonus, issued a circular that it would procure only 10 quintals of paddy per acre from individual farmers. Andhra Pradesh has also limited its procurement. Thus, open-ended procurement which ensured India’s food security and farmer security is now in the process of being whittled down while the rate of increase of MSP is delinked from the increases in the cost of production and adequate profit margins. This is in contrast to the Swaminathan Commission’s recommendation for MSP to be calculated at the cost of production plus 50 per cent profit, to keep agriculture viable.
The immediate impact in Chhattisgarh has been distress sales by farmers to private traders who can dictate prices, buoyed by the assurance from the government that it would not procure more grains.
The Shanta Kumar Committee report takes these dangerous steps further by advocating limited procurement as the officially declared policy.
This is directly linked to its recommendation to scrap the existing Food Security Act (FSA). The Committee wants to reduce the coverage from 67 per cent to 40 per cent of the population. It also wants to double the prices that these food grains are to be sold at under the present Act by linking the price to the MSP. This means resurrecting the fraudulent and discredited Above Poverty Line and Below Poverty Line estimations and depriving equally poor people of subsidised grains. In fact, as the Left has consistently argued and fought for, it is only a universalised PDS that can meet the requirement to make India hunger-free. The Shanta Kumar Committee wants to eliminate even the inadequate provisions under the existing FSA and push the country back to the worst days of food insecurity.
Ironically, such a recommendation comes at a time when the United Nations agencies monitoring country-wise performances towards meeting the Millennium goals have praised India for its reduction of malnutrition, giving credit for this to food security systems like the “ICDS [Integrated Child Development Services] as well as the public distribution system.” In spite of the reduction, which brings India from the “most alarming category” to the “seriously affected” category, the country is still home to the largest malnourished population in the world; its rank in the Global Hunger Index at 55 out of 76 emerging economies is only slightly ahead of Pakistan and Bangladesh but worse than Sri Lanka and Nepal.
As in the case of procurement, the Modi government has started to subvert the FSA in the case of implementation too. The FSA became law in September 2013. More than a year later, it is being implemented in only 11 States. The Central government has excluded 25 States and Union Territories from the ambit of the Act. According to a release on November 28, 2014, these States and Union Territories “have not completed the preparatory measures required for the implementation of the Act.” It was further stated that “the Central Government extended the deadline for the implementation of the Act by another six months, namely till April 2014.”
The Government of India has no right to make the implementation of the Act conditional to “preparedness” on the basis of parameters it has decided arbitrarily. There is no such legal provision in the Act, nor is there any legal deadline. But the official release reflects clearly the present government’s hostility towards taking any responsibility for food security. This is also reflected in the allocation of food grains. If the FSA is to be implemented, then according to the calculations of the Food Ministry, the allocations will go up to 550 lakh tonnes of food grains compared to the pre-FSA allocations in 2012-2013 of 504 lakh tonnes.
Shift to direct cash transfers
According to the Ministry’s food grains bulletin till December 2014, allocations to the States were just 388 lakh tonnes of food grains. This is roughly the same as it was the previous year, before the Act was passed. In other words, the Modi government has already stayed the implementation of the FSA. It is preparing to shift to direct cash transfers for a more restricted number of families.
The Shanta Kumar Committee’s recommendations to unbundle the FCI, allowing the free play of market forces in procurement and storage of food grains, and restricting the FSA are in tune with the demands raised by the western world led by the U.S. in the World Trade Organisation against India’s systems of procurement, storage and distribution. The India-U.S. agreement to end the stalemate in the WTO process is clearly premised on the changes being suggested by the Committee.
The government can be expected to try and bulldoze the required amendments to the FSA through Parliament using its majority. But undoubtedly it will face the resistance of the people.
