Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.
Cabinet approves continuation of PM-AASHA to provide better prices to farmers
Note4Students
From UPSC perspective, the following things are important :
Prelims level: PM-AASHA scheme;
Mains level: Significance of PM-AASHA;
Why in the News?
The government has approved the extension of the PM-AASHA scheme, allocating ₹35,000 crore, to ensure farmers receive better prices for their produce and to regulate price fluctuations of essential commodities for consumers.
What is PM-AASHA?Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA) is an umbrella scheme launched by the Government of India in September 2018, aimed at ensuring remunerative prices for farmers’ produce. It integrates various existing schemes to provide a comprehensive approach to price support, including:
The scheme has been extended until 2025-26 with a financial outlay of ₹35,000 crore to enhance its effectiveness and reach. |
What are the implications of PM-AASHA?
- Income Security: By ensuring MSP, PM-AASHA aims to stabilize farmers’ incomes and protect them from price fluctuations in the market.
- Increased Production: The assurance of remunerative prices is expected to encourage farmers to increase production, particularly in pulses and oilseeds, which have historically been underproduced.
- Market Stability: The scheme helps regulate prices of essential commodities, making them affordable for consumers while ensuring fair compensation for producers.
- Strengthened Procurement Mechanism: The integration of various schemes under PM-AASHA enhances the overall procurement process, making it more efficient and transparent.
What are the issues related to MSP?
- Limited Coverage: MSP is primarily applicable to a few crops like wheat and rice, leaving many farmers without guaranteed prices for their produce.
- Inefficient Procurement Infrastructure: The existing infrastructure for procurement is inadequate, leading to delays and inefficiencies that affect farmers’ ability to sell their produce at MSP.
- Lack of Awareness: Many farmers are unaware of their rights regarding MSP or how to access these benefits effectively.
- Regional Disparities: There are significant regional disparities in the implementation of MSP. States like Punjab and Haryana benefit more from MSP due to better procurement systems, while farmers in other states may struggle to access these benefits.
- Market Distortions: The MSP system leads to market distortions, encouraging overproduction of certain crops while neglecting others.
What should be done to resolve the issues related to MSP?
- Expand MSP Coverage: The government should consider extending MSP to a wider range of crops, particularly those that are crucial for food security and farmer livelihoods.
- Enhance Procurement Infrastructure: Investments should be made in developing better procurement facilities, including storage and transportation systems, especially in rural areas.
- Increase Awareness Campaigns: Implementing educational programs for farmers about their rights regarding MSP and how they can benefit from it would empower them significantly.
Mains PYQ:
Q What do you mean by Minimum Support Price (MSP)? How will MSP rescue the farmers from the low income trap? (UPSC IAS/2016)
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States can directly buy Rice from FCI
Note4Students
From UPSC perspective, the following things are important :
Prelims level: FCI, Open Market Sale Scheme
Why in the News?
The Union Food and Consumer Affairs Minister announced that States can now directly purchase rice from the Food Corporation of India (FCI) under the Open Market Sale Scheme (Domestic) without participating in e-auctions.
Key Announcements:Direct Rice Purchase of Rice by the States:
Launch of Price Monitoring System (PMS) 4.0:
|
About Open Market Sale Scheme
| Details | |
| Purpose | Enhance the supply of food grains, especially wheat, during the lean season to moderate open market prices, especially in deficit regions. |
| Administered by | Food Corporation of India (FCI) |
| Method of Sale | Surplus stocks of wheat and rice sold at pre-determined prices through e-auction on the National Commodity and Derivatives Exchange (NCDEX) platform. |
| Participants | Bulk consumers, private traders, State Governments, and Union Territory Administrations |
| Auction Frequency | Weekly |
| Reserve Price | Fixed by the government; bidders cannot quote less than the reserve price. |
| Schemes under OMSS |
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PYQ:[2017] Which of the following is/are the advantage/advantages of implementing the ‘National Agriculture Market’ scheme? 1. It is a pan-India electronic trading portal for agricultural commodities. 2. It provides the farmers access to nationwide market, with prices commensurate with the quality of their produce. Select the correct answer using the codes given below: (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 |
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The PDS impact on household expenditure
Note4Students
From UPSC perspective, the following things are important :
Prelims level: About PDS and its structural mandate
Mains level: Imputation of values for food and non-food items
Why in the news?
The Household Consumption Expenditure Survey Data provides an opportunity to analyze the effects of social transfers.
About Public Distribution System (PDS):
- The Public Distribution System (PDS) aims to ensure food security by providing subsidized foodgrains to economically vulnerable sections of society. Under the National Food Security Act (NFSA), 2013, up to 75% of the rural population and 50% of the urban population are eligible for subsidized foodgrains.
- Foodgrains procured by the Food Corporation of India (FCI) are distributed through a network of Fair Price Shops (FPS).
Its structural mandate:
- Procurement and Distribution: The PDS operates through the procurement of foodgrains by the Food Corporation of India (FCI) from farmers at Minimum Support Prices (MSP). These foodgrains are then allocated to states and union territories based on their requirements and distributed to Fair Price Shops (FPS), which deliver subsidized foodgrains to eligible beneficiaries.
- Identification and Subsidy: Beneficiaries are identified based on the Socio-Economic and Caste Census (SECC) data, classifying households into Priority Households and Antyodaya Anna Yojana (AAY) households. Under the National Food Security Act (NFSA), 2013, eligible households receive rice at ₹3 per kg, wheat at ₹2 per kg, and coarse grains at ₹1 per kg. The system aims to ensure that food security is maintained for the economically vulnerable sections of society.
Observations made by the HCES:2022-23 report
- The Household Consumption Expenditure Survey (HCES) 2022-23 provides insights into the coverage of social welfare programs, including the Public Distribution System (PDS).
- The survey highlights discrepancies between administrative data and survey estimates due to inclusion and exclusion errors, offering detailed characteristics of households benefiting from these programs.
Imputation of values for food and non-food items
Note: Imputation of values for food and non-food items refers to the process of assigning a monetary value to items received by households for free or at a subsidised rate through social welfare programs like the Public Distribution System (PDS) in India.
- Purpose: Imputation is done to estimate the total consumption expenditure of households more accurately. It accounts for the fact that households receive goods (such as foodgrains from PDS) without directly paying for them, thus impacting their overall consumption.
- Methodology: The National Sample Survey Office (NSSO) and other agencies use statistical methods to assign a value to these items. This involves determining the modal (most common) or percentile prices of the items received, which may vary by state and rural/urban classification.
- Types of Items Imputed: Imputation covers both food and non-food items. In the context of the PDS, it primarily includes foodgrains but can extend to other essential commodities provided through government schemes.
- Data Sources: Data for imputation can come from surveys like the HCES, where households report receiving these items. NSSO surveys typically provide detailed guidelines on how imputation values are derived and applied in their reports.
- Impact on Analysis: Imputing values allows analysts to compute metrics like the Monthly Per Capita Consumption Expenditure (MPCE) accurately, reflecting the true economic status and welfare impact of households.
Implications for Poverty
- Economic Relief for Poorer Households: By providing foodgrains at highly subsidized rates, the PDS reduces the financial burden on poorer households, allowing them to allocate their limited resources to other essential needs.
- Enhanced Measurement of Poverty: Imputing the value of free or subsidised items received through programs like the PDS allows for a more comprehensive assessment of household consumption. Including these imputed values in poverty measurements provides a more accurate reflection of the economic well-being of households.
- Policy Insights and Targeting: Understanding how imputed values impact poverty metrics helps policymakers in targeting social welfare programs more effectively.
- Diversification of Diet: Access to subsidized foodgrains from the PDS allows households to free up resources, potentially enabling them to purchase a more diverse range of nutrient and protein-rich foods such as vegetables, milk, pulses, eggs, fish, and meat
Way forward:
- Enhancing Efficiency and Targeting: Improve the identification and targeting of beneficiaries through updated and accurate data collection methods. Continuous validation and updating of Socio-Economic and Caste Census (SECC) data can help in reducing inclusion and exclusion errors.
- Promoting Nutritional Security and Health Outcomes: Expand the scope of subsidized items beyond basic grains to include more nutritious food options like pulses, edible oils, and fruits.
Mains PYQ:
Q What are the major challenges of Public Distribution System (PDS) in India? How can it be made effective and transparent? (2022)
Q Food Security Bill is expected to eliminate hunger and malnutrition in India. Critically discuss various apprehensions in its effective implementation along with the concerns it has generated in WTO. (2013)
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Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.
Why govt must create a buffer stock of all main food items?
Note4Students
From UPSC perspective, the following things are important :
Prelims level: NAFED, Open Market
Mains level: How Buffer in Chana Helped
Why in the news?
Sales of wheat and chana in the open market have effectively curbed soaring inflation in cereals and pulses.
What is an Open Market?
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Present State of Inflation:
- Overall CPI Inflation: Stood at 4.75% year-on-year in May, the lowest in 12 months, but food inflation remained elevated at 8.69%.
- Cereals and Pulses: Inflation rates were 8.69% for cereals and 17.14% for pulses in May 2024.
- Impact of Buffer Stocks: Buffer stocks of wheat and chana moderated inflation by ensuring sufficient supply during periods of price volatility.
How Buffer in Gram(Chana) Helped:
- NAFED Procurements: Procured large quantities of chana during surplus years at MSP, preventing prices from soaring during crop failures.
- Distribution: Sold chana through various channels including open market e-auctions and ‘Bharat Dal’ at subsidized rates, stabilizing prices for consumers.
- Current Stock Levels: Despite recent sales, NAFED still maintains a buffer stock of 4.01 lakh tonnes of chana as of now.
Significant Role Played by FCI:
- Wheat Offloading: FCI offloaded a record 100.88 lakh tonnes of wheat in fiscal 2023-24 through open market sales, stabilizing prices and reducing inflation.
- Retail Price Management: Sales under schemes like ‘Bharat Atta’ ensured wheat and cereal inflation was reduced from peak levels earlier in 2023.
- Buffer Management: Despite reduced stocks from previous years, FCI’s interventions have been crucial in managing price volatility in essential commodities.
Need to Adopt Buffer Policy and Better Procurement:
- Buffer Stock Strategy: Proposal to expand buffer stocks beyond rice, wheat, and select pulses to include oilseeds, vegetables, and even milk powder to mitigate price spikes.
- Enhanced Procurement: Advocates for increased procurement during surplus years to build adequate buffer stocks for future market stabilization.
- Policy Impact: Buffer stocking can moderate price volatility influenced by climate change-induced agricultural uncertainties, benefiting both consumers and producers.
Way forward:
- Enhanced Diversification of Buffer Stocks: There is a need to diversify buffer stocks beyond traditional items like rice and wheat to include a broader range of essential commodities such as oilseeds, vegetables, and milk powder. This expansion would help in better managing price spikes and supply shocks across various sectors.
- Strengthened Procurement Mechanisms: Improving procurement strategies during surplus production years is crucial. This involves proactive measures to purchase larger quantities of commodities at minimum support prices (MSPs), ensuring adequate buffer stocks for future market stabilization and price moderation during scarcity periods.
Mains PYQ:
Q Food Security Bill is expected to eliminate hunger and malnutrition in India. Critically discuss various apprehensions in its effective implementation along with the concerns it has generated in WTO. (UPSC IAS/2013)
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How Punjab and Haryana remain key to National Food Security?
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Trends in wheat and Rice production
Mains level: National food security;
Why in the News?
The recent drop in agricultural production due to El-Nino has highlighted once more the critical role Punjab and Haryana play in ensuring India’s food security.
Role of Punjab and Haryana for the Food Security of India:
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Wheat Production:
- Traditional procurement: Until the mid-2000s, Punjab and Haryana supplied over 90% of the wheat for India’s public distribution system (PDS) and other government programs.
- Impact of the Green Revolution: The spread of high-yielding varieties to other states and the establishment of infrastructure for buying grain at minimum support prices (MSP) reduced Punjab and Haryana’s share to around 65% by the early 2010s.
- In 2019-20 and 2020-21, total wheat procurement reached record levels (39-43.3 million tons), with Punjab and Haryana’s share falling to just over 50%. Madhya Pradesh became the top wheat procurer in 2019-20, surpassing Punjab.
- Climate Shocks: The last three years have seen production setbacks due to climate shocks, including: An unseasonal temperature surge in March 2022. Heavy rain in March 2023 during the grain formation stage.
Recent Climate Impact:In 2023-24, unusually warm temperatures in November-December impacted wheat yields, especially in central India. The delayed winter, attributed to El Nino, led to premature flowering and shortened the vegetative growth phase. Regional Impact:
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Rice production in the states:
- Traditional Procurement: Government rice procurement was historically concentrated in Punjab, Haryana, and the Godavari-Krishna and Kaveri delta regions of Andhra Pradesh (AP) and Tamil Nadu (TN).
- Diversification: There has been a diversification in rice procurement, with new states like Telangana, Chhattisgarh, Odisha, and Uttar Pradesh (UP) becoming significant contributors to the Central pool.
- Change in Procurement Shares: The combined share of Punjab and Haryana in total rice procurement decreased from 43-44% in the early 2000s to an average of 28.8% in the four years ending 2022-23. In the current crop year, this share has risen to around 32.9%, with some procurements still pending in Telangana, AP, and TN.
Impact of Irrigation:
- Farmers in Punjab and Haryana, with assured access to irrigation, did not suffer production losses from last year’s patchy monsoon attributed to El Niño.
- In contrast, states like Telangana saw reduced rabi paddy planting and struggled with irrigation due to depleted groundwater levels.
Policy implications
- NFSA Entitlements: Under the NFSA, about 813.5 million people are entitled to receive 5 kg of wheat or rice per month through the Public Distribution System (PDS) at highly subsidized prices.
- Current Government Policy: Since January 2023, the current government has been providing this grain to all NFSA beneficiaries free of cost.
Way Forward:
- Adoption of Climate-Resilient Varieties: Develop and promote high-yield, climate-resilient wheat varieties that are tolerant to heat, drought, and diseases.
- Efficient Irrigation Systems: Invest in modern irrigation systems such as drip and sprinkler irrigation to ensure efficient water use.
- Invest in Agricultural Research: Increase funding for agricultural research institutions to develop new wheat varieties and innovative farming techniques.
Mains PYQ:
Q Why did the Green Revolution in India virtually by-pass the eastern region despite fertile soil and good availability of water? (UPSC IAS/2014)
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Food factor: On the latest retail inflation data
Note4Students
From UPSC perspective, the following things are important :
Prelims level: NA
Mains level: Food Inflation and Control Measures
Why in the news?
- India’s retail inflation remained virtually unchanged at 5.09% in February, even as food prices paid by consumers resurged from 8.3% in January to 8.66% in February.
Context-
- Most economists expect inflation to stay in the 5.1%-5.2% range in March as well, which would lift average inflation in the last quarter of this year over the 5% average projected by the RBI
The primary reason behind the food inflation in February-
- Vegetable Prices Surge: Vegetables experienced a significant price surge, with a seven-month high pace of 30.25% in February. This spike in vegetable prices contributed significantly to the overall food inflation.
- Rise in Egg and Meat Prices: Prices of eggs and meat/fish also rose at a faster pace in February compared to January. Eggs witnessed a notable increase from 5.6% to 10.7%, while meat and fish prices rose from 1.2% to 5.2%.
- Deceleration in Pulses and Spices Prices: While there was a slight deceleration in the inflation rate of pulses and spices compared to the previous year, these items still experienced steep price increases. Pulses inflation stood at 18.5%, and spices recorded a 13.5% increase.
- Regional Disparities: Food inflation varied across different states, with some states experiencing inflation rates above the RBI’s upper tolerance threshold of 6%. States like Odisha, Telangana, Haryana, and Assam recorded high inflation rates, while others like Delhi, Madhya Pradesh, Uttarakhand, and West Bengal had relatively lower inflation rates.
- Seasonal Factors and Supply Chain Issues: Seasonal factors, along with supply chain disruptions, could have contributed to the rise in food prices. Factors such as adverse weather conditions, transportation constraints, and supply-demand imbalances may have affected the availability and prices of food items in the market.
To address inflation-related issues in the short term and long term, several measures can be considered:
[A] Short-Term Measures:
Supply-Side Interventions:
- Increase the supply of essential commodities by releasing buffer stocks, if available.
- Facilitate faster transportation of perishable goods through streamlined logistics and distribution channels.
- Establish temporary market outlets to directly connect farmers with consumers, reducing intermediary costs and price hikes.
Import Policies:
- Relax import restrictions on essential food items to augment domestic supply and stabilize prices.
- Expedite customs clearance procedures to ensure timely availability of imported goods in the market.
Price Monitoring and Control:
- Implement strict price monitoring mechanisms to prevent hoarding and profiteering.
- Set up special task forces or committees to monitor price movements and take swift action against price manipulation.
Demand Management:
- Promote alternative dietary choices to alleviate pressure on high-priced items.
- Encourage conservation and rational utilization of essential commodities through public awareness campaigns.
[B] Long-Term Measures:
Investment in Agriculture Infrastructure:
- Enhance investment in agricultural infrastructure, including irrigation systems, cold storage facilities, and transportation networks, to improve productivity and reduce post-harvest losses.
Crop Diversification and Technology Adoption:
- Encourage farmers to diversify their crops to mitigate the impact of price volatility.
- Promote the adoption of modern agricultural practices, including mechanization, precision farming, and biotechnology, to enhance crop yields and resilience to climate change.
Market Reforms:
- Implement market reforms to create a more efficient and transparent agricultural marketing system.
- Facilitate the establishment of Farmer Producer Organizations (FPOs) and agricultural cooperatives to empower farmers and strengthen their bargaining power in the market.
Food Processing and Value Addition:
- Promote investment in food processing industries to add value to agricultural produce and reduce post-harvest losses.
- Establish food processing clusters and agro-industrial parks to encourage entrepreneurship and create employment opportunities in rural areas.
Risk Management and Insurance:
- Introduce crop insurance schemes and risk management tools to protect farmers from income volatility caused by price fluctuations and natural disasters.
- Provide training and technical assistance to farmers to improve their risk assessment and management capabilities.
Sustainable Agriculture Practices:
- Encourage the adoption of sustainable agriculture practices, including organic farming, agroforestry, and soil conservation, to ensure long-term environmental sustainability and food security.
Conclusion-
To mitigate food inflation, short-term measures such as supply-side interventions and price monitoring are essential, while long-term solutions like investment in agriculture infrastructure and market reforms are crucial for sustainable food security.
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Kerala to launch affordable ‘Sabari K-Rice ‘
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Sabari K-Rice, Bharat Rice, Atta
Mains level: Food security, affordability
In the news
- The Kerala government’s decision to introduce ‘Sabari K-Rice’ is seen as a response to the Union government’s distribution of ‘Bharat Rice.’
Bharat Rice and Other Commodities
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Sabari K-Rice
- Objective: It aims to provide good quality rice at affordable rates, presenting an alternative to the existing subsidized rice scheme.
- Distribution: K-Rice will be made available through Supplyco outlets, alongside the existing subsidized rice supply of 10 kg per card.
- Quality and Pricing: K-Rice offers high-quality varieties at subsidized rates, contrasting with Bharat Rice sold by NAFED and NCCF at different prices.
- Price Discrepancy: While Bharat Rice sells at ₹29 per kg, K-Rice aims to provide affordable rates, with the state government incurring additional costs to distribute it.
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FCI Capital raised from Rs 10,000 cr to Rs 21,000 cr
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Food Corporation of India (FCI): Major functions
Mains level: Read the attached story
Introduction
- The government has raised the authorized capital of the state-run Food Corporation of India (FCI) from ₹10,000 crore to ₹21,000 crore, marking a significant stride in bolstering its operational capabilities.
- This initiative, announced by the Food Ministry, underscores the government’s commitment to strengthening FCI’s role in ensuring food security and safeguarding farmers’ interests.
About Food Corporation of India (FCI)
- Establishment and Objectives: Founded in 1965 under the Food Corporation Act, 1964, FCI serves as a statutory body under the Ministry of Consumer Affairs, Food and Public Distribution, Government of India.
- Core Objectives: FCI is entrusted with the tasks of providing price support to farmers by
- Procuring grains at Minimum Support Prices (MSP),
- Supplying grains to Public Distribution System (PDS), and
- Maintaining strategic grain reserves.
Initiatives to Enhance FCI’s Efficiency
- Integrated IT Systems: FCI is implementing integrated IT solutions and adopting e-office initiatives to transition towards a paperless work environment and streamline operational functions effectively.
- Infrastructure Development: FCI is investing in infrastructure projects such as cement road construction, roof maintenance, and weighbridge modernization to enhance operational efficiency.
- Quality Assurance: Efforts are underway to procure lab equipment and develop software platforms for quality assessment, ensuring adherence to stringent quality standards.
Significance of Increased Authorized Capital
- Operational Strengthening: The augmentation of authorized capital aims to bolster FCI’s operational efficiency, reduce interest burdens, and positively impact government subsidies.
- Modernization Imperative: In addition to financial infusion, the government emphasizes the modernization of storage facilities, transportation networks, and adoption of advanced technologies for enhanced performance.
- Empowering Farmers: The government’s commitment to MSP-based procurement and investment in FCI’s operational capabilities reflects a collaborative approach towards empowering farmers, fortifying the agricultural sector, and ensuring nationwide food security.
Relevance of FCI
- Bedrock of National Food Security: FCI plays a pivotal role in implementing the National Food Security Act, ensuring procurement and distribution to far-flung areas for national food security.
- Response to Crisis: During crises such as the Covid pandemic and migrant crises, FCI has effectively tackled challenges of hunger and starvation.
- Fight against Malnutrition and Poverty: FCI’s role in the Public Distribution System (PDS) contributes to combating malnutrition and poverty, promoting inclusive growth.
- Support to Farmers: By purchasing crops at MSP, FCI provides financial security to farmers, making agriculture remunerative.
Challenges Faced by FCI
- Limited Farmer Participation: Less than 10% of farmers can sell their produce to government agencies due to various factors such as lack of awareness or access to the MSP system, benefiting only large farmers in certain states like Punjab.
- Storage Overload: FCI has stored double the grains than the prescribed buffer limits, leading to a shortage in the open market, inflation, and deterioration of grains due to limited storage capacity.
- Leakages in Distribution: According to NSSO 2011, 40-60% of grains distributed through the Public Distribution System (PDS) are siphoned off, highlighting significant challenges in distribution efficiency and governance.
Way Forward:
Shanta Kumar Committee (2014) Recommendations
- The Shanta Kumar Committee proposed a comprehensive set of recommendations aimed at reforming the Food Corporation of India (FCI) and enhancing its efficiency in managing food systems.
- The committee proposes designating FCI as an “Agency for Innovation in Food Management Systems” to foster creativity and efficiency in managing food resources.
[A] Procurement Stage
- Outsourcing Procurement: Recommends outsourcing procurement activities in better-performing states like Punjab while centralizing procurement in states like Bihar, Assam, Bengal, and eastern Uttar Pradesh.
- Cash Transfers to Farmers: Suggests exploring cash transfers to farmers as an alternative mechanism for procurement.
- Buffer Stock Quotas: Advocates setting buffer stock quotas instead of open-ended procurement to optimize resource utilization.
- Stringent Quality Checks: Emphasizes the need for stringent quality checks by third parties to ensure the quality of procured grains.
[B] Storage Stage
- Outsourcing Stocking Operations: Recommends outsourcing stocking operations to various agencies such as the Central Warehousing Corporation (CWC), State Warehousing Corporation (SWC), and the private sector under the Private Entrepreneur Guarantee (PEG) scheme.
- Automatic Liquidation of Excess Stock: Proposes automatic liquidation of excess buffer stock in the open market to prevent overstocking and market distortions.
- Maintaining Strategic Buffer Reserves: Suggests maintaining strategic buffer reserves to stabilize markets and address emergencies effectively.
[C] Distribution Stage
- Expanding Coverage under NFSA: Recommends expanding coverage under the National Food Security Act 2013 to encompass 40% of the population, ensuring wider access to subsidized food grains.
- End-to-End Computerization: Advocates for end-to-end computerization of the distribution system to enhance transparency, efficiency, and accountability.
- Online Tracking: Proposes online tracking of the entire system from procurement to retail distribution to facilitate real-time monitoring and management.
[D] Transportation Improvements
- Integration of Road and Rail Transport: Suggests integrating road transport along with rail to optimize transportation networks and reduce dependency on rail.
- Containerization: Recommends using containers instead of gunny bags for efficient and hygienic transportation of food grains.
- Utilization of Inland Waterways: Advocates utilizing inland waterways for transporting food grains, leveraging cost-effective and eco-friendly transportation modes.
- Automation in Loading and Unloading: Proposes automation in loading and unloading processes to enhance efficiency and minimize manual labor.
[E] Operational Overhaul
- Doing Away with FIFO Principle: Suggests doing away with the FIFO (first in, first out) principle to release hygienic food grains on time and prevent wastage.
- Targeting Chronically Starved Areas: Recommends implementing a pre-positioning shipment policy to store food grains nearer to chronically starved areas, ensuring timely access to essential supplies during emergencies.
- Ensuring Last-Mile Connectivity: Advocates leveraging a network of Self-Help Groups (SHGs) and Farmer Producer Organizations (FPOs) to ensure last-mile connectivity and efficient distribution of food grains.
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How to tackle malnutrition effectively
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Anaemia Mukt Bharat
Mains level: complexities of malnutrition, providing a comprehensive view of the two-way relationship between nutrition and health.
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Central Idea:
The article discusses the intricate relationship between nutritional deficiencies, particularly iron deficiency, and certain disorders like anaemia. It emphasizes the two-way impact of nutrition and health, citing examples such as iron deficiency anaemia, Vitamin A, and zinc deficiency. The article highlights the challenges in addressing malnutrition and the importance of government interventions like Anaemia Mukt Bharat and Large-Scale Food Fortification (LSFF).
Key Highlights:
- Nutritional deficiencies, especially iron deficiency, can result from both poor dietary choices and underlying health conditions like celiac disease or infections.
- The article underscores the inter-generational impact of malnutrition, stating that anaemic mothers often give birth to anaemic babies.
- Government programs such as Anaemia Mukt Bharat and the Mid-day Meal Scheme aim to address nutritional deficiencies, but effective implementation remains a challenge.
- The shift from traditional, balanced diets to processed and sugar-laden alternatives is contributing to nutritional deficiencies.
- About 46% of South Asia’s population lacks access to an affordable balanced diet, with India facing challenges in ensuring a nutrient-adequate diet for its citizens.
- Large-Scale Food Fortification (LSFF) is proposed as a crucial strategy to enhance ongoing efforts, aligning with micronutrient supplementation and behavioral change measures.
Key Challenges:
- Effective implementation of government programs like Anaemia Mukt Bharat and the Mid-day Meal Scheme.
- Lack of access to an affordable balanced diet for a significant portion of the population.
- Misgivings and resistance among beneficiaries regarding the appearance and texture of fortified foods.
- The need for an intensive information, education, and communication (IEC) campaign to address misconceptions and build trust.
- India lags behind in adopting universal food fortification, despite success in iodised salt under the National Iodine Deficiency Disorders Control Programme.
Key Terms:
- Anaemia Mukt Bharat (AMB)
- Micronutrient deficiencies
- Large-Scale Food Fortification (LSFF)
- Iodised salt
- Nutrient-adequate diet
- Information, education, and communication (IEC) campaign
Key Phrases:
- “Two-way relationship between nutritional deficiencies and certain disorders.”
- “Malnutrition caused by micronutrient deficiency has inter-generational impacts.”
- “Challenges of effective implementation persist.”
- “Dietary patterns have shifted from seasonal and varied foods to processed and sugar-laden alternatives.”
- “46% of South Asia’s population lacks access to an affordable balanced diet.”
Key Quotes:
- “The burden of malnutrition is complex and needs to be addressed through multiple interventions.”
- “The onus seems to be on people to recognize that reducing consumption of processed foods is a crucial step towards ensuring better health outcomes.”
- “Food fortification may not be the ideal remedy. However, it is a vital first step.”
- “Awareness is critical to the acceptance of fortified foods among the targeted beneficiaries.”
Key Statements:
- “Consistent intake of food lacking in essential micronutrients can lead to iron deficiency anaemia and impair immunity.”
- “LSFF, when aligned with micronutrient supplementation programs, diet diversity promotion, and measures to induce behavioral change has immense potential.”
Key Examples and References:
- Adoption of iodised salt under the National Iodine Deficiency Disorders Control Programme in 1992.
- The success of LSFF in other countries with universal food fortification.
- Government programs like Anaemia Mukt Bharat and the Mid-day Meal Scheme as interventions.
Key Facts and Data:
- About 46% of South Asia’s population lacks access to an affordable balanced diet.
- 74% of India’s population could not afford a healthy diet, and 39% fell short of a nutrient-adequate one.
- The article mentions data from The State of Food Security and Nutrition in the World, 2023.
Critical Analysis:
The article effectively highlights the complexities of malnutrition, providing a comprehensive view of the two-way relationship between nutrition and health. It emphasizes the need for multifaceted interventions and addresses challenges in implementation and awareness. The proposal of LSFF as a strategy is substantiated by referencing successful past programs like iodised salt. The article uses clear language, making it accessible to a wide audience.
Way Forward:
- Strengthening implementation of existing government programs.
- Increasing awareness through intensive IEC campaigns.
- Focusing on the affordability and accessibility of a balanced diet.
- Emphasizing the importance of reducing the consumption of processed foods.
- Urging timely adoption and alignment of Large-Scale Food Fortification to enhance ongoing initiatives.
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Sourcing FCI rice under OMSS to impact retail prices
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Open Market Sale Scheme (OMSS)
Mains level: Not Much
Central Idea
- The Department of Food and Public Distribution has proposed a plan to source rice from the Food Corporation of India (FCI) under the Open Market Sale Scheme (OMSS) for consumer sales.
- The FCI is providing quality rice under OMSS at a reserve price of ₹29 per kg.
About Open Market Sale Scheme (OMSS)
| Details | |
| Purpose of OMSS | To sell government-owned food grains (wheat and rice) in the open market to enhance supply and moderate prices, especially during lean seasons and in deficit regions. |
| Implementing Agency | Food Corporation of India (FCI) |
| Components of OMSS | 1. Sale of wheat to bulk consumers/private traders through e-auction.
2. Sale of wheat through e-auction by dedicated movement. 3. Sale of Raw Rice Grade ‘A’ to bulk consumers/private traders through e-auction. |
| Method of Selling | Through e-auction for transparency, conducted weekly using the platform of NCDEX (National Commodity and Derivatives Exchange Limited). |
| Participants | State Governments/Union Territory Administrations and private entities can participate in the e-auction.
States procure additional food grains through OMSS for distribution under the National Food Security Act,2013 (NFSA). |
Impact on Rice Inflation
- Current Inflation Rate: The annual inflation rate of rice has been around 12% for the past two years, accumulating over time and raising concerns.
- Objective: The department aims to reduce this inflation rate and make rice more affordable for consumers.
Significances of OMSS
- Enhance the supply of food grains: The OMSS helps to enhance the supply of food grains, especially wheat, during the lean season and moderates the open market prices, especially in deficit regions.
- Prevent wastage and deterioration of food grains: The OMSS also helps to prevent wastage and deterioration of food grains in FCI godowns due to a lack of storage space and proper maintenance.
- Provides an alternative source of food grains: The OMSS provides an alternative source of food grains for bulk consumers, state governments, UTs and private parties who participate in various schemes and programmes such as ethanol production under biofuel policy.
- Generates revenue for the FCI: The OMSS generates revenue for the FCI and reduces its subsidy burden on the central government. The FCI sells food grains under OMSS at pre-determined prices which are higher than the minimum support prices (MSPs) paid to farmers for procurement.
Challenges faced by OMSS
- Low demand from the buyers: The OMSS faces low demand from buyers due to high reserve prices fixed by the FCI, which are often above the market prices.
- Logistical challenges: The OMSS also faces logistical challenges such as transportation, handling and quality issues of food grains, which affect the timely delivery and customer satisfaction.
- Limited impact on stabilizing the market prices: The OMSS has a limited impact on stabilizing the market prices as it accounts for a small share of the total food grain supply and demand in the country.
- Does not address the structural problems: The OMSS does not address the structural problems of food grain management such as procurement, distribution and buffer stocking policies, which need to be reformed to ensure food security and fiscal prudence.
Way forward
- Revise the reserve prices of food grains: The FCI should revise the reserve prices of food grains under OMSS based on the prevailing market conditions and demand-supply situation to attract more buyers and clear the excess stocks.
- Improve logistics and quality management: The FCI should improve its logistics and quality management system to ensure timely delivery and good quality of food grains under OMSS.
- Diversify product portfolio: The FCI should diversify its product portfolio under OMSS to include coarse grains, pulses and oilseeds, which are also essential for nutrition security and have a higher demand in the market.
- Coordinate with state governments: The FCI should coordinate with state governments, UTs and other stakeholders to ensure effective implementation and monitoring of OMSS and address any grievances or complaints arising from it.
Back2basics
Food Corporation of India (FCI)
|
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Bharat Atta: Subsidized Wheat Flour Scheme
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Bharat Atta
Mains level: Not Much
Central Idea
- In a bid to maintain stability in food prices during the festive season, the Indian government has unveiled a subsidized packaged wheat flour initiative accessible to all consumers.
- Termed “Bharat Atta,” the scheme aims to release a quarter of a million tonnes of state-owned wheat to various cooperative outlets and federations.
Bharat Atta
- Distribution Channels: The government has chosen Kendriya Bhandar, a network of cooperative general stores, along with the National Agricultural Cooperative Marketing Federation and National Cooperative Consumers’ Federation, as the primary channels for distributing Bharat Atta.
- Reduced Price: Bharat Atta is offered at a reduced price of ₹27.50 per kilogram, which is lower than the earlier rate of ₹29.50 at Kendriya Bhandar.
- Expansion: To ensure accessibility, the subsidized flour will be available at Kendriya Bhandar, NAFED, NCCF, government cooperative outlets, and food vans operated by NAFED and NCCF.
- Government Support: The government is facilitating this scheme by milling the wheat through firms selected through a tender process, thereby minimizing the milling cost, which is approximately ₹1.80 per kilogram for large wheat millers.
Why such move?
- Free Cereals: PM recently announced that cereals would be provided free of cost to 800 million beneficiaries entitled to subsidized food for the next five years.
- Price Controls: The government has implemented various measures such as banning wheat and rice exports, setting a floor price for onion exports, and reducing import duties on pulses to combat rising food prices.
- Election Context: These anti-inflation measures come as India faces key assembly elections in five states and a general election in the near future.
Challenges in implementation
- Cereal Inflation: Despite a significant wheat harvest, India continues to grapple with high cereal inflation, which has persisted for over a year, reaching double digits.
- Record Foodgrain Production: The fourth and final round of estimates for the 2022-23 crop output indicates a record high in foodgrain production. However, wheat production slightly decreased from initial estimates.
- Positive Outlook: Despite minor fluctuations, wheat production remains higher than the previous year, reflecting a positive outlook for addressing food price concerns.
Conclusion
- The government’s subsidized wheat flour initiative, Bharat Atta, exemplifies its dedication to ensuring that the joy of the festive season is not marred by soaring food prices.
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PM Garib Kalyan Anna Yojana (PMGKAY) extended for 5 Years
Note4Students
From UPSC perspective, the following things are important :
Prelims level: PMGKAY
Mains level: No
Central Idea
- The Union government’s Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) to provide 5 kg of free foodgrains per month to 81 crore Indians will be extended for another five years.
What is PMGKAY?
- PMGKAY is a food security welfare scheme announced by the GoI in March 2020, during the COVID-19 pandemic in India.
- The program is operated by the Department of Food and Public Distribution under the Ministry of Consumer Affairs, Food and Public Distribution.
- The scale of this welfare scheme makes it the largest food security program in the world.
Targets of the scheme
- To feed the poorest citizens of India by providing grain through the Public Distribution System to all the priority households (ration card holders and those identified by the Antyodaya Anna Yojana scheme).
- PMGKAY provides 5 kg of rice or wheat (according to regional dietary preferences) per person/month and 1 kg of dal to each family holding a ration card.
At what rate are food grains provided under the NFSA?
- NFSA beneficiaries are entitled to receive food grains at highly subsidised rates.
