India has emerged as a nation with the unenviable distinction of being home to millions of hungry people even as her granaries are overflowing with food. For the second time in the current decade, the country has witnessed an enormous build-up of food-stocks even as majority of the population fail to attain the minimum nutritional standards. With the Supreme Court intervening to urge the government to distribute surplus food-stocks to the hungry, the debate over management of the food economy in the country has taken a centre-stage within the polity. The government seems to have been irked by this intervention by the Supreme Court. The Prime Minister has made it clear that it is not possible to distribute free food to the poor and has also taken umbrage to the Court’s intrusion in the realm of policy-making.
Looking at the picture of persistent widespread hunger and malnutrition in the country, it is evident that the even the Supreme Court recommendation for distributing grains free only to the Below Poverty Line (BPL) population falls short of what is required. However, the reluctance and refusal of the government to even undertake such bare minimum steps baffles one as to what economic rationale can lead the government to spend large sums to hold food stocks and yet not distribute it for consumption by the hungry. In this context, it would be useful to revisit the dimensions of hunger that are facing the country as well as appraise the rationality of the government policy of food management in recent times.
Burgeoning Food Stocks and Escalating Hunger: Déjà Vu:
The current build-up of food-stocks that we have witnessed is not an unprecedented phenomenon. A similar development occurred at the beginning of this decade. In the year 2001-02, the total food-grain stocks reached around 51 million tons (stocks as on April 1, at the end of a financial year), more than thrice the buffer norm of 16.2 million tons. In a rerun of history, we have a massive build-up of food stocks of 43.3 million tons by the end of 2009-10. With the Rabi wheat harvests of 2009-10 coming into the Food Corporation of India (FCI) godowns by May of this year, the stocks further soared to 60.9 million tons (FCI month wise food stocks data). This is double the storage capacity of 30.5 million tons (owned and hired) available with the FCI as on August 15, 2010. It is therefore hardly surprising that there are reports of widespread rotting and wastage of food-grain stocks lying in the open.
With fresh rice harvests due to be procured by November, that is, in another couple of months, the food storage situation is set to worsen. Without urgent measures to distribute the surplus grain, there will, in all likelihood, emerge an escalated glut of grains at the FCI warehouses and consequently further spoiling of valuable food-grains by the end of this year. The storage capacity that FCI owns have remained stagnated at around 15 million tons during this decade and the organization has been adjusting the hired component of its capacities over time to cope with the higher levels of food stocks. It is unlikely that the FCI can drastically increase the hiring of warehouses in the next few months to meet the massive requirements. However, more than these logistical issues, what concerns us is that why have food stocks soared in this manner and what is the economic rationale behind maintaining such large food-stocks in the country. Delving in these crucial questions will also reveal that the policymakers and the government has hardly learnt anything from the earlier instance of burgeoning food stocks at the beginning of this decade.
The usual thinking that gripped the NDA government during the earlier instance of accumulation of food stocks was that this occurred essentially due to over-production of food-grains and higher procurement due to the high Minimum Support Price (MSP). This reasoning was entirely misplaced given that there was no marked rise in food production in the country during the years preceding the stockpiling of grains between 2000 and 2002. The three-year average per capita food-grains production for the years 1997 to 1999 was around 181 kg, which was marginally higher than average for the nineties. What actually happened during this period was a fast decline in the consumption of food-grains by the population. The per-head availability of food-grains (which reflects the consumption of grains in the economy) declined from 183.4 kg in 1996-97 to 164.4 kg in 2000-011.
The introduction of a Targeted Public Distribution System in 1997 based on official poverty lines (the arbitrariness of which is well-recognized now in all quarters) implied that a sizeable section of the population in need of subsidized grains had to purchase food at higher market prices, and thereby perforce made to reduce the amounts of food in their plates. The food that never reached the plates of the people showed up as stocks in the FCI storage facilities. However, the decision makers within the government, driven by their erroneous idea that falling per-capita consumption of grains represented a diversification of diets by the population away from cereals, chose to deny any increase in hunger in the country. Instead, the government decided to dispose of the surplus stock by exporting it in the animal-feed markets for feeding the European cattle.
This judgment that the accumulated food stocks were exportable surplus was misplaced and wrong on two counts. First, diversification of diets by the population increases (and not decrease) the absorption of grains in the economy, as the experiences of all developed countries bears out. As diets shift from cereals to animal-products, there is an increase in the indirect consumption of grains (required as animal feed for producing meat and milk products). The increase in indirect consumption of grains, more than offsets the decline in the direct cereal consumption, given that the animal stomach is an inefficient converter of energy from grains to animal products2. Secondly, the data on consumption of macro-nutrients reveal that there was a decline in per capita per day protein intake from 56.1 gram in 1996 to 54.7 grams in 2000, providing direct evidence that there has been no substitution of calories by proteins, whatsoever, for the average Indian during these years.
