People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 26

June 27, 2004

         Why Immediate Food-For-Work Is Necessary


Utsa Patnaik


IT is surprising that very many progressive and intelligent people still think that agrarian distress has to do with drought, and that a couple of years of good rains and good harvests will automatically take care of the problem. Nothing could be further from the truth. Agrarian distress throughout the country, predates the general drought of 2002, and predates current drought conditions in particular districts of Andhra and Karnataka. Agrarian distress is going to continue unless urgent measures are adopted, for it has built up owing to many years of wrong reform policies. Drought where it occurs is not a primary cause but simply makes an already bad situation worse. One of the main causes of agrarian distress has been sharp decline in public investment and development spending in rural India, which has contributed to halving of output growth and produced large-scale unemployment.



At the same time economic reform policies of cutting input subsidies raised input prices, while the cost of credit also rose for farmers, forced to turn to usurious private moneylenders, as the banks so far giving rural credit were directed to no longer consider farmers and small scale industry as priority sectors for lending. The data show a considerable fall during the last six years in the share of rural India in total bank credit and a sharp fall in the numbers extended credit under schemes like the Integrated Rural Development Programme. All this was happening moreover, as from 1997-8 onwards there was a prolonged fall in global primary product prices which were allowed to ruin Indian farmers producing cash crops like cotton since government refused to intervene to ensure adequate support prices to the growers. Squeezed between falling output prices and rising input prices, unable to obtain any more private or bank loans, the poor peasants and small peasants have been the first to lose what little land and other assets they had.  Suicides owing to indebtedness started as far back as 1998 while the latest available data show a rise in landlessness. But as the same incorrect policies were mindlessly continued, distress has become more generalized over the years so that middle peasants and even sections of the former rich peasants have been reduced to penury. Members of cultivating  households who had never worked earlier for wages are now forced to throw themselves on the labour market and compete with full-time rural labourers whose own job opportunities have been shrinking fast and real earnings falling.


The end result today is a scenario of massive rise in farm debts and loss of rural purchasing power which is reflected in an unprecedented decline of foodgrains absorption in rural India to around 155 kg per annum compared to around 175 kg only six years ago. Not only have farmers lost on their cash crops, but on foodgrains too they have faced lowered sales as mass purchasing power fell year by year.  Nor must it be imagined that the states governed by the Left Front have been immune to these effects: central policy measures have impacted strongly on all states and further, the finances of all state governments have been eroded and their ability to maintain development spending is restricted as long as new sources of revenue are not tapped. The task of reversing the long process of decline, is a formidable one and as the CMP of the new government recognizes, it requires a large increase in rural investment and an employment guarantee scheme.


However rural investment and employment generation measures involve time lags, before results show in revived rates of growth and employment. At present even budgetary provision has not been made and implementing schemes will take even longer. Current distress is so acute, that immediate and urgent short-run steps on an emergency footing are necessary to restore some purchasing power and prevent the extreme outcomes for farmers which are still continuing, like loss of all land against debt, starvation, suicides and organ sales.


The obvious answer is two-fold: launch immediate food-for-work programmes to provide employment, and designate a senior administrative officer as Debt Relief Commissioner in every state, whose job it would be to invite distressed farmers and rural workers to apply for relief, and issue sanction letters for loans with standing instructions to banks to give these loans without question without seeking collateral. In effect government in the form of the Debt Relief Commissioner would be the guarantor of loans to the distressed and a certain part could also be grants in cases of acute distress. This would enable indebted farmers to roll over their private debts and obtain enough to sow their land for the kharif crop for which the time is now. Food-for work would relieve those who are already landless. Since every part of the country cannot be immediately covered and a start has to be made somewhere, the candidates are those areas with indicators of agrarian distress like farmer suicides, starvation and organ sales. These areas include not only the deeply distress-hit Andhra Pradesh and some areas of Karnataka and Orissa, but also those tea plantations of North Bengal whose workers have been stranded without wages or food and are starving, for employers have simply abandoned smaller plantations during the last two years as tea auction prices have gone down.