- Under the food law, rice is provided at Rs 3 per kg, wheat at Rs 2 per kg, and coarse grains at Re 1 per kg.
Success
- Pandemic mitigation: It was the first step by the government when pandemic affected India.
- Wide section of beneficiaries: The scheme reached its targeted population feeding almost 80Cr people.
- Support to migrants: It has proven to be more of a safety net to migrant people who had job and livelihood losses.
- Food and Nutrition Security: This has also ensured nutrition security to children of the migrant workers.
Limitations of the scheme
- Corruption: The scheme has been affected by widespread corruption, leakages and failure to distribute grain to the intended recipients.
- Leakages: Out of the 79.25 crore beneficiaries under the National Food Security Act (NFSA), only 55 crore have so far received their 5 kg.
- Inaccessibility: Many people were denied their share due to inability to access ration cards.
- Low consumption: Livelihood losses led to decline in aggregate demand and resulted into lowest ever consumption expenditure by the people owing to scarcity of cash.
- Resale of subsidized grains: This in turn led to selling of the free grains obtained in the local markets for cash.
Back2Basics: National Food Security (NFS) Act
- The NFS Act, of 2013 aims to provide subsidized food grains to approximately two-thirds of India’s 1.2 billion people.
- It was signed into law on 12 September 2013, retroactive to 5 July 2013.
- It converts into legal entitlements for existing food security programmes of the GoI.
- It includes the Midday Meal Scheme, Integrated Child Development Services (ICDS) scheme and the Public Distribution System (PDS).
- Further, the NFSA 2013 recognizes maternity entitlements.
- The Midday Meal Scheme and the ICDS are universal in nature whereas the PDS will reach about two-thirds of the population (75% in rural areas and 50% in urban areas).
- Pregnant women, lactating mothers, and certain categories of children are eligible for daily free cereals.
Key provisions of NFSA
- The NFSA provides a legal right to persons belonging to “eligible households” to receive food-grains at a subsidised price.
- It includes rice at Rs 3/kg, wheat at Rs 2/kg and coarse grain at Rs 1/kg — under the Targeted Public Distribution System (TPDS).
- These are called central issue prices (CIPs).
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India’s record Food Production
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Food Production stats
Mains level: Read the attached story
Central Idea
- Recent data from the agriculture ministry has revealed that India achieved record-high food production in the 2022-23 fiscal year.
- However, this surge in production appears to be at odds with the government’s decision to restrict the export of key staples like wheat and rice, as well as the persistent trend of rising food inflation.
Food Production Statistics
- Record-High Food Production: The agriculture ministry estimates food production for 2022-23 at a historic 329.7 million tonnes, marking a 4.5% increase from the previous year.
- Cereal Production: Major cereal production, including rice and wheat, rose by 4.9% and 2.6%, respectively. Coarse grain production surged by 12%, while pulses production experienced a 4.4% year-on-year decline but remained 6% higher than the five-year average.
- Challenges Faced: These estimations were made despite adverse conditions such as subpar monsoons affecting rice output and late rains causing damage during crop harvesting.
Inconsistencies in the Data
- Export Curbs: In September 2022, India imposed export curbs on broken rice and imposed a 20% duty on certain varieties due to expected domestic production challenges. These curbs have since intensified.
- Wheat Export Ban: Last year, a miscalculation of wheat harvest, primarily due to a heatwave, led to export bans in May 2022, despite promises to bridge global supply gaps after Russia’s invasion of Ukraine.
- Rising Food Prices: Despite record production and export restrictions, retail prices for cereals have continued to surge. Wheat and rice prices have been in double digits, with consumer cereal prices up by 11% year-on-year, and pulses registering a 16.4% increase. As of October 21, retail prices for rice and wheat flour were 12.7% and 5% higher year-on-year, respectively.
Prospects for 2023-24
- Kharif Production Estimate: The first advance estimate for kharif production, typically released in September, is yet to be published. This year’s monsoon, with the lowest rainfall in five years and uneven distribution, is expected to impact rice production, the main kharif crop.
- Pulses and Oilseeds: Additionally, reduced rainfall in several states may affect pulses and oilseeds production. Retail prices for specific pulse varieties like tur (pigeon peas) have already surged by 38% compared to the previous year.
Challenges in Robust Crop Estimations
- Reliability of Data: National crop yield estimates rely on crop-cutting experiments conducted by state revenue and agriculture departments, raising concerns about the accuracy of data collection, particularly in understaffed state departments.
- Remote Sensing: India is using remote sensing to cross-verify the data, yet reliability remains a challenge, especially for crops with multiple harvests.
- Horticulture Crops: Estimating yield for horticulture crops, which are harvested in stages, is even more complex than for food grains.
Conclusion
- India’s agricultural landscape presents a perplexing scenario with record-high food production, export restrictions, and stubborn food inflation.
- The government’s efforts to stabilize prices through export curbs have not yielded the expected results.
- As India navigates the complexities of its agricultural sector, it must address the discrepancies in data collection and explore innovative approaches to ensure accurate estimates and sustainable food security.
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Ridding India of food insecurity
Note4Students
From UPSC perspective, the following things are important :
Prelims level: NA
Mains level: Food-price inflation in India, food security, impacts and solutions
What’s the news?
- India, touted as the world’s fastest-growing large economy, is grappling with a formidable challenge: soaring food-price inflation.
Central Idea
- The rise in the price of food first accelerated sharply in 2019 and has climbed in most years thereafter. In July this year, annual inflation exceeded 11%, the highest in a decade. An implication of continuing high food-price inflation is that a section of the population could face hardship in consuming food of adequate nutritional value.
The grim reality
- The FAO’s State of Food Security and Nutrition in the World report reveals a staggering figure: an estimated 74% of India’s population cannot afford a healthy diet as of 2021, encompassing roughly one billion individuals.
- Given a population of 1,400 million, this makes for approximately one billion Indians.
Factors contributing to the failure to control food-price inflation in India
- Supply-side Challenges: Weather disruptions, infrastructure gaps, and supply chain inefficiencies hinder food production and distribution.
- Rising Input Costs: Increased expenses for fertilizers, pesticides, and labor raise production costs, leading to higher food prices.
- Government Policies: Distortionary policies like minimum support prices (MSPs) and export restrictions affect market dynamics and prices.
- Ineffectiveness of Macroeconomic Policy: Traditional macroeconomic policies, which have been relied upon to control inflation, have proven ineffective in addressing food-price inflation.
- Failure of the Reserve Bank of India (RBI): The RBI, responsible for monetary policy in India, has consistently failed to control inflation, with rates exceeding the target for four years.
- Inadequacy of Inflation Targeting: The RBI’s approach of “inflation targeting,” involving output contraction during inflation spikes, is considered misleading and unsuitable for managing food inflation driven by supply-side issues.
- Limitation of Central Banks: Central banks, including the RBI, are perceived as incapable of effectively addressing the problem of food-price inflation, particularly within a reasonable time frame.
A study report: Trend in the price of food in Mumbai over 2018–2023
- Rising Food Prices: The primary factor behind food price inflation is the significant increase in the cost of food items. Specifically, the cost of preparing a traditional thaali meal at home in Mumbai has risen by 65% from 2018 to 2023.
- Wage Growth Lag: Although there has been wage growth for both manual and salaried workers, with manual workers’ wages increasing by 38% and salaried workers’ wages increasing by 28% during the same period, these wage increases have not kept pace with the rapid rise in food prices.
- Purchasing Power Erosion: The households in Mumbai have experienced a substantial reduction in purchasing power. As food prices have risen considerably, households are forced to allocate a larger portion of their income to food expenses, which leaves less for other essential needs and discretionary spending.
- Nutritional Consequences: Food price inflation has led to adverse nutritional consequences, particularly an increase in the prevalence of anemia, especially among adult women in Mumbai. This rise in anemia cases is primarily attributed to nutrient deficiencies caused by reduced access to nutritious food due to escalating prices.
- Validity of the FAO’s Estimate: The FAO’s estimates that over half of India’s population may struggle to afford a healthy diet. Even in the event of a potential 100% overestimation by the FAO, it would still leave a staggering 500 million people in this category, surpassing the populations of most countries globally except China.
The significance of the Green Revolution
- Food Self-Sufficiency:
- At the time of the Green Revolution, India was grappling with severe food shortages due to consecutive droughts.
- The government’s supply-side response, which included providing farmers with high-yielding seeds, affordable credit, and guaranteed prices through procurement, was highly successful.
- Within a few years, India achieved self-sufficiency in food production and was no longer dependent on food imports.
- Economic and geopolitical significance:
- While some mistakes were made during the Green Revolution, such as the excessive use of chemical fertilizers and a focus on cereals over pulses, the program’s success had significant economic and geopolitical implications.
- It allowed India to assert self-reliance in a polarized Cold War era, a vital geopolitical consideration.
- Poverty Alleviation: The Green Revolution played a pivotal role in reducing poverty in India by increasing agricultural productivity and farm incomes. The increased food production also benefited the poor, as it made food more accessible and affordable.
- Lessons for the Future: While acknowledging past mistakes, the article suggests that the Green Revolution’s lessons can be applied to address the current challenges of food price inflation. Specifically, the focus should be on correcting past errors and launching a second agricultural revolution to lower the cost of food production while ensuring sustainability.
Proposed initiatives to combat food price inflation and ensure access to nutritious food for all
- Increase Public Investment in Irrigation: Address inefficiencies in public expenditure on irrigation to expand irrigated land.
- Facilitate Land Leasing: Lift restrictions on land leasing to encourage productivity-enhancing capital investments.
- Revitalize Agricultural Research: Reinvigorate India’s network of agricultural research institutes to harness innovation.
- Reinstate Extension Services: Restore and strengthen agricultural extension services to disseminate best practices.
- Focus on Protein Production: Develop a program to substantially increase protein production to address India’s protein deficiency.
Conclusion
- Taming India’s food-price inflation crisis demands immediate and concerted efforts. Our past achievements, such as the Green Revolution, serve as a testament to our capabilities when we address food security head-on. Let us seize this moment to launch a second agricultural revolution, ensuring that every Indian has access to affordable, nutritious food and once again reducing poverty and malnutrition on a massive scale.
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Annapurna Food Packet Scheme in Rajasthan
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Annapurna Food Packet Scheme
Mains level: Not Much
Central Idea
- Rajasthan’s government launched the Annapurna food packet scheme as part of its welfare initiatives, aiming to support 1.10 crore people, especially those hit hard by the pandemic.
Annapurna Food Packet Scheme
- The scheme primarily benefits families identified through the National Food Security Act (NFSA) survey, encompassing poor and destitute families.
- It also extends beyond NFSA beneficiaries to encompass families that received ₹5,500 pandemic assistance, totalling around 1.05 crore beneficiaries.
Benefits and Contents
- Monthly Distribution: Eligible beneficiaries can collect Annapurna food packets monthly from fair price shops (FPS) at no cost.
- Content Details: Each packet contains essential items – 1 kg gram pulses, sugar, and iodized salt, 1 litre soybean refined edible oil, 100 grams each of chilli powder and coriander powder, and 50 grams of turmeric powder.
- Commission to FPS: FPS will receive a ₹10 commission per packet distributed, incentivizing their participation.
Back2Basics: National Food Security Act (NFSA)
- The NFS Act was enacted on 12th September 2013, with retrospective effect from 5th July 2013.
- It integrates legal entitlements for prevailing food security initiatives of the GoI, encompassing the Midday Meal Scheme, Integrated Child Development Services (ICDS), and the Public Distribution System (PDS).
- The NFSA enshrines a legal right for individuals belonging to “eligible households” to acquire food grains at subsidized rates.
Features
- Recognizing Maternity: The NFS Act acknowledges the importance of maternal health by incorporating maternity entitlements within its provisions.
- Coverage Spectrum: While the Midday Meal Scheme and ICDS are accessible to all, the PDS caters to about two-thirds of the population (75% in rural areas and 50% in urban areas).
- Special Benefits: Pregnant women, lactating mothers, and specific categories of children enjoy the privilege of daily free cereals, enhancing their nutritional security.
- Subsidized Rates: The act establishes central issue prices (CIPs) for food grains, offering rice at Rs 3/kg, wheat at Rs 2/kg, and coarse grains at Rs 1/kg through the Targeted Public Distribution System (TPDS).
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Cash Transfers vs Foodgrain Distribution
Note4Students
From UPSC perspective, the following things are important :
Prelims level: NA
Mains level: Implications of cash transfers instead of grains
Central idea
- Three years ago, financial constraints prevented the Centre and states from providing cash transfers to vulnerable households during pandemic lockdowns. However, there was an abundance of wheat and rice in FCI’s warehouses, allowing distribution to 813.5 million people. However, the current scenario has reversed, with governments having funds but limited grain stocks, raising concerns for future provisions.
Grain Distribution and Export Scenario
Grain Distribution:
- During the pandemic-enforced lockdowns the government distributed 10 kg of grain per month practically free to 813.5 million people from April 2020 to December 2022.
- This distribution was made possible through the public distribution system (PDS) and aimed to support poor and vulnerable households suffering from job and income losses.
Offtake of Grains:
- 2020-21 (April-March): The offtake of wheat and rice totalled 92.9 million tonnes, surpassing the annual average of 62.5 million tonnes during the first seven years after the National Food Security Act (NFSA) implementation.
- 2021-22: The offtake further increased to 105.6 million tonnes.
- 2022-23: The offtake remained high at 92.7 million tonnes.
Grain Exports:
- Rice: In 2021-22, India exported 21.2 million tonnes of rice, valued at $9.66 billion. In 2022-23, rice exports reached 22.3 million tonnes, valued at $11.14 billion.
- Wheat: Wheat exports accounted for 7.2 million tonnes ($2.12 billion) in 2021-22 and 4.7 million tonnes ($1.52 billion) in 2022-23
Karnataka Case: Shift from Grain to Cash Transfers
- Change in Financial Situation: As economic activities resumed, the financial situation improved for both the Centre and the states. Gross GST revenues grew, indicating increased financial resources available to the governments.
- Reduction in Grain Quota: From January 2023, the monthly grain quota under the National Food Security Act (NFSA) was reduced from 10 kg to 5 kg per person.
- Additional grain demand: The government in Karnataka sought additional grain from the FCI to fulfill its election promise of providing 10 kg of free rice per month to all members of below-poverty-line (BPL) households.
- Centre’s Refusal: The Centre did not allow the state government to distribute the extra rice beyond the 5 kg provided under the National Food Security Act (NFSA)
- Resort to Cash Transfers: As a result the Karnataka government started giving cash transfers instead. They started transferring Rs 170 to the bank accounts of the BPL family heads in lieu of the extra 5 kg of rice
Implications of cash transfers
- Inflationary Pressures:
- When households receive cash instead of free grain, they have the flexibility to use the money for various purposes, including purchasing rice or other goods.
- Increased demand for rice in the market can lead to higher prices, potentially contributing to inflationary pressures.
- Deflationary Impact of Free Grain Distribution:
- When surplus grains are distributed without a monetary transaction, it can help stabilize or reduce the prices of grains in the market.
- This can mitigate inflationary pressures and ensure affordable access to essential food items for vulnerable populations.
- Budgetary Considerations:
- This allocation needs to be carefully managed to ensure that it aligns with overall fiscal goals and priorities.
- The availability of adequate financial resources for cash transfers can be a determining factor in choosing between cash transfers and free grain distribution.
- Flexibility for Beneficiaries:
- Instead of receiving a predetermined amount of grain, households can decide how to allocate the cash according to their priorities.
- This flexibility allows households to address their unique requirements beyond food, such as healthcare, education, or other essential expenses.
- Market Dynamics:
- Cash transfers can stimulate economic activity by injecting money into local markets. This can have positive multiplier effects, benefiting various sectors and local businesses.
- On the other hand, free grain distribution may limit the market demand for grains, potentially affecting the livelihoods of farmers and traders.
Depleted grain stocks and uncertain monsoon
- Depleted Grain Stocks:
- The total stocks of wheat and rice in the Central pool today stands at a five-year-low.
- While these stocks are still above the normative minimum required, there are concerns about the monsoon and its impact on this year’s rice crop, which may affect procurement and future stocks.
- Monsoon Impact on Production:
- The poorly distributed rain has resulted in lower-than-usual rice cultivation, with farmers having planted only 123.18 lakh hectares out of the normal total of 399.45 lakh hectares under rice during the monsoon season. Additionally, the cumulative area sown is 6.1% lower than the previous year.
- Insufficient rainfall in the monsoon’s second half can impact not only the kharif rice but also the upcoming rabi wheat crop.
The Export conundrum
- Record Export Quantities: Despite the imposition of restrictions on grain exports, India witnessed record-breaking exports of rice, wheat, and other cereals. Specifically, total exports amounted to 32.3 million tonnes in 2021-22 and 30.7 million tonnes in 2022-23, valued at $12.87 billion and $13.86 billion, respectively.
- Inflationary Pressures: The rising demand for rice, coupled with reduced domestic availability due to exports, can lead to higher prices for consumers within the country.
- Limited Import Capability for Rice: As India is the world’s largest rice exporter, importing rice in case of domestic production shortfalls becomes challenging. Unlike wheat, which can be imported due to ample global supplies, rice imports are restricted.
- Price Volatility and Potential Export Restrictions: The rising rice prices globally, indicating potential price volatility. Given concerns over depleted grain stocks and uncertainties related to the monsoon, the government is considering additional export restrictions.
Way forward: A balanced approach
- Targeted Cash Transfers: Implement focused cash transfer programs to support the most vulnerable households affected by economic hardships.
- Optimal Grain Procurement: Strengthen grain procurement mechanisms to ensure an adequate supply of grains for the Public Distribution System (PDS) and strategic reserves.
- Strategic Stock Management: Develop effective strategies to balance grain distribution for immediate consumption while maintaining sufficient reserves for emergencies.
- Diversify Food Sources: Explore diverse food options, such as millets, pulses, and vegetables, to reduce reliance on a single crop and enhance food and nutritional diversity.
- Enhance Food System Resilience: Improve supply chain efficiency, reduce food waste, and enhance coordination among stakeholders for a resilient food system.
- Continuous Monitoring and Evaluation: Establish robust monitoring and evaluation systems to track the effectiveness of cash transfer programs, grain procurement strategies, and food security initiatives.
Conclusion
- The current state of depleted grain stocks, coupled with the uncertainties surrounding monsoon performance and global market dynamics, presents a significant challenge for the government. Balancing the need for cash transfers to alleviate the plight of vulnerable households while ensuring adequate grain reserves to sustain the country’s food security is a delicate task.
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Annapurti: The grain ATM
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Annapurti
Mains level: Not Much
Central Idea
- The recent demonstration of the Automated Multi-Commodity Grain Dispensing Machine, Annapurti, during the ‘National Conference of Food Ministers of States/UTs,’ showcased an innovative solution developed by the World Food Programme (WFP) India.
What is Annapurti?
- Annapurti, also known as the Grain ATM, offers a fast, clean, and precise method of providing subsidized grains to beneficiaries through the Public Distribution System.
- Developed by WFP India, it is an automated multi-commodity dispensing solution that ensures efficient access to commodities like rice, wheat, and grains.
- Beneficiaries can securely access their entitlements through Annapurti following biometric authentication.
Key Features
- Annapurti offers 24×7 access to full entitlements, eliminating spillage, waste, and inaccurate weighing.
- The machine can dispense one or two grain commodities, up to 50 kilograms, within five minutes, with a minimal error rate of 0.01 percent.
Advantages and Potential Applications
(1) Ensuring Food Security:
- Annapurti has significant potential for food-based safety nets, ensuring beneficiaries receive their monthly subsidized grains promptly.
- The machine’s precision and reliability prevent losses and ensure individuals receive their entitled portions.
(2) Emergency Food Grain Distribution:
- During emergencies, such as natural disasters or humanitarian crises, Annapurti can facilitate efficient and timely distribution of food grains to affected populations.
- Its automated system streamlines the process, reducing dependency on manual labor and minimizing errors.
(3) Market Access for Smallholder Farmers:
- Annapurti can play a crucial role in expanding market access for smallholder farmers.
- By offering a reliable and efficient distribution channel, farmers can sell their produce directly to Annapurti, ensuring fair prices and reducing intermediaries.
Sustainable and Modular Design
(1) Energy Efficiency:
- Annapurti is designed to prioritize food security while ensuring efficient energy consumption.
- With a consumption rate of only 0.6 Watt per hour, it offers an environmentally friendly solution.
(2) Modular Design:
- Annapurti’s modular design allows for flexibility and scalability based on available space.
- The storage unit and components can be easily assembled and customized to suit different requirements.
(3) Integration with Renewable Energy:
- Annapurti can be integrated with solar panels, inverter batteries, and elevators for automatic refilling.
- This integration enhances the sustainability of the system by reducing dependency on conventional energy sources.
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The Open Market Sale Scheme (OMSS) for wheat and rice
Note4Students
From UPSC perspective, the following things are important :
Prelims level: NA
Mains level: Open Market Sale Scheme (OMSS) and its relevance
Central Idea
- States across India are exploring alternative avenues for procuring wheat and rice due to the Food Corporation of India’s (FCI) recent quantity restrictions and denial of permission to participate in the Open Market Sale Scheme (OMSS). While the Centre claims that these measures are aimed at curbing inflation and regulating supply, critics argue that they prioritize political interests over the welfare of marginalized beneficiaries.
Relevance of the topic:
*According to a 2020 estimate by The Ministry of Consumer Affairs, Food and Public Distribution, more than 38,000 metric tonnes (MTs) of food grains got damaged in the five years leading upto 2020, including wheat, rice and pulses.
*According to the BCG report, around 2.1 billion tonnes of food grains will be wasted by the time we reach 2030.
*Amidst the challenge of food grain wastage, hunger and food security, the initiatives related to management of food grains becomes significant
What is Open Market Sale Scheme (OMSS)?
- The OMSS is a program implemented by the Food Corporation of India (FCI) to sell surplus food grains, primarily wheat and rice, from the central pool in the open market
- The scheme allows the FCI to sell these food grains to traders, bulk consumers, retail chains, and other entities at pre-determined prices through e-auctions.
- Through e-auctions, interested bidders can purchase specific quantities of food grains. Additionally, states have the option to procure grains through the OMSS, beyond their allocation from the central pool, to distribute among beneficiaries of the National Food Security Act (NFSA)
Key changes in the OMSS implementation
- Quantity Restrictions: The Centre decided to restrict the quantity that a single bidder can purchase in a single bid under the OMSS. Previously, the maximum quantity allowed per bid was 3,000 metric tonnes (MT). However, the revised OMSS now sets a range of 10 to 100 metric tonnes for the maximum quantity per bid. This change aims to accommodate more small and marginal buyers and promote wider participation in the scheme.
- Suspension of Sales to State Governments: In a notification sent to the states on June 13, the Centre stopped the sale of rice and wheat from the central pool under the OMSS to state governments. This means that state governments can no longer procure these food grains directly from the FCI through the OMSS. Additionally, private bidders are also disallowed from selling their OMSS supplies to state governments.
Significance of OMSS in India’s food grain management system
- Surplus Management: The OMSS enables the Food Corporation of India (FCI) to effectively manage surplus food grains, primarily wheat and rice, from the central pool. By selling these surplus grains in the open market, the FCI can prevent wastage and maintain optimal stock levels.
- Price Stability: The OMSS plays a crucial role in maintaining price stability in the market. By periodically selling surplus grains at pre-determined prices, the scheme helps regulate food grain prices, preventing excessive fluctuations and ensuring affordability for consumers.
- Market Competition: The OMSS promotes market competition by allowing various entities, including traders, bulk consumers, and retail chains, to participate in e-auctions and purchase food grains. This fosters a more competitive market environment, preventing the concentration of purchasing power in the hands of a few entities and encouraging fair market practices.
- Additional Procurement Avenue for States: States in India can procure food grains through the OMSS beyond their allocated quantities from the central pool. This provides an additional avenue for states to meet their food grain requirements, particularly for implementing welfare schemes such as the National Food Security Act (NFSA). It allows states to supplement their allocations and ensure the availability of essential food grains for marginalized beneficiaries.
- Small and Marginal Buyers: The recent revisions in the OMSS implementation, including the reduction in the maximum quantity per bid, aim to accommodate more small and marginal buyers. By encouraging their participation, the scheme aims to promote inclusivity, empower smaller market participants, and prevent monopolies held by bulk buyers. This supports the growth and sustainability of small businesses and helps distribute the benefits of the scheme more evenly.
How states are reacting to the changes?
- Karnataka: In Karnataka, the Anna Bhagya scheme, which aims to provide rice to marginalized families, was a significant electoral promise of the Congress government. They argue that the changes in the OMSS hinder the implementation of the welfare scheme and are politically motivated.
- Tamil Nadu: Tamil Nadu has also been affected by the changes in the OMSS. The state government has sought alternative sources to purchase 50,000 tonnes of rice, as the Union government has stopped the supply of rice under the OMSS. The state used to buy rice through the scheme and then subsidize it for ration card holders.
- Criticism of Centre’s Politics: States like Karnataka and Tamil Nadu, as well as other states, have criticized the Centre for engaging in politics at the expense of marginalized beneficiaries of state welfare schemes. They argue that the restrictions and changes in the OMSS implementation are driven by political considerations rather than prioritizing the welfare of vulnerable sections of society.
How OMSS contributes to food security?
- Distribution to National Food Security Act (NFSA) Beneficiaries: The OMSS allows states to procure additional food grains beyond their allocated quantities from the central pool for distribution to beneficiaries under the NFSA. This ensures that the eligible population, particularly marginalized sections of society, has access to an adequate supply of essential food grains, such as wheat and rice, at affordable prices.
- Price Stabilization: By periodically selling surplus food grains through the OMSS, the scheme helps stabilize prices in the market. The availability of surplus stocks from the central pool prevents excessive price fluctuations and ensures that food grains remain affordable for consumers.
- Market Competition and Inclusivity: The OMSS promotes market competition by allowing various entities, including traders, bulk consumers, and retail chains, to participate in e-auctions and purchase food grains. This diversifies the buyer base and prevents monopolistic practices, fostering fair market competition. Moreover, recent revisions in the OMSS implementation, such as the reduction in the maximum quantity per bid, aim to encourage the participation of small and marginal buyers, promoting inclusivity and empowering smaller market participants.
- Surplus Management: The OMSS helps manage surplus food grains held by the Food Corporation of India (FCI) in the central pool. By selling these surpluses in the open market, the FCI avoids wastage and ensures efficient utilization of available resources.
- Additional Procurement Avenues for States: The OMSS provides states with an additional avenue to procure food grains beyond their allocated quantities from the central pool. This helps states meet their food grain requirements for welfare schemes and other initiatives aimed at ensuring food security at the state level.
Challenges faced by OMSS
- Low buyer demand due to high reserve prices: The OMSS faces a challenge of low demand from buyers, primarily because of the high reserve prices set by the FCI. These reserve prices, which include various costs like procurement, storage, transportation, and handling charges, are often higher than the prevailing market prices.
- Logistical hurdles affecting timely delivery: Transportation, handling, and quality issues of food grains pose logistical challenges for the OMSS. These challenges can result in delays and impact customer satisfaction. The heavy reliance on railways by the FCI for grain movement can lead to congestion and further exacerbate the logistical problems.
- Limited impact on market price stabilization: The OMSS has a limited impact on stabilizing market prices as it represents only a small share of the overall food grain supply and demand in the country. The FCI sells only a fraction of its total stocks through the OMSS, while the majority is distributed through the Targeted Public Distribution System (TPDS) and other welfare schemes (OWS).
- Inadequate addressing of structural issues: The OMSS fails to adequately address the structural problems associated with food grain management, including procurement, distribution, and buffer stocking policies. Reforms in these areas are necessary to ensure food security and fiscal prudence. The excessive procurement by the FCI, beyond the requirements of TPDS and OWS, leads to surplus stocks and high carrying costs.
Way forward: Steps to enhance its effectiveness
- Stakeholder Consultation: The Centre should engage in meaningful consultations with states, policymakers, experts, and relevant stakeholders to understand the diverse perspectives and concerns related to the OMSS. This will help in developing a more inclusive and comprehensive approach that considers the welfare of marginalized beneficiaries, the interests of states, and the broader macroeconomic considerations.
- Review and Reconsideration of Changes: The Centre should review and reconsider the recent changes made to the OMSS, taking into account the feedback and concerns raised by states. This could involve revisiting the quantity restrictions and exploring alternative ways to achieve the objectives of curbing inflation, promoting market competition, and ensuring wider participation of small and marginal buyers.
- Transparency and Accountability: Ensuring transparency in the functioning of the OMSS is crucial. The Centre should provide clear guidelines, transparent processes, and timely information regarding the e-auctions, pricing, and availability of food grains through the scheme.
- Strengthening State-Level Procurement: Alongside the OMSS, efforts should be made to strengthen state-level procurement mechanisms for food grains. This will enable states to meet their requirements for welfare schemes more effectively and reduce their dependence on central schemes like the OMSS.
- Integrated Approach to Food Security: Food security is a multi-dimensional issue that requires an integrated approach. The Centre should work in collaboration with states to develop comprehensive strategies that address not only the availability and accessibility of food grains but also factors such as storage, transportation, nutrition, and agricultural productivity.
- Monitoring and Evaluation: Regular monitoring and evaluation of the OMSS and its impact on food security outcomes are essential. This will help identify any shortcomings, assess the effectiveness of the scheme, and make necessary adjustments to improve its functioning. Data-driven analysis and feedback mechanisms should be put in place to ensure evidence-based decision-making and continuous improvement.
Conclusion
- The Centre’s recent restrictions on the OMSS have sparked a political controversy, with states like Karnataka and Tamil Nadu accusing the government of prioritizing politics over the welfare of marginalized beneficiaries. As the Centre aims to curb inflation and regulate supply, it must consider the potential impact on state welfare schemes and ensure the availability of essential food grains to those in need.
Also read:
| Managing Inflation and Ensuring Food Security in India |
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Anna Bhagya Scheme of Karnataka
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Annna Bhagya Scheme
Mains level: Not Much
Central Idea
- The government in Karnataka is facing challenges in procuring rice for its ambitious Anna Bhagya scheme.
- However, there is a ray of hope as Punjab has agreed in-principle to supply the required quantity of rice.
What is Anna Bhagya Scheme?
- The state government plans to enhance the free rice allocation per person in the Below Poverty Line (BPL) card from 5 kg to 10 kg.
- The scheme is estimated to cost the exchequer ₹840 crore monthly and ₹10,092 crore annually.
- It is scheduled to be launched on July 1.
Challenges Faced
- The Food Corporation of India (FCI) initially agreed to provide the required 2.28 lakh tonnes of rice but later refused to do so.
- Telangana and Andhra Pradesh expressed inability to supply, while Chhattisgarh government offered to supply 1.5 lakh tonnes.
- Karnataka is now searching for rice in other states and aims to purchase it at ₹34 per kg.
Consideration of Alternative Grains:
- If needed, the state may provide 2 kg of either ragi or jowar, which would last for six months.
- However, the government still needs to supply an additional 3 kg of rice on top of the existing 5 kg allocation.
Punjab’s Offer
- The Punjab government expressed willingness to supply rice to Karnataka in the federal spirit.
- Punjab has enough rice and wants to help mitigate the problems faced by the poor across the country.
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Centre Discontinues Sale of Rice and Wheat under OMSS
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Open Market Sale Scheme (OMSS)
Mains level: Read the attached story
Central Idea
- The Centre has discontinued the sale of rice and wheat from the central pool to State governments under the Open Market Sale Scheme (OMSS).
- This move is aimed at controlling price inflation and stabilizing food prices, but it may have an impact on states like Karnataka that offer free grains to the poor.
What is Open Market Sale Scheme (OMSS)?
- The OMSS refers to the government’s selling of food grains, such as rice and wheat, in the open market at predetermined prices.
- The scheme aims to enhance grain supply during the lean season and moderate open market prices.
- It consists of three components:
- Sale of wheat to bulk consumers/private traders through e-auction.
- Sale of wheat to bulk consumers/private traders through e-auction by dedicated movement.
- Sale of Raw Rice Grade ‘A’ to bulk consumers/private traders through e-auction.
Working of OMSS
- To ensure transparency, the Food Corporation of India (FCI) has adopted e-auction as the method for selling food grains under the OMSS (Domestic).
- Weekly auctions are conducted on the NCDEX platform.
- State governments and Union Territory Administrations can participate in the e-auction if they require wheat and rice outside TPDS & OWS (Targeted Public Distribution System & Other Welfare Schemes).
Reasons for Discontinuation of OMSS:
- Controlling price inflation: Discontinuing OMSS helps regulate the supply of rice and wheat to prevent price hikes.
- Ensuring price stability: By limiting the availability of grains through OMSS, the government aims to maintain stable market prices.
- Balancing stock levels: Discontinuation allows for better management of grain stock in the central pool.
- Streamlining distribution channels: OMSS discontinuation enables a more focused and efficient distribution of grains through targeted welfare schemes.
- Efficient utilization of resources: By discontinuing OMSS, resources can be allocated more effectively to optimize procurement and distribution efforts.
- Flexibility in response to market conditions: The discontinuation provides flexibility to adjust grain supply based on market demands and conditions.
- Promoting market competition: The absence of OMSS encourages the participation of private traders and bulk consumers, fostering a competitive market environment.
Concerns and Production Challenges
- Adverse weather conditions: Unseasonal rains, hailstorms, and higher temperatures have posed challenges to wheat production.
- Lower production and higher prices: The adverse weather conditions may lead to reduced wheat production and subsequent price increases.
- Rice price fluctuations: Rice prices have already increased by 10% at the mandi level in the last year.
- Dependence on monsoon rains: Monsoon rains are crucial for rice production, as 80% of the country’s total rice production occurs during the kharif season.
- Potential impact on food security: Lower production and price fluctuations can affect food security, particularly for vulnerable sections of society.
- Procurement challenges: Slow wheat procurement and increased prices create difficulties in achieving procurement targets and maintaining stock levels.
- Potential impact on overall agricultural output: Production challenges in wheat may have a ripple effect on the overall agricultural sector and farm incomes.
- Need for stabilizing measures: Measures to stabilize supply, improve agricultural practices, and manage weather-related risks are crucial to address these concerns.
Efforts to Stabilize Supply and Stock Levels
- Food Corporation of India: FCI plays a vital role in ensuring the availability of food grains at reasonable prices to vulnerable sections of society through the Public Distribution System.
- Increased Procurement: The government has set a procurement target of 341.5 lakh metric tonnes of wheat for the ongoing Rabi Marketing Season (RMS) 2023-24.
Conclusion
- The Centre’s decision to discontinue the sale of rice and wheat to states under the OMSS aims to control price inflation and stabilize food prices.
- Exceptions have been made for regions facing specific challenges.
- The imposition of stock limits and offloading through the OMSS demonstrates the government’s efforts to manage overall food security and prevent hoarding.
- However, concerns remain regarding lower wheat production due to adverse weather conditions, highlighting the need for measures to stabilize supply and stock levels.
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India’s Ambitious Grain Storage Plan
Note4Students
From UPSC perspective, the following things are important :
Prelims level: NA
Mains level: Need for integrated grain storage plan
Central Idea
- India, with its massive population of 1.4 billion people, faces the challenge of ensuring food security for its citizens.
- To address this issue, the Centre has approved the establishment of an Inter-Ministerial Committee (IMC) to facilitate the implementation of the “world’s largest grain storage plan in the cooperative sector.”
- This article explores the key aspects of the plan and its potential impact on food security in India.
Need for Grain Storage Network
(1) Population vs. Arable Land
- India constitutes 18% of the global population but has only 11% of the arable land.
- The country’s vast population necessitates a robust network of food-grain storage facilities.
(2) Current Storage Gap
- India’s current foodgrain storage capacity is 145 million metric tonnes (MMT).
- However, the total food production stands at 311 MMT, resulting in a storage gap of 166 MMT.
- Insufficient storage facilities often lead to open storage, causing damage to food grains.
(3) Global Storage Capacities
- Countries like China, USA, Brazil, Russia, Argentina, Ukraine, France, and Canada have better storage capacities than their foodgrain production.
- For instance, China, with a foodgrain production of 615 MMT, has a storage capacity of 660 MMT.