Now, the processes that have resulted in a build-up of food-stocks this time round has been similar to the experience at the beginning of the decade outlined above. This is evident from the chart on trends in food production and availability. The government, particularly the agriculture minister, was ecstatic about the record food-grains production in 2007-08 and 2008-09 although the per capita production was only around 180/181 kg, which can at best be termed as normal levels of production; higher levels have been reached in the country before without such large accumulation in food stocks. On the other hand, the per capita food availability declined from 171.3 kg in 2007-08 to 161.9 in 2009-10. The back-breaking double-digit food inflation rates that have persisted in the economy since the end of 2008 and continue even today have been singularly responsible for this decline in demand for food in the economy. The loss of employment that occurred with the slowdown in the economy when the global economic crisis unfolded, coupled with the fast rising food prices, have worked in tandem to reduce food consumption for the vast majority of poor in the country. It is however, intriguing how food inflation has sustained itself at a high level for nearly two years now, when food production and supply was mostly normal and the overall demand for food-grains was declining, an issue which we shall address later.
Figure: Per Capita Cereal Production and Availability for India: 2000-1 to 2009-10
Source: Based on data from WASDE, USDA
Clearly then, the large food stocks presently lying in the open in FCI premises, rotting away or being eaten by rats, have accumulated only because millions of hungry in the country could not afford to buy them. These grains have landed in government possession only because the markets snatched them away from the poor and sold it to the government (when the demand from the richer population also dried up) and not because of any record food production that some seem to believe. It is now the duty of the government to reach the basic minimum quantities of food to the poor; a duty which the free markets have miserably failed to perform. Why then the government is reluctant to undertake obvious measures, even at the risk of destroying millions of tons of food-grain? This necessitates us to examine the political economy dimension of the issue.
Abdicating Responsibilities: In who’s Interest?
A large body of research has provided increasingly impeccable evidence towards the emergence of South Asia, and particularly India, as one of the major hunger hotspots of the world. A long list of multi-lateral institutions (FAO, IFPRI, UNDP) and individual researchers have clearly exhibited evidence in this regard. The Indian case is particularly interesting given that the high growth experience of the country has been accompanied with rising calorie deprivation. By 2004-05, 87 percent of the population in rural areas was consuming less than 2400 Kcal per day per capita (69 percent under 2200 Kcal) and these figures have been higher than that in 1993-94. The situation in urban areas was also precarious given that 65 percent of the population had a calorie-intake of less than 2100 Kcal per day per capita (Utsa Patnaik, EPW, 2007, 2010). India has been consistently maintaining her poor rank in the Global Hunger Index developed by IFPRI and the situation of hunger and malnutrition in some states of the country were comparable or worse than many poor African countries.
Given this large volume of compelling evidence on hunger incidence in the country and the pressure of campaigns like the Right to Food campaign, the UPA-II government has been forced to contemplate a Right to Food legislation, although the neo-liberal elements within the government and the bureaucracy are tiring overnight to reduce the same to a cosmetic piece of legislation. Without this pressure from the political and academic circles, this government, like its earlier NDA counterpart, could have merrily decided to export the surplus grains by now and relieved itself of the costs of holding the large food-stocks.
However, in the real sense, nothing seemed to have changed in the thinking of the political and bureaucratic establishment, since the years of the last round of food-stock accumulation, as far as public policy response is concerned. The obstinate refusal of the Prime Minister and members of his cabinet to distribute the surplus grain (whether free or subsidized) and expand the coverage of the PDS in the face of increasing hunger, only goes to show that the government is unabashedly nonchalant and insensitive towards the plight of the hungry, even though it may have officially not been able to dismiss hunger as a major challenge before the country.
What explains this numbness on part of the government? There are serious theoretical flaws on part of the government in comprehending the economics of food consumption. The declining per capita food availability, for two decades now, reflects escalating hunger among the population and is not normal in an economy where average per capita incomes have grown. Normally, with rise in per capita income, the population diversifies their diet, demand more of animal products or proteins/fats and therefore the overall consumption of grains (direct and indirect) rises at a faster rate for the reasons explained above. The experiences of developed nations during the 60s and 70s stand testimony to this fact. In the Indian case, the per capita income in real terms have grown during the last two decades only for a thin upper section of population, although that growth has been so large that it has offset the decline or stagnation in the real incomes of the majority population. Thus, it is only the richest section of the population for whom we witness diet diversification and a move away from direct consumption of cereals/calories (for example in the metropolitans), even as the calorie and protein intakes fall for the population as a whole.