As purchasing power fell and mountainous stocks built up to over 60 million tonnes by July 2002, the previous NDA government, rather than facing facts on distress and launching food-for –work, and even though it was clear that there was severe drought, had taken the callous step of exporting a record 17 million tonnes of foodgrains between July 2002 and November 2003, as per the export figures given in the Reserve Bank of India’s Report on Currency and Finance 2002-03 which became available earlier this year. These are the largest exports ever in independent India. However there are some strange and quite large internal inconsistencies in the relevant table on public procurement, off-take from PDS, and net exports given month by month. This table (p.11) has been quoted in the RBI publication, from the Ministry of Food, Consumer Affairs and Public Distribution. When we add up the individual items we find that the closing stocks in each month (which is also the opening stock of the next month) should be larger than the figure given. For example the opening stock for January 2003 is 48.2 million tonnes while over that month procurement is stated to be 2 m.t. and off-take was 4.6 m.t.  (off-take being the sum of PDS sales, open market sales, allocations to schemes for other weaker sections, and exports) so the closing stock should be (48.2 + 2 – 4.6) = 45.6 m.t., but it is given as 40.1 m.t. raising the question of what happened to 4.5 m.t. of unaccounted foodgrains. Every month has similar though smaller discrepancies so that the final figure of opening stocks for November 2003 has been shown as 22 million tonnes whereas it should be 35 million tonnes. The question is, where did the 13 million tonnes go, which are not accounted for? Did it rot, was it destroyed, or were exports larger than they actually are stated to be? 13 million tonnes is a huge figure and if it had been used as food- -for work would have raised absorption of foodgrains per head in the country by over 12 kg annually. In any case the bureaucrats of the concerned Ministry have to give an explanation regarding the quiet fudging of the figures and the mystery behind the missing millions of tonnes of foodgrains.                       


With fresh procurement having taken place from the rabi 2004 harvest however there should be enough stocks now to launch food-for –work in the worst affected areas. 


In my previous article in (Peoples’ Democracy, June 6) I had pointed out that the Planning Commission and academic poverty estimators had been taking the country for a ride by quietly dropping the minimum calorie norm on which the very concept of poverty is based, without saying they have done so, while following an indirect method of using a price index to update a thirty- year old poverty line based on quantities people consumed at that time. They have been ignoring the current actual consumption data and calorie equivalents, which the NSS has been presenting year after year. The poverty estimates no longer reflect ground reality and in fact the very method of using a price index is giving perverse results: the more crop output prices fall and agrarian distress rises, the lower is the rise in the overall price index and the lower is ‘poverty’ as measured by the faulty official method. A remarkably low rate of inflation does not benefit wageworkers either where their employment is falling even faster reducing real earnings. 

The officially estimated percentage of people in poverty in India’s most prosperous states for the year 1999-2000, is only 7.4 per cent in Haryana and 6 per cent in Punjab following the above described faulty method of updating, using a price index, the expenditure 30 years ago which provided 2400 calories at that time. The NSS data for 1999-2000 however reveals that half or more of the rural population was actually in poverty with less than 2400 calories intake per day (see Table). We can get the more exact percentages by plotting the data on a graph (approximating the average for each expenditure class by the mid-point of the class), and find that in Haryana 48 per cent and in Punjab, 60 per cent of rural population consumed below the 2400 calorie norm. The fact that the situation in Punjab is even worse than in Haryana, should not surprise us when we recall that Punjab saw an even sharper reduction than did Haryana, in rural development expenditures as a percentage of State Domestic Product in the early nineties under Congress reform policies and that the situation only got worse under SAD rule.

Finally, let us see what is the calorie intake corresponding to the official head-count ‘poverty’ estimates, the lowest 7.4 and 6 per cent of the population in Haryana and Punjab. From the Table we find that in both states only those persons are being officially considered to be ‘poor’ whose daily intake is less than 1700 calories, far below the original norm and indeed far below any internationally accepted norm. 

                                                                               Table A


Actual levels of poverty in Punjab and Haryana from NSS Consumption Expenditure for 55th round, 1999-2000





Monthly per Expenditure Group Rs


per head per day Kcal

Cumulative percentage of all persons %

Calories per head per day Kcal


percentage of

 all persons %


Up to 300


















































Note: the expenditure groups are the same for Punjab and Haryana

Source: NSS Reports No. 454 and 471.