(4) Regional Disparities in India
- In India, the storage capacity varies across regions.
- Some southern states have a storage capacity of 90% and above, while northern states like Uttar Pradesh and Bihar have capacities below 50%.
Understanding the ‘World’s Largest Grain Storage Plan’
(1) Role of Primary Agricultural Credit Societies (PACS)
- The Ministry of Cooperation plans to establish a network of integrated grain storage facilities through PACS.
- PACS are widely spread across India, with over 1,00,000 societies and more than 13 crore farmers as members.
- Leveraging the existing PACS network is a crucial aspect of the plan.
(2) IMC Composition
- The IMC, constituted under the chairmanship of Minister of Cooperation , includes three other ministers and secretaries from relevant ministries.
- The IMC will modify guidelines and implementation methodologies of schemes to facilitate the storage plan.
(3) Budgetary Allocation
- The plan will be implemented through the convergence of 8 existing schemes, eliminating the need for a separate allocation.
- Schemes under the Ministry of Agriculture and Farmers Welfare, Ministry of Food Processing Industries, and Ministry of Consumer Affairs, Food and Public Distribution will be utilized.
Benefits of the Grain Storage Plan
(1) Multi-Purpose Benefits:
The plan aims to establish godowns at the PACS level, enabling them to serve multiple functions:
- Procurement centres for state agencies and Food Corporation of India (FCI)
- Fair Price Shops (FPS)
- Custom hiring centres
- Common processing units for agricultural produce
(2) Other benefits
- Reduction in post-harvest losses
- Decreased foodgrain handling and transportation costs
- Enhanced market flexibility for farmers, reducing distress sales
Key issues addressed
- Infrastructure Address: The establishment of godowns at PACS level will address the shortage of agricultural storage infrastructure, increasing India’s foodgrain storage capacity by 700 lakh tonnes.
- Diversification of PACS: PACS will be empowered to undertake various activities such as procurement centers, fair price shops, and setting up custom hiring centers, enhancing farmer incomes.
- Reduced Food Grain Wastage: Decentralized storage at PACS level will minimize grain wastage, contributing to improved food security.
- Prevention of Distress Sales: Farmers can store their produce in PACS facilities and access loans of up to 70%, preventing distress sales and enabling better prices.
- Cost Reduction: Local storage facilities will significantly reduce transportation costs of food grains to procurement centers and fair-price shops.
Design and Features of Integrated Storage Facilities
(1) Facility Layout
- Spread over 1 acre of land, the integrated modular PACS will have various components.
- These include a custom hiring center, a multi-purpose hall, primary processing units, storage sheds, and container storage and silos.
(2) Financing and Capacity:
- The cost of establishing the facility is estimated at Rs 2.25 crore.
- A subsidy of Rs 51 lakh will be provided, with the remaining amount as margin money or a loan.
- The PACS is projected to earn Rs 45 lakh per year.
- The hub and spoke model will be implemented, with 55,767 PACS functioning as spokes and 7,233 PACS as hubs.
- The combined storage capacity of all 63,000 PACS will be 70 million tonnes.
(3) Technological Advancements:
- The modern silos will be equipped with computerized real-time monitoring systems.
- These facilities can be rented out to the FCI and other private agencies.
Conclusion
- India’s ambitious grain storage plan in the cooperative sector, facilitated by the IMC, aims to bridge the storage gap and ensure food security for its billion-plus population.
- By leveraging the vast network of PACS and implementing an integrated storage model, the plan seeks to reduce losses, transportation costs, and distress sales.
- With proper execution and allocation of resources, this transformative initiative can have a significant and positive impact on India’s food security landscape.
Back2Basics: Primary Agricultural Credit Societies (PACS)
- PACS are the lowest tier of the Short-Term Cooperative Credit (STCC) structure in India directly dealing with Farmers.
- The first PACS was established in 1904.
- They are headed by the State Cooperative Banks (SCB) at the state level.
- Credit from the SCBs is transferred to the District Central Cooperative Banks (DCCBs) which operate at the district level.
- PACS directly work with farmers and play a crucial role in providing short-term lending.
- PACS provide credit to farmers at the beginning of the cropping cycle to meet their needs for seeds, fertilizers, and other requirements.
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Debate over Fortified Rice
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Fortified Rice
Mains level: Food fortification and related concerns
Central Idea
- The Union Food Ministry refuted the allegations made by the Opposition regarding the distribution of Fortified Rice through fair price shops.
What is Fortified Rice?
- Fortified rice refers to the process of enhancing regular rice with essential nutrients to address nutritional deficiencies in populations that heavily rely on rice as a staple food.
- These added nutrients aim to improve the nutritional value of rice and combat specific deficiencies prevalent in certain regions or population groups.
- The fortification process involves coating the rice grains with a nutrient-rich powder or premix.
- The specific nutrients added to fortified rice can vary, but commonly include:
- Iron: Iron is often added to fortified rice to address iron deficiency anaemia, a widespread nutritional problem globally.
- Vitamins: Essential vitamins such as vitamin A, vitamin B-complex (including thiamine, riboflavin, niacin, and folic acid), and vitamin D may be included in fortified rice to address specific vitamin deficiencies prevalent in target populations.
- Minerals: Other minerals like zinc, calcium, and iodine may be incorporated into fortified rice, depending on the specific nutritional needs and deficiencies of the target population.
Need for fortification
- Data from the National Family Health Survey 2019-21 shows that 57 per cent of women in the reproductive age group (15-49) are deficient in iron.
- Moreover, studies have shown that about a fifth of the children (0-5 years) who do not have access to a nutritious and diversified diet suffer from vitamin-A deficiency.
- Vitamin D deficiency has been termed a silent epidemic.
Advantages offered
- Health: Fortified staple foods will contain natural or near-natural levels of micro-nutrients, which may not necessarily be the case with supplements.
- Taste: It provides nutrition without any change in the characteristics of food or the course of our meals.
- Nutrition: If consumed on a regular and frequent basis, fortified foods will maintain body stores of nutrients more efficiently and more effectively than will intermittently supplement.
- Economy: The overall costs of fortification are extremely low; the price increase is approximately 1 to 2 percent of the total food value.
- Society: It upholds everyone’s right to have access to safe and nutritious food, consistent with the right to adequate food and the fundamental right of everyone to be free from hunger.
Issues with fortified food
- Against nature: Fortification and enrichment upset nature’s packaging. Our body does not absorb individual nutrients added to processed foods as efficiently compared to nutrients naturally occurring.
- Bioavailability: Supplements added to foods are less bioavailable. Bioavailability refers to the proportion of a nutrient your body is able to absorb and use.
- Immunity issues: They lack immune-boosting substances.
- Over-nutrition: Fortified foods and supplements can pose specific risks for people who are taking prescription medications, including decreased absorption of other micro-nutrients, treatment failure, and increased mortality risk.
Possible health hazard
- Thalassemia, sickle cell anaemia and malaria are conditions where there is already excess iron in the body, whereas TB patients are unable to absorb iron.
- Consumption of iron-fortified foods among patients of these diseases can reduce immunity and functionality of organs.
Ministry’s justification of Fortified Rice
- The Ministry cited various studies to support the assertion that consumption of fortified rice leads to a significant improvement in haemoglobin levels and a reduction in the prevalence of anaemia.
- Rice fortification has been adopted by seven countries, including the U.S., since 1958, highlighting its effectiveness as a public health intervention.
- Ongoing evaluation, conducted by NITI Aayog in collaboration with the Indian Council of Medical Research, is being carried out to assess the impact and effectiveness of fortified rice.
- Evaluation studies focusing on pilot districts are currently underway to gather comprehensive data and insights.
Way Forward
- Collaborative efforts between the Ministry, NITI Aayog, and other relevant institutions should be prioritized to conduct a thorough and independent evaluation of the fortified rice program.
- Transparent communication of evaluation results and findings is crucial to foster trust and address any potential shortcomings or areas of improvement.
- Incorporating feedback and recommendations from stakeholders will be valuable in enhancing the implementation and impact of the fortified rice distribution program.
- Continuous monitoring and assessment of the program’s effectiveness should be a priority, enabling necessary adjustments and improvements to be made in a timely manner.
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Declining Allocations for Welfare Schemes: Neglecting India’s Social Fabric
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Key welfare schemes
Mains level: Child health and nutrition programms, Welfare schemes and challenges
Central Idea
- The Union Budget of the current year has faced widespread criticism for its dwindling allocations towards welfare schemes, undermining the importance of social spending in the post-COVID-19 recovery phase. Over the years, central allocations for welfare schemes and sectors ensuring basic rights have steadily decreased as a proportion of GDP. This alarming trend raises concerns about the government’s commitment to addressing crucial issues such as child malnutrition, hunger, and education.
Key Welfare Programs
- Saksham Anganwadi and Poshan 2.0: These programs aim to address child malnutrition and hunger. Starting from 2021-22, the Anganwadi program (Integrated Child Development Services – ICDS) was merged with POSHAN Abhiyaan and a nutrition scheme for adolescent girls.
- Mid-Day Meal (MDM) Scheme: The MDM scheme provides nutritious meals to approximately 12 crore children in schools. The program has shown positive outcomes, including improved attendance, learning outcomes, and reduced stunting among children.
- Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA): MGNREGA guarantees 100 days of employment per rural household and plays a vital role in providing income support to rural households.
- National Food Security Act (NFSA): NFSA aims to provide subsidized grains to over 80 crore people, ensuring food security.
- National Social Assistance Programme (NSAP): NSAP provides pensions and monetary assistance to vulnerable sections such as the elderly, widows, and disabled individuals below the poverty line.
- PM Matru Vandana Yojana (PMMVY): The scheme provides conditional cash transfers to women in the unorganized sector, aiming to cover all eligible women and births as per the NFSA mandate
Concerns regarding their resource allocations
- Saksham Anganwadi and Poshan 2.0: The allocation for these programs has decreased from 0.13% of GDP in 2014-15 to 0.07% in 2023-24. This decline in budgetary support raises concerns about the programs’ ability to effectively address child malnutrition and hunger.
- MDM Scheme: The budget allocation for the MDM scheme has decreased by 50% as a share of GDP, from 0.08% in 2014-15 to 0.04% in 2023-24. This reduced allocation poses challenges in providing nutritious meals to children and improving their overall health outcomes.
- MGNREGA: The MGNREGA expenditure as a share of GDP has declined from 0.26% in 2014-15 to 0.20% in 2023-24. This decrease in allocation raises concerns about the program’s ability to provide sufficient employment opportunities to rural households.
- National Food Security Act : The expenditure on NFSA as a share of GDP has decreased from 0.94% in 2014-15 to 0.65% in 2023-24. This reduction in allocation poses challenges in ensuring food security for a significant population.
- National Social Assistance Programme (NSAP): The allocation for NSAP as a share of GDP has declined from 0.06% in 2014-15 to 0.03% in 2023-24. This decrease raises concerns about the adequacy of pensions and monetary assistance provided to vulnerable sections.
- PM Matru Vandana Yojana: The PMMVY budget falls significantly short of the required amount, hindering its effectiveness in providing adequate maternity benefits.
Why these is distress among the working class?
- Low Wages and Income Inequality: Many workers, particularly those in the informal sector, earn low wages that are insufficient to meet their basic needs. Income inequality further exacerbates the disparity between the wages of the working class and the higher-income groups, leading to financial distress.
- Lack of Job Security: Many working-class individuals, especially those in the informal economy, face precarious employment conditions without job security or benefits. Uncertainty regarding employment continuity, lack of social protection, and limited access to formal labor rights contribute to their distress.
- Limited Access to Social Protection: A significant portion of the working-class lacks access to adequate social protection mechanisms, such as health insurance, pension schemes, and unemployment benefits. This leaves them vulnerable to economic shocks and reduces their resilience in times of crises.
- Declining Real Wages: Despite economic growth, the growth in real wages has not kept pace, resulting in stagnation or minimal growth in purchasing power for many workers. This phenomenon limits their ability to improve their living standards and contributes to distress.
- Exploitative Working Conditions: The working class often faces exploitative working conditions, including long working hours, unsafe work environments, lack of breaks, and limited rights to collective bargaining. These conditions can negatively impact physical and mental well-being, contributing to distress.
- Lack of Skill Development and Upward Mobility: Limited opportunities for skill development and upward mobility can trap workers in low-wage jobs with limited prospects for advancement. This lack of upward mobility can lead to frustration and distress among the working class.
- Inadequate Social Services: Insufficient access to quality healthcare, education, and affordable housing places an additional burden on the working class. The lack of affordable and accessible services exacerbates their financial stress and limits their ability to meet essential needs.
Way Ahead
- Prioritize Social Spending: The government should prioritize social spending, especially in the post-COVID-19 recovery period, to ensure adequate resources for welfare schemes. Allocating sufficient funds to programs addressing child nutrition, working class welfare, social assistance, and education is essential to uplift vulnerable sections of society.
- Increase Budget Allocations: The budget allocations for child nutrition and hunger programs, such as Saksham Anganwadi and Poshan 2.0, and the mid-day meal scheme need to be increased to effectively tackle malnutrition and improve children’s health outcomes. Adequate funding will ensure the successful implementation and expansion of these programs.
- Strengthen MGNREGA and NFSA: Recognizing the importance of MGNREGA and NFSA in providing rural employment and food subsidies, the government should prioritize and enhance the budget allocations for these schemes. This will support the livelihoods of the rural population and alleviate poverty and distress.
- Focus on Wage Growth: To address the distress among the working class, there should be a focus on policies that promote wage growth. This can be achieved through skill development programs, labor reforms, and measures to improve the employment ecosystem, ensuring better wages and improved livelihoods.
- Enhance Social Security Programs: The government should consider increasing allocations for social security programs, such as the National Social Assistance Programme (NSAP), to provide adequate support to the elderly, widows, and disabled individuals. Raising the pension amounts and expanding the coverage will help alleviate financial hardships among vulnerable sections of society.
- Allocate Sufficient Funds for Education and Healthcare: Given the importance of education and healthcare, the government should allocate adequate funds for school education and healthcare infrastructure. This will help improve access to quality education, reduce dropout rates, and ensure affordable and accessible healthcare for all.
- Improve HDI and Social Indicators: To uplift India’s Human Development Index (HDI) rank and address rising malnutrition levels, it is crucial to increase social expenditure in proportion to the country’s GDP growth. This can be achieved by redirecting revenue foregone due to tax concessions and adopting efficient fiscal management practices.
- Strengthen Monitoring and Evaluation: Effective monitoring and evaluation mechanisms should be put in place to ensure that allocated funds are utilized efficiently and reach the intended beneficiaries. Regular assessment of the impact and outcomes of welfare schemes will help identify areas of improvement and enable evidence-based policy decisions.
Facts for prelims
Prevalence of Iron deficiency anemia in India
What is Iron deficiency anemia?
|
Conclusion
- The decline in allocations for welfare schemes in the Union Budget raises concerns about the government’s commitment to social development, impacting crucial areas such as child nutrition, working-class welfare, and access to education and healthcare. To foster inclusive growth, there is an urgent need to prioritize social expenditure, increase budget allocations, and address the pressing issues facing vulnerable sections of society.
Also read:
| A reality check on Nutrition programs |
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Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.
Leveraging PDS to Improve Nutrition Security
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Food procurement
Mains level: Nutritious food through PDS
Central Idea
- The Department of Food and Public Distribution (DoF&PD), in particular the Food Corporation of India (FCI), must have heaved a sigh of relief that the procurement of wheat so far has crossed 20 million tonnes (MT), a notch higher than last year. Three states Punjab, Haryana and Madhya Pradesh have contributed more than 98 per cent to the central pool.
Wheat production estimates
- The Ministry of Agriculture and Farmers’ Welfare (MoA&FW) had earlier estimated the wheat production for this year to be 112 MT. However, the impact of unseasonal rains on wheat production has made the revised estimate uncertain.
- Punjab: Punjab, one of the largest contributors to wheat procurement, is also in the process of estimating losses due to rough weather just before the harvest time. Despite the unseasonal rains, interactions with Punjab Agriculture University (PAU), market functionaries and farmers suggest that the production of wheat this year is higher than last year.
- Uttar Pradesh: Uttar Pradesh produces almost double the amount of wheat (about 35 MT) than Punjab (about 18 MT). UP is estimated to procure 3.5 MT of wheat, but so far it has procured a meagre 0.12 MT. Unless it brings a surprise in May and June, the overall wheat procurement may stop well short of even 30 MT.
Facts for prelims
The benefits of Mulching of paddy straw
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Challenges for providing nutritious food through PDS
- Infrastructure and supply chain: There is a lack of proper infrastructure and supply chain to transport and store nutritious food items such as millets, pulses, and oilseeds. This leads to spoilage, wastage, and ultimately affects the quality of food provided through PDS.
- Cost: Providing nutritious food items through PDS may increase the cost of the program, which can be a challenge for the government to sustain in the long run.
- Awareness and demand: There is a lack of awareness among the general public about the benefits of nutritious food items and the need to include them in their diet. Also, there may not be enough demand for these items, leading to poor offtake and wastage.
- Operational challenges: There are several operational challenges such as sourcing, storage, and distribution of nutritious food items, which need to be addressed for an effective PDS program.
- Political interference: There may be political interference in the selection of food items to be included in PDS, leading to a focus on populist measures rather than on nutritious food items. This can undermine the effectiveness of the program.
Nutrition security through PDS and a help to climate resilient agriculture
- Introducing more nutritious food: The introduction of more nutritious food, such as millets, pulses, and oilseeds, in PDS can help achieve the twin objectives of nutrition and climate resilience.
- Encouraging climate-resilient food: Encouraging the production of climate-resilient food crops like millets, pulses, oilseeds, etc., can help create a steady flow of nutritious food.
- Upgrading fair price shops to Nutritious Food Hubs: At least 10% of fair price shops can be upgraded and declared as Nutritious Food Hubs (NFHs). These NFHs can have fortified, including bio-fortified, rice and wheat, millets, pulses, oilseeds (especially soyabean products with 40% protein), fortified milk and edible oils, eggs, etc.
- Electronic vouchers for targeted beneficiaries: Consumers of PDS list may be given electronic vouchers (like an e-food coupon in a food court) that can be charged by the government three or four times a year.
- Government assistance for upgrading NFHs: The NFHs can be upgraded with government assistance, creating demand for more diversified and nutritious food from the masses.
- Capping the procurement of rice: The procurement of rice would have to be capped, starting with districts where the water table has been depleting alarmingly.
- For example, Sangrur in Punjab has witnessed a fall of groundwater level by more than 25 meters during 2000-2019. Farmers of such districts could be incentivized to grow millets, pulses, oilseeds, etc., that are climate smart, use much less water and fertilizers, thus saving power and fertilizer subsidies.
- Giving a special package for carbon credits: The Centre and the states need to join hands to give a special package for carbon credits for growing such crops. Farmers can be rewarded about Rs 10,000/acre (to be shared equally by the Centre and the state), as these crops would save that much fertilizer subsidy of the Centre and power subsidy of the state.
Conclusion
- The Department of Food and Public Distribution’s Chintan Shivir on leveraging PDS to offer more nutritious food is a great vision, but there are several operational challenges to provide a steady flow of these foods. Upgrading at least 10% of the fair price shops as Nutritious Food Hubs could create a demand for more diversified and nutritious food from the masses. However, capping the procurement of rice and incentivizing farmers to grow millets, pulses, and oilseeds that are climate-smart and use less water and fertilizers is necessary.
Mains Question
Q. How PDS can be leveraged to provided nutritious food and also help make Indian agriculture more climate resilient? Discuss along with the challenges
Also read:
Food Security and Energy Crisis In The South Asian neighbourhood
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Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.
India-UAE Food Security Partnership Stands to Benefit From Multiple Points of Convergence
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Food security measures, India's millets mission
Mains level: India-UAE food security partnership nad benefits
Central Idea
- The UAE, heavily dependent on food imports, has set the goal of achieving food access and supply chain crisis readiness. India is a key partner in the UAE’s efforts to strengthen food security, given India’s status as the world’s second-largest food producer. The India-UAE food security partnership stands to benefit from multiple points of convergence.
India’s Capabilities in the Global Agri-Export Market
- Global agri-export powerhouse: India has become a global agri-export powerhouse thanks to its vast arable land, favourable climate, and growing food production and processing sector
- India’s role in global food security: India has demonstrated its evolving role in advancing regional and global food security by serving as a humanitarian provider of food to developing countries
- Global food marketplace: India has invested in massive food parks and placed its food sector to benefit from bilateral trade agreements, reflecting a strong and sustained intent to make the most of its agri-capabilities in the global food marketplace
India’s Domestic Food Security Measures
- World’s largest food subsidy programme: India runs the world’s largest food subsidy programme, the Public Distribution System, providing nearly 800 million citizens with subsidised grains for daily, affordable meals
- POSHAN Abhiyaan: India’s Prime Minister’s Overarching Scheme for Holistic Nutrition (POSHAN) Abhiyaan is the world’s largest nutrition programme for children and women
- 3 C’s for instance: India promotes the consumption and farming of millets as part of its G-20 presidency, demonstrating its resilience focus to address the three Cs of Covid, Conflict, and Climate issues pernicious to food security in India and across the globe
Facts for prelims: Food security measures
| Scheme | Description | Target Beneficiaries |
| Public Distribution System (PDS) | World’s largest food subsidy program providing subsidized grains to nearly 800 million citizens | BPL (Below Poverty Line) and APL (Above Poverty Line) families |
| National Food Security Act (NFSA) | Provides legal entitlement to subsidized food grains to two-thirds of India’s population | Priority households and Antyodaya Anna Yojana (AAY) households |
| Mid-Day Meal Scheme (MDMS) | Provides cooked meals to children in primary and upper primary schools | Children in primary and upper primary schools |
| Integrated Child Development Services (ICDS) Scheme | Provides supplementary nutrition to children under six years of age, pregnant women, and lactating mothers | Children under six years of age, pregnant women, and lactating mothers |
| Annapurna Scheme | Provides 10 kg of food grains per month free of cost to senior citizens who are not covered under the NFSA or PDS | Senior citizens who are not covered under the NFSA or PDS |
| Prime Minister’s Overarching Scheme for Holistic Nutrition (POSHAN) Abhiyaan | World’s largest nutrition program for children and women | Children under six years of age, pregnant women, and lactating mothers |
| Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) | Provides free food grains to around 80 crore beneficiaries for a period of 8 months to mitigate the impact of COVID-19 | Migrant workers, urban and rural poor, and other vulnerable groups |
| Antyodaya Anna Yojana (AAY) | Provides highly subsidized food grains to the poorest of the poor families identified by the government | Poorest of the poor families identified by the government |
The India-UAE Food Security Partnership
- UAE’s Commitment to Food Security: The UAE is focusing on the twin objectives of food access and readiness to confront supply chain crises
- Food corridor: The food corridor could potentially commence a route for foods made and processed in India, beginning their outbound journey on the Indian coast of the Arabian Sea, passing through the UAE, and towards major international markets
- Agri-trade for India: The corridor stands to emerge as a world-class template of successful agri-trade for India, while also unlocking greater productivity, efficiency, and growth for its millions of workers and employees
- Boost to food processing sector: The UAE’s private sector projects spanning its agricultural and food processing sector will generate lakhs of non-farm agri-jobs while enabling farmers to discover better prices for their products.
- Diversified pathways to the global marketplace: Bolstered by the UAE’s infrastructural capabilities, India’s agricultural products will have more resilient and diversified pathways to the global marketplace
Facts for prelims
Millet production and food security
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In depth: The Benefits of India-UAE food security partnership for India and the UAE
For India
- Investment in Food Parks: During the I2U2 summit in July 2020, the UAE committed $2 billion in investment towards constructing food parks in India. This investment will generate lakhs of non-farm agri-jobs, while enabling farmers to discover better prices for their products.
- Access to Global Markets: The food security corridor established on the sidelines of the Comprehensive Economic Partnership Agreement (CEPA) with logistics partner DP World takes forward India’s envisioned presence on the global food value chain, beyond the UAE. The corridor has the potential to establish a route for foods made and processed in India, beginning their outbound journey on the Indian coast of the Arabian Sea, passing through the UAE, and towards major international markets.
- Direct Access to UAE’s Food Ecosystem: The Dubai Multi Commodities Centre, the UAE’s largest free trade zone, launched Agriota, an agri-trading and commodity platform to link Indian farmers to food companies in the UAE. This platform will give millions of Indian farmers the opportunity to directly reach out to the entirety of the UAE’s food ecosystem (processing companies, traders, wholesalers) and stock their products in Emirati stores.
- Infrastructure Development: Several UAE-based companies have expressed interest in constructing a supporting logistics and infrastructure pipeline to accelerate trade and reinforce the food corridor. A consortium of UAE-based entities are investing up to $7 billion in mega food parks, contract farming, and the sourcing of agro-commodities in India. This initiative will include mega food parks, logistics and warehouse hubs, and fruits and vegetable hubs, which will bolster India’s agricultural products’ resilient and diversified pathways to the global marketplace.
For UAE
- Diversification of food reserves: UAE heavily relies on food imports to feed its population. The partnership with India will help UAE diversify its food reserves and reduce its dependence on a few countries for its food security.
- Strategic location: UAE’s strategic location between Asia and Europe can be leveraged to serve as India’s food export gateway to West Asia and Africa region, and beyond. This could enhance the UAE’s position as a hub for food trade in the region.
- Investment opportunities: The partnership could open up investment opportunities for UAE-based companies to invest in India’s food and agriculture sector, including mega food parks, contract farming, and sourcing of agro-commodities.
- Better access to Indian products: The partnership could give UAE better access to India’s diversified agri-produce, enabling them to benefit from India’s large and growing food production and processing sector.
- Infrastructural capabilities: The UAE’s infrastructural capabilities could strengthen India’s agricultural products’ pathways to the global marketplace, providing more resilient and diversified routes to the global food value chain.
Value addition box
India’s efforts to promote millet:
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Conclusion
- The India-UAE food security partnership stands to benefit both countries, and the collaboration between the two nations can offer solutions to address food security issues in the Global South. With the UAE’s infrastructural capabilities and India’s agricultural capabilities, the partnership can create diversified pathways to the global marketplace, generate non-farm agri-jobs, and enable farmers to receive better prices for their products.
Mains Question
Q. Explain the India-UAE food security partnership and enumerate the mutual benefit of the food security partnership.
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SMART-PDS: The Transformative Potential Beyond Food Security
Note4Students
From UPSC perspective, the following things are important :
Prelims level: TPDS Schemes, SMART-PDS
Mains level: TPDS, Challenges and Initiatives
Central Idea
- India’s National Food Security Act, 2013 (NFSA) governs the largest beneficiary-centric program, the Targeted Public Distribution System (TPDS), providing food security to 81.35 crore persons every month. The government is now implementing the Scheme for Modernisation and Reforms through Technology in Public Distribution System (SMART-PDS). This initiative generates vast amounts of data, which can be leveraged to improve the delivery of other central schemes and welfare programs.
Existing challenges for TPDS
- Leakage and diversion of food grains: One of the most pressing issues in the TPDS is the leakage and diversion of food grains meant for beneficiaries, leading to corruption and losses in the system. This problem is primarily due to poor monitoring, lack of transparency, and weak enforcement mechanisms.
- Inaccurate targeting of beneficiaries: The TPDS often suffers from errors in identifying eligible beneficiaries, resulting in the exclusion of deserving households and the inclusion of ineligible ones. This misidentification can be attributed to outdated data, lack of verification mechanisms, and manipulation of records.
- Inefficient supply chain management: TPDS faces logistical challenges in transporting, storing, and distributing food grains across the vast country. Inadequate storage facilities, poor transportation infrastructure, and delays in procurement and distribution contribute to wastage and inefficiencies in the system.
- Limited portability of benefits: Until recently, the TPDS lacked portability, which meant that beneficiaries could only access their food grains from designated Fair Price Shops (FPS) in their home states. This restriction made it difficult for migrant workers and their families to access their entitled benefits.
- Lack of transparency and accountability: Corruption, fraud, and manipulation of records are pervasive issues in the TPDS, partly due to the lack of transparency and accountability in the system. The absence of real-time monitoring and the reliance on manual record-keeping exacerbate these problems.
- Technological constraints: Many states and union territories in India face technological constraints in implementing IT-based solutions for TPDS operations. Limited access to IT hardware, software, and technical manpower can hinder the adoption of technology-driven reforms, such as electronic Point of Sale (ePoS) devices and biometric authentication systems
What is SMART-PDS?
- SMART-PDS (Scheme for Modernisation and Reforms through Technology in Public Distribution System) is an initiative by the Indian government aimed at improving the efficiency, transparency, and accountability of the country’s Targeted Public Distribution System (TPDS).
The key objectives of the SMART-PDS initiative
- Preventing leakage of food grains: By leveraging technology, SMART-PDS aims to reduce diversion and pilferage of food grains, ensuring that the intended beneficiaries receive their due share of food subsidies.
- Enhancing efficiency in the distribution chain: The initiative focuses on streamlining the supply chain from procurement to distribution by incorporating technology-driven solutions, such as electronic Point of Sale (ePoS) devices, real-time monitoring, and tracking systems.
- Data-driven decision-making: Data Analytics on the TPDS ecosystem generates critical information about beneficiaries, food security needs, and migration patterns, addressing the long-standing challenge of credible and dynamic data for efficient delivery of central welfare schemes to vulnerable sections of society.
- Convergence and integration with AI: The national leadership’s push for trans-ministerial convergence and AI integration can be a game-changer for both people and governments, bringing accountability across all programs.
- Technology-led PDS reforms: The Centre plans to use data analytics, BI platforms, and ICT tools to standardize PDS operations through technology integration with FCI, CWC, transport supply chain, Ministry of Education, Women and Child Development, and UIDAI. This is expected to overcome state-level technological limitations in PDS operations and institutionalize an integrated central system for all PDS-related operations across states/UTs.
- Aadhaar authentication and ePoS devices: With 100% digitization of ration cards and the installation of ePoS devices, nearly 93% of the total monthly allocated foodgrains are distributed through Aadhaar authentication mode.
Integrated Management of Public Distribution System (IM-PDS)
- The government has launched the IM-PDS to implement One Nation One Ration Card (ONORC), create a national-level data repository, and integrate data infrastructure/systems across ration card management, foodgrain supply chain, and FPS automation.
- The ONORC plan has recorded over 100 crore portability transactions since its inception in 2019.
SMART-PDS benefits beyond ration distribution
- The data generated by SMART-PDS has become a tool for central ministries and state governments, benefiting initiatives like e-Shram Portal, Ayushman Bharat, and PM-SVANidhi Yojana.
- The Ministry of Agriculture and Farmers’ Welfare (MoAFW) plans to use ONORC/ration card data to map beneficiaries, and seamless tracking of nutrition from ICDS centers to PM Poshan will become a reality with Aadhaar numbers for the newly born.
Conclusion
- The transformative potential of SMART-PDS goes beyond food security, enabling data-driven decision-making, convergence, and integration with AI for improved delivery of central schemes and welfare programs across India.
Mains Question
Q. Despite several efforts taken by the government the Targeted Public Distribution System still faces various challenges. In this backdrop discuss the new initiative of SMART-PDS and its key features
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What is Open Market Sale Scheme (OMSS)?
Note4Students
From UPSC perspective, the following things are important :
Prelims level: OMSS, PDS
Mains level: Food inflation control measures
The government has announced its plan to sell 20 lakh tonnes of wheat from its buffer stock in the market under the Open Market Sale Scheme (OMSS).
Why such move?
- The purpose of the move is to cool down the surge in wholesale prices of grain.
- It will be sold in the open market to stabilize grain prices.
Do you know?During the COVID-19 pandemic, the Indian government increased the allocation of rice and wheat for the OMSS to ensure that the supply of food grains remained stable and that people had access to affordable food. |
Open Market Sale Scheme (OMSS)
- OMSS refers to the selling of food grains by the government/government agencies at predetermined prices in the open market from time to time.
- This scheme aims to enhance the supply of grains, especially during the lean season and thereby to moderate the general open market prices, especially in the deficit regions.
- The Food Corporation of India (FCI) on instructions from the Government, sells wheat and rice in the open market from time to time.
- This enhances the supply of wheat and rice especially during the lean season and moderates the open market prices, especially in the deficit regions.
Components of the scheme
The present form of OMSS comprises 3 schemes as under:
- Sale of wheat to bulk consumers/private traders through e-auction.
- Sale of wheat to bulk consumers/private traders through e-auction by dedicated movement.
- Sale of Raw Rice Grade ‘A’ to bulk consumers/private traders through e-auction.
Selling through a transparent process
- For transparency in operations, the Corporation has switched over to e-auction for sale under Open Market Sale Scheme (Domestic).
- The FCI conducts a weekly auction to conduct this scheme in the open market using the platform of commodity exchange NCDEX (National Commodity and Derivatives Exchange Limited).
- The State Governments/ Union Territory Administrations are also allowed to participate in the e-auction if they require wheat and rice outside TPDS & OWS.
Answer this PYQ in the comment box:
Q.The economic cost of food grains to the Food Corporation of India is Minimum Support Price and bonus (if any) paid to the farmers plus:
(a) Transportation cost only
(b) Interest cost only
(c) Procurement incidentals and distribution cost
(d) Procurement incidentals and charges for godowns
Post your answers here.
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MIIRA: India readies plan to popularise millets on world stage
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Millets, MIIRA, Shree Anna
Mains level: Millets consumption
On the premises of G20, India is planning to propose the launch of a global initiative ‘MIIRA’ to encourage the consumption and production of millets.
What are Millets?
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What is MIIRA?
- “MIIRA” or Millet International Initiative for Research and Awareness will be aimed at coordinating millet research programmes at the international level.
- For MIIRA to take off, India will contribute the “seed money” while each G20 member will later have to contribute to its budget in the form of a membership fee.
- The secretariat will be in Delhi, the sources said, adding that this will, with India being a major producer of millets, ensure a flow of investment from the country’s industry and research bodies.
- It is in line with the UN declaring 2023 as the International Year of Millets and the Centre’s plan to make India a global hub for millets.
- It is launched keeping in mind the nutritional value and the climate-resilient nature of millets.
Key objectives
- MIIRA will aim to connect millet research organisations across the world while also supporting research on millet crops.
- Besides setting up a web platform to connect researchers and holding international research conferences, the plan is also to promote millet consumption by raising awareness.
Ecological significance of millets
- Drought resistance: Millets are drought-resistant crops, which means that they can grow in areas with low rainfall and are less susceptible to the effects of drought. This makes them an ideal crop for farmers in regions that are prone to drought and other climate-related risks.
- Soil health: Millets have shallow roots and can grow in poor soil, which means that they can be cultivated in marginal lands that are unsuitable for other crops. Millets also improve soil health by enhancing soil organic matter, reducing soil erosion, and improving soil structure and fertility.
- Low carbon footprint: Millets have a low carbon footprint compared to other crops because they require less water, fertilizer, and pesticides. They are also less energy-intensive to produce and transport.
- Resilience to climate change: Millets are known for their resilience to climate change and extreme weather events, such as floods and droughts. By promoting the cultivation and consumption of millets, countries can build resilience to the impacts of climate change and ensure food security in the face of these challenges.
- Biodiversity conservation: Millets are often grown in mixed cropping systems, which promote biodiversity and can help conserve natural resources. The cultivation of millets also supports the conservation of traditional knowledge and local agricultural practices, which can be important for the resilience of rural communities in the face of climate change.
Recent initiatives to promote Millets
- Finance Minister described various types of millets as ‘Shree Anna’ in her budget speech.
- To make India a global hub for Shree Anna, the Indian Institute of Millet Research, Hyderabad will be supported as the Centre of Excellence.
- In 2018, the Agriculture Ministry declared some millets as ‘Nutri Cereals’ for their “high nutritive value”.
How popular are millets globally?
- Now grown in more than 130 countries, millets are the traditional food for more than half a billion people in Asia and Africa.
- Gobally, jowar is the most widely grown millet crop; its major producers are the US, China, Australia, India, Argentina, Nigeria, and Sudan.
- Bajra, another major millet crop, is mainly grown in some African countries and India, where millets are mainly a kharif crop.