The government by keeping its eyes shut to this growing inequality and forwarding the theoretically flawed justification for falling food availability in the economy, based on fictional diet diversification, is doing great injustice to the majority of the population. In effect, it remains oblivious to the growing magnitude of hunger and under-nutrition in the country.
However, the non-responsiveness of the government is not only an issue of right or wrong economic theory. It is hard to believe that none among the government and the policymakers realize the incorrectness of the diet diversification argument, especially in the face of strong evidence that suggests otherwise. Rather, this flawed reasoning helps the political establishment and the votaries of the neo-liberal mantra to obfuscate or deny the intensification of hunger during the last two decades, when laisser-faire economic policies have been dominant in the country. Any admission that the ‘divine’ markets have aggravated hunger-incidence, the most basic challenge before society and mankind, would perhaps raise serious qualms regarding the infallibility of the neo-liberal economic doctrine. Thus, it is not only flawed theoretical belief that is behind the languor of the government on the issue of rotting food-stocks but also the dogmatic ideological stance of ‘keeping governments small’ that is thwarting any credible expansion of the coverage of the PDS as an exigency measure in the face of burgeoning food-stocks and escalating hunger in the country.
In fact, the high food inflation in the country has largely been a result of this policy of letting markets a free reign. The government has time and again expressed helplessness over controlling food inflation by citing external factors as drivers of increasing food prices. This argument of global factors driving food inflation, which has remained in double digits since November, 2008 is again wrong on two counts. First, the world food prices, which had reached astronomical levels during the global food crisis between 2006 and 2008 collapsed with the onset of the financial crisis towards the end of 2008. It is only much later now that world food prices are moving northwards again. On the contrary, the Indian cereal price inflation crossed the 10 percent mark towards the end of 2008 and remained above that level since then. Definitely, there is no evidence of any unambiguous correspondence between world and domestic food prices. Secondly, with normal cereal harvests in 2007 and 2008, there was no food shortage that would lead the country to import food grains and also any price-escalating factors dominating the world market in the process. In fact, the country has imported no rice since 2008 and a meagre 307 tons of wheat in 2008 and 2009 (compare this to the annual demand for wheat in 2008 and 2009, which was 70.9 and 78.2 million tons).
The purpose that was served by citing external factors as the cause behind high domestic food prices was to shield the speculative activities of the domestic private food trading interests. The speculation intensified with the announcement of a bad monsoon in the second half of 2009. Speculation, backed by private hoarding of food-grains and artificial supply shortages, was the primary reason behind rising food prices in the country during a period. There can be no other plausible reason why food prices should rise during years when production was normal and demand (as represented by the falling per head consumption) was actually falling!
The legitimate question that one can ask is how such sustained speculation in food prices is possible when public food-stocks are at a very high level. The answer to this puzzle is that it can happen only under a neo-liberal state, whose leaders and policymakers time and again underscore their policy stance of not proceeding with any expansion of the PDS and not undertaking any enhanced distribution of the accumulated food-stocks at lower interventionist prices, thereby repeatedly assuring private speculators that the public food-stock policy have no role in controlling unduly rising food prices in the economy. By destining the large public food-stocks to either rot in the open or be eaten by rats and refusing, at regular intervals, to undertake any credible enhancement of food distribution, the government has in effect expunged all and any economic value of the enormous food-stocks that are in possession with the FCI currently. The wholesome inaction of the government has served to facilitate unbridled speculation and profiteering by private entities in the food markets, as more and more people fell off the ladder into the hell called hunger.
Naivety arising out of false theories and intransigence inspired by neo-liberal dogmas is reigning supreme and continue to grip our policymakers when millions of hungry citizens of the country need their intervention the most. In the process, the legitimacy of a public institution like the FCI has been greatly compromised and the faith of the larger public in the democratic institution of governance summarily betrayed. It is necessary to immediately reinstate a public food policy that serves the interest not of profiteers and market fundamentalists but of that majority who are rendered vulnerable by the markets. This is imperative not only in the interest of restoring the waning confidence of people over democratic processes in the country but also to ascertain that the poor and hungry of our nation do not lose their dignity and ‘Right to Life’.
1 All figures of grain production, consumption or imports are based on data from the WASDE, USDA database and FAO population figures. The food-stocks data are from the FCI publications.
2 The calorie equivalent grain-meat conversion ratios for poultry in 2:1 i.e. 2 kg of grain has to be fed to the chicken to produce poultry meat that provides the same amount of energy as 1 kg of grain when directly consumed. For beef, this ratio is high as 7:1.