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Pulses: The sustainable crops
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Pulses, cropping patterns and characteristics
Mains level: Pulses production and consumption In India
Context
- The United Nations General Assembly endorsed the request made by the Government of Burkina Faso regarding the annual observance of World Pulses Day on 10 February at its 73rd session in December 2018, building on the success of the 2016 International Year of Pulses, with Food and Agriculture Organisation (FAO) playing a leading role in the campaign.
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Theme for World pulses day 2023
- The 2023 World Pulses Day’s theme is Pulses for a Sustainable Future, which underlines the significance of pulses in fostering equity and generating chances for livelihood, both of which are essential elements of sustainable agrifood systems.
In short: All you need to know about Pulses
- Major pulses that are grown in India: Tur, urad, moong, masur, peas and gram.
- Chief Characteristics:
- Pulses are the major sources of protein in a vegetarian diet.
- Being leguminous crops, all the above-mentioned pulses (except tur) help in restoring soil fertility by fixing nitrogen from the air.
- These crops are mostly grown in rotation with other crops.
- Pulses need less moisture and survive even in dry conditions.
- Important Producing Areas: The major pulse producing areas are Madhya Pradesh, Uttar Pradesh, Rajasthan, Maharashtra and Karnataka. It is grown on about 11% of the total sown area in India.
- India is largest producer and consumer: India is the largest producer as well as consumer of pulses in the world. About 25% of the pulses of the world are produced here.
In Depth: Why pulses are important?
- Pulses withstand drought: Pulses have a lower water footprint than other food crops and are better able to withstand drought and climate-related calamities making them a crucial tool for adjusting to and reducing climate change.
- Help farmers in water scarce region: They also help farmers in water-scarce regions have a better quality of lives.
- Can help to increase productivity and livelihood: In a number of farming systems, including agroforestry, intercropping, and integrated farming systems, pulses can help to increase productivity and improve the resilience of agricultural livelihoods.
- Pulses ensures wholesome food and sustainable use of natural resources: The global pulses industry which deals with the production and trade of pulses also demonstrates to be a beneficial force in ensuring the stability of regional and global supply chains, enabling consumers to access wholesome foods, and promoting the sustainable use of natural resources.
- Most Valuable Player for Health: Pulse grains have been acknowledged as being a “Most Valuable Player” in preventing obesity, lowering chronic diseases such as diabetes and heart disease, and fostering a varied microbiome in children who are at risk of stunting during the first 1,000 days of their life.
- Two to three times as much protein as cereals: Pulses are a great choice for populations with diets low in protein because they contain two to three times as much protein as cereals.
- Pulses provide a number of other assets to the climate change battle: They lessen the requirement for fertiliser throughout the entire crop cycle and reduce greenhouse gas emissions by fixing atmospheric nitrogen.
- Help to achieve SDG’s: A significant advantage in a changing climate is that many pulse crops are evolved to grow in arid circumstances and can withstand drought stress better than most other crops. Thus, achieving Sustainable Development Goals 2, 3, and 13 which call for improved human health, sustainable agriculture, food security, and climate action.
Pulse consumption in India
- Imports are necessary because of insufficient production: India is currently the world’s largest producer and consumer of pulses, but because production is insufficient to meet demand, imports are necessary.
- India’s demand for pulses has steadily increased: In keeping with the government’s measures to expand pulse production to meet domestic demand, the volume of imports has consistently decreased since 2014-15.
- National Food Security Mission-Pulses programme: To increase the production of pulses, the Government of India is implementing National Food Security Mission-Pulses programme across 644 districts of 28 States and Union Territories (UTs) of Jammu & Kashmir and Ladakh.
- In Indian diets, pulses are a crucial source of protein: Children, adolescent girls, and pregnant and lactating women receive half of the recommended dietary requirement of protein through the Government of India’s food security programmes.
Way ahead
- Pulses to combat malnutrition: Pulses can be included to cereal-based meals to help combat malnutrition. There is evidence to support the fact that people who eat pulses more frequently are more nutrient-secure.
- For example: During the pandemic, 5 kg of rice/wheat and 1 kg of selected pulses were provided to the poor under the Pradhan Mantri Garib Kalyan Yojana.
- PDS can be utilised for better accessibility and affordability: As a matter of policy, the PDS should offer pulses at discounted prices to increase their accessibility and affordability to vulnerable population.
- For instance: Some states, including Andhra Pradesh, Telangana, Haryana, and Himachal Pradesh, have been successful in distributing pulses under the Public Distribution System (PDS).
Conclusion
- India is moving closer to Aatmnirbharta on pulses with consistent efforts by the government. It is vital to raise awareness about the benefits of eating pulses that are high in macronutrients for both sustainability and dietary needs.
Mains question
Q. India is expanding its pulse production to meet domestic demand. In this light discuss what makes pulses a significant crop?
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Free foodgrain scheme named ‘PM Garib Kalyan Anna Yojana’
Note4Students
From UPSC perspective, the following things are important :
Prelims level: NFSA, PMGKAY
Mains level: Schemes related to food security
The Centre has named its new free foodgrain scheme under the National Food Security Act, 2013, as ‘Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY)’.
PM Garib Kalyan Anna Yojana
- PM had approved the new integrated food security scheme for providing free foodgrains for a year beginning January 1, 2023 to beneficiaries under the NFSA –
- Antyodaya Anna Yojana (AAY)
- Primary Household (PHH)
How is it different from earlier scheme?
- The difference between the two schemes is that about 81 crore NFSA beneficiaries were entitled to get free of cost 5 kg foodgrain per person in a month over and above their monthly entitlements.
- However, they were required to pay the subsidised rate of foodgrains (Rs 3 per kg rice, Rs 2 per kg wheat and Rs 1 per kg coarse grains) to purchase the quantity for which they were entitled–35 kg per Antyoday Anna Yojana Household and 5kg per person to a Priority Household in a month.
- In the new scheme, the government has done away with the subsided prices and is providing foodgrains free of cost for a year.
- Now the additional quantity, which was available during the Covid pandemic, will not be provided to these beneficiaries.
- They will receive as much quantity of foodgrains, for which they are entitled under the NFSA.
Implementation strategy
- For effective and uniform implementation of NFSA 2013, PMGKAY will subsume the two subsidy schemes of Department of Food & Public Distribution –
- Food Subsidy to FCI and
- Food Subsidy for decentralized procurement states dealing with procurement, allocation and delivery of free foodgrains to the states under NFSA
National Food Security (NFS) Act
Key provisions of NFSA
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81 crore people to get free foodgrains for one year under NFSA
Note4Students
From UPSC perspective, the following things are important :
Prelims level: NFSA, PMGKAY
Mains level: Schemes related to food security
The government discontinued the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) and has decided to provide free foodgrains to all 81 crore beneficiaries covered under the National Food Security Act (NFSA) for one year.
About PMGKAY
- PMGKAY is a food security welfare scheme announced by the GoI in March 2020, during the COVID-19 pandemic in India.
- The program is operated by the Department of Food and Public Distribution under the Ministry of Consumer Affairs, Food and Public Distribution.
- The scale of this welfare scheme makes it the largest food security program in the world.
Targets of the scheme
- To feed the poorest citizens of India by providing grain through the Public Distribution System to all the priority households (ration card holders and those identified by the Antyodaya Anna Yojana scheme).
- PMGKAY provides 5 kg of rice or wheat (according to regional dietary preferences) per person/month and 1 kg of dal to each family holding a ration card.
Success of the scheme
- Pandemic mitigation: It was the first step by the government when pandemic affected India.
- Wide section of beneficiaries: The scheme reached its targeted population feeding almost 80Cr people.
- Support to migrants: It has proven to be more of a safety net to migrant people who had job and livelihood losses.
- Food and Nutrition security: This has also ensured nutrition security to children of the migrant workers.
Limitations of the scheme
- Corruption: The scheme has been affected by widespread corruption, leakages and failure to distribute grain to the intended recipients.
- Leakages: Out of the 79.25 crore beneficiaries under the National Food Security Act (NFSA), only 55 crore have so far received their 5 kg.
- Inaccessibility: Many people were denied their share due to inability to access ration cards.
- Low consumption: Livelihood losses led to decline in aggregate demand and resulted into lowest ever consumption expenditure by the people owing to scarcity of cash.
- Resale of subsidized grains: This in turn led to selling of the free grains obtained in the local markets for cash.
Back2Basics: National Food Security (NFS) Act
- The NFS Act, 2013 aims to provide subsidized food grains to approximately two-thirds of India’s 1.2 billion people.
- It was signed into law on 12 September 2013, retroactive to 5 July 2013.
- It converts into legal entitlements for existing food security programmes of the GoI.
- It includes the Midday Meal Scheme, Integrated Child Development Services (ICDS) scheme and the Public Distribution System (PDS).
- Further, the NFSA 2013 recognizes maternity entitlements.
- The Midday Meal Scheme and the ICDS are universal in nature whereas the PDS will reach about two-thirds of the population (75% in rural areas and 50% in urban areas).
- Pregnant women, lactating mothers, and certain categories of children are eligible for daily free cereals.
Key provisions of NFSA
- The NFSA provides a legal right to persons belonging to “eligible households” to receive foodgrains at a subsidised price.
- It includes rice at Rs 3/kg, wheat at Rs 2/kg and coarse grain at Rs 1/kg — under the Targeted Public Distribution System (TPDS).
- These are called central issue prices (CIPs).
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Tamil Nadu’s CM Breakfast Scheme
Note4Students
From UPSC perspective, the following things are important :
Prelims level: CM Breakfast Scheme
Mains level: Mid-day meal program
This newscard talks for replicating Tamil Nadu’s CM breakfast scheme in other states.
CM’s Breakfast Scheme
- The scheme covers around 1.14 lakh students in 1,545 schools which include 417 municipal corporation schools, 163 municipality schools and 728 taluk and village panchayat-level schools.
- The inauguration of the scheme marks an important milestone in the State’s history of providing free meals to school students.
How has the idea evolved?
(a) Pre-independence
- In November 1920, the Madras Corporation Council approved a proposal for providing tiffin to the students of a Corporation School at Thousand Lights at a cost not exceeding one anna per student per day.
- Theagaraya Chetty, the then President of the Corporation and one of the stalwarts of the Justice Party, said the boys studying at the school were poor, which affected the strength of the institution ‘greatly’.
- The scheme, which was extended to four more schools and facilitated higher enrollment of students.
(b) Post-independence
- The concept saw a Statewide application in 1956 when the then CM K. Kamaraj decided to provide free noon meal to poor children in all primary schools across the State.
- The Budget for 1956-57 contained a provision for supplying mid-day meals to schoolchildren for 200 days a year, initially covering 65,000 students in 1,300 feeding centres.
- In July 1982, it was left to the then CM MG Ramachandran to extend the programme to children in the 2-5 age group in Anganwadis and those in 5-9 age group in primary schools in rural areas.
- Subsequently, the scheme now called Puratchi Thalaivar MGR Nutritious Meal Programme — was extended to urban areas as well.
- Since September 1984, students of standards VI to X have been covered under the scheme.
Beneficiaries of the programme
- As of now, there are nearly 7 lakh beneficiaries spread over 43,190 nutritious meal centres.
- This includes around 3,500 students of National Child Labour Project (NCLP) special schools.
- Besides, as a consequence of the collaborative implementation of the Integrated Child Development Scheme (ICDS) and the nutritious meal programme, around 15.8 lakh children in the age group of 2+ to 5+ years receive nutritious meals.
Impact on school education
- Rise in enrolment: After the improved version of the mid-day meal scheme in 1982, the Gross Enrollment Ratio (GER) at primary level (standards I to V) went up by 10% during July-September, 1982 as compared to the corresponding period in 1981.
- Girls’ enrolment: The rise in boys’ enrollment was 12% and in the case of girls, 7%, according to a publication brought out by the Tamil Nadu government on the occasion of the launch of the Scheme.
- Increase in attendance: Likewise, attendance during July-September 1982 rose by 33% over the previous year’s figure.
Focus areas programme
- Anaemia is a major health problem in Tamil Nadu, especially among women and children, says the 2019-21 National Family Health Survey (NFHS)-5’s report.
- From 50% during the period of the 2015-16 NFHS-4, the prevalence of anaemia in children now went up to 57%.
- This and many other health issues can be addressed through the combined efforts of the departments of School Education, Public Health and Social Welfare and Women Empowerment.
- Besides, a continuous and rigorous review of the progress of the scheme and nutritious meal programme should be carried out in a sustained manner.
Why it can be implemented in other states?
- An interesting feature of this scheme is the cost-effective delivery of the service as it is complementary to the existing schemes.
- Further, the income of the Anganwadi workers substantially increased on account of multiple roles played by them.
- In the same way, the morning breakfast scheme makes use of the physical infrastructure (like cooking place and utensils) built for mid-day meals scheme.
Conclusion
- In other words, with small additional expenditure, the government is able to provide substantial benefits to the children
- The scheme must be extended to all the schools in the state.
- Further, the scheme is worth replicating in other states in India.
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Need to expand the food safety net
Note4Students
From UPSC perspective, the following things are important :
Prelims level: National food security Act (NFSA)
Mains level: Food security, public distribution system and the problem
Context
- The National Food Security Act (NFSA), 2013, through the Public Distribution System (PDS), provides a crucial safety net for roughly 800 million people. Even critics of the PDS appreciated its services during the COVID-19 lockdown.
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Background: COVID-19 lockdown and policy gaps in ensuring food security
- Too many still excluded from the PDS: The humanitarian crisis resulting from the COVID-19 lockdown, made it apparent that too many were still excluded from the PDS.
- Governments decision: In response to the humanitarian crisis, the Government made one sensible policy decision swiftly. It doubled the entitlements of the 800 million who were already covered by the PDS (from five kilograms per person per month, to 10kg). But that does nothing for those without ration cards.
National food security Act (NFSA)
- Aims to provide subsidized food grains: The NFS Act, 2013 aims to provide subsidized food grains to approximately two-thirds of India’s 1.2 billion people.
- Legal entitlements for existing food security programs: It was signed into law on 12 September 2013, retroactive to 5 July 2013. It converts into legal entitlements for existing food security programmes of the GoI.
- Integrating various government schemes: It includes the Midday Meal Scheme, Integrated Child Development Services (ICDS) scheme and the Public Distribution System (PDS). The Midday Meal Scheme and the ICDS are universal in nature whereas the PDS will reach about wo-thirds of the population (75% in rural areas and 50% in urban areas).
- It recognizes maternity entitlement: Pregnant women, lactating mothers, and certain categories of children are eligible for daily free cereals.
- Key provisions: The NFSA provides a legal right to persons belonging to “eligible households” to receive foodgrains at a subsidised price. It includes rice at Rs 3/kg, wheat at Rs 2/kg and coarse grain at Rs 1/kg under the Targeted Public Distribution System (TPDS). These are called central issue prices (CIPs).
How Public Distribution System (PDS) is determined?
- PDS coverage is determined by Section 3(2) of the NFSA 2013.
- It states that the entitlements of eligible households “shall extend up to seventy-five per cent of the rural population and up to fifty per cent of the urban population.”
- Section 9 of NFSA required that the total number of persons to be covered “shall be calculated on the basis of the population estimates as per the census of which the relevant figures have been published.”
What are the exclusion problems?
- Coverage ratio is too low: The exclusion problem could be because the NFSA coverage ratios were too low to start with, or due to the ‘freeze’ in coverage in absolute terms (around 800 million).
- Population increase has not been accounted: Between the last Census in 2011 and today, population increase has not been accounted for in determining the number of ration cards. No one could have anticipated that the 2021 Census would be postponed indefinitely. This means that even a decadal update has not happened.
- Lack of sensitivity to understand the problem: There is no attempt at understanding or addressing the hardships of people who are deprived of the food security net that the PDS provides.
- Court’s observation and a suggestion: Government inaction led to the matter being taken to the Supreme Court of India in the Problems and Miseries of Migrant Labourers case. The Court agreed that the prayer to increase coverage “seems to be genuine and justified”. It directed the Union of India to “come out with a formula and/or appropriate policy/scheme, if any, so that the benefits under NFSA are not restricted as per the census of 2011 and more and more needy persons/citizens get the benefit under the National Food Security Act”. Going further, the Court said that the Government could consider “projection of population increase” to resolve this issue.
- Burdening the states: In its response, the Government attempts repeatedly to shift the blame to State governments. But States are responsible for identifying people for PDS ration cards, once they are given the numbers to be covered by the central government.
Way ahead
- Several State governments have used their own resources this includes poor States such as Chhattisgarh and Odisha to expand coverage beyond the centrally determined quotas.
- Robust procurement trends and a comfortable food stocks position are what make an expansion affordable.
- Adjusting for population increase, as directed by the Supreme Court, will increase coverage by roughly 10% (from 800 million to 900 million).
- Any sensible policy should have an in-built mechanism for updating coverage annually to account for population increase.
Conclusion
- Instead of allowing the Government to delay this any further (the matter has been in Court since 2020), the Supreme Court should be firm, directing the Government to get on with apportioning the additional coverage of roughly 100 million across States, so that the States can start identifying new ration card beneficiaries.
Mains Question
Q. What is food security? What is National food security Act? There is number some problems for expanding food security net through PDS. Analyse and suggest way forward.
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A reality check on Nutrition programs
Note4Students
From UPSC perspective, the following things are important :
Prelims level: NFHS and GHI
Mains level: Malnutrition in India
Context
- The Global Hunger Index (GHI) 2022 has brought more unwelcome news for India, as far as its global ranking on a vital indicator of human development is concerned. India ranked 107 out of 121 countries. Malnutrition still haunts India
Global hunger Index (GHI)
- The GHI is an important indicator of nutrition, particularly among children, as it looks at stunting, wasting and mortality among children, and at calorific deficiency across the population.
Findings according to the National family health survey findings (NFHS-5)
- India’s National Family Health Survey (NFHS-5) from 2019-21 reported that in children below the age of five years, 35.5% were stunted, 19.3% showed wasting, and 32.1% were underweight.
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Status of budgetary allocation for Government Schemes
- Gaps in the funding: Experts have suggested several approaches to address the problem of chronic malnutrition, many of which feature in the centrally-sponsored schemes that already exist. However, gaps remain in how they are funded and implemented, in what one might call the plumbing of these schemes.
- Saksham Anganwadi:
- The Government of India implements the Saksham Anganwadi and Prime Minister’s Overarching Scheme for Holistic Nutrition (POSHAN) 2.0 scheme (which now includes the Integrated Child Development Services (ICDS) scheme),
- It seeks to work with adolescent girls, pregnant women, nursing mothers and children below three.
- However, the budget for this scheme for FY2022-23 was ₹20,263 crore, which is less than 1% more than the actual spent in FY2020-21 an increase of less than 1% over two years.
- PM POSHAN:
- PM POSHAN, or Pradhan Mantri Poshan Shakti Nirman, known previously as the Mid-Day Meal scheme (National Programme of Mid-Day Meal in Schools).
- The budget for FY2022-23 at ₹10,233.75 crore was 21% lower than the expenditure in FY2020-21.
- It is clear that the budgets being allocated are nowhere near the scale of the funds that are required to improve nutrition in the country.
What are the hurdles for effective Implementation of such large-scale schemes.
- Underfunded Nutrition Programme: An Accountability Initiative budget brief reports that per capita costs of the Supplementary Nutrition Programme (one of the largest components of this scheme) has not increased since 2017 and remains grossly underfunded, catering to only 41% of the funds required.
- Vacant posts of Projects officers and insufficient manpower: The budget brief also mentions that over 50% Child Development Project Officer (CDPO) posts were vacant in Jharkhand, Assam, Uttar Pradesh, and Rajasthan, pointing to severe manpower constraints in successfully implementing the scheme of such importance.
- Regular controversies over the food served under MDM: While PM POSHAN (or MDM) is widely recognized as a revolutionary scheme that improved access to education for children nationwide, it is often embroiled in controversies around what should be included in the mid-day meals that are provided at schools.
- Irregular social audits: Social audits that are meant to allow community oversight of the quality of services provided in schools are not carried out routinely.
- Volatile food prices effects: The effect of cash transfers is also limited in a context where food prices are volatile and inflation depletes the value of cash.
- Social factors: Equally, there are social factors such as ‘son preference’, which sadly continues to be prevalent in India and can influence household-level decisions when responding to the nutrition needs of sons and daughters.
Suggestions for the effective delivery of the government schemes
- Tracing the reasons behind existing malnutrition: It is clear that malnutrition persists due to depressed economic conditions in large parts of the country, the poor state of agriculture in India, persistent levels of unsafe sanitation practices, etc. Political battles over malnutrition are not going to help; nor is continuing to think in silos.
- Cash transfers where purchasing poverty is less: Cash transfers have a role to play here, especially in regions experiencing acute distress, where household purchasing power is very depressed. Cash transfers can also be used to incentivize behavioural change in terms of seeking greater institutional support.
- Targeted supplementation: Food rations through PDS and special supplements for the target group of pregnant and lactating mothers, and infants and young children, are essential.
- Community participation: Getting these schemes right requires greater involvement of local government and local community groups in the design and delivery of tailored nutrition interventions.
- Comprehensive social education programs for girls: A comprehensive programme targeting adolescent girls is required if the inter-generational nature of malnutrition is to be tackled. There is a need of comprehensive social education programme.
Conclusion
- Malnutrition has been India’s scourge for several years now. A month-long POSHAN Utsav may be good optics, but is no substitute for painstaking everyday work. The need of the hour is to make addressing child malnutrition the top priority of the government machinery, and all year around.
Mains Question
Q. Despite large government nutrition programs, malnutrition still haunts India. Discuss the problems and suggest solutions.
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Addressing the Leakages in PDS in the light of PMGKAY
Note4Students
From UPSC perspective, the following things are important :
Prelims level: PMGKY
Mains level: PMGKY, food security and Issues with PDS
Context
- The government of India extended Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), a scheme to distribute free food grains to the poor, for another three months. However, issues of food grain leakages remains unaddressed.
Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY)
- PM-GKAY: Launched during COVID-19 crisis to provided food security to the poor, needy and the vulnerable households/beneficiaries so that they do not suffer on account of non-availability of adequate foodgrains. Under PMGKAY, effectively it has doubled the quantity of monthly foodgrains entitlements being normally delivered to beneficiaries.
- Benefits: Under PMGKAY welfare scheme, 5 kg of food grain per person per month is provided free of cost for all the beneficiaries covered under the National Food Security Act (NFSA) including those covered under Direct Benefit Transfer (DBT).
- Financial Expenditure: Financial implication for the Government of India has been about 3.45 Lakh Crore for Phase-VI of PMGKAY. With the additional expenditure of about Rs. 44,762 Crore for Phase-VII of this scheme, the overall expenditure of PMGKAY will be about Rs. 3.91 lakh crore for all the phases.
- Grain Allotment: The total outgo in terms of food grains for PMGKAY Phase VII is likely to be about 122 LMT. Food grain for phases I- VII is about 1121 LMT.
- Implementation: PM Garib Kalyan Ann Yojana (PMGKAY) has been implemented in the following phases –
- Phase I and II (8 months): April’20 to Nov.’20
- Phase-III to V (11 months): May’21 to March’22
- Phase-VI (6 months): April’22 to Sept.’22
Impact of the PMGKY scheme
- Ensuring food security and public health: Policymakers and experts concede that the scheme made a difference to food security and public health during the pandemic.
- IMF commended the scheme: Be it the Parliamentary Standing Committee on Food and Public Distribution or the authors of an IMF-published working paper, “Pandemic, Poverty, and Inequality: Evidence from India” (April 2022), the scheme has received commendation.
- Absorbing the shock in the pandemic: The working paper concluded that “the social safety net provided by the expansion of India’s food subsidy program absorbed a major part of the pandemic shock.”
Why the experts are suggesting the study of PMGKY?
- Rationalizing the budget: To keep the budgetary allocation under control, rules on quota for rice or wheat can be changed suitably.
- Checking the diversion of Funds: While it is all right to provide foodgrains free during the pandemic, the central and State authorities need to ponder over the scheme’s continuance, given the chronic problem of diversion from the Public Distribution System (PDS).
- Combing the Centre and state subsidy: In many States, including West Bengal, Kerala and Karnataka, the 50 kg is free. In Tamil Nadu, for over 10 years, rice-drawing card holders have been getting rice free.
How the transparent study of PMGKY will help in leakage detection?
- Updating the database of beneficiary: Study should be the basis for updating the database of foodgrain-drawing card holders, scrutinising the data critically and zeroing in on the needy.
- Automation of PDS: The task should not be onerous, given the widespread application of technological tools in the PDS such as Aadhaar, automation of fair price shops and capturing of the biometric data of beneficiaries.
- Estimation of PHH: Using this database, the Centre and States can decide whether the size of the Priority Households (PHH) nearly 71 crores, can be pruned or not.
- Reasonable price to avoid freebies culture: In addition, if they feel the need to go beyond the mandate of the NFSA, as is being done under the PMGKAY, they can supply the foodgrains at a reasonable price. The culture of providing essential commodities free of cost at the drop of a hat has to go.
Conclusion
- PMGKY has helped the needy in people in the dark period of pandemic. However, with good intention of government food grain leakages of PDS couldn’t be stopped. Transparent study of will certainly help in leakage detection and more targeted delivery.
Mains Question
Q. Schemes of food security are always with good intentions; However, lack of transparency and leakages disturbs targeted delivery. Discuss the measures to ensure the last mile delivery of food grains.
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Food Security, Success Story and Challenges Ahead
Note4Students
From UPSC perspective, the following things are important :
Prelims level: NA
Mains level: global Food security challenge
Context
- The Hunger Hotspots Outlook (2022-23) a report by the Food and Agriculture Organization of the United Nations (FAO) and the World Food Programme (WFP) forebodes escalating hunger, as over 205 million people across 45 countries will need emergency food assistance to survive. 16 October is celebrated as World Food Day.
What is the current situation of Food security worldwide?
- Adverse impact of COVID 19 pandemic: Globally, food and nutrition security continue to be undermined by the impacts of the COVID 19 pandemic, climate change, spiralling food inflation, conflict, and inequality.
- Challenge of Severe hunger continues: Today, around 828 million people worldwide do not have enough to eat, and over 50 million people are facing severe hunger.
What are the challenges for ensuring food security?
- The challenge of Climate change: Recent climate shocks have raised concerns about India’s wheat and rice production over the next year. Therefore, it is important to place a greater focus on climate adaptation and resilience building.
- Rising population will need more resource: By 2030, India’s population is expected to rise to 1.5 billion. Agro food systems will need to provide for and sustainably support an increasing population.
- The challenge of Soil degradation: Nutrition and agricultural production are not only impacted by climate change but also linked to environmental sustainability. Soil degradation by the excessive use of chemicals, non-judicious water use, and declining nutritional value of food products need urgent attention.
How India managed its food security?
- Constant efforts towards Self-sufficiency: India has had an inspiring journey towards better production and achieving self-sufficiency and is now one of the largest agricultural product exporters. During 2021-22,it recorded $49.6billion in total agriculture exports a 20%increase from 2020-21.
- Efficient targeted public distribution system: One of India’s greatest contributions to equity in food is its National Food Security Act (NFSA)2013 which anchors the Targeted Public Distribution System (TPDS), the PM POSHAN scheme (earlier known as the Midday Meals scheme), and the Integrated Child Development Services (ICDS).
- Extensive food safety net: Today, India’s food safety nets collectively reach over a billion people. The WFP works with State and national governments to strengthen these systems to reach the people who need them most.
- Large scale digitization of programmes: The Government continues to take various measures to improve these programmes with digitisation and measures such as rice fortification, better health, and sanitation.
- Better buffer stock policy: Food safety nets and inclusion are linked with public procurement and buffer stock policy visible during the global food crisis (2008-12)and the COVID19 pandemic fallout, whereby vulnerable and marginalised families in India continued to be buffered by the TPDS which became a lifeline.
- Successful implementation of PMGKAY: An International Monetary Fund paper titled ‘Pandemic, Poverty, and Inequality: Evidence from India’ asserted that‘ extreme poverty was maintained below 1% in 2020 due to the Pradhan Mantri Garib KalyanAnna Yojana (PMGKAY
How India and World can manage food security?
- Avoiding conventional input intensive agriculture: There is increased recognition to move away from conventional input intensive agriculture towards more inclusive, effective and sustainable agro food systems that would facilitate better production.
- Promoting sustainable practices: Since 1948, the FAO has continued to play a catalytic role in India’s progress in the areas of crops, livestock, fisheries, food security, and management of natural resources through the promotion of sustainable practices.
- Focus on millets: Millets have received renewed attention as crops that are good for nutrition, health, and the planet. As climate-smart crops, they are hardier than other cereals. Since they need fewer inputs, they are less extractive for the soil and can revive soil health.
- India’s Efforts as an example: India has led the global conversation on reviving millet production for better lives, nutrition, and the environment, including at the UN General Assembly, where it appealed to declare 2023 as the International Year of Millets. It is the world’s leading producer of millets, producing around 41% of total production in2020. The national government is also implementing a Sub-Mission on Nutrition-Cereals (Millets) as part of the National Food Security Mission.
- G20 presidency an opportunity for India: India’s upcoming G20 presidency is an opportunity to bring food and nutrition security to the very centre of a resilient and equitable future.
Conclusion
- India can lead the global discourse on food and nutrition security by showcasing home grown solutions and best practices, and championing the principle of leaving no one behind working continuously to make its food system more equitable, empowering, and inclusive.
Mains Question
Q.Food security has become increasingly challenging due to unpredictable weather conditions. Illustrate. How India can contribute to the global food security issue.
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Global Hunger Index is out, India in ‘serious’ category at rank 107
Note4Students
From UPSC perspective, the following things are important :
Prelims level: GHI
Mains level: Credibility of GHI
India ranks 107 out of 121 countries on the Global Hunger Index in which it fares worse than all countries in South Asia barring war-torn Afghanistan.
Global Hunger Index (GHI)
- The Global Hunger Index is a peer-reviewed annual report, jointly published by Concern Worldwide and Welthungerhilfe.
- It determines hunger on a 100-point scale, where 0 is the best possible score (no hunger) and 100 is the worst.
- It is designed to comprehensively measure and track hunger at the global, regional, and country levels.
- The aim of the GHI is to trigger action to reduce hunger around the world.
For each country in the list, the GHI looks at four indicators:
- Undernourishment (which reflects inadequate food availability): calculated by the share of the population that is undernourished (that is, whose caloric intake is insufficient)
- Child Wasting (which reflects acute undernutrition): calculated by the share of children under the age of five who are wasted (that is, those who have low weight for their height)
- Child Stunting (which reflects chronic undernutrition): calculated by the share of children under the age of five who are stunted (that is, those who have low height for their age)
- Child Mortality (which reflects both inadequate nutrition and unhealthy environment): calculated by the mortality rate of children under the age of five
India’s performance
- India’s child wasting rate (low weight for height), at 19.3%, is worse than the levels recorded in 2014 (15.1%) and even 2000 (17.15),
- It is the highest for any country in the world and drives up the region’s average owing to India’s large population.
- Prevalence of undernourishment has also risen in the country from 14.6% in 2018-2020 to 16.3% in 2019-2021.
- This translates into 224.3 million people in India considered undernourished.
How India performs among its neighbours?
- India’s score of 29.1 places it in the ‘serious’ category. India also ranks below Sri Lanka (64), Nepal (81), Bangladesh (84), and Pakistan (99).
- Afghanistan (109) is the only country in South Asia that performs worse than India on the index.
- China is among the countries collectively ranked between 1 and 17 having a score of less than five.
Has India improved somewhere?
- India has shown improvement in child stunting, which has declined from 38.7% to 35.5% between 2014 and 2022, as well as child mortality which has also dropped from 4.6% to 3.3% in the same comparative period.
- On the whole, India has shown a slight worsening with its GHI score increasing from 28.2 in 2014 to 29.1 in 2022.
Reasons for such poor performance
- Poor maternal health: Mothers are too young, too short, too thin and too undernourished themselves, before they get pregnant, during pregnancy, and then after giving birth, during breast-feeding.
- Poor sanitation: Poor sanitation, leading to diarrhoea, is another major cause of child wasting and stunting.
- Food insecurity: Low dietary diversity in India is also a key factor in child malnutrition.
- Poverty: Almost 50 million households in India are dependent on these small and marginal holdings.
- Livelihood loss: The rural livelihoods loss after COVID and lack of income opportunities other than the farm sector have contributed heavily to the growing joblessness in rural areas.
Issues over credibility of GHI
- India has ranked among many African countries while it is among the top 10 food-producing countries in the world.
- The GHI is largely children-oriented with a higher emphasis on under-nutrition than on hunger and its hidden forms, including micronutrient deficiencies.
- The first component — calorie insufficiency — is problematic for many reasons.
- The lower calorie intake, which does not necessarily mean deficiency, may also stem from reduced physical activity, better social infrastructure and access to energy-saving appliances at home, among others.
- For a vast and diverse country like India, using a uniform calorie norm to arrive at deficiency prevalence means failing to recognise the huge regional imbalances in factors that may lead to differentiated calorie requirements at the State level.
Conclusion
- The low ranking does not mean that India fares uniformly poor in every aspect.
- This ranking should prompt us to look at our policy focus and interventions and ensure that they can effectively address the concerns raised by the GHI, especially against pandemic-induced nutrition insecurity
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Centre extends Free Ration Scheme PMGKAY for 3 months
Note4Students
From UPSC perspective, the following things are important :
Prelims level: PMGKAY
Mains level: Schemes related to food security
The Union government has extended the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) for another three months from October 1.
What is PMGKAY?
- PMGKAY is a food security welfare scheme announced by the GoI in March 2020, during the COVID-19 pandemic in India.
- The program is operated by the Department of Food and Public Distribution under the Ministry of Consumer Affairs, Food and Public Distribution.
- The scale of this welfare scheme makes it the largest food security program in the world.
Targets of the scheme
- To feed the poorest citizens of India by providing grain through the Public Distribution System to all the priority households (ration card holders and those identified by the Antyodaya Anna Yojana scheme).
- PMGKAY provides 5 kg of rice or wheat (according to regional dietary preferences) per person/month and 1 kg of dal to each family holding a ration card.
At what rate are food grains provided under the NFSA?
- NFSA beneficiaries are entitled to receive foodgrains at highly subsidised rates.
- Under the food law, rice is provided at Rs 3 per kg, wheat at Rs 2 per kg, and coarse grains at Re 1 per kg.
Why was such a scheme needed?
- The devastation by pandemic has increased manifold in the second wave resulting into localized restrictions and lockdowns from the States.
- This resulted in massive jobs losses in urban areas since the largest employers being construction and hospitality sectors have been completely shut down.
- The virus penetrated deeper in the countryside in rural areas halting almost every sources of livelihood.
- These areas are such where 60% of the income was earned from non-pharm activities. This resulted in livelihood losses of large section of population.
Success of the scheme
- It was the first step by the government when pandemic affected India.
- The scheme reached its targeted population feeding almost 80Cr people.
- It has proven to be more of a safety net to migrant people who had job and livelihood losses.
- This has also ensured nutrition security to children of the migrant workers.
Failures
- The scheme has been affected by widespread corruption, leakages and failure to distribute grain to the intended recipients.
- Several of the states above have claimed that the ineffective distribution has been caused by the beneficiaries, especially migrant workers, not being available to receive their rations.
- Out of the 79.25 crore beneficiaries under the National Food Security Act (NFSA), only 55 crore have so far received their 5 kg.
- However, almost 90% of beneficiaries have received their regular subsidized grain for the month, raising questions over why the free grain has reached fewer beneficiaries.
- Many people were denied their share due to inability to access ration cards.
- Livelihood losses led to decline in aggregate demand and resulted into lowest ever consumption expenditure by the people owing to scarcity of cash.
- This in turn led to selling of the free grains obtained in the local markets for cash.
Way forward
- There should be an all-encompassing database for migrant workers and their family. This should accurately capture the data on migration.
- The One Nation One Ration Card should be implemented in true spirit by all the states.
- Along with food security, there should be a sustainable income support through schemes like MGNREGS accompanied by free vaccines in nearest future.
- The leakages in PDS should be minimized through modernize PDS.
- To avoid leakages, there should be food-token system.
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Agriculture Supply Chain
Note4Students
From UPSC perspective, the following things are important :
Prelims level: NA
Mains level: Food security
Context
- Disruption of supply chains due to Ukraine war has implications for India’s food security
What is supply chain in simple words?
- A supply chain is the network of all the individuals, organizations, resources, activities and technology involved in the creation and sale of a product.
Is supply chain management related to agriculture?
- Agribusiness, supply chain management (SCM) implies managing the relationships between the businesses responsible for the efficient production and supply of products from the farm level to the consumers to meet consumers’ requirements reliably in terms of quantity, quality and price.
What are two types of food chain?
- Agriculture food supply chains for fresh agricultural products: (such as fresh vegetables, flowers, fruit). In general, these chains may comprise growers, auctions, wholesalers, importers and exporters, retailers and speciality shops and their input and service suppliers. Basically, all of these stages leave the intrinsic characteristics of the product grown or produced untouched. The main processes are the handling, conditioned storing, packing, transportation and especially trading of these goods.
- Agriculture food supply chains for processed food products: (such as portioned meats, snacks, juices, desserts, canned food products). In these chains, agricultural products are used as raw materials for producing consumer products with higher added value. In most cases, conservation and conditioning processes extend the shelf-life of the products.
Supply chain issues
- Shelf-life constraints for raw materials, intermediates and finished products and changes in product quality level while progressing the supply chain (decay).
- High volume, low variety (although the variety is increasing) production systems.
- Importance of production planning and scheduling focusing on high capacity utilization.
- Highly sophisticated capital-intensive machinery leading to the need to maintain capacity utilization.
- Variable process yield in quantity and quality due to biological variations, seasonality, random factors connected with weather, pests and other biological hazards.
What should we do to ensure nutritional security?
- Strengthening and shortening food supply chains: reinforcing regional food systems, food processing, agricultural resilience and sustainability in a climate-changing world will require prioritising research and investments along these lines.
- Infrastructure: Lastly, infrastructure and institutions supporting producers, agripreneurs and agricultural micro, small and medium enterprises (MSMEs) in their production value chain are central to the transition.
- Potential for crop diversification: Data compiled in the agro-climatic zones reports of the Indian Council of Agricultural Research and the erstwhile Planning Commission of India reveal enormous potential for crop diversification and precision for enhanced crop productivity based on soil type, climate (temperature and rainfall), and captive water resources.
- Holistic policy approach: In the context of the intensifying economic, environmental and climate challenges and crisis, the need of the hour is a good theory of transition encompassing the spatial, social and scientific dimensions, supported by policy incentives and mechanisms for achieving a sustainable, resilient and food secure agriculture.
- Agro-climatic approach: An agro-climatic approach to agricultural development is important for sustainability and better nutrition.
Way forward
- Transparency: The Indian government could ensure more transparency on food stocks and regulate the private sector.
- Set restriction on hoarding: For that, there is a need to set restrictions on the reserves that the private sector can hold, as they often tend to hoard food stocks to later sell at a profit.
- Speculation should be regulated: This will help prevent the opaqueness of private sector reserves, which often fuels speculation by large international financial actors.
- Positional limits: Internationally, positional limits could be set on speculators but that would require a multilateral accord, a topic which should be on the agenda at the next G-20 meeting.
Mains question
Q. What role supply chain play in nutritional security? Discuss the constraints in supply chain along with way forward.
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India’s ‘wheat waiver’ WTO demand is risk-fraught
Note4Students
From UPSC perspective, the following things are important :
Prelims level: WTO waiver
Mains level: Paper 3- Public Stockholding of Food issue at WTO
Context
The WTO ministerial meeting in June at Geneva did precious little to address the issue of public stockholding of food.
Public stockholding issue at WTO
- India’s PSH policy is based on procuring food from farmers at an administered price (minimum support price or MSP), which is generally higher than the market price.
- PSH’s’ twin objectives: The PSH policy serves the twin objectives of offering remunerative prices to farmers and providing subsidised food to the underprivileged.
- Trade distortion subsidy: Under WTO law, such price support-based procurement from farmers is counted as a trade-distorting subsidy, and if given beyond the permissible limit, breaches WTO law.
- India in the World Trade Organization (WTO) — and rightly so — has been to find a permanent solution to the issue of public stockholding (PSH) of food to protect India’s food security (PSH policy).
- Peace clause: Currently, India has temporary relief due to a ‘peace clause’ which bars countries from bringing legal challenges against price support-based procurement for food security purposes.
- The WTO ministerial meeting in June at Geneva did precious little to address this issue.
- India’s concerns about the PSH issue have been taken on board.
India’s concerns
- For India, the real issue is not about maintaining adequate food stocks, which WTO rules do not prohibit, provided food is stocked by employing non-trade distorting instruments such as providing income support to farmers (cash transfers independent of crop production).
- Use of MSP: India’s concern is that it should have the policy space to hold public food stocks using the MSP, which is a price support instrument.
- However, there is no mention of price support in the Geneva declaration.
- India’s demand for a permanent solution to the PSH policy has acquired a new dimension.
- India insists that it should also be allowed to export food, most notably wheat, from the pool of the foodgrain procured under the MSP.
- However, WTO law proscribes countries from exporting foodgrain procured at subsidised prices.
- Paragraph 4 of the 2013 WTO decision on PSH for food security purposes, clearly states that countries procuring food for food-security purposes shall ensure that such procured food does not “distort trade or adversely affect the food security of other Members”.
- The same spirit is reflected in paragraph 10 of the Geneva ministerial food security declaration, which states that countries may release surplus food stocks in the international market in accordance with WTO law.
- However, it is very unlikely that such a request will be acceded to.
- As per Article IX.3 of the WTO Agreement, waivers can be adopted only in “exceptional circumstances”.
Way forward
- Developed countries have historically opposed India’s PSH programme as they apprehend that India might divert some of its public stock to the international market, thus depressing global prices.
- India actively pushing for exporting food from its official granaries gives fresh ammunition to the PSH solution opponents.
- Thus, India should revisit its stand on asking for a waiver for wheat exports from its public stockholding, which, in any case, was not a part of India’s PSH policy.
- Spending scarce negotiating capital on this issue might dilute India’s core agenda of pushing for a permanent solution for its PSH programme to attain the goal of food security and providing remunerative prices to the farmers.
- Negotiations at the WTO require crystal clarity of the core objectives that should be relentlessly pursued.
- Adding newer objectives and shifting goalposts might result in falling between two stools.
Conclusion
Instead of asking for the waiver to export wheat from public stockholding, the laudable objective of helping countries facing food crises can be accomplished by strengthening India’s commitment to the United Nations World Food Programme.
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What is Essential Commodities Act?
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Essential Commodities Act
Mains level: Not Much
The Centre has invoked the Essential Commodities Act of 1955 to ask States to monitor and verify the stocks of Arhar/Tur Dal available with traders.
Essential Commodities Act
- The ECA, 1955 was established to ensure the delivery of certain commodities or products, the supply of which, if obstructed due to hoarding or black marketing, would affect the normal life of the people.
- The list of items under the Act includes drugs, fertilizers, pulses, and edible oils, as well as petroleum and petroleum products.
- The Centre can include new commodities as and when the need arises, and takes them off the list once the situation improves.
- Additionally, the government can also fix the maximum retail price (MRP) of any packaged product that it declares an “essential commodity”.
How ECA works?
(1) Centre notifying stock limit holding
- If the Centre finds that a certain commodity is in short supply and its price is spiking, it can notify stock-holding limits on it for a specified period.
- The States act on this notification to specify limits and take steps to ensure that these are adhered to.
- Anybody trading or dealing in the commodity, be it wholesalers, retailers or even importers are prevented from stockpiling it beyond a certain quantity.
(2) States can opt-out
- A State can, however, choose not to impose any restrictions.
- But once it does, traders have to immediately sell into the market any stocks held beyond the mandated quantity.
What happens for non-compliance?
- As not all shopkeepers and traders comply, State agencies conduct raids to get everyone to toe the line and the errant are punished.
- The excess stocks are auctioned or sold through fair price shops.
- This improves supplies and brings down prices.
Ex: The Union Government has brought masks and hand-sanitizers under the ECA to make sure that these products, key for preventing the spread of Covid-19 infection, are available to people at the right price and in the right quality. Later this move was reverted.
What about Food Items?
(1) Items covered:
Rice, wheat, atta, gram dal, arhar dal, moong dal, urad dal, masoor, dal, tea, sugar, salt, Vanaspati, groundnut oil, mustard oil, milk, soya oil, palm oil, sunflower oil, gur, potato, onion and tomato.
(2) Price Stabilization Fund (PSF):
The government utilizes the buffer of agri-horticultural commodities like pulses, onion, etc. built under Price Stabilization Fund (PSF) to help moderate the volatility in prices.
Recent amendments to the ECA
In 2020, the EC Act was amended for the stock limit to be imposed only under exceptional circumstances such as famine or other calamities.
- Exceptional circumstances: It allowed the centre to delist certain commodities as essential, allowing the government to regulate their supply and prices only in cases of war, famine, extraordinary price rises, or natural calamities.
- Commodities de-regulated: The commodities that have been deregulated are food items, including cereals, pulses, potatoes, onion, edible oilseeds, and oils.
Exceptions provided
- The government regulation of stocks will be based on rising prices, and can only be imposed if there is
- A 100% increase in retail price in the case of horticultural produce and
- A 50% increase in retail price in the case of non-perishable agricultural food items
- These restrictions will not apply to stocks of food held for public distribution in India.
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Centre launches ‘Ration Mitra’ Portal to register for Rations
Note4Students
From UPSC perspective, the following things are important :
Prelims level: NFSA
Mains level: Schemes related to food security
The Centre has launched a common facility to register names in ration cards on a pilot basis for 11 States and Union Territories.
Ration Mitra
- Ration Mitra’ Portal aims to enable these States to identify and verify the eligible beneficiaries for coverage under the National Food Security Act.
- Named as Ration Mitr, this software developed by the National Informatics Centre can be used to enrol people of any State.
- The portal is an enabler for States/UTs to complete their inclusion exercise under NFSA.
- The NFSA provides food security coverage for 81.35 crore persons in the country. The present NFSA coverage is about 79.74 crore.
About National Food Security (NFS) Act
- The NFS Act, 2013 aims to provide subsidized food grains to approximately two-thirds of India’s 1.2 billion people.
- It converts into legal entitlements for existing food security programs of the GoI.
- It includes the Midday Meal Scheme, Integrated Child Development Services (ICDS) scheme and the Public Distribution System (PDS).
- Further, the NFSA 2013 recognizes maternity entitlements.
- The Midday Meal Scheme and the ICDS are universal in nature whereas the PDS will reach about two-thirds of the population (75% in rural areas and 50% in urban areas).
- Pregnant women, lactating mothers, and certain categories of children are eligible for daily free cereals.
Key provisions of NFSA
- The NFSA provides a legal right to persons belonging to “eligible households” to receive foodgrains at a subsidised price.
- It includes rice at Rs 3/kg, wheat at Rs 2/kg and coarse grain at Rs 1/kg — under the Targeted Public Distribution System (TPDS). These are called central issue prices (CIPs).
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Odisha tops first-ever NFSA State Ranking Index
Note4Students
From UPSC perspective, the following things are important :
Prelims level: NFSA
Mains level: Food and nutrition security of India
Odisha has topped the list of 34 states and Union territories (UTs) in the first-ever NFSA State Ranking Index. Ladakh was ranked last on the index.
NFSA State Ranking Index
- The GoI has come up with a first-ever state ranking index to capture the implementation of the Targeted Public Distribution System (TPDS) under the National Food Security Act (NFSA).
- The states and UTs were ranked for 2022 on the basis of three parameters:
- NFSA coverage, rightful targeting and implementation of all provisions under the Act
- The delivery platform while considering the allocation of food grains, their movement and last-mile delivery to fair price shops
- Nutrition initiatives of the department
Why need such index?
- NFSA is a crucial policy instrument to ensure food security. It covers nearly 800 million people.
- However, NFSA’s implementation through TPDS has not been uniform in the country.
- While some states and Union territories lead, others are yet to pick up in terms of coverage, beneficiary satisfaction, digitisation and overall system efficiency.
- The index has been developed to create an environment of competition, cooperation and learning among states while addressing matters of food security and hunger.
Back2Basics: National Food Security (NFS) Act
- The NFS Act, 2013 aims to provide subsidized food grains to approximately two-thirds of India’s 1.2 billion people.
- It converts into legal entitlements for existing food security programs of the GoI.
- It includes the Midday Meal Scheme, Integrated Child Development Services (ICDS) scheme and the Public Distribution System (PDS).
- Further, the NFSA 2013 recognizes maternity entitlements.
- The Midday Meal Scheme and the ICDS are universal in nature whereas the PDS will reach about two-thirds of the population (75% in rural areas and 50% in urban areas).
- Pregnant women, lactating mothers, and certain categories of children are eligible for daily free cereals.
Key provisions of NFSA
- The NFSA provides a legal right to persons belonging to “eligible households” to receive foodgrains at a subsidised price.
- It includes rice at Rs 3/kg, wheat at Rs 2/kg and coarse grain at Rs 1/kg — under the Targeted Public Distribution System (TPDS). These are called central issue prices (CIPs).
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https://www.downtoearth.org.in/news/governance/odisha-tops-first-ever-nfsa-state-ranking-index-83549
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For India, a lesson in food security from Sri Lanka
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Food security
Context
India needs to have a strategy of self-reliance in basic foods, including edible oils.
Contrasting cases of Sri Lanka and Saudi Arabia
- Sri Lanka, a country with 21.5 million population imported dairy products valued at $333.8 million in 2020 and $317.7 million in 2021.
- The island nation’s imports of whole milk powder (WMP) alone were 89,000 tonnes and 72,000 tonnes in these two years.
- The 89,000 tonnes of powder imported in 2020 would have, thus, “produced” almost 2.1 million litres per day (MLPD) equivalent of milk.
- This is as against the 1.3 MLPD that Sri Lanka produces from its own cows and buffaloes.
- It translates into an import dependence of over 60 per cent.
- At the other end, we have Saudi Arabia, home to over 35 million inhabitants (including immigrants) and also the world’s largest vertically integrated dairy company.
- Almarai Company has six dairy farms producing more than 3.5 MLPD of milk.
- The animals are sourced from the US and Europe.
- The entire feed and also forage given to them are procured from abroad.
- Why is Saudi Arabia taking such pains to produce its own milk?
- The answer is food security.
- The Saudis — other Persian Gulf countries have also copied the Almarai model — are prepared to pay any price when it comes to ensuring the availability of basic food like milk.
Lessons for India: Reducing import dependence on edible oil
- India annually imports 13.5-14.5 million tonnes of vegetable oils, again roughly 60 per cent of its total consumption.
- Low international prices meant that the import bill, though high, fell from $9.85 billion in 2012-13 to $9.67 billion in 2019-20.
- However, in the last couple of years, retail prices of most oils more than doubled
- The value of India’s vegetable oil imports surged to a record $19 billion in 2021-22.
Conclusion
As a country with a population many times that of Sri Lanka and Saudi Arabia, India needs to have a strategy of self-reliance in basic foods.
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The message from the government’s wheat export ban
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Challenges facing wheat economy in India
Context
The ban on the export of wheat was not unexpected. The rather ambivalent approach to agriculture comes out clearly with this move.
Understanding how this ban has come about
- We are not comfortable with market forces operating in agriculture.
- Nor are we quite sure whether we want the farmer to get a better price or the consumer to pay less.
- Governments spend a lot of money in the form of subsidies to ensure farmers are enthused to produce more wheat.
- The Centre keeps increasing the MSP for this purpose and states often pay a bonus for procurement.
- There are political reasons too as the farmer lobby needs to be placated.
- There are political reasons too as the farmer lobby needs to be placated.
- We have been taking credit for the production of wheat and every year we set a new record.
- This year, the Ministry announced that wheat production will touch a record of 111 million tonnes, which has recently been revised downwards.
- With the war, conditions have changed. Russia and Ukraine are large producers of wheat and their supply to world markets has been cut off due to sanctions and supply chain disruptions.
- With supplies interrupted, there is an opportunity for other surplus nations to step in.
- But the disruption has caused world prices to rise significantly.
Opportunity for India
- The World Bank data indicates that the price of US (soft red winter) wheat has gone up from $328/tonne in December to $672/tonne while US (hard red winter) wheat is up from $377 to $496/tonne.
- Countries that produce abundant wheat now have a chance to leverage this opportunity to export.
- However, in case of India it does appear that production will be lower than expected.
- Low wheat stock: The government has also not been able to procure wheat as farmers are no longer selling at MSP (which is at Rs 2,015/quintal) as they are getting higher prices in mandis.
- As of May 10, procurement was just 18 million tonnes against 43 million tonnes last year.
- This is a significant fall.
- But stocks with the Centre and other state agencies are 30.3 million tonnes, way above the buffer norms of 27.6 million tonnes.
- The ban on wheat exports is because of this.
Two constraints on the wheat economy
- In 2007 and again in 2021, the government banned futures trading in wheat on grounds that it led to speculative pressure on prices even though the quantity traded and the open interest were minuscule.
- At that time, it was a decline in expected output which triggered this action.
- It does look like the wheat economy will continue to operate within two constraints that have become barriers to commercialisation.
- MSP and government procurement: The first is MSP and government procurement, which feeds into the public distribution system.
- Arhatiya system: The second is the arhatiya system of trading where middlemen have come in the way of any reform.
Suggestions
- Abolish MSP and procurement system: The MSP and procurement system needs to be dismantled.
- Cash transfers: As the government has successfully expanded both the Aadhaar and Jan Dhan programmes, there should be simple cash transfers to beneficiaries.
- Buffer stocks can be held to ease distress during a crisis, but government involvement should stop there.
- Procuring unlimited quantities of wheat and keeping huge stocks has distorted the wheat matrix.
- The mandi system too needs to be revisited and alternatives have to be made available so that farmers can choose the point of sale.
Conclusion
We have been talking about being a part of global supply chains to augment value addition and accelerate growth. But when it comes to agriculture it is a blow-hot blow-cold approach. This not only affects our credibility but also sends confusing signals to producers as to what is the best way out for them.
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Government lacking a coherent policy of food security
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Need for coherent policy of food security
Context
The Government of India announced a sudden ban on export of wheat on May 13, 2022, a few days after Prime Minister Narendra Modi had stated that “at a time when the world is facing a shortage of wheat, the farmers of India have stepped forward to feed the world”.
What led to the sudden wheat export ban?
- Low public procurement: The sudden turnaround in the export policy appears to be on account of fears that low public procurement would affect domestic food security.
- This summer, procurement of wheat by the Food Corporation of India (FCI) has been very low.
- Last year, the FCI and other agencies procured 43.34 million tonnes of wheat.
- For the current season, procurement has only been 17.8 million tonnes, as of May 10, 2022.
- Given the low levels of procurement, the Government has reduced the procurement target for the current season from 44.4 to 19.5 million tonnes.
- Low production: While wheat production this year has been lower than estimated on account of high heat and other factors in March, there is not a big shortfall in production relative to previous years.
- Wheat production was 103.6 million tonnes in 2018-19, 107.8 million tonnes in 2019-20, and 109.5 million tonnes in 2020-21.
- The most recent estimate of production for 2021-22, revised downwards from the earlier estimate, is 105.
Public procurement in India
- The system of public procurement has been in place since the mid-1960s, and has been the backbone of food policy in India.
- As part of the liberalisation policy, many other economists suggested that food stocks be run down in India and that needs of food security be met through world trade and the Chicago futures market.
Need for effective PDS
- Higher than buffer stock norm: Stocks of wheat in the central pool as of April 30, 2022 were 30.3 million tonnes, much lower than the 52.5 million tonnes of last year, but comfortably higher than buffer stock norms.
- While the Government procurement in this marketing season has been lower than the previous two years, the stock position so far is similar to 2019, when we had 35.8 million tonnes of stock in April.
- An important role in pandemic: In the two COVID-19 years (2020-21 and 2021-22), the Public Distribution System (PDS) played a stellar role, and, its role showed the wisdom of not dismantling it.
- Total offtake of rice and wheat was 102.3 million tonnes in 2021-22 when distribution through the PDS and other welfare schemes is combined.
- It is essential that the PDS and open market operations be used to cool down food price inflation.
- While most States have high inflation rates, States with better PDS, such as Kerala and Tamil Nadu, have low inflation rates.
Way forward
- Provide remunerative prices: To promote production, a key aspect of food policy in India has been to provide remunerative prices to farmers.
- As is well known, after the reports of the National Commission on Farmers, the announced minimum support price (MSP) for wheat has often been inadequate to cover costs of cultivation for several regions and classes of farmers, especially if comprehensive costs (or Cost C2) are taken as the base.
- Over the last two years, costs of production have risen sharply, one important component being the spiralling price of fuel.
Conclusion
India’s flip-flop on the export of wheat is an example of the Government lacking a coherent policy of food security.
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Inflation in India
Note4Students
From UPSC perspective, the following things are important :
Prelims level: CPI
Mains level: Paper 3- Tackling food inflation
Context
Recently, the RBI raised the repo rate by 40 basis points (bps) and the cash reserve ratio (CRR) by 50 bps with a view to tame inflation.
How effective would be the rate hike in taming the inflation?
- High inflation is always an implicit tax on the poor and those who keep their savings in banks.
- Will the increases in the repo rate and CRR control inflation, especially food inflation?
- The RBI has been behind the curve by at least by 4-to 5 months, and its optimism in controlling inflation in the earlier meetings of the Monetary Policy Committee was somewhat misplaced.
- The reason for this is that food prices globally are scaling new peaks as per the FAO’s food price index.
- The disruptions caused by the pandemic and now the Russia-Ukraine war are contributing to this escalation in food prices.
- India cannot remain insulated from this phenomenon.
Opportunities and challenges for India
- Record wheat export: For the first time in the history of Indian agriculture, cereal exports have already crossed a record high of 31 million metric tonnes (MMT) at $13 billion (FY22), and the same cereal wonder may be repeated this fiscal (FY23).
- Among cereals, wheat exports have witnessed an unprecedented growth of more than 273 per cent, jumping nearly fourfold from $0.56 billion (or 2 MMT) in FY21 to $2.1 billion (or 7.8 MMT) in FY22.
- Rice exports have crossed 20 MMT in FY22 in a global market of 50 MMT.
- Some of the concerns on the wheat front are genuine, and we need to realise that climate change is already knocking on our doors.
- With every one degree Celsius rise in temperatures, wheat yields are likely to suffer by about 5 MMT, as per earlier IPCC reports.
- This calls for massive investments in agri-R&D to find heat-resistant varieties of wheat and also create models for “climate-smart” agriculture. We are way behind the curve on this.
Need for rationalising food subsidy
- India distribute free food to 800 million Indians, with a food subsidy bill that is likely to cross Rs 2.8 lakh crore this fiscal out of the Centre’s net tax revenue of about Rs 20 lakh crore in FY23.
- Reducing coverage: What needs to be done targeting only those below the poverty line for free or subsidised food and charging a reasonable price, say 90 per cent of MSP, from those who are above the poverty line.
- Giving an option to beneficiaries to receive cash in their Jan Dhan accounts (equivalent to MSP plus 20 per cent) in lieu of grains can be considered.
- This is permitted under NFSA and by doing so, he can save on the burgeoning food subsidy bill.
Conclusion
Indian farmers need access to global markets to augment their incomes, and the government must facilitate Indian farmers to develop more efficient export value chains by minimising marketing costs and investing in efficient logistics for exports.
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PDS has had a spectacular run. That may not last
Note4Students
From UPSC perspective, the following things are important :
Prelims level: PMGKAY
Mains level: Paper 3- Significance of PDS and challenges ahead
Context
2020-21 was one of Indian agriculture’s finest moments, as memorable as 1967-68 that inaugurated the Green Revolution. Agriculture was the only sector to grow 3.3 per cent in 2020-21, even as the economy overall contracted by 4.8 per cent.
Increase in grain offtake under PDS
- NFSA along with PMGKAY has led to a massive jump in grain offtake through the PDS.
- More importantly, this increase has largely taken place in the poorer states.
- UP, Bihar and Jharkhand together accounted for 21.6 per cent of national grain offtake in 2012-13, which was pre-NFSA.
- Sales of rice and wheat under various government schemes totalled 92.9 million tonnes (mt) in 2020-21 and 105.6 mt in 2021-22.
- This was as against an average offtake of 62.5 mt during the first seven years after the implementation of the National Food Security Act (NFSA) in 2013-14 and 48.4 mt in the seven years preceding the legislation.
Provisions under NFSA
- The NFSA legally entitles up to 75 per cent of India’s rural and 50 per cent of the urban population — translating into some 813.5 million people — to receive 5 kg of grain per person per month at highly subsidised rates of Rs 2/kg for wheat and Rs 3/kg for rice.
- In the wake of the Covid-induced economic disruptions, a new Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) scheme was launched giving NFSA beneficiaries an extra 5 kg grain per person per month free of cost.
- PMGKAY was implemented for eight months (April-November) in 2020-21 and 11 months (May-March) of 2021-22.
PDS reforms in states
- Only a handful of states — Kerala, Tamil Nadu and Andhra Pradesh — had well-functioning PDS till the early 2000s.
- In the late-2000s, Chhattisgarh initiated reforms to curb diversion/leakages by entrusting the running of fair price shops to cooperatives and local bodies (as against private licensees), making timely allocation and supplying grain directly to PDS outlets (bypassing middle-level distribution agencies), and using IT to track dispatches right from procurement centres to points of sale.
- Chhattisgarh’s example was emulated by Odisha, followed by Madhya Pradesh and West Bengal — all by 2015-16.
- The three poorest states are the latest entrants to the list.
- The accompanying charts show the offtake of rice and wheat both at the all-India level and for the three poorest states as per the NITI Aayog’s National Multidimensional Poverty Index — Bihar, Jharkhand and Uttar Pradesh (UP).
- UP particularly has seen its grain offtake soar from 9.5 mt to 17.3 mt in the last two years.
- Out of the 17.3 mt (10.7 mt wheat and 6.6 mt rice) distributed in 2021-22, 7.8 mt comprised free grains under PMGKAY.
- The PDS, indeed, turned out to be the only effective social safety net during the pandemic.
- Some states went beyond rice and wheat.
Challenges
- The expansion of the PDS, especially post-NFSA, was underwritten by the superabundance of rice and wheat in government granaries.
- Official wheat procurement is likely to halve this time from last year’s record 43.3 mt, because of a poor crop singed by the abnormal spike in March temperatures.
- Rice stocks are far more comfortable, though the precarious supply situation in fertilisers raises questions about the prospects for the coming kharif season.
- Looking ahead, the Food Corporation of India’s stocks can probably sustain the pre-2020-21 annual offtake levels of 60-65 mt – enough for NFSA, but certainly not schemes such as PMGKAY.
Conclusion
The PDS was originally meant to protect ordinary people from extraordinary price rises. Whether it can do that at a time of renewed global inflation remains to be seen.
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Why reforming the system of free food is necessary
Note4Students
From UPSC perspective, the following things are important :
Prelims level: NFSA 2013
Mains level: Paper 3- PDS reforms
Context
The release of two new working papers, one from the World Bank and the other from the IMF, has led to a renewed debate on poverty in India.
A substantial decline in extreme poverty in India
- Both papers claim that extreme poverty in the country, based on the international definition of $1.90 per capita per day (in purchasing power parity (PPP), has declined substantially.
- The World Bank paper uses the Consumer Pyramid Household Surveys (CPHS) data to conclude that 10.2 per cent of the country’s population was at extreme poverty levels in 2019.
- The IMF paper calculates poverty by using the NSO Consumer Expenditure Survey as the base and adjusts it for the direct effect of the massive food grain subsidy given under the National Food Security Act (NFSA, 2013) and PM Garib Kalyan Anna Yojana (PMGKAY) during the pandemic period.
- It claims that extreme poverty has almost vanished – it was 0.77 per cent in 2019 and 0.86 per cent in 2020.
- Another estimate of poverty by the NITI Aayog, the multi-dimensional poverty index (MPI), has put Indian poverty at 25 per cent in 2015 based on NFHS data.
- How MPI is calculated?: This MPI is calculated using twelve key components from areas such as health and nutrition, education and standard of living.
How much should be the coverage under NFSA, 2013?
- The offtake of grains under NFSA in FY20 was 56.1 million metric tonnes (MMT).
- Following the outbreak of Covid-19, the government launched the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) in April 2020 to distribute 25 kg cereals per family per month in addition to food transfers under the NFSA.
- That catapulted the offtake to 87.5 MMT (under PMGKAY and NFSA) in FY21.
- The scheme continued in FY22, and the grain offtake touched 93.2 MMT.
Issues with the wide coverage
- A further extension of free food on top of the NFSA allocations was uncalled for.
- This will strain the fisc, reduce public investments and hamper potential job creation.
- A look at the size of food freebies will help understand the gravity of this problem.
- As of April 1, the Food Corporation of India’s wheat and rice stocks stood at 74 MMT against a buffer stock norm of 21 MMT – there is, therefore, an “excess stock” of 53 MMT.
- The cost of excess stock: The economic cost of rice, as given by FCI, is Rs 3,7267.6/tonne and that of wheat is Rs 2,6838.4/tonne (2020/21).
- The value of “excess stocks”, beyond the buffer norm, is, therefore, Rs 1.85 lakh crore — this, despite a total of 72.2 MMT grains distributed for free under the PMGKAY in FY21 and FY22.
- Ballooning food subsidy: All this results in a ballooning food subsidy for FY 23, it is provisioned at Rs 2.06 lakh crore, for FY 23, it is provisioned at Rs 2.06 lakh crore.
- But this amount is likely to go beyond Rs 2.8 lakh crore with the continuing distribution of free food under the PMGKAY.
- This would amount to more than 10 per cent of the Centre’s net tax revenue (after deducting the states’ share).
Way forward
- It is all the more important to change the current policy of free food given the massive leakages in the PDS.
- As per the High-Level Committee on restructuring FCI, leakages were more than 40 per cent based on the NSSO data of 2011.
- Ground reports suggest that these leakages hover around 30 per cent or so today.
- Make PDS more targeted: In reforming this system of free food, wisdom lies in going back to the Antyodaya Anna Yojana (AAY).
- Under AAy, the “antyodaya” households (the most poor category) get more rations (35 kg per household) at a higher subsidy (rice, for instance, at Rs 3/kg and wheat at Rs2/kg).
- For the remaining below poverty line (BPL) families, the price charged was 50 per cent of the procurement price and for above poverty line families (APL), it was 90 per cent of the procurement price.
- This will make PDS more targeted and lead to cost savings.
- Use of technology: There could be some problems in identifying the poor. However, technology can help overcome this difficulty.
- Option of cash transfer: This measure should be combined with giving people the option of receiving cash instead of providing grains to targeted beneficiaries.
- The savings so generated from this reform can be ploughed back as investments in agri-R&D, rural infrastructure (irrigation, roads, markets) and innovations that will help create more jobs and reduce poverty on a sustainable basis.
Conclusion
The government needs to bite the bullet and emulate the Vajpayee government (which had introduced AAY) in using scarce resources more wisely.
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How Russia-Ukraine conflict will effect inflation in India
Note4Students
From UPSC perspective, the following things are important :
Prelims level: FSA 2013
Mains level: Paper 3- Inflation challenge
Context
With the Russia-Ukraine conflict flaring into a war, global commodity prices, especially that of crude oil and gas, are likely to see a strong surge. This poses a challenge not only for India to contain inflationary pressures but also the world at large.
The problem of rising inflation
- At 6 per cent, India’s consumer price index (CPI) inflation crossed the upper limit of RBI’s tolerance band in January 2022.
- Implications: High inflation inflicts a large “inflation tax” on the general public whose bank savings earn an interest of less than 1 per cent.
- This is robbing the general public in the name of fuelling growth.
- India is not impervious to this tendency. Most of the major banks in the country offer interest rates between 3 to 4 per cent to depositors.
- Both the finance ministry and the RBI are betting on revving up growth, at least for the time being.
- This is fine as long as they can tame inflation within reasonable limits.
- If we want to do justice to the masses on whose deposits the entire banking system hinges, one must ensure positive real rates of interest.
How to ensure lower rates of inflation
- Given that food has a weight of more than 45 per cent in CPI in India, understanding the dynamics of food inflation is critical.
- India imports roughly 60 per cent of its consumption of edible oils, and global prices of edible oils have gone up by more than 50 per cent over the last year.
- Edible oil inflation in India was touching 35 per cent a few months back.
- This has come down to 18 per cent after the reduction on import duties.
- The Union Minister of Commerce has also recently claimed that they have brought down the inflation in pulses by imposing stock limits on traders and by lowering import duties and importing more pulses.
- The Centre has also imposed stocking limits on domestic oil/oilseed traders.
Way forward: Reform the grain-management-cum-food-subsidy system
- Stock limit on wheat and rice with FCI: As on January 1, it is saddled with stocks that are almost four times the buffer stock norms.
- By unloading the excess grain in the open market, FCI could help in bringing down food inflation substantially as rice and wheat have a high weightage in CPI.
- In the name of the poor, India runs one of the largest but perhaps the most inefficient and corrupt public distribution system (PDS) in the world.
- Stop competitive populism: Every political party promises freebies before elections.
- Unless the Election Commission comes down heavily on such promises or a public interest litigation is filed in the Supreme Court to stop this competitive populism, Indian policymaking cannot be growth-oriented.
- Reduce the population coverage under PDS: India’s food subsidy policy covers 67 per cent of the population and distributes rice and wheat at more than 90 per cent subsidy under the National Food Security Act of 2013.
- Raise productivity: This should be combined with taking giant strides to raise productivity and producing more nutritious food while protecting the environment.
- Focus on R&D in agriculture: It’s well-known agri-R&D gives a much higher return in terms of promoting growth with competitiveness, and reduces poverty by making food cheaper and controlling food inflation
Conclusion
It is important to reform the grain-management-cum-food-subsidy system to release precious resources for growth of agriculture.
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[pib] Centre declares Soya Meal as an Essential Commodity
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Regulation of Essential Commodities
Mains level: Essential Commodities Act
In a bid to cool down the domestic prices of Soya Meal, Government has notified order under the Essential Commodities Act to declare ‘Soya Meal’ as Essential Commodities under the Essential Commodities Act, 1955.
Essential Commodities Act
- The ECA, 1955 was established to ensure the delivery of certain commodities or products, the supply of which, if obstructed due to hoarding or black marketing, would affect the normal life of the people.
- The list of items under the Act includes drugs, fertilizers, pulses, and edible oils, as well as petroleum and petroleum products.
- The Centre can include new commodities as and when the need arises, and takes them off the list once the situation improves.
- Additionally, the government can also fix the maximum retail price (MRP) of any packaged product that it declares an “essential commodity”.
How ECA works?
(1) Centre notifying stock limit holding
- If the Centre finds that a certain commodity is in short supply and its price is spiking, it can notify stock-holding limits on it for a specified period.
- The States act on this notification to specify limits and take steps to ensure that these are adhered to.
- Anybody trading or dealing in the commodity, be it wholesalers, retailers or even importers are prevented from stockpiling it beyond a certain quantity.
(2) States can opt-out
- A State can, however, choose not to impose any restrictions.
- But once it does, traders have to immediately sell into the market any stocks held beyond the mandated quantity.
What happens for non-compliance?
- As not all shopkeepers and traders comply, State agencies conduct raids to get everyone to toe the line and the errant are punished.
- The excess stocks are auctioned or sold through fair price shops.
- This improves supplies and brings down prices.
Ex: The Union Government has brought masks and hand-sanitizers under the ECA to make sure that these products, key for preventing the spread of Covid-19 infection, are available to people at the right price and in the right quality. Later this move was reverted.
What about Food Items?
(1) Items covered:
Rice, wheat, atta, gram dal, arhar dal, moong dal, urad dal, masoor, dal, tea, sugar, salt, Vanaspati, groundnut oil, mustard oil, milk, soya oil, palm oil, sunflower oil, gur, potato, onion and tomato.
(2) Price Stabilization Fund (PSF):
The government utilizes the buffer of agri-horticultural commodities like pulses, onion, etc. built under Price Stabilization Fund (PSF) to help moderate the volatility in prices.
Recent amendments to the ECA
In 2020, the EC Act was amended for the stock limit to be imposed only under exceptional circumstances such as famine or other calamities.
- Exceptional circumstances: It allowed the centre to delist certain commodities as essential, allowing the government to regulate their supply and prices only in cases of war, famine, extraordinary price rises, or natural calamities.
- Commodities de-regulated: The commodities that have been deregulated are food items, including cereals, pulses, potatoes, onion, edible oilseeds, and oils.
Exceptions provided:
- The government regulation of stocks will be based on rising prices, and can only be imposed if there is
- A 100% increase in retail price in the case of horticultural produce and
- A 50% increase in retail price in the case of non-perishable agricultural food items
- These restrictions will not apply to stocks of food held for public distribution in India.
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Duare Ration Scheme in West Bengal
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Duare Ration Scheme, PDS
Mains level: Not Much
West Bengal CM has launched an ambitious “Duare Ration” Scheme.
Duare Ration Scheme
- The Scheme aims for providing food grains under the public distribution system (PDS) at the doorstep for the entire population of the State.
- It aims to unload the person carrying huge chunk of food grains manually.
- Vehicles will carry ration in a particular street or lane and employees of ration dealers will make the food grains available to the people near their residence.
Key arrangements
- The state govt would provide around 21,000 ration dealers with the financial assistance of ₹1 lakh each to purchase vehicles for delivering ration to people in this manner.
- It also announced financial assistance to ration dealers to hire additional staff to make the scheme a success.
Back2Basics: Public Distribution System
- The PDS is an Indian food Security System established under the Ministry of Consumer Affairs, Food, and Public Distribution.
- PDS evolved as a system of management of scarcity through the distribution of food grains at affordable prices.
- PDS is operated under the joint responsibility of the Central and State Governments.
- The Central Government, through the Food Corporation of India (FCI), has assumed the responsibility for procurement, storage, transportation, and bulk allocation of food grains to the State Governments.
- The operational responsibilities including allocation within the State, identification of eligible families, issue of Ration Cards and supervision of the functioning of Fair Price Shops (FPSs) etc., rest with the State Governments.
- Under the PDS, presently the commodities namely wheat, rice, sugar and kerosene are being allocated to the States/UTs for distribution. Some States/UTs also distribute additional items of mass consumption through the PDS outlets such as pulses, edible oils, iodized salt, spices, etc.
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PM Poshan Shakti Nirman Scheme
Note4Students
From UPSC perspective, the following things are important :
Prelims level: PM POSHAN Scheme
Mains level: Mid-day meal scheme
The existing Mid-Day Meal scheme, which provides hot meals to students, has been renamed as the National Scheme for PM Poshan Shakti Nirman.
Key propositions in the PM POSHAN Scheme
- Supplementary nutrition: The new scheme has a provision for supplementary nutrition for children in aspirational districts and those with high prevalence of anaemia.
- States to decide diet: It essentially does away with the restriction on the part of the Centre to provide funds only for wheat, rice, pulses and vegetables. Currently, if a state decides to add any component like milk or eggs to the menu, the Centre does not bear the additional cost. Now that restriction has been lifted.
- Nutri-gardens: They will be developed in schools to give children “firsthand experience with nature and gardening”.
- Women and FPOs: To promote vocal for local, women self-help groups and farmer producer organisations will be encouraged to provide a fillip to locally grown traditional food items.
- Social Audit: The scheme also plans “inspection” by students of colleges and universities for ground-level execution.
- Tithi-Bhojan: Communities would also be encouraged to provide the children food at festivals etc, while cooking festivals to encourage local cuisines are also envisaged.
- DBTs to school: In other procedural changes meant to promote transparency and reduce leakages, States will be asked to do direct benefit cash transfers of cooking costs to individual school accounts, and honorarium amounts to the bank accounts of cooks and helpers.
- Holistic nutrition: The rebranded scheme aims to focus on “holistic nutrition” goals. Use of locally grown traditional foods will be encouraged, along with school nutrition gardens.
About the Mid-Day Meal Scheme
- The Midday Meal Scheme is a school meal program designed to better the nutritional standing of school-age children nationwide.
- It was launched in the year 1995.
- It supplies free lunches on working days for children in primary and upper primary classes in:
- Government, government aided, local body schools
- Education Guarantee Scheme, and alternate innovative education centres,
- Madarsa and Maqtabs supported under Sarva Shiksha Abhiyan, and
- National Child Labour Project schools run by the ministry of labour
- The Scheme has a legal backing under the National Food Security Act, 2013.
Objective:
To enhance the enrolment, retention and attendance and simultaneously improve nutritional levels among school going children studying in Classes I to VIII
History of the scheme
- In 1925, a Mid Day Meal Programme was introduced for disadvantaged children in Madras Municipal Corporation.
- By the mid-1980s three States viz. Gujarat, Kerala and Tamil Nadu and the UT of Pondicherry had universalized a same scheme with their own resources for children studying at the primary stage.
- In 2001, the Supreme Court asked all state governments to begin this programme in their schools within 6 months.
Calorie approach
- Primary (1-5) and upper primary (6-8) schoolchildren are currently entitled to 100 grams and 150 grams of food grains per working day each.
- The calorific value of a mid-day meal at various stages has been fixed at a minimum:
| Calories Intake | Primary | Upper Primary |
| Energy | 450 calories | 700 calories |
| Protein | 12 grams | 20 grams |
Impact created by the Scheme
- The MDM Scheme has many potential benefits: attracting children from disadvantaged sections (especially girls, Dalits and Adivasis) to school, improving regularity, nutritional benefits, socialisation benefits and benefits to women are some that have been highlighted.
- Apart from nutrition, this scheme has been miraculous. Mothers who first used to interrupt their work to feed their children at home, now no longer need to do so.
Issues with the Scheme
- Discrimination: Caste-based discrimination continues to occur in the serving of food, though the government seems unwilling to acknowledge this.
- Leakages: The scheme has been subjected to leakages similar to the Public Distribution System.
- Unhealthy and unhygienic: There have been cases of eating pesticide-contaminated mid-day meals leading to food poisoning.
Try this PYQ:
Which of the following can be said to be essentially the parts of Inclusive Governance?
- Permitting the Non-Banking Financial Companies to do banking
- Establishing effective District Planning Committees in all the districts
- Increasing government spending on public health
- Strengthening the Mid-day Meal Scheme
Select the correct answer using the codes given below:
(a) 1 and 2 only
(b) 3 and 4 only
(c) 2, 3 and 4 only
(d) 1, 2, 3 and 4
Post your answers.
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Mandatory rice fortification policy should be re-examined
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Food fortification
Mains level: Paper 3- food fortification to deal with anaemia
Context
To deal with the high prevalence of anaemia, the government has been pursuing the policy of food fortification with iron. This policy needs a rethink.
Rice-fortification policy
- There are high levels of anaemia in India, affecting women and children equally.
- This is despite the corrective measures like mandatory supplementation of iron tablets through Anaemia Mukt Bharat programme of pharmaceutical iron supplementation.
- To deal with the issue, the government has decided on compulsory rice fortification in safety-net feeding programmes like the ICDS, PDS and school mid-day meals.
- This was announced by the Prime Minister in his recent Independence Day address to the nation.
- The mandatory rice fortification programme is being piloted in some districts already.
- Food fortification is considered attractive as it requires no behavioural modification by the beneficiary.
Why iron fortification policy needs re-examination?
1) Over-estimation of anaemia burden
- High WHO cutoff for Hg levels: WHO haemoglobin cut-offs are used to diagnose anaemia in India.
- There is a growing global consensus that these may be too high.
- A recent Lancet paper suggested a lower haemoglobin cut-off level to diagnose anaemia in Indian children.
- Using this will actually reduce the anaemia burden by two-thirds.
- Capillary Vs venous blood sample: Haemoglobin level can be falsely low when a capillary blood sample (taken by finger-prick) is used for measurement, instead of the more reliable venous blood sample (taken with a syringe from an arm vein). The anaemia burden in India is estimated from capillary blood, which inflates the anaemia burden substantially.
- If the recommended venous blood sample is used, it would halve this burden.
- There is, thus, a significant overestimation of anaemia burden.
2) Other nutrients and protein intake
- A MoHFW national survey (Comprehensive National Nutrition Survey) of Indian children showed that iron deficiency was related to less than half the anaemia cases.
- Many other nutrients and adequate protein intake are also important, for which a good diverse diet is required.
3) Iron requirement over-estimated
- The idea for iron fortification comes from the premise that a normal Indian diet cannot possibly meet an individual’s daily iron requirement.
- This is wrong thinking, and is based on older iron requirements (as per National Institute of Nutrition [NIN] 2010), which were much too high.
- The latest corrected iron requirements (NIN 2020) are 30-40 per cent lower.
- The iron density of the Indian vegetarian diet, about 9 mg/1000 kCal, can thus meet most requirements.
4) Challenges in rice fortification
- Rice fortification is very complex.
- It requires a fortified rice “kernel” or grain that is composed of rice flour paste, along with the required concentration of micronutrients and binders, extruded into a grain that exactly matches the shape of the rice it is intended to fortify.
- The problem lies in making “matching” kernels for each rice cultivar that is distributed in the food safety-net programmes from year to year and state to state.
- If it does not match, the instinct of a home cook will be to pick out and discard the odd grains, thereby defeating the purpose of fortification.
Risks involved
- Ingesting fortified salt (two teaspoons, 10 g/day) or rice (quarter kilo/day) will deliver an additional 10 mg iron/day each to the diet.
- When the iron intake exceeds 40 mg/day, the risk of toxicity goes up.
- The unabsorbed iron that remains in the gut can wreak havoc among the beneficial bacteria in the large intestine.
- Iron causes oxidative stress, and more seriously, is implicated in diabetes and cancer risk. Men will also be more at risk.
Way forward
- We just need to absorb the existing dietary iron better and complement this with all the other nutrients that are required, by eating a diverse diet (with fruits and vegetables, for example), and improving our environment.
- Indeed, it is well-known that the benefits derived from the nutrients in whole foods are greater than the sum of their parts.
Conclusion
We need to rethink our reductionist strategies if we are to deliver food and nutrition security to our people.
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One Nation One Ration Card (ONORC)
Note4Students
From UPSC perspective, the following things are important :
Prelims level: ONORC
Mains level: Benefits of ONORC for Migrants
The Supreme Court directed all states and UTs to implement the One Nation, One Ration Card (ONORC) system, which allows for inter-and intra-state portability, by July 31.
ONORC Scheme
- The ONORC scheme is aimed at enabling migrant workers and their family members to buy subsidized ration from any fair price shop anywhere in the country under the National Food Security Act, 2013.
- For instance, a migrant worker from will be able to access PDS benefits elsewhere in India, where he or she may have gone in search of work.
- While the person can buy food grains as per his or her entitlement under the NFSA at the place where he or she is based, members of his or her family can still go to their ration dealer back home.
- To promote this reform in the archaic Public Distribution System (PDS), the government has provided incentives to states.
How does ONORC work?
- ONORC is based on technology that involves details of beneficiaries’ ration card, Aadhaar number, and electronic Points of Sale (ePoS).
- The system identifies a beneficiary through biometric authentication on ePoS devices at fair price shops.
- The system runs with the support of two portals —Integrated Management of Public Distribution System (IM-PDS) (impds.nic.in) and Annavitran (annavitran.nic.in), which host all the relevant data.
- When a ration card holder goes to a fair price shop, he or she identifies himself or herself through biometric authentication on ePoS, which is matched real time with details on the Annavitaran portal.
- Once the ration card details are verified, the dealer hands out the beneficiary’s entitlements.
- While the Annavitaran portal maintains a record of intra-state transactions — inter-district and intra-district — the IM-PDS portal records the inter-state transactions.
How many people will it benefit?
- Under the National Food Security Act, 2013, about 81 crore people are entitled to buy subsidised foodgrains — rice at Rs 3/kg, wheat at Rs 2/kg, and coarse grains at Re 1/kg – from designated fair price shops.
- As on 28 June 2021, there are about 5.46 lakh fair price shops and 23.63 crore ration cardholders across the country.
- Each NFSA ration cardholder is assigned to a fair price shop near the place where his ration card is registered.
What factors led to the launch of ONORC?
- Earlier, NFSA beneficiaries were not able to access their PDS benefits outside the jurisdiction of the specific fair price shop to which they have been assigned.
- The government envisioned the ONORC to give them access to benefits from any fair price shop.
- The idea was to reform the PDS, which has been historically marred by inefficiency and leakages.
- ONORC was initially launched as an inter-state pilot.
- When the Covid-19 pandemic forced thousands of migrant workers to return to their villages last year, a need was felt to expedite the rollout.
What has been the coverage so far?
- Till date, 32 states and Union Territories have joined the ONORC, covering about 69 crore NFSA beneficiaries.
- About 1.35 crore portability transactions every month are being recorded under ONORC on an average.
- While inter-state ration card portability is available in 32 states, the number of such transactions is much lower than that of intra-district and inter-district transactions.
States not joining
- Four states are yet to join the scheme — Assam, Chhattisgarh, Delhi and West Bengal. There are various reasons.
- For instance, Delhi is yet to start the use of ePoS in fair price shops, which is a prerequisite for the implementation of ONORC.
- In the case of West Bengal, the state government has demanded that the non-NFSA ration cardholders — ration cards issued by the state government — should also be covered under the ONORC.
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What is Open Market Sale Scheme (OMSS)?
Note4Students
From UPSC perspective, the following things are important :
Prelims level: OMSS Scheme
Mains level: Schemes related to food security
The Centre has informed the Supreme Court regarding the purchase of grains by the States and the UTs under the Open Market Sales Scheme (OMSS) in 2021-2022 while debunking apprehensions that those without ration cards may be left to die.
Open Market Sale Scheme (OMSS)
- OMSS refers to the selling of food grains by the government/government agencies at predetermined prices in the open market from time to time.
- This scheme aims to enhance the supply of grains especially during the lean season and thereby to moderate the general open market prices, especially in the deficit regions.
- The Food Corporation of India (FCI) on the instructions from the Government, sells wheat and rice in the open market from time to time.
- This enhances the supply of wheat and rice especially during the lean season and moderates the open market prices, especially in the deficit regions.
Components of the scheme
The present form of OMSS comprises 3 schemes as under:
- Sale of wheat to bulk consumers/private traders through e-auction.
- Sale of wheat to bulk consumers/private traders through e-auction by dedicated movement.
- Sale of Raw Rice Grade ‘A’ to bulk consumers/private traders through e-auction.
Selling through a transparent process
- For transparency in operations, the Corporation has switched over to e-auction for sale under Open Market Sale Scheme (Domestic).
- The FCI conducts a weekly auction to conduct this scheme in the open market using the platform of commodity exchange NCDEX (National Commodity and Derivatives Exchange Limited).
- The State Governments/ Union Territory Administrations are also allowed to participate in the e-auction if they require wheat and rice outside TPDS & OWS.
Answer this PYQ in the comment box:
Q.The economic cost of food grains to the Food Corporation of India is Minimum Support Price and bonus (if any) paid to the farmers plus:
(a) Transportation cost only
(b) Interest cost only
(c) Procurement incidentals and distribution cost
(d) Procurement incidentals and charges for godowns
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[pib] 17 States implement One Nation One Ration Card System
Note4Students
From UPSC perspective, the following things are important :
Prelims level: ONORC
Mains level: Welfare of the migrant workers
Seventeen (17) States have successfully operationalised the “One Nation One Ration Card system” with Uttarakhand being the latest State to complete the reform.
Practice question for mains:
The ‘One nation one ration card ‘scheme would bring perceptible changes to the lives of India’s internal migrant workers. Comment.
One Nation One Ration Card
- This scheme aims to ensure all beneficiaries, especially migrants get ration (wheat, rice and other food grains) across the nation from any Public Distribution System (PDS) shop of their own choice.
- Under the existing system, a ration cardholder can buy food grains only from the fair price shop (FPS) in the locality where he or she lives.
- It was also launched with the purpose that no poor person should be deprived of getting subsidised food grains under the food security scheme when they shift from one place to another.
- It aims to reduce instances of corruption by middlemen and fraudulence in ration cards to avail benefits from different states.
Who is eligible under this scheme?
- Any citizen, who is declared under the Below Poverty Line (BPL) category, will be eligible to get the benefit of this scheme across the country.
- The beneficiaries will be identified on the basis of their Aadhar based identification through the electronic point of sale (PoS) device.
- All the PDS shops will have the facility of electronic PoS devices.
Impact on states
- The reform enables the States to better targeting of beneficiaries, elimination bogus/ duplicate/ineligible cardholders resulting in enhanced welfare and reduced leakage.
- An additional borrowing limit of 0.25 per cent of the Gross State Domestic Product (GSDP) is allowed to the States only on completion of both of the following actions:
- Aadhar Seeding of all the ration cards and beneficiaries in the State
- Automation of all the FPSs in the State.
Back2Basics: Public distribution system (PDS)
- The public distribution system (PDS) is an Indian food Security System established under the Ministry of Consumer Affairs, Food, and Public Distribution.
- PDS evolved as a system of management of scarcity through the distribution of food grains at affordable prices.
- PDS is operated under the joint responsibility of the Central and the State Governments.
- The Central Government, through the Food Corporation of India (FCI), has assumed the responsibility for procurement, storage, transportation and bulk allocation of food grains to the State Governments.
- The operational responsibilities including allocation within the State, identification of eligible families, issue of Ration Cards and supervision of the functioning of FPSs etc., rest with the State Governments.
- Under the PDS, presently the commodities namely wheat, rice, sugar and kerosene are being allocated to the States/UTs for distribution.
- Some states/UTs also distribute additional items of mass consumption through PDS outlets such as pulses, edible oils, iodized salt, spices, etc.
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A case for a revamped, need-based PDS
Note4Students
From UPSC perspective, the following things are important :
Prelims level: NFSA 2013
Mains level: Paper 3- Reforming the PDS
The article highlights the factors governing the food subsidy bill and suggests ways to reduce it.
Growing food subsidy bill
- The Economic Survey, tabled in Parliament in January, rightly flagged the issue of a growing food subsidy bill.
- During 2016-17 to 2019-20, the subsidy amount, clubbed with loans taken by the Food Corporation of India (FCI) under the National Small Savings Fund (NSSF) towards food subsidy, was in the range of ₹1.65-lakh crore to ₹2.2-lakh crore.
- In future, the annual subsidy bill of the Centre is expected to be about ₹2.5-lakh crore.
- During the three years, the quantity of food grains drawn by States (annually) hovered around 60 million tonnes to 66 million tonnes.
- The National Food Security Act (NFSA) 2013, covered two-thirds of the country’s population, this naturally pushed up the States’ drawal.
- Based on an improved version of the targeted Public Distribution System (PDS), the law requires the authorities to provide to each beneficiary 5 kg of rice or wheat per month.
How politics influenced the issue price
- Economic Survey has hinted at an increase in the Central Issue Price (CIP).
- Central Issue Price has remained at ₹2 per kg for wheat and ₹3 per kg for rice for years, though the NFSA, even in 2013, envisaged a price revision after three years.
- What makes the subject more complex is the variation in the retail issue prices of rice and wheat, from nil in States such as Karnataka and West Bengal for Priority Households (PHH) and Antyodaya Anna Yojana (AAY) ration card holders.
- In Tamil Nadu, rice is given free of cost for all categories; this includes non-PHH.
- A mere increase in the CIPs of rice and wheat without a corresponding rise in the issue prices by the State governments would only increase the burden of States.
- Political compulsions are perceived to be coming in the way of the Centre and the States increasing the prices.
Relook at food subsidy system
- An official committee in January 2015 called for decreasing the quantum of coverage under the law, from the present 67% to around 40%.
- For all ration cardholders drawing food grains, a “give-up” option, as done in the case of cooking gas cylinders, can be made available.
- Even though States have been allowed to frame criteria for the identification of PHH cardholders, the Centre can nudge states into pruning the number of such beneficiaries.
- As for the prices, the existing arrangement of flat rates should be replaced with a slab system.
- Barring the needy, other beneficiaries can be made to pay a little more for a higher quantum of food grains.
Consider the question “There is a pressing need for revamping the food subsidy system. In light of this, suggest the measures to improve the system.”
Conclusion
These measures, if properly implemented, can have a salutary effect on retail prices in the open market. A revamped, need-based PDS is required not just for cutting down the subsidy bill but also for reducing the scope for leakages. Political will should not be found wanting.
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NITI Aayog proposes revisions to National Food Security Act
Note4Students
From UPSC perspective, the following things are important :
Prelims level: NFS Act
Mains level: Assurance of Food Security
The NITI Aayog has recently proposed a revision in the National Food Security Act (NFSA), 2013 for lowering the coverage of both rural and urban population to save up to Rs 47,229 crore annually.
National Food Security (NFS) Act
- The NFS Act, 2013 aims to provide subsidized food grains to approximately two-thirds of India’s 1.2 billion people.
- It was signed into law on 12 September 2013, retroactive to 5 July 2013.
- It converts into legal entitlements for existing food security programmes of the GoI.
- It includes the Midday Meal Scheme, Integrated Child Development Services (ICDS) scheme and the Public Distribution System (PDS).
- Further, the NFSA 2013 recognizes maternity entitlements.
- The Midday Meal Scheme and the ICDS are universal in nature whereas the PDS will reach about two-thirds of the population (75% in rural areas and 50% in urban areas).
- Pregnant women, lactating mothers, and certain categories of children are eligible for daily free cereals.
Key provisions of NFSA
- The NFSA provides a legal right to persons belonging to “eligible households” to receive foodgrains at a subsidised price.
- It includes rice at Rs 3/kg, wheat at Rs 2/kg and coarse grain at Rs 1/kg — under the Targeted Public Distribution System (TPDS).
- These are called central issue prices (CIPs).
Try this PYQ:
Q.With reference to the provisions made under the National Food Security Act, 2013, consider the following statements:
- The families coming under the category of ‘below poverty line (BPL)’ only are eligible to receive subsidized food grains.
- The eldest woman in a household, of age 18 years or above, shall be the head of the Household for the purpose of issuance of a ration card.
- Pregnant women and lactating mothers are entitled to a ‘take-home ration’ of 1600 calories per day during pregnancy and for six months thereafter.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 2 only
(c) 1 and 3 only
(d) 3 only
What has NITI Aayog asked for review?
- A revision of CIPs is one of the issues that have been discussed.
- The other issues are updating of the population covered under the NFSA, and beneficiary identification criteria.
- Under sub-section (1) of Section 3 of the Act, the term “eligible households” comprises two categories — “priority households”, and families covered by the Antyodaya Anna Yojana (AAY).
- Priority households are entitled to receive 5 kg of foodgrains per person per month, whereas AAY households are entitled to 35 kg per month at the same prices.
Provisions for review
- Under Schedule-I of the Act, these subsidised prices were fixed for “a period of three years from the date of commencement of the Act”.
- While different states began implementing the Act at different dates, the deemed date of its coming into effect is July 5, 2013, and the three-year period was therefore completed on July 5, 2016.
- However, the government has yet not revised subsidised prices.
- The government can do so under Schedule-I of the Act, after completion of the three-year period.
- To revise the prices, the government can amend Schedule-I through a notification, a copy of which has to be laid before each House of Parliament as soon as possible after it is issued.
- The revised prices cannot exceed the minimum support price for wheat and coarse grains, and the derived minimum support price for rice.
The question of coverage
- The Act has prescribed the coverage under “eligible households” — 75% of the rural population and up to 50% of the urban population.
- On the basis of Census 2011 figures and the national rural and urban coverage ratios, 81.35 crore persons are covered under NFSA currently.
- This overall figure has been divided among the states and UTs, based on the NSSO Household Consumer Expenditure Survey 2011-12.
- Section 9 of the Act deals with an update of coverage of the population under the Act.
- However, given the population increase since then, there have been demands from the states and union territories to update the list by ensuring an annual updating system under NFSA.
Propositions by NITI Aayog
- The NITI Aayog has suggested that the national rural and urban coverage ratio be reduced from the existing 75-50 to 60-40.
- If this reduction happens, the number of beneficiaries under the NFSA will drop to 71.62 crores (on the basis of the projected population in 2020).
- To make these changes in the law, the government will have to amend sub-section (2) of Section 3 of the NFSA. For this, it will require parliamentary approval.
Implications of the move
- If the national coverage ratio is revised downward, the Centre can save up to Rs 47,229 crore (as estimated by the NITI Aayog paper).
- On the other hand, if the rural-urban coverage ratio remains at 75-50, then the total number of people covered will increase from the existing 81.35 crores to 89.52 crore —an increase of 8.17 crore.
- This estimate by the NITI Aayog is based on the projected 2020 population, and, according to the paper, will result in an additional subsidy requirement of Rs 14,800 crore.
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Budget’s big worry: the food subsidy
Note4Students
From UPSC perspective, the following things are important :
Prelims level: National Food Security Act
Mains level: Paper 3- Problem of food subsidy and excess grain stocks
The article highlights the challenge of managing the procurement of wheat and rice at MSP by the FCI and maintaining its financial health.
The problem of surplus in wheat and rice procurement
- While MSP is declared for 23 crops, the biggest financial burden comes from wheat and rice.
- Procurement has increased significantly with states like MP, Chhattisgarh, Telangana and Odisha stepping up their efforts.
- Overall procurement of rice and wheat has gone up to 52 million tonnes and 39 million tonnes, respectively.
- The requirement of PDS and welfare schemes is about 60 million tonnes.
- This leaves a surplus of about 30 million tonnes, in addition to the carry-over stock of about 42 million tonnes (current)—far above the buffer and strategic reserve norms.
Cost of the surplus and its significance
- The subsidy burden for rice and wheat (2020-21) is estimated to be Rs 1.8 lakh crore.
- FCI procures wheat and rice at MSP (some states do so under the decentralised procurement & distribution scheme).
- They incur costs like market fees, labour charges, packing costs, transport, storage charges, etc.
- These are of the order of 9% for procurement, 9-11% for labour and transport, and 15-17% for distribution.
- The sale price is fixed at Rs 2 and Rs 3 per kg for wheat and rice, respectively, under the National Food Security Act.
- In addition, there are releases under LEAN (lower entitlements and higher costs compared to NFSA cards, but subsidised nonetheless) and Open Market Sales (OMSS).
- Cost of holding the buffer for a year is about Rs 5,500 per tonne.
- FCI is holding 39 million tonnes of rice and 55 million tonnes of wheat (July 2020) against the buffer/strategic reserve norm of 13.5 million tonnes of rice and 27.6 million tonnes of wheat, i.e., a surplus of 52 million tonnes.
- The cost of holding this stock works out to Rs 29,000 crore per year.
Financial burden on FCI
- The finance ministry has not been able to allocate adequate funds to meet the full requirement of food subsidy.
- Under-provisioning on this account has been going on, and FCI was being given loans at 8% interest from the National Savings Scheme Fund (NSSF) since 2016-17.
- The outstanding loan on this account (October 31, 2020) is Rs 2,93,000 crore.
- This has meant FCI getting zero budgetary support against current subsidy claims since 2017, thereby, postponing the problem year after year.
- The subsidy burden is rising (with MSP increasing every year, quantities going up and prices under PDS fixed), and is likely to cross Rs 2 lakh crore.
Conclusion
Government need to bring in the reforms in the PDS and MSP regime to stop both the systems from collapsing under their own weights.
Source:-
https://www.financialexpress.com/opinion/union-budget-2021-22-the-burgeoning-food-subsidy-bill-will-be-a-key-budget-worry/2155584/
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2025 nutrition targets call for a multi-dimensional focus
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Nutrition safety
The article highlights the issue of nutrition and suggest the ways to achieve nutrition security in the country to drive sustainable growth for India.
Nutrition in India
- A recent United Nations report- The State of Food Security and Nutrition in the World, 2020 highlighted that there are 189.2 million undernourished people in India.
- Even though this number has declined by 60 million over the past decade, the progress is far too slow.
- While we recorded a drop in undernourishment, obesity amongst Indian adults grew from 25.2 million in 2012 to 34.3 million in 2016.
- India is likely to miss the 2025 global nutrition targets according to the Global Nutrition Report 2020, unless more is done, soon.
Impact of POSHAN Abhiyan
- With the launch of POSHAN Abhiyan in 2018, the government mainstreamed nutrition, with this multi-ministerial and multi-sectoral approach.
- It converges all existing programs to improve the nutritional status of pregnant women, mothers and children.
- It brings together several programs such as National Rural Health Mission, Mid-Day meals, Integrated Child Development Scheme, Sarva Shiksha Abhiyan, and others to improve nutrition intake in India.
- The success lies in following an outcome based approach to ensure all the benefits under these interventions are delivered to mothers and children within the first 1000 days, setting the base for healthier lives.
Micronutrients through food fortification
- Food fortification is another effective way to deliver micronutrients to Indian masses, through existing food delivery systems such as mid-day meals and the public distribution system.
- Regulators have already been promoting fortification in food products like salt, edible oil, milk, rice and wheat flour to improve nutritional content.
- Going forward, we will see more and more food products and crops getting covered.
Need for innovation
- It is crucial for the food and beverage industry to make nutrition an integral part of their strategy.
- Healthier ingredients, fortification, reformulation to reduce saturated and trans-fat content and optimize sugar and sodium content, immunity boosting product is already commonplace across urban markets.
- This will soon permeate to rural markets.
- Factors such as product taste, convenience, shelf life, and price – all of which determine consumption – are also important elements that ensure higher intake of nutritious products by consumers everywhere.
- This calls for more innovation. Innovation in product, pricing, technology, digitalization, and research and development by food companies.
Rising nutrition awareness
- Solving the problem of malnourishment has to start with awareness.
- In rural areas, general nutritional awareness has historically been lower.
- In urban areas even though people are generally more aware a large percentage still consumes excess sugar and salt, leads sedentary lifestyles coupled with lack of exercise, resulting in lifestyle diseases like diabetes, obesity, high blood pressure
- Consumers everywhere need to be better educated about nutritional benefits of common food items and the importance of including them in regular diet.
- This can be done effectively through government led awareness campaigns and healthy public food distribution initiatives, industry acting responsibly.
Conclusion
Good nutrition is the best investment we can make in human capital. It has the power to drive sustainable economic growth for India.
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State coverage ratios under NFSA
Note4Students
From UPSC perspective, the following things are important :
Prelims level: NFS Act
Mains level: Assurance of Food Security
The government has initiated the process of ascertaining the new State/UT-specific coverage ratios for rural and urban areas under the National Food Security Act, 2013 (NFSA).
Try this question:
Q.In the ongoing crisis, maintaining the level of food security has become one of the most essential needs. In light of the above statement, critically examine the priority areas for maintaining food security in the country. Suggest measures to make accessibility and availability of food easier for all. (250W)
National Food Security (NFS) Act
- The NFS Act, 2013 aims to provide subsidized food grains to approximately two-thirds of India’s 1.2 billion people.
- It was signed into law on 12 September 2013, retroactive to 5 July 2013.
- It converts into legal entitlements for existing food security programmes of the GoI.
- It includes the Midday Meal Scheme, Integrated Child Development Services (ICDS) scheme and the Public Distribution System (PDS).
- Further, the NFSA 2013 recognizes maternity entitlements.
- The Midday Meal Scheme and the ICDS are universal in nature whereas the PDS will reach about two-thirds of the population (75% in rural areas and 50% in urban areas).
- Under the provisions of the bill, beneficiaries of the PDS are entitled to 5 kilograms per person per month of cereals at the following prices:
- Rice at ₹3 per kg
- Wheat at ₹2 per kg
- Coarse grains (millet) at ₹1 per kg.
- Pregnant women, lactating mothers, and certain categories of children are eligible for daily free cereals.
Why such a move?
- At present, NFSA covers up to 75 per cent of the rural population and 50 per cent of the urban population in the country.
- Based on this, state-wise coverage under NFSA was determined by the erstwhile Planning Commission—now NITI Aayog.
- It was done by using the National Sample Survey Household Consumption Expenditure Survey data for 2011-12.
- Since then, the state-wise coverage ratio has not been revised.
Statewise data
- Currently, Manipur has the highest coverage in rural areas across the country (88.56 per cent), while Andaman & Nicobar Islands has the lowest (24.94 per cent).
- Manipur is followed by Jharkhand (86.48 per cent), Bihar (85.12 per cent) and Chhattisgarh (84.25 per cent).
- In urban areas too, Manipur has the maximum coverage ratio (85.75 per cent), while Andaman & Nicobar Islands has the lowest (1.70 per cent).
- In urban areas, Manipur is followed by Bihar (74.53 per cent), Uttar Pradesh (64.43 per cent) and Madhya Pradesh (62.61 per cent).
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Redefining essential items: why it was needed, and who it will impact
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Essential Commodities
Mains level: Essential Commodities (Amendment) Bill, 2020
Recently, the Rajya Sabha passed the Essential Commodities (Amendment) Bill, 2020 which is aimed at deregulating commodities such as cereals, pulses, oilseeds, edible oils, onion and potatoes.
Try this question:
What are the salient features of Essential Commodities (Amendment) Bill, 2020?
Essential Commodities (Amendment) Bill, 2020
- It amends the Essential Commodities Act, 1955, by introducing a new Subsection 1(A) in Section 3.
- After the amendment, the supply of certain foodstuffs — including cereals, pulses, oilseeds, edible oils, potato — can be regulated only under extraordinary circumstances, which include an extraordinary price rise, war, famine, and natural calamity of a severe nature.
- In effect, the amendment takes these items out from the purview of Section 3(1), which gives powers to the central government to “control production, supply, distribution, etc, of essential commodities”.
- Earlier, these commodities were not mentioned under Section 3(1) and reasons for invoking the section were not specified.
How is an ‘essential commodity’ defined?
- There is no specific definition of essential commodities in the Essential Commodities Act, 1955. Section 2(A) states that an “essential commodity” means a commodity specified in the Schedule of the Act.
- The Act gives powers to the central government to add or remove a commodity in the Schedule.
- The Centre, if it is satisfied that it is necessary to do so in the public interest, can notify an item as essential, in consultation with state governments.
Which are those commodities?
- According to the Ministry of Consumer Affairs, Food and Public Distribution, which implements the Act, the Schedule at present contain seven commodities.
- They are drugs; fertilizers, whether inorganic, organic or mixed; foodstuffs including edible oils; hank yarn made wholly from cotton; petroleum and petroleum products; raw jute and jute textiles; seeds of food-crops and seeds of fruits and vegetables, seeds of cattle fodder, jute seed, cottonseed.
- By declaring a commodity as essential, the government can control the production, supply, and distribution of that commodity, and impose a stock limit.
Under what circumstances can the government impose stock limits?
- While the 1955 Act did not provide a clear framework to impose stock limits, the amended Act provides for a price trigger.
- It says that agricultural foodstuffs can only be regulated under extraordinary circumstances such as war, famine, extraordinary price rise, and natural calamity.
- However, any action on imposing stock limits will be based on the price trigger.
- Thus, in case of horticultural produce, a 100% increase in the retail price of a commodity over the immediately preceding 12 months or over the average retail price of the last five years, whichever is lower, will be the trigger for invoking the stock limit.
- For non-perishable agricultural foodstuffs, the price trigger will be a 50% increase in the retail price of the commodity over the immediately preceding 12 months or over the average retail price of the last five years, whichever is lower.
Why was the need for this felt?
- The 1955 Act was legislated at a time when the country was facing a scarcity of foodstuffs due to persistently low levels of foodgrains production.
- The country was dependent on imports and assistance (such as wheat import from the US under PL-480) to feed the population.
- To prevent hoarding and black marketing of foodstuffs, the Essential Commodities Act was enacted in 1955. But now the situation has changed.
- The production of wheat has increased 10 times while the production of rice has increased more than four times since five decades.
- The production of pulses has increased 2.5 times, from 10 million tonnes to 25 million tonnes. In fact, India has now become an exporter of several agricultural products.
What will be the impact of the amendments?
- The key changes seek to free agricultural markets from the limitations imposed by permits and mandis that were originally designed for an era of scarcity.
- The move is expected to attract private investment in the value chain of commodities removed from the list of essentials, such as cereals, pulses, oilseeds, edible oils, onions and potatoes.
- While the purpose of the Act was originally to check illegal trade practices such as hoarding, it has now become a hurdle for investment in the agriculture sector in general, and in post-harvesting activities in particular.
- The private sector had so far hesitated about investing in cold chains and storage facilities for perishable items as most of these commodities were under the ambit of the EC Act.
- The amendment seeks to address such concerns.
Why is it being opposed?
- This was one of the three ordinances/Bills that have seen protests from farmers in parts of the country.
- The Opposition says the amendment will hurt farmers and consumers, and will only benefit hoarders.
- They say the price triggers envisioned in the Bill are unrealistic — so high that they will hardly ever be invoked.
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[pib] National Food Security Act, 2013
Note4Students
From UPSC perspective, the following things are important :
Prelims level: NFS Act
Mains level: Assurance of Food Security
The Department of Food &Public Distribution has issued directions to States/UTs to include all eligible disabled persons under the National Food Security (NFS) Act 2013.
Try this question:
Q.In the ongoing crisis, maintaining the level of food security has become one of the most essential needs. In light of the above statement, critically examine the priority areas for maintaining food security in the country. Suggest measures to make accessibility and availability of food easier for all.
National Food Security (NFS) Act
- The NFS Act, 2013 aims to provide subsidized food grains to approximately two-thirds of India’s 1.2 billion people.
- It was signed into law on 12 September 2013, retroactive to 5 July 2013.
- It converts into legal entitlements for existing food security programmes of the GoI.
- It includes the Midday Meal Scheme, Integrated Child Development Services (ICDS) scheme and the Public Distribution System (PDS).
- Further, the NFSA 2013 recognizes maternity entitlements.
- The Midday Meal Scheme and the ICDS are universal in nature whereas the PDS will reach about two-thirds of the population (75% in rural areas and 50% in urban areas).
- Under the provisions of the bill, beneficiaries of the PDS are entitled to 5 kilograms per person per month of cereals at the following prices:
- Rice at ₹3 per kg
- Wheat at ₹2 per kg
- Coarse grains (millet) at ₹1 per kg.
- Pregnant women, lactating mothers, and certain categories of children are eligible for daily free cereals.
Implementation
- Section 38 of the Act mandates that the Central Government may from time to time give directions to the State Governments for effective implementation of the provisions of the Act.
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Nutrition security along with food security
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Food security and healthy diet
- The “State of Food Security and Nutrition in the World” was recently released.
About the report
- It is published by the UN Food and Agriculture Organization (FAO) and other UN agencies including the WHO.
- The report estimated that 820 million people worldwide did not have enough to eat in 2018, up from 811 million in the previous year.
- At the same time, the number of overweight individuals and obesity continue to increase in all regions.
Highlights of the report
- The number of people going hungry has risen for the third year running to more than 820 million. After decades of decline, food insecurity began to increase in 2015.
- Africa and Asia account for more than nine out of ten of the world’s stunted children, at 39.5% and 54.9% respectively.
- However at the same time, obesity and excess weight are both on the rise in all regions, with school-age children and adults affected particularly.
India scenario
- The number of obese adults in India has risen by a fourth in four years, from 24.1 million in 2012 to 32.8 million in 2016.
- While India’s undernourished population has dropped by roughly the same fraction in 12 years, from 253.9 million in 2004-06 to 194.4 million in 2016-18.
Compared with China
- The report has a section on economic growth in China and India, and its effect on poverty.
- Between 1990 and 2017, the two countries had an average GDP per capita growth rate of 8.6 per cent and 4.5 per cent respectively, the report said, citing World Bank.
- In both countries, the increase in GDP per capita has been accompanied by poverty reduction.
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Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.
Issue of Food subsidy in India
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Public Account
Mains level: Paper 3- PDS and FCI related issues
Solutions to Problems in Food Subsidy Delivery
The following solutions will help in addressing problems associated with PDS.
- Replacing Targeted Public Distribution System (TPDS) with Direct Benefit Transfer (DBT) of food subsidy. National Food Security Act (NFSA) states that the centre and states should introduce schemes for cash transfers to beneficiaries.Cash transfers seek to increase the choices available with a beneficiary, and provide financial assistance. It has been argued that the costs of DBT may be lesser than TPDS, owing to lesser costs incurred on transport and storage. These transfers may also be undertaken electronically. As per a report given by a high level committee of Food Corporation of India, DBT would reduce Government subsidy bills by more than Rs 30,000 crores.
- Automation at the Fair Price Shops is another important step taken to address the problem in PDS. Currently more than 4.3 lakh (82%) Fair Price Shops have been automated across the country. Automation involves installation of Point of Sale (PoS) devices, for authentication of beneficiaries and electronic capturing of transactions.
- Aadhar and introduction of Biometrics was recommended to plug leakages in PDS. Such transfers could be linked to Jan Dhan accounts, and be indexed to inflation. It facilitates the removal of bogus ration cards, check leakages and ensure better delivery of food grains. In February 2017, the Ministry made it mandatory for beneficiaries under NFSA to use Aadhaar as proof of identification for receiving food grains.
- 100% ration cards had been digitised.
- Between 2016 and 2018, seeding of Aadhaar helped in detection of 1.5 crore fake, duplicate and bogus ration cards and these cards were deleted.
- Increase the procurement undertaken by states known as Decentralised Procurement (DCP), and reduce the expenditure on centralised procurement by the Food Corporation of India (FCI). This would drastically reduce the transportation cost borne by the government as states would distribute the food grains to the targeted population within their respective states. As of December 2019,17 states have adopted decentralised procurement.
- The Fair Price shops operate at very low margins as per findings of the Government. Hence the fair price shops should be allowed to sell even non-PDS items and make it economically viable. This will motivate them to not to resort to unfair practices in the distribution of Government subsidized food grains meant for beneficiaries of Government schemes.
- A greater and more active involvement of the panchayats in the PDS can significantly improve access at the village level.
- There is also an urgent need to set up a proper and effective grievances redressal system for both the fair price shops as well as beneficiaries
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Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.
[pib] Pradhan Mantri Garib Kalyan Anna Yojana
Note4Students
From UPSC perspective, the following things are important :
Prelims level: PMGKAY
Mains level: Assurance of Food Security
The Union Cabinet has approved the extension of Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) as part of Economic Response to COVID-19, for another five months from July to November 2020.
Practice question for mains:
Q.Discuss how the Pradhan Mantri Garib Kalyan Anna Yojana has helped to ensure food security to the vulnerable sections of India during the Covid-19 induced lockdown period.
PM- Garib Kalyan Anna Yojana
- Under the scheme it is proposed to distribute 9.7 Lakh MT cleaned whole Chana to States/UTs for distribution to all beneficiary households under the National Food Security Act, 2013 (NFSA).
- Thus it would 1kg per month free of cost under for the next five months -July to November 2020.
- All expenses on the extended PMGKAY are to be borne by the Central Government.
- About 19.4 crore households would be covered under the Scheme.
Benefits of the scheme
- Extension of the scheme is in line with the commitments of the GOI to allow anybody, especially any poor family, to suffer on account of non-availability of food grains due to disruption during next five months.
- Free distribution of whole Chana will also ensure adequate availability of protein to all the above-mentioned individuals during these five months.
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Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.
Universalising the PDS
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- PDS and related issues
- The Public distribution system (PDS) is an Indian food Security Systemestablished under the Ministry of Consumer Affairs, Food, and Public Distribution.
- PDS evolved as a system of management of scarcity through distribution of food grains at affordable prices.
- PDS is operated under the joint responsibility of the Central and the State Governments.
- The Central Government, through Food Corporation of India (FCI), has assumed the responsibility for procurement, storage, transportation and bulk allocation of food grains to the State Governments.
- The operational responsibilities including allocation within the State, identification of eligible families, issue of Ration Cards and supervision of the functioning of Fair Price Shops (FPSs) etc., rest with the State Governments.
- Under the PDS, presently the commodities namely wheat, rice, sugar and keroseneare being allocated to the States/UTs for distribution. Some States/UTs also distribute additional items of mass consumption through the PDS outlets such as pulses, edible oils, iodized salt, spices, etc.
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Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.
Applying the lessons learned from GST to One Nation One Ration Card (ON-ORC)
Note4Students
From UPSC perspective, the following things are important :
Prelims level: GSTN
Mains level: Paper 3- Challenges ON-ORC could face and how the GST could offer valuable lesson for ON-ORC
Never before we felt the necessity of portable benefit schemes as we did in the wake of the pandemic. Portable ration card could have mitigated the suffering of migrant workers to some extent. But it was not to be. This article examines the challenges in implementing the idea of ON-ORC and offers the solution to these challenges by drawing on the lessons learned from GST. At the same time, the shortcoming of GST can also be avoided in the ON-ORC.
What is One Ration Card (ON-ORC)?
- In the present system, a ration cardholder can buy foodgrains only from an Fair Price Shop that has been assigned to her in the locality in which she lives.
- However, this will change once the ONORC system becomes operational nationally.
- Under the ONORC system, the beneficiary will be able to buy subsidised foodgrains from any FPS across the country.
- The new system, based on a technological solution, will identify a beneficiary through biometric authentication on electronic Point of Sale (ePoS) devices installed at the FPSs.
- This would enable that person to purchase the number of foodgrains to which she is entitled under the NFSA.
Portable welfare benefit and attempts so far to achieve it
- The idea of portable welfare benefits means a citizen should be able to access welfare benefits irrespective of where she is in the country.
- In the case of food rations, the idea was first mooted under the UPA government by a Nandan Nilekani-led task force in 2011.
- The current government had committed to a national rollout of One Nation, One Ration Card (ON-ORC) by June 2020, and had initiated pilots in 12 states.
Progress on intra-state and inter-state portability
- While intra-state portability of benefits has seen good initial uptake, inter-state portability has lagged.
- The finance minister has now announced the deadline of March 2021 to roll out ON-ORC.
So, to ensure a smooth rollout, let’s review the challenges thus far
1) The fiscal implications:
- ON-ORC will affect how the financial burden is shared between states.
2) The larger issues of federalism and inter-state coordination:
- Many states are not convinced about a “one size fits all” regime because i) they have customised the PDS through higher subsidies, ii) higher entitlement limits, and iii) supply of additional items.
3) The technology aspect:
- ON-ORC requires a complex technology backbone that brings over 750 million beneficiaries, 5,33,000 ration shops and 54 million tonnes of food-grain annually on a single platform.
How the lessons learned from GST can be applied to deal with the above 3 challenges?
1. Fiscal challenge
- Just like with ON-ORC, fiscal concerns had troubled GST from the start.
- States like Tamil Nadu and Gujarat that are “net exporters” were concerned they would lose out on tax revenues to “net consumer” states like UP and Bihar.
- Finally, the Centre had to step in and provide guaranteed compensation for lost tax revenues for the first five years.
- The Centre could provide a similar assurance to “net inbound migration” states such as Maharashtra and Kerala that any additional costs on account of migrants will be covered by it for the five years.
2. We could have a National council for ON-ORC
- GST also saw similar challenges with broader issues of inter-state coordination.
- In a noteworthy example of cooperative federalism, the central government created a GST council consisting of the finance ministers of the central and state governments to address these issues.
- The government could consider a similar national council for ON-ORC.
- To be effective, this council should meet regularly, have specific decision-making authority, and should operate in a problem-solving mode based on consensus building.
3. Technological aspect: PDS Network
- GST is supported by a sophisticated tech backbone, housed by the GST Network (GSTN), an entity jointly owned by the Centre and states.
- A similar system would be needed for ON-ORC.
- The Nilekani-led task force recommended setting up of a PDS network (PDSN).
- PDSN would track the movement of rations, register beneficiaries, issue ration cards, handle grievances and generate analytics.
- Since food rations are a crucial lifeline for millions, such a platform should incorporate principles such as inclusion, privacy, security, transparency, and accountability.
- The IM-PDS portal provides a good starting point.
Also, there are certain shortcomings in GST which we could avoid in ON-ORC
We should learn from the shortcomings and challenges of the GST rollout. For example:
1) Delay in GST refunds led to cash-flow issues.
- Similar delays in receiving food rations could be catastrophic.
- Therefore, ON-ORC should create, publish and adhere to time-bound processes.
- The time-bound processes could be in the form of right to public services legislation that have been adopted by 15 states, and rapid grievance redress mechanisms.
2) Increase in compliance burden for MSMEs, especially for those who had to digitise overnight.
- Similar challenges could arise in ON-ORC.
- PDS dealers will need to be brought on board, and not assumed to be compliant.
- Citizens will need to be shielded from the inevitable teething issues by keeping the system lenient at first.
- This can be done by providing different ways of authenticating oneself and publicising a helpline widely.
Consider the question “One Nation-One Ration Card(ON-ORC) could solve many problems faced by the beneficiaries when they move across the country. Examine the challenges the ON-ORC could face. Suggest ways to deal with these challenges.”
Conclusion
If done well, ON-ORC could lay the foundation of a truly national and portable benefits system that includes other welfare programmes like LPG subsidy and social pensions. It is an opportunity to provide a reliable social protection backbone to migrants, who are the backbone of our economy.
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Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.
Private: In news: Public Distribution System
Given the lockdown due to COVID crisis, Many experts are proposing that On the PDS front, we need to move towards cash transfers that can be withdrawn from anywhere in the country.
What is PDS?
- The Public distribution system (PDS) is an Indian food Security System established under the Ministry of Consumer Affairs, Food, and Public Distribution.
- PDS evolved as a system of management of scarcity through distribution of food grains at affordable prices.
- PDS is operated under the joint responsibility of the Central and the State Governments.
- The Central Government, through Food Corporation of India (FCI), has assumed the responsibility for procurement, storage, transportation and bulk allocation of food grains to the State Governments.
- The operational responsibilities including allocation within the State, identification of eligible families, issue of Ration Cards and supervision of the functioning of Fair Price Shops (FPSs) etc., rest with the State Governments.
- Under the PDS, presently the commodities namely wheat, rice, sugar and kerosene are being allocated to the States/UTs for distribution. Some States/UTs also distribute additional items of mass consumption through the PDS outlets such as pulses, edible oils, iodized salt, spices, etc.
Evolution of PDS in India
- PDS was introduced around World War II as a war-time rationing measure. Before the 1960s, distribution through PDS was generally dependant on imports of food grains.
- It was expanded in the 1960s as a response to the food shortages of the time; subsequently, the government set up the Agriculture Prices Commission and the FCIto improve domestic procurement and storage of food grains for PDS.
- By the 1970s, PDS had evolved into a universal scheme for the distribution of subsidised food
- Till 1992, PDS was a general entitlement scheme for all consumers without any specific target.
- The Revamped Public Distribution System (RPDS) was launched in June, 1992 with a view to strengthen and streamline the PDS as well as to improve its reach in the far-flung, hilly, remote and inaccessible areas where a substantial section of the underprivileged classes lives.
- In June, 1997, the Government of India launched the Targeted Public Distribution System (TPDS) with a focus on the poor.
- Under TPDS, beneficiaries were divided into two categories: Households below the poverty line or BPL; and Households above the poverty line or APL.
- Antyodaya Anna Yojana (AAY): AAY was a step in the direction of making TPDS aim at reducing hunger among the poorest segments of the BPL population.
- A National Sample Survey exercise pointed towards the fact that about 5% of the total population in the country sleeps without two square meals a day. In order to make TPDS more focused and targeted towards this category of population, the “Antyodaya Anna Yojana” (AAY) was launched in December, 2000 for one crore poorest of the poor families.
- In September 2013, Parliament enacted the National Food Security Act, 2013. The Act relies largely on the existing TPDS to deliver food grains as legal entitlements to poor households. This marks a shift by making the right to food a justiciable right.
How does the PDS system function?
- The Central and State Governments share responsibilities in order to provide food grains to the identified beneficiaries.
- The centre procures food grains from farmers at a minimum support price (MSP)and sells it to states at central issue prices. It is responsible for transporting the grains to godowns in each state.
- States bear the responsibility of transporting food grains from these godowns to each fair price shop (ration shop), where the beneficiary buys the food grains at the lower central issue price. Many states further subsidise the price of food grains before selling it to beneficiaries.
Importance of PDS
- It helps in ensuring Food and Nutritional Security of the nation.
- It has helped in stabilising food prices and making food available to the poor at affordable prices.
- It maintains the buffer stock of food grains in the warehouse so that the flow of food remains active even during the period of less agricultural food production.
- It has helped in the redistribution of grains by supplying food from surplus regions of the country to deficient regions.
- The system of minimum support price and procurement has contributed to the increase in food grain production.
Issues Associated with PDS System in India
- Identification of beneficiaries: Studies have shown that targeting mechanisms such as TPDS are prone to large inclusion and exclusion errors. This implies that entitled beneficiaries are not getting food grains while those that are ineligible are getting undue benefits.
- According to the estimation of an expert group set up in 2009, PDS suffers from nearly 61% error of exclusion and 25% inclusion of beneficiaries, i.e. the misclassification of the poor as non-poor and vice versa.
- Leakage of food grains: (Transportation leakages + Black Marketing by FPS owners) TPDS suffers from large leakages of food grains during transportation to and from ration shops into the open market. In an evaluation of TPDS, the erstwhile Planning Commission found 36% leakage of PDS rice and wheat at the all-India level.
- Issue with procurement: Open-ended Procurement i.e., all incoming grains accepted even if buffer stock is filled, creates a shortage in the open market.
- Issues with storage: A performance audit by the CAG has revealed a serious shortfall in the government’s storage capacity.
- Given the increasing procurement and incidents of rotting food grains, the lack of adequate covered storage is bound to be a cause for concern.
- The provision of minimum support price (MSP) has encouraged farmers to divert land from production of coarse grains that are consumed by the poor, to rice and wheat and thus, discourages crop diversification.
- Environmental issues: The over-emphasis on attaining self-sufficiency and a surplus in food grains, which are water-intensive, has been found to be environmentally unsustainable.
- Procuring states such as Punjab and Haryana are under environmental stress, including rapid groundwater depletion, deteriorating soil and water conditions from overuse of fertilisers.
- It was found that due to the cultivation of rice in north-west India, the water table went down by 33 cm per year during 2002-08.
PDS Reforms
- Role of Aadhar: Integrating Aadhar with TPDS will help in better identification of beneficiaries and address the problem of inclusion and exclusion errors. According to a study by the Unique Identification Authority of India, using Aadhaar with TPDS would help eliminate duplicate and ghost (fake) beneficiaries, and make identification of beneficiaries more accurate.
- Technology-based reforms of TPDS implemented by states: Wadhwa Committee, appointed by the Supreme court, found that certain states had implemented computerisation and other technology-based reforms to TPDS. Technology-based reforms helped plug leakages of food grains during TPDS.
- Tamil Nadu implements a universal PDS, such that every household is entitled to subsidised food grains.
- States such as Chhattisgarh and Madhya Pradesh have implemented IT measures to streamline TPDS, through the digitisation of ration cards, the use of GPS tracking of delivery, and the use of SMS based monitoring by citizens.
PDS VS Cash Transfer
- National Food Security Act,2013 provides for reforms in the TPDS including schemes such as Cash transfers for provisioning of food entitlements.
Arguments in Favor of substituting PDS grain transfers with cash?
1.PDS Prone to corruption and leakage: Proponents of substituting PDS grain transfers with cash argue that PDS is an inefficient mode of transfer of subsidies, prone to enormous leakages into the black market and high waste in costs of transferring subsidies in the form of food transfers. They argue that replacing food with direct cash transfers would greatly reduce corruption and leakages.
2.Better targeting: It would enable the poor to access goods currently denied them by a PDS beset by corruption.
3.More Choice for consumers: It would enable people to buy better quality food of their choice from the open market and not be restricted to items sold in the PDS, which are often inferior in quality and limited in range.
4.Will Reduce wastage: Providing subsidies directly to the poor, it is further argued, would both bypass brokers as well as reduce the waste and holding costs of storing grains in government silos. The amount of grain actually required for India’s buffer stock needs could be held in better-quality warehouses, eliminating waste and rotting.
5.Will reduce the fiscal deficit: Cash transfers would help reduce the fiscal deficit by curbing expenditures earmarked for the PDS that is siphoned off through corruption, as well as avoiding substantially higher costs of transferring food rather than cash.
Arguments against substituting PDS grain transfers with cash?
- Not leakage proof: it is problematic to assume that cash transfers would in themselves bring about drastic reductions in corruption and leakages in welfare programmes, as there is nothing intrinsic to cash transfers which renders them less vulnerable to leakages.
- Irregularities are empirically found to be high in existing cash transfer programmes. Cash transfers of old-age pensions are at least as notorious for corruption and leakages as the PDS.
- PDS performing better: Studies confirm that many states have been able to reform PDS and significantly reduce leakages, as much as some states have reformed pension transfers.
- Clearly, the difference between the corruption or probity of delivery of welfare programmes is not dependent on whether cash or food is delivered, but on political and administrative will and capacities, and public vigilance and organization.
- Misuse of Cash: It is also possible for people to spend cash transfers not on more nutritious food, as proponents suggest, but instead on non-food items, which would decrease the amount of household money left for buying food.
- There are significant gender differences of choice here.
- Research confirms that culturally decisions relating to cash in households tend to be made by men, who may or may not spend the money on food.
- Decisions relating to food are made by women in almost all cultures, and therefore food rather than cash in a household is more likely to end up as food in a child’s stomach.
- Weak Banking Infrastructure: There are also worries about how genuinely inclusive of people in remote rural regions is India’s banking system.
- Fair price shops exist in three of every four villages, and are therefore generally accessible.
- According to one survey, the average distance to the nearest bank branch is between 6.5km to 10km.
- Distances would be much longer in remote regions, entailing high additional costs of transport and time.
- PDS a shield against Inflation: Another advantage of PDS over cash transfers from the perspective of the poor is that PDS supplies rations at a constant price, irrespective of the fluctuations in market prices. This therefore provides a shield against inflation, a benefit that cash transfers cannot match.
- PDS ensures stable income for Farmers: it is a mistake to view PDS only as a means to transfer subsidies to poor households.
- PDS costs need to be measured against its other goals as well. PDS requires the government to procure food from farmers.
- The government builds up stocks of grains which are also useful for price stabilization. Indeed, the guarantee of minimum support price purchase by the government for wheat and rice is the most important instrument for the protection of farmers’ income in India, and this would become infeasible if the government could not offload a lot of this grain back through the PDS.
- Cash Transfer leading to exclusion: In areas where pilot programmes has been launched There were issues in transfers, as results show as high as 50 per cent of those entitled did not receive the full or part cash transfer, especially due to issues in linking of bank accounts with Aadhaar and ration cards.
Way Forward
- Certainly, DBT is a novel idea and it could certainly reduce leakages and corruption of PDS system has proven its record in LPG case where Government saved Rs. 14000 crore due to better targeting and elimination of ghost beneficiaries
- However, DBT in food subsidy is an idea which has many flaws as mentioned above. The PDS system itself is flawed and it needs to be eliminated.
- Therefore, instead of cash transfer, the Government should give food coupons as this will solve the problem of misuse of cash for buying non-food things and it will also give poor people the choice to buy food from the retailer of their choice. Food coupon amount should be periodically revised so that it takes into account the current inflation. Thus what we require is a system which is somewhere in between the present inefficient PDS system and the proposed DBT system.
Probable Question
Q. Replacing PDS with cash transfers would, in effect, gradually erode and eventually dismantle this obligation of the government, with an adverse impact on already precarious agriculture and farmer protection. Critically comment
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‘One Nation, One Ration Card’ System
Note4Students
From UPSC perspective, the following things are important :
Prelims level: ONORC Scheme
Mains level: Assurance of Food Security with the ONORC Scheme
Finance Minister has announced the nationwide rollout of a ‘One Nation, One Ration Card (ONORC)’ system in all states and UTRs by March 2021. As of now, about 20 states have come on board to implement the inter-state ration card portability.
Practice question for mains:
Q. The ‘One nation one ration card ‘scheme would bring perceptible changes to the lives of India’s internal migrant workers. Comment.
What is PDS?
- The Public distribution system (PDS) is an Indian food Security System established under the Ministry of Consumer Affairs, Food, and Public Distribution.
- PDS evolved as a system of management of scarcity through distribution of food grains at affordable prices.
- PDS is operated under the joint responsibility of the Central and the State Governments.
- The Central Government, through Food Corporation of India (FCI), has assumed the responsibility for procurement, storage, transportation and bulk allocation of food grains to the State Governments.
- The operational responsibilities including allocation within the State, identification of eligible families, issue of Ration Cards and supervision of the functioning of Fair Price Shops (FPSs) etc., rest with the State Governments.
- Under the PDS, presently the commodities namely wheat, rice, sugar and kerosene are being allocated to the States/UTs for distribution. Some States/UTs also distribute additional items of mass consumption through the PDS outlets such as pulses, edible oils, iodized salt, spices, etc.
Evolution of PDS in India
- PDS was introduced around World War II as a war-time rationing measure. Before the 1960s, distribution through PDS was generally dependant on imports of food grains.
- It was expanded in the 1960s as a response to the food shortages of the time; subsequently, the government set up the Agriculture Prices Commission and the FCIto improve domestic procurement and storage of food grains for PDS.
- By the 1970s, PDS had evolved into a universal scheme for the distribution of subsidised food
- Till 1992, PDS was a general entitlement scheme for all consumers without any specific target.
- The Revamped Public Distribution System (RPDS) was launched in June, 1992 with a view to strengthen and streamline the PDS as well as to improve its reach in the far-flung, hilly, remote and inaccessible areas where a substantial section of the underprivileged classes lives.
- In June, 1997, the Government of India launched the Targeted Public Distribution System (TPDS) with a focus on the poor.
- Under TPDS, beneficiaries were divided into two categories: Households below the poverty line or BPL; and Households above the poverty line or APL.
- Antyodaya Anna Yojana (AAY): AAY was a step in the direction of making TPDS aim at reducing hunger among the poorest segments of the BPL population.
- A National Sample Survey exercise pointed towards the fact that about 5% of the total population in the country sleeps without two square meals a day. In order to make TPDS more focused and targeted towards this category of population, the “Antyodaya Anna Yojana” (AAY) was launched in December, 2000 for one crore poorest of the poor families.
- In September 2013, Parliament enacted the National Food Security Act, 2013. The Act relies largely on the existing TPDS to deliver food grains as legal entitlements to poor households. This marks a shift by making the right to food a justiciable right.
How does the PDS system function?
- The Central and State Governments share responsibilities in order to provide food grains to the identified beneficiaries.
- The centre procures food grains from farmers at a minimum support price (MSP)and sells it to states at central issue prices. It is responsible for transporting the grains to godowns in each state.
- States bear the responsibility of transporting food grains from these godowns to each fair price shop (ration shop), where the beneficiary buys the food grains at the lower central issue price. Many states further subsidise the price of food grains before selling it to beneficiaries.
Importance of PDS
- It helps in ensuring Food and Nutritional Security of the nation.
- It has helped in stabilising food prices and making food available to the poor at affordable prices.
- It maintains the buffer stock of food grains in the warehouse so that the flow of food remains active even during the period of less agricultural food production.
- It has helped in the redistribution of grains by supplying food from surplus regions of the country to deficient regions.
- The system of minimum support price and procurement has contributed to the increase in food grain production.
Issues Associated with PDS System in India
- Identification of beneficiaries: Studies have shown that targeting mechanisms such as TPDS are prone to large inclusion and exclusion errors. This implies that entitled beneficiaries are not getting food grains while those that are ineligible are getting undue benefits.
- According to the estimation of an expert group set up in 2009, PDS suffers from nearly 61% error of exclusion and 25% inclusion of beneficiaries, i.e. the misclassification of the poor as non-poor and vice versa.
- Leakage of food grains: (Transportation leakages + Black Marketing by FPS owners) TPDS suffers from large leakages of food grains during transportation to and from ration shops into the open market. In an evaluation of TPDS, the erstwhile Planning Commission found 36% leakage of PDS rice and wheat at the all-India level.
- Issue with procurement: Open-ended Procurement i.e., all incoming grains accepted even if buffer stock is filled, creates a shortage in the open market.
- Issues with storage: A performance audit by the CAG has revealed a serious shortfall in the government’s storage capacity.
- Given the increasing procurement and incidents of rotting food grains, the lack of adequate covered storage is bound to be a cause for concern.
- The provision of minimum support price (MSP) has encouraged farmers to divert land from production of coarse grains that are consumed by the poor, to rice and wheat and thus, discourages crop diversification.
- Environmental issues: The over-emphasis on attaining self-sufficiency and a surplus in food grains, which are water-intensive, has been found to be environmentally unsustainable.
- Procuring states such as Punjab and Haryana are under environmental stress, including rapid groundwater depletion, deteriorating soil and water conditions from overuse of fertilisers.
- It was found that due to the cultivation of rice in north-west India, the water table went down by 33 cm per year during 2002-08.
What is the one ‘One Nation, One Ration Card’ system?
- Under the National Food Security Act, 2013, about 81 crore persons are entitled to buy subsidized foodgrain — rice at Rs 3/kg, wheat at Rs 2/kg, and coarse grains at Re 1/kg — from their designated Fair Price Shops (FPS) of the Targeted Public Distribution System (TPDS).
- Currently, about 23 crore ration cards have been issued to nearly 80 crore beneficiaries of NFSA in all states and UTs.
- In the present system, a ration cardholder can buy foodgrains only from an FPS that has been assigned to her in the locality in which she lives.
- However, this will change once the ONORC system becomes operational nationally.
How would that work?
- Under the ONORC system, the beneficiary will be able to buy subsidised foodgrains from any FPS across the country.
- The new system, based on a technological solution, will identify a beneficiary through biometric authentication on electronic Point of Sale (ePoS) devices installed at the FPSs.
- This would enable that person to purchase the number of foodgrains to which she is entitled under the NFSA.
How will the system of ration card portability work?
- Ration card portability is aimed at providing intra-state as well as inter-state portability of ration cards.
- While the Integrated Management of PDS portal provides the technological platform for the inter-state portability of ration cards.
- It enables a migrant worker to buy foodgrains from any FPS across the country.
- The Annavitaran portal hosts the data of the distribution of foodgrains through E-PoS devices within a state.
- The portal enables a migrant worker or his family to avail the benefits of PDS outside their district but within their state.
- While a person can buy her share of foodgrains as per her entitlement under the NFSA, wherever she is based, the rest of her family members can purchase subsidised foodgrains from their ration dealer back home.
Revamping of the PDS
- The PDS system was marred with inefficiency leading to leakages in the system. To plug the leakages and make the system better, the government started the reform process.
- For, this purpose it used a technological solution involving the use of Aadhaar to identify beneficiaries. Under the scheme, the seeding of ration cards with Aadhaar is being done.
- Simultaneously, PoS machines are being installed at all FPSs across the country.
- Once 100 per cent of Aadhaar seeding and 100 per cent installation of PoS devices is achieved, the national portability of ration cards will become a reality.
- It will enable migrant workers to buy foodgrains from any FPS by using their existing/same ration card.
How many states have come on board?
- It was initially proposed to nationally roll out the ONORC scheme by June 1, 2020.
- So far, 17 major states and UTs have come on board to roll out the inter-state portability of ration cards under the NFSA.
- Three more states — Odisha, Mizoram, and Nagaland — are expected to come on board by June 1, taking the number of States and UTs to 20 under the One Nation, Once Ration Card System.
How has been the experience of Ration Card Portability so far?
- The facility of inter-state ration card portability is available in 20 states as of now but the number of transactions done through using this facility has been low so far.
- According to data available on the IMPDS portal, only 275 transactions have been done until May 14.
- However, the number of transactions in the intra-state ration card portability is quite high.
- The data available on the Annavitaran portal shows that about one crore transactions took place using the facility last month.
- It means that usages of intra-state ration card portability are way higher than the inter-state portability.
Back2Basics: National Food Security Act, 2013
- The NFS Act, 2013 (also Right to Food Act) aims to provide subsidized food grains to approximately two-thirds of India’s 1.2 billion people.
- It was signed into law on 12 September 2013, retroactive to 5 July 2013.
- The NFSA 2013 converted into legal entitlements for existing food security programmes.
- It includes the Midday Meal Scheme, Integrated Child Development Services scheme and the Public Distribution System.
- Further, the NFSA 2013 recognizes maternity entitlements.
- The Midday Meal Scheme and the Integrated Child Development Services Scheme are universal in nature whereas the PDS will reach about two-thirds of the population (75% in rural areas and 50% in urban areas).
- Pregnant women, lactating mothers, and certain categories of children are eligible for daily free cereals.
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FCI to the rescue
Note4Students
From UPSC perspective, the following things are important :
Prelims level: FCI.
Mains level: Paper 3- Role of the FCI.
FCI, indeed, has remained a crucial topic from the examination viewpoint. Mostly it is highlighted for its issues, corruption and wastages in the godowns. Be it MS Swaminathan or the latest Shanta Kumar committee all focus on how to revamp this giant institution. This article, however, points to the relevance of the FCI in the times of pandemic and suggests areas where there is scope for improvement in fulfilling its role. Stay tuned to find out what are the major concerns with FCI which needs consideration by the government.
A background check on FCI
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The FCI was set up under the Food Corporations Act 1964.
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In its first decade, FCI was at the forefront of India’s quest of self-sufficiency in rice and wheat following the Green Revolution.
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Its functions involved managing procurement and stocking grain that supported a vast Public Distribution System (PDS).
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Over time it became a behemoth that had long outlived its purpose and Its operations were regarded as expensive and inefficient.
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Even in the 1970s and 1980s, poor storage conditions meant a lot of grain was lost to pests, mainly rats; diversion of grain was widespread.
What role can FCI play amid Covid-19?
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The FCI has consistently maintained the PDS, a lifeline for vulnerable millions across the country.
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In the middle of the COVID-19 pandemic, it can play a major role in avoiding hunger and starvation.
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Before the lockdown, with 77 million tonnes of grains in its godowns, the FCI was facing a serious storage problem.
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This was worrying not just because of a shortage of modern storage facilities but also because the FCI lacked a “pro-active liquidation policy” for excess stocks.
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Post-COVID: FCI has opened up the godowns to release food stocks to those affected by the lockdown.
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The FCI has also enabled purchases by States and non-governmental organisations directly from FCI depots, doing away with e-auctions typically conducted for the Open Market Sale Scheme (OMSS).
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With rabi procurement underway in many States, it seems that the country will secure ample food supplies to cope with the current crisis.
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Given the extended lockdown, the FCI is uniquely positioned to move grain across State borders where private sector players continue to face formidable challenges of transport.
5 suggestions for the FCI to perform better
1. Using roads along with rails:
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The FCI is overwhelmingly reliant on rail, which has several advantages over road transport.
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In 2019-2020 (until February) only 24% of the grain moved was by road.
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The FCI has long recognised that road movement is often better suited for emergencies and for remote areas.
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Containerised movement too, which is not the dominant way of transporting grain, is more cost-effective and efficient.
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Now, more than ever, it is imperative to move grain quickly and with the least cost and effort, to areas where the need is greatest.
2. Store grain near demand hotspot
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The FCI already has a decentralised network of godowns.
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In the current context, it would be useful for the State government and the FCI to maintain stocks at block headquarters or panchayats in food insecure or remote areas.
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This would allow State governments to respond rapidly.
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It will also provide a sense of assurance and psychological comfort to vulnerable communities.
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This is especially relevant for regions that are chronically underserved by markets or where markets have been severely disrupted.
3. Release stocks over and above existing allocation
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The central government need to look beyond the PDS and the Pradhan Mantri Garib Kalyan Yojana and release stocks over and above existing allocations.
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This would provide flexibility to local governments to access grains for appropriate interventions at short notice and to sell grain locally at pre-specified prices until supply is restored.
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This would allow the state government to engage in feeding programmes, free distribution to vulnerable and marginalised sections, those who are excluded from the PDS, etc.
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In many States, there is a vibrant network of self-help groups formed under the National Rural Livelihoods Mission (NRLM) which can be tasked with last mile distribution of food aid other than the PDS.
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Consultative committees presumably exist already in each State to coordinate with the FCI on such arrangements.
4. Suspend FIFO principle
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Typically, the FCI’s guidelines follow a first in, first out principle (FIFO).
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FIFO mandates that grain that has been procured earlier needs to be distributed first to ensure that older stocks are liquidated, both across years and even within a particular year.
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It is time for the FCI to suspend this strategy, that enables movement that costs least time, money and effort.
5. Support the farmers trying to reach out to consumers directly
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In many places, farmer producer organisations (FPOs) have been at the forefront of rebuilding these broken supply chains.
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The FCI along with the National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED), is well placed to rope in expertise to manage the logistics to support these efforts.
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NAFED has already taken the initiative to procure and transport horticultural crops.
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The FCI should similarly consider expanding its role to support FPOs and farmer groups, to move a wider range of commodities including agricultural inputs such as seeds and fertilizers, packing materials and so on.
Major concerns regarding FCI’s role
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Cost of food subsidy: The first is a long-term concern regarding the costs of food subsidy.
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An analysis of FCI costs spanning 2001-16 suggests that on average about 60% of the costs of acquisition, procurement, distribution and carrying stocks are in fact transfers to farmers.
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Not all of what is counted as subsidy therefore represents a waste of resources.
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The government needs to address the FCI’s mounting debts — an estimated ₹2.55 lakh crore in March 2020 in the form of National Small Saving Funds Loan alone.
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Depressing food prices: A second concern is that extended food distribution of subsidised grain is akin to dumping and depresses food prices locally.
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The depressed prices, in turn, affect farmers.
The Covid-19 pandemic has brought into sharp focus the relevance of the FCI. This makes PDS and Food security in prelims as well as in mains examination focus area. So, questions based on the topic are likely to be asked by the UPSC, for ex- “The FCI’s role in providing succour has been proved many times in the past and it lived up to its reputation amid Covid-19 pandemic as well. In the light of the above statement, discuss the relevance of the FCI and suggest the ways to improve its performance in the times of disasters”
Also consider a question asked by the UPSC in 2019, “What are the reformative steps taken by the Government to make the food grain distribution system more effective?”
Conclusion
In 2015, the Shanta Kumar report recommended repurposing the organisation as an “agency for innovations in Food Management System” and advocated shedding its dominant role in the procurement and distribution of grain. There is no doubt that the FCI needs to overhaul its operations and modernise its storage. At the same time, the relevance of an organisation such as the FCI or of public stockholding, common to most Asian countries, has never been more strongly established than now.
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Three dimensions of food security amid Covid-19
Note4Students
From UPSC perspective, the following things are important :
Prelims level: National Food Security Act.
Mains level: Paper 3-Ensuring food security with all its dimension amid corona pandemic.
The article discusses the three dimensions of food security-1)Availability 2)Acces 3) Absorption. The first two are also dependent on job security. All these are now being threatened by the pandemic. Ways to safeguard food security along with its 3 dimensions are suggested at the end of the article.
1. Availability of food in the market
- The first is the availability of food in the market, and this is seen as a function of production.
- Fortunately, thanks to the Green Revolution, today we have enough food in the market and in government godowns.
- This is a great accomplishment by Indian farmers who converted a “ship to mouth” situation to a “right to food” commitment.
- Yet we cannot take farmers’ contributions in terms of sustaining production for granted.
- Some special exemptions have been given to the agricultural sector, farmers are confronted at the moment with labour shortages.
- But many of the inputs, including seeds, are expensive or unavailable, marketing arrangements including supply chains are not fully functional, pricing is not remunerative, and public procurement is also not adequate.
- There is no room for complacency, as in the absence of demand, the lack of storage or value addition facilities, especially for perishable commodities, we do not yet know exactly what the impact of the current pandemic will be on the kharif sowing and food availability in the future.
2. Access to food
- The second dimension is the access to food, which is a function of purchasing power, as unless you are a farmer and grow your own food, others have to buy it.
- Fortunately, the government, through the National Food Security Act (NFSA) and the PDS, has assured some additional food to every individual during this crisis.
- Strengthening the food basket: This should be further strengthened and the food basket widened by including millets, pulses and oil.
- Hidden hunger: Steps should also be taken to avoid hidden hunger caused by the deficiency of micronutrients in the diet.
- In light of the closure of schools and anganwadi centres, and the consequent disruptions in the provision of midday meals or other nutritional inputs, it is important to pay attention to the life cycle approach advocated in the NFSA, particularly the first thousand days in a child’s life, when the cognitive abilities of the child are shaped.
- We may otherwise see negative effects on nutritional security in the medium to longer term.
After reading the article you’ll be able to answer the question such as this one- “In the ongoing crisis, maintaining the level of food security has become one of the most essential need. In light of the above statement, critically examine the priority areas for maintaining food security in the country. Suggest measures to make accessibility and availability of food easier for all.”
Job security to ensure food security and access to food
- Food security and access to nutritious, good quality food is also contingent on job security.
- Today, a lot of people employed both on farms and in the non-farm sector are without jobs.
- If job security is threatened, then so is food and nutrition security.
- We have to ensure people do not lose their jobs, and one way of doing this will be to ensure value addition to primary products.
- One example of such value addition is the Rice Biopark in Myanmar, wherein the straw, bran, and the entire biomass are utilised.
- This would mean some attention to and investment in new technologies that can contribute to biomass utilisation.
- The Amul model provides a good example from the dairy sector of improved incomes to milk producers through value addition.
- Similar attention needs to be given to the horticulture sector on a priority basis.
- Women farmers are at the forefront of horticulture and special attention needs to be given to both their technological and economic empowerment during this crisis.
- A second pathway to livelihood security is strengthening the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
- Need to cover skilled work: Given the lack of jobs and incomes during the COVID-19 crisis, it is imperative to expand the definition of work in MGNREGA to cover skilled work related to farmers and their farming activities.
- This is particularly important for women farmers and workers, who should not just be given tasks of carrying stones or digging mud.
- Apart from farming, they engage in a range of essential care tasks, including caring for children, the elderly and sick people.
- These tasks, often invisible, need to be recognised as work and supported with appropriate education, including on nutrition.
3. Absorption of food in the body and its utilisation
- The third dimension of food security is the absorption of food in the body or its utilisation.
- Absorption and utilisation of food is dependent importantly on sanitation, drinking water and other non-food factors, including public health services.
- Ensuring that these services are functional depends on the capacities of the local panchayats and their coordination with other local bodies.
- The lack of adequate clean water, in particular, has come to the fore in both rural areas and urban slums in the context of COVID-19, where one of the key measures for stopping transmission relates to frequent hand-washing.
Food security threatened by pandemic
- If we can ensure food availability, food access and food absorption, then we have a fairly robust system of food and nutrition security.
- All the above dimensions are, however, now threatened by the novel coronavirus, as discussed earlier.
- It is very critical to highlight the linkages between agriculture, nutrition and health.
- The inability to harvest, transport and market perishable fruits and vegetables at remunerative prices during the current crisis has deprived farmers of incomes and livelihoods.
- It has also deprived consumers of micronutrients in their diets.
- Farmers making losses, and agriculture moving from being job-led to jobless, raise questions about the sustainability of the production cycle.
- At the same time, this can have long-term consequences on nutrition and health security.
A question based on the dimension of the food security can be asked by the UPSC for ex- “Food security involved the security of food in all three dimensions, availability of food, access to food and absorption of food. How far the food security act is effective in ensuring security in all three dimensions?”
Conclusion
India avoided what could have been a big famine in the 1960s through the help of technology and public policy, which actively worked with and supported farmers to achieve significant increases in yield. Through a combination of farmers’ cooperation, technological upgrading and favourable public policies in procurement, pricing and distribution, we can deal with the fallouts of the pandemic.
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Farmers are at their wits’ end
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- What will be the impact of the corona crisis on agriculture and food security?
Context
As global trade falls and supply disruptions persist, a prolonged lockdown will adversely affect food security.
Fears of food crisis and impact of COVID-19 on agriculture
- The COVID-19 pandemic has led to global concerns on the state of agriculture and food security.
- Warning of food crisis: On the one hand, the Food and Agriculture Organization (FAO) has warned of a “food crisis” if countries do not protect vulnerable people from hunger and malnourishment.
- On the other, farmers face a stalemate as they are unable to work on their land, earn remunerative prices and gain access to markets.
We can try to understand the impact of COVID-19 on agriculture with three questions.
- One, does the world have enough food to feed its people?
- Two, is food available at affordable prices?
- Three, how are farmers coping with the lockdown?
Food stocks and prices in the world
- Cereal stock in the world: According to the FAO, as on April 2, 2020, the total stock of cereals in the world was about 861 million tonnes. This translates to a stocks-to-use ratio (SUR) — i.e., the proportion of consumption available as stocks — of 30.7%.
- The FAO considers this “comfortable”. The SURs for wheat, rice and coarse grains were 35.3%, 35.1% and 26.9%, respectively.
- Variation among nations: World stocks are different from national stocks. About 52% of the global wheat stocks is held by China, and about 20% of the global rice stocks is held by India.
- Rice importers may suffer: If the major holders of global stocks decide to turn precautionary and stop exporting, and if the lockdown is prolonged, countries dependent on rice imports will suffer.
- Restriction on wheat export: Kazakhstan, a major wheat exporter, has banned exports. Russia, the largest wheat exporter, is expected to restrict its exports.
- Restriction on rice export: Vietnam, the third-largest rice exporter, has stopped its exports, which will reduce the global rice exports by 15%.
- If India and Thailand too ban exports, the world supply of rice will sharply fall.
- In March 2020, the Philippines and the European Union, major rice importers, had inventories of rice enough to feed their populations for about three months.
- Others, however, had inventories to hold on for about one month only. If the lockdown continues beyond a month, these countries will face food shortages.
Stocks with India and output projections
- India’s foodgrain output is projected to be about 292 MMT in 2019-20.
- Stock with FCI: On March 1, 2020, the total stock of wheat and rice with the Food Corporation of India (FCI) was 77.5 MT.
- Buffer stock norms: The buffer norms for foodgrain stocks — i.e., operational stock plus strategic reserves — is 21.04 MT.
- Similarly, for pulses, India had a stock of 2.25 MT in mid-March 2020.
- In both cases, the rabi harvest is slated to arrive in April 2020, and the situation is expected to ease further.
Price fluctuation of food in the world
- Fall in demand and supply and price fluctuation: There is always an element of uncertainty on how prices will behave if both demand and supply fall together.
- Prices in different markets fluctuate considerably given differences in the extent of production, stocks, arrivals and supply disruptions.
- According to the FAO, the world food price index fell by 4.3% and world cereal price index fell by 1.9% between February and March 2020 due to the weakening demand for food and the sharp fall in maize prices owing to poor demand for biofuels.
- Price rise in Western economies: Retail prices of rice and wheat have been rising in the Western economies in March 2020.
- The major reasons identified are panic buying by households, export restrictions by countries and continuing supply chain disruptions.
- Retail prices of beef and eggs have also been rising.
Demand and price fluctuation in India
- WPI and CPI for food in India were rising from mid-2019 onwards, reflecting a rise in vegetable prices, especially onion prices.
- January and February 2020 saw a moderate fall in these indices, but vegetable prices have remained high.
- If food prices rise due to the lockdown, it will be on top of an already rising price curve.
- However, unlike in the West, food prices in India have not risen after the lockdown.
- While supplies have declined, demand has fallen too. This is because there has been a sharp fall in the consumption of foodgrains and vegetables. Similarly, the consumption of milk has fallen by 10-12%.
The crisis in the harvesting and marketing of the crops
Harvesting and marketing of crops are in crisis across India, because of-
- Disruptions in the procurement of foodgrains by government agencies.
- Disruptions in the collection of harvests from the farms by traders.
- Shortage of workers to harvest the rabi crops.
- Shortage of truck drivers.
- Blockades in the transport of commodities.
- Limited operations of APMC mandis; and
- Shutdowns in the retail markets.
Conclusion
The world and India have adequate food stocks. But as global trade shrinks and supply disruptions persist, a prolonged lockdown will adversely affect food security in many countries. Concurrently, farmers face acute labour shortages, falling farmgate prices and lack of access to input/output markets. It is unclear who is benefiting, but farmers, workers and the poor are at their wits’ end.
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AMMA Canteen and its success
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Amma Canteen
Mains level: Food subsidization and its impact
The Amma Canteen, a delivery system to provide urban food security in Tamil Nadu, has become an effective mechanism in reaching the needy during the lockdown.
AMMA Canteen
- Amma Unavagam better known as Amma Canteen is a food subsidization programme run by the Government of Tamil Nadu.
- Under the scheme, municipal corporations of the state-run canteens serving subsidised food at low prices.
- The dishes are offered at low prices: ₹1 for an idli, ₹5 for a plate of sambar rice, ₹5 for a plate of “Karuvapellai Satham” (Curry leaves rice) and ₹3 for a plate of curd rice.
Feeding the stranded
- Migrants usually benefit from this canteen scheme. It is not uncommon to see policemen, municipal workers and people from the media having their breakfast in these canteens.
- The system, in short, has ensured urban food security and is a boon to migrants during lockdown. There are, thus, unexpected but pleasant benefits from this scheme.
Reasons for success
- It is a delivery system with minimum leakages and has reached to its target group very effectively compared to the PDS system.
- People realized the benefits of the scheme in due course of time and thus it emerged popularly.
A lesson for all
- Welfare schemes are started with the intention to provide benefits to vulnerable sections of society.
- The success of any welfare scheme depends on the seriousness of the people at the helm of affairs, the efficiency of the scheme’s functionaries and the involvement of the people.
- During the process of implementation, some deserving people get excluded from the scheme, while some of those who were undeserving manage to enjoy its benefits.
- Welfare schemes deliver unexpected but pleasant benefits sometimes.
Way forward
- For such a welfare scheme to be successful, it must be launched in letter and spirit.
- The benefits of the schemes cannot be realized at pan India level in the absence of a good delivery system.
- These states should explore the possibility of utilising available infrastructure in existing private canteens and hotels (closed during lockdown).
- This measure would not only help migrant workers but also provide employment to workers who remained unemployed since the lockdown came into effect.
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A smarter supply line
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- Ensuring the food supply lines are not disrupted in the lockdown and suggestions to ensure it.
Context
The government must ensure that people don’t go hungry and take measures to make sure that people don’t crowd a few outlets, increasing the chances of the virus spreading.
Need for the package to compensate losses
- Welfare package: The government has announced relief measures. Last week, the Finance Minister announced a welfare package of Rs 1.7 lakh crore.
- This is too small to cope with the onslaught of the virus.
- How much a comprehensive package would cost? A package to compensate all losses, including business losses, should amount to at least Rs 5 to 6 lakh crore, if not more.
- How will the government find funds for this package?
- Funds accrued as a result of oil price crash: The windfall gains that have accrued to it as a result of the crash in crude oil prices could come in handy.
- Diver all the subsidies and development funds: The government could divert all subsidies and some development funds to fund this package and ask the country’s corporate leaders to help with funds.
- Issue clarion call for voluntary donation: The prime minister could even issue a clarion call to those with a fixed income (say above Rs 50,000/month) to voluntarily donate at least 10 per cent of their salaries to fund the battle against the virus.
Focus on supply lines of food and ways to achieve it
- Why good food supply line matters? The government must do to ensure that people don’t go hungry and the measures it must take to make sure people don’t crowd a few outlets, increasing the chances of the virus spreading.
- The government has announced that the beneficiaries of the public distribution system can avail three months’ ration at one go.
- The challenge of delivery: The challenge is to ensure that fair price shops deliver the provisions in an orderly manner and their supply lines remain intact.
- Home delivery option: Home (street) delivery of these provisions, to avoid crowding, is a good option.
- Roping in civil society: This is also an occasion to rope in civil society. NGOs, resident welfare associations, religious organisations and paramilitary forces can be engaged for orderly and safe distribution of food — both pre-cooked and fresh.
- NGOs with experience in food preparation and distribution, such as Akshaya Patra, could guide local authorities.
- People involved in this endeavour should be provided with safety gears.
- The challenge of supplying perishables: These perishables-like fruits, vegetables and milk- must be sold in a packaged form in mobile vans. The weekly markets need to be temporarily suspended lest they spread the virus.
- Vegetable vendors can work with civil society organisations as well as e-commerce players to do this job in a safe manner.
- Retail distribution lines: Retail distribution lines need to be seamlessly linked to wholesale supply lines.
- Buffer stocks: The government godowns are overflowing with wheat and rice — about 77 million metric tonnes (MMT) on March 1, against a buffer stock norm of 21.4 MMT on April 1.
- How to manage rabi season procurement? Procurement operations for rabi crops are around the corner.
- Training and safety measures: The FCI and other procuring agencies need to be trained about safety measures and supplied safety gear.
- Providing incentives to farmers for staggered selling: Farmers could be given Rs 50/quintal per month as an incentive to stagger bringing their produce to the market — say after May 10.
- They will also need to be screened, given training and equipped with safety gear.
Challenge of mandi operations for fresh produce in large mandis
- This pertains to mandi operations for fresh produce in large APMC mandis like Azadpur in Delhi and Vashi near Mumbai.
- These mandis are usually overflowing with fruits and vegetables and the labour force at these centres usually handles the produce without safety gears.
- The challenge of screening and providing safety kits to these workers is doubly daunting. The country is not fully prepared in this respect.
- The safety of workers in mandis — and other workers who handle agricultural produce — should be accorded as much priority as the safety of frontline health warriors.
- Suspend the APMC Act: We should also use this opportunity to suspend the APMC Act and encourage NGOs, civil society and corporate houses to directly procure from farmers.
Issue of poultry and maize farmers
- Sharp fall in poultry items: In such times, prices of essential food items are known to shoot up. But in India, prices of food items like chicken meat and eggs have registered a sharp fall.
- In Delhi’s Gazipur Mandi, for example, the price of broiler chicken has fallen from Rs 55/kg in January 2020 to Rs 24/kg in March.
- This has also pushed the maize prices down as poultry is largely fed packaged maize.
- The government may have to think of compensating poultry and maize farmers in due course.
Conclusion
When things settle, it will be worth knowing how the virus spread from Wuhan to Iran, Italy, Washington, India and other parts of the world. Which organisation or nation failed to blow the whistle and alert the world in time? Was it China’s failure? Or that of WHO? Or was it the failure of all governments around the world to respond quickly to the outbreak? We need better global governance for pandemics to avert the next crisis.
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Ahead: bumper crop, multiple challenges
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not Much
Mains level: Ensuring food supplies amidst COVID-19 crisis
This is perhaps the first time ever that India is facing a national disaster or a war-like situation amidst plentiful supplies of food even as a bumper Rabi crop beckons.
Bumper yield in crisis
- Farmers are currently about to harvest —if they haven’t already.
- Given the surplus and extended monsoon rains, which helped recharge ground water and fill up reservoirs, superabundant produce is round the corner.
- This comes even as there is demand destruction from the shutting down of HORECA (hotels, restaurants and catering) and other institutional segment businesses following the nationwide lockdown.
- It raises the possibility of a crisis similar to the one three years ago that followed demonetization. But the scale, it is feared, could be bigger.
- The post-demonetization rabi crop, also a bumper one, was at least harvested and marketed even if it didn’t fetch a good price.
The real challenge
- The food and civil supplies departments in states will ultimately ensure that the terminal markets in these centres major cities receive their required daily flow of produce anyhow.
- The problem will be in the remote towns and the rural hinterlands that are serviced through upcountry APMCs.
- The grocers there are at the greatest risk of running out of stocks if the lockdown continues without inter-state movement restrictions in agricultural commodities being removed.
How to transport produce
- This time, there are doubts being raised even on that.
- The simple reason for it is: Will farmers, labourers and machines (combines, threshers and tractor trolleys) be able to move freely to harvest the produce and take it to the mandis?
- The UP government has issued a direction to all district administrations and law-enforcement authorities to exempt all services, including labour, that are involved in agricultural production, processing and marketing from the current lockdown provisions.
- Other states, too, may follow. But the question remains of the directives being implemented on the ground.
Will there be workers?
- At the second stage comes the mandis, where marketing of the crop would happen.
- Here again, there is a possibility of shortage of labour (the people who do unloading, cleaning, bagging and reloading of the grain that is auctioned or sold) and even gunny bags.
- Further, it would be necessary to prevent crowding, and maintain social distancing.
Possible alternatives
- One way out could be to allow entry only to a limited number of farmers, who may be issued SMS alerts informing them about the date and time to bring their crop.
- Each farmer can also be given a maximum quantity — say, one tractor-trolley load of 30-40 quintals — that may be brought in a single day.
- The permission for the next trolley load will be only after other farmers have got their turn to sell.
- All this will obviously delay the process of marketing, raising the prospect of panic sales.
- This could be avoided if the government were to give a clear-cut assurance — at least in respect of crop where there is MSP-based procurement — that it will continue buying till the last grain is offered.
Safer places than APMC
- Besides, the marketing of produce needn’t be limited to the APMC (agricultural produce market committee) mandi yard.
- Any flour or dal mill, and even primary school premises can be designated as an APMC marketing area.
- The objective should be to ensure that the farmer’s produce gets marketed without resulting in overcrowding.
Way forward
- The risk of shortages today is really not in the metros or state capitals.
- Once marketing is done, the crop has to move beyond the mandi.
- This is probably the right time to dismantle all inter-state and intra-state movement restrictions in farm produce.
- Free movement is necessary for the context of both a bumper crop and the ongoing lockdown.
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Essential Commodities
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Essential Commodities Act, PSF
Mains level: Read the attached story
The Price Monitoring Division (PMD) in the Department of Consumer Affairs is monitoring the retail and wholesale prices of 22 essential food commodities due to increased panic buying by customers.
Essential Commodities Act
- The ECA is an act which was established to ensure the delivery of certain commodities or products, the supply of which if obstructed owing to hoarding or black-marketing would affect the normal life of the people.
- The ECA was enacted in 1955. This includes foodstuff, drugs, fuel (petroleum products) etc.
- It has since been used by the Government to regulate the production, supply and distribution of a whole host of commodities it declares ‘essential’ in order to make them available to consumers at fair prices.
- Additionally, the government can also fix the maximum retail price (MRP) of any packaged product that it declares an “essential commodity”.
- The list of items under the Act includes drugs, fertilizers, pulses and edible oils, and petroleum and petroleum products.
- The Centre can include new commodities as and when the need arises, and takes them off the list once the situation improves.
How ECA works?
- If the Centre finds that a certain commodity is in short supply and its price is spiking, it can notify stock-holding limits on it for a specified period.
- The States act on this notification to specify limits and take steps to ensure that these are adhered to.
- Anybody trading or dealing in the commodity, be it wholesalers, retailers or even importers are prevented from stockpiling it beyond a certain quantity.
- A State can, however, choose not to impose any restrictions. But once it does, traders have to immediately sell into the market any stocks held beyond the mandated quantity.
- This improves supplies and brings down prices. As not all shopkeepers and traders comply, State agencies conduct raids to get everyone to toe the line and the errant are punished.
- The excess stocks are auctioned or sold through fair price shops.
Ex: The Union Government has brought masks and hand-sanitisers under the ECA to make sure that these products, key for preventing the spread of Covid-19 infection, are available to people at the right price and in the right quality.
What about Food Items?
- The items covered include rice, wheat, atta, gram dal, arhar dal, moong dal, urad dal, masoor, dal, tea, sugar, salt, Vanaspati, groundnut oil, mustard oil, milk, soya oil, palm oil, sunflower oil, gur, potato, onion and tomato.
- Based on the deliberations, Government takes various measures from time to time to stabilize prices of essential food items which, inter-alia, include appropriately utilizing trade and fiscal policy instruments like import duty.
- The govt. can impose stock limits and advise State for effective action against hoarders & black marketers etc. to regulate domestic availability and moderate prices.
- The government utilizes the buffer of agri-horticultural commodities like pulses, onion, etc. built under Price Stabilization Fund (PSF) to help moderate the volatility in prices.
Back2Basics
Price Stabilization Fund (PSF)
- The PSF was set up in 2014-15 under the Department of Agriculture, Cooperation & Famers Welfare (DAC&FW) to help regulate the price volatility of important agri-horticultural commodities like onion, potatoes and pulses were also added subsequently.
- Procurement of these commodities will be undertaken directly from farmers or farmers’ organizations at farm gate/mandi and made available at a more reasonable price to the consumers.
- Losses incurred, if any, in the operations will be shared between the Centre and the States.
- PSF provides for advancing interest-free loans to State Governments/ UTs and Central agencies to support their working capital and other expenses they might incur on procurement and distribution interventions for such commodities.
- The scheme provides for maintaining a strategic buffer of the commodities for subsequent calibrated release to moderate price volatility and discourages hoarding and unscrupulous speculation.
- The PSF is managed centrally by a Price Stabilization Fund Management Committee (PSFMC) which will approve all proposals from State Governments and Central Agencies.
- The PSF is maintained as a Central Corpus Fund by Small Farmers Agribusiness Consortium (SFAC), a society promoted by the Ministry of Agriculture for linking agriculture to private businesses and investments and technology.
With inputs from: http://www.arthapedia.in/index.php?title=Price_Stabilisation_Fund_(PSF)
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A crisis deferred
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3-Reforms in foodgrain management, the PDS and the fertiliser subsidy.
Context
Union budget missed the opportunity to undertake reforms in the grain management system and food security act.
The massive reduction in food subsidy and its implications
- Subsidy slashed by 75,552 crores: The revised estimates (RE) for food subsidy for 2019-20 have been slashed by a whopping Rs 75,552 crore -from the budgeted estimate (BE) of Rs 1,84,220 crore to Rs 1,08,668 crore (RE).
- For the next fiscal year, the budget estimate has been kept at Rs 1,15,570 crore.
- No major reforms in grain management system: One wonders whether any major reforms have been undertaken in the grain management system or in the National Food Security Act such that this massive reduction in budget estimates is feasible. But no such reforms are undertaken.
- The Food Corporation of India (FCI) has been asked to borrow more from myriad sources, but most importantly from the National Small Savings Fund (NSSF).
- An item that should have been in the budget, is now getting reflected as outstanding dues of FCI.
- Implications of the move–postponing of the crisis: In order to gauge how much is the effective food subsidy in the country, the budget numbers are becoming totally irrelevant.
- One needs to add the actual subsidy numbers reflected in the budget to the outstanding dues of FCI.
- Effective food subsidy: If one adds the due, the effective food subsidy turns out to be Rs 3,57,688 crore.
- By not provisioning for it fully in the budget, and not undertaking any reforms in the foodgrain management system or the NFSA, the government is only postponing the crisis.
Need to bring down the coverage: The Economic Survey
- Bringing down the coverage at 20 %: While the Economic Survey clearly states that the coverage under NFSA needs to be revisited, and brought down to say 20 per cent of the population.
- The budget did not bite this bullet.
- Cost of procurement to go up: The expected cost of rice to FCI in 2020-21 is going to be about Rs 37/kg, and for wheat it will be Rs 27/kg.
- The issue price, that covers 67 per cent of the population, is just Rs 3/kg and Rs 2/kg respectively.
Excessive stock with the FCI
- Actual stock in excess of buffer stocks: Compared to a buffer stock norm of 4 million tonnes, actual stocks with FCI (including unmilled paddy) were 3.5 times higher.
- It speaks of a colossal waste of scarce resources, especially when tax revenues have been sluggish.
- Stocks likely to increase further: Given that Skymet has predicted that the coming wheat crop is going to be one of the best in many years-the stocks is likely to touch 113 million tonnes.
- With procurement prices being above global prices, the chances of wheat exports are bleak unless there is a subsidy for exports.
- And that will be challenged in the WTO.
- The FCI may run out of stock capacity: So, one should expect a piling up of grains stocks with a record procurement of wheat.
- FCI may run out of storage capacity. Stock levels may touch 85-90 million tonnes, or even more, by July 1, 2020.
Fundamental questions
- First: Is the government ignorant of the impending crisis of plenty?
- Second: Does it realise that the policy of procurement prices (50 per cent above cost A2+FL), without looking at the demand side, is likely to create more troubles for the government?
- Third: Does the government have any plan to reform the public distribution system under NFSA?
Way forward
- Reforms in foodgrain management: Reforms in foodgrain management have to start with reforming the PDS system.
- With moving gradually moving away from grains to cash transfers.
- Think over implementing the Shanta Kumar Committee reports recommendations.
- Stop open-ended procurement in Punjab-Haryana belt: The policy of procurement prices, with open-ended procurement in the Punjab-Haryana belt, is doing more damage by depleting the water table and not letting crop diversification take place.
- This is very unfortunate as the “dead loss” in grain management runs to more than Rs 1,00,000 crore.
- Rationalise the fertiliser subsidy: The other part related to this is the fertiliser subsidy, which is largely used in wheat and rice.
- The budget estimates for 2020-21 show a reduction in the subsidy, while dues of the fertiliser industry keep on piling.
- The fertiliser industry estimates that by April 2020, the dues will be roughly Rs 60,000 crore.
- Demoralised fertiliser industry: While FCI has been asked to borrow, the fertiliser industry does not have that type of window.
- It is feeling totally demoralised.
- No private player wants to come and invest in this sector.
Conclusion
Instead of postponing the crisis by compelling the FCI to borrow, the government need to reform the foodgrain management system, rationalise the fertiliser subsidy and limit the coverage under the NFSA.
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Thalinomics: the Economics of a plate of food in India
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Thalinomics
Mains level: Read the attached story
- The Economic Survey 2019-20 states that affordability of vegetarian Thalis improved 29 per cent from 2006-07 to 2019-20 while that for non-vegetarian Thalis by 18 per cent.
- Affordability of Thalis vis-à-vis a day’s pay of a worker has improved over time, indicating improved welfare of the common person.
- The Survey says that food is not just an end in itself but also an essential ingredient in the growth human capital and therefore important for national wealth creation.
The term ‘Thalinomics’
- The conclusion has been drawn on the basis of “Thalinomics: the Economics of a plate of food in India” – an attempt to quantify what a common person pays for a Thali across India.
- Price data from the Consumer Price Index for industrial workers for around 80 centers in 25 States and UTs from April 2006 to October 2019 has been used for the study.
- Using the dietary guidelines for Indians, the price of Thalis is constructed.
- The Survey states that across India and also the 4 regions- North, South, East and West- it is found that the absolute prices of a vegetarian Thali have decreased significantly since 2015-16 though the price has increased in 2019.
- This is owing to the sharp downward trend in the prices of vegetables and dal in contrast to the previous trend of increasing prices.
- As a result, an average household of 5 individuals that eats two vegetarian Thalis a day, gained around Rupees 10887, on average per year, while a non-vegetarian household gained Rupees 11787, on average per year.
Shift in Thali dynamics
- The Survey states that 2015-16 can be considered as a year when there was a shift in the dynamics of Thali prices.
- Many reform measures were introduced since 2014-15 to enhance the productivity of the agricultural sector as well as efficiency and effectiveness of agricultural markets for better and more transparent price discovery.
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[op-ed of the day] Food for Expediency
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- PDS and issue of excess food stock with FCI.
Context
A substantial rise in consumer food price inflation to 14.12% in December 2019, the highest ever in the past six years, has driven the retail price inflation in this country.
Discrepancies in the fiscal deficit
- Policy dilemma for the RBI: Though the CPI was at 14.12% in December but with the core inflation rate still not overshooting the Reserve Bank of India’s (RBI) medium-term target of 4(+/- 2)%.
- Speculations hover as to whether the RBI monetary policy committee will go for another rate cut in the coming month.
- This is a policy dilemma for the central bank
- Why is the dilemma? The dilemma is because the moot issues regarding the government’s key economic estimates, such as the fiscal deficit, largely remain unresolved.
- Discrepancies flagged by the CAG: The CAG has stated that the current figures on deficit have been kept at a 1.5% to 2% low by not including the government’s off-budget borrowings from public accounts, such as the National Small Savings Fund (NSSF).
- According to media reports, such off-budget expenditure of the current government stands at ₹1.5 lakh crore in 2019–20.
- The major portion of off budged expenditure on food subsidy: About three-fourths of the incremental off-budget expenditure is on account of under-recoveries in food subsidies of the Food Corporation of India (FCI).
- Low allocation but high expenditure on food subsidy: For instance, the 2019–20 Union Budget had provisioned food subsidy at₹1.84 lakh crore.
- While the overdue of the FCI is already at₹1.86 lakh crore.
- For these burgeoning overdue, FCI’s off-budget borrowings from the NSSF have been on the rise.
Excessive stock by the government and rising inflation
- Issue of supply management: The issues of agricultural supply management are relegated to the background by the standard causality argument of “crop damages” caused by excessive rains and that the inflation will ease out once the new harvest comes in.
- This argument can hold some water for horticulture crops like onions that saw an almost 200% rise in price in November and December.
- Unable to explain inflation in wheat and other cereals: This argument may not find traction in explaining the price inflation of wheat and other cereals.
- holding the excessive cereal stock: With the government currently stocking much higher quantities of cereals at the FCI than the buffer norms.
- 45.8 million tonnes of wheat as against the buffer norm of 27.5 million tonnes and nearly double the amount of rice vis-à-vis the buffer norm of 13.5 million tonnes.
- India is now a cereal surplus economy.
- Why then the inflation in cereal prices? Is this artificially created by the government through its irrational stocking practice?
- Some fundamental concerns are triggered at this juncture.
- Concerns with excess stocks
- First-Higher stock means higher subsidy bill-With the economic costs of the FCI being 12 times or more than the allocation cost of the grains through the public distribution system-higher stocks would imply higher subsidy bills.
- Second–No benefit of the stock: In tandem with the first, ad hoc releasing of the stocks will not bring about any major changes in the situation.
- Third–Hiding fiscal deficit from the public: In this context, off-budget borrowing can serve various politically expedient purposes.
- It has enabled the government to showcase a consistently low share (below 1%) of subsidies in national income.
- Thereby diverted the public attention from two critical facts: the FCI’s tipping financials and the country’s (grossly) underestimated fiscal deficit.
Conclusion
The government must recall that the “illusion” of this acceptable limit of inflation potentially rests upon the savings of the common consumers, which is being unduly misemployed by the government.
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[op-ed snap]Lifting growth, containing inflation
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3-Issues related to direct and indirect farm subsidies and minimum support prices, Public Distribution System- Objectives, functioning, limitations,revamping, issues of buffer stocks, and food security, Technology missions, economics of animal rearing.
Context
There is a large scope for the improvement in the efficiency of grain management system under the National Food Security Act (NFSA).
Declining Agri-sector growth rate
- India’s growth rate plummeted to 4.5 per cent in the second quarter of this fiscal.
- The quarterly growth in GDPA (agri-GDP) is hovering at around 2 percent, it is a cause for great concern.
- Agriculture still engages about 44 per cent of India’s workforce, which has serious consequences for the overall economy of the country.
The bleak picture of the economy
- Recently inflation has started to surge after a long time.
- Inflation is led by the different components of the food segment- cereals, pulses, and vegetables.
- There is a challenge of containing inflation and increasing the demand at the same time.
- At the same time, there is also the challenge of maintaining the fiscal deficit by 3.3 %.
- Recently Finance minister has launched an investment package of 102 lakh crores.
- So, there is a need to take a look at the inefficiencies in food grain management.
Inefficiencies in NFSA
- It supplies a certain quantity of wheat and rice to 67 percent population.
- It gives wheat at Rs. 2/kg and rice at Rs. 3/kg.
- While the cost of these grains to FCI is at Rs. 25/kg and Rs. 35/kg respectively.
- This led to the provision of Rs 1.84 lakh crores for food subsidy.
- The buffer stocks with the FCI is far more than double the buffer stock norms as on January 1 every year.
- This excess stock is the result of an inefficient strategy for food management.
- The strategy where the procurement of these grains is open-ended while the disbursement is restricted.
- The money locked in these excess stock is about 1 lakh crores.
- If the rabi season procurement is good FCI may run out of storage space to accommodate.
Suggestions for improvement
- The open market operation should be increased.
- Even if the government liquidate half of the excess stock it would fetch Rs.50,000 crores.
- The Shanta Kumar panel had submitted the blueprint for the improvement in the grain management system.
- Only three reiterations are needed.
- First-while the Antyodaya category should keep getting the maximum food subsidy, the issue price should be fixed at 50% of the procurement for the rest.
- Second- restrict the percentage of population covered under the scheme to 40 % from the present 67%
- Third-stop the procurement of rice in the north-western states of Punjab and Haryana where the water table is depleting.
Conclusion
- If the government implements these three points it can save the country another Rs. 50,000 crores annually. On top of this, it will help the government to reduce its fiscal deficit.
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