The Food Security Ordinance

Brinda Karat

SINCE the CPI(M) is a strong proponent of a legally mandated right to food, the question may be raised as to why the Party has strongly criticised the Food Security Ordinance (FSO). There are three reasons. First, coming as it does on the eve of the parliament session, it shows contempt for parliament and is an unacceptable attempt of the government to impose its writ on parliament. Second, the ordinance contains two new clauses concerning state governments without any consultation with them thus undermining the federal structure of the constitution. Third, on the substantive issues regarding the provision of food security the ordinance ignores the amendments, which were suggested by several parties, including the CPI(M), and circulated in the last session of parliament. On the other hand, it retains the extremely flawed provisions in the earlier Bill, which have been discussed in these columns in some detail. These clauses reduce even present entitlements for a large section of the population. Further, the ordinance like the Bill before it, does not protect, let alone build on the various food schemes operating well in at least twelve major states.

The effort of the CPI(M) both inside and outside parliament has been to push for amendments to the Bill, now ordinance, to prevent irrational exclusions of populations equally food insecure and to put in place a legal guarantee for a universalised right to food security which will help redress the grave injustices which have led to India being home to the largest malnourished population in the whole world.

NEW CLAUSE: IDENTIFICATION

WITHIN 180 DAYS

The Food Security Ordinance introduces a new sub-clause in Clause 10.1.(b) of the earlier Bill regarding a time-frame. It states “State Government may, as soon as possible, but within such period not exceeding 180 days after the commencement of the ordinance, identify the eligible households in accordance with the guidelines framed under this sub-section.”

The state governments will be required to complete two processes. First, the Ordinance has lowered the entitlement to 5 kgs per capita and eliminated the 35 kg entitlement per household. Thus a five member BPL family will get only 25 kgs, losing 10 kgs from its present entitlement. A four member BPL family say in a state like Kerala where family size is smaller, will lose 15 kgs from its present entitlement. To implement this reduced entitlement, it will be necessary for a state government to identify the number of individuals in each family.

Secondly, except for Antodaya card holders, there will have to be a new verification for “eligible beneficiaries”, since the targeted system remains though in a new form.

Thus the time framework should first have been discussed with state governments rather than including it in the ordinance. The CPI(M) will move an amendment to this effect.

WHO ACTUALLY

DECIDES CRITERIA?

The sub-section in the clause, which was also there in the earlier Bill, states that it is the state governments who decide the criteria for identification. The central government is claiming that in the said clause the demand of the state government for the right to decide the criteria has been accepted. This is a typical half truth to conceal the assault on the rights of the states in this ordinance. The government propaganda is that the Bill will cover 75 percent of the rural population in all states and 50 percent of the urban population, coming to an average of 67 percent in all states. This is not the case. It is a 67 percent average for the total national population divided differently in the states on the basis of criteria decided by the Planning Commission.

The state wise lists of the inclusion ratio (base 2011-12) have already been sent from the Planning Commission to the food ministry. The Planning Commission’s state wise “poverty quotas” for rural and urban areas is given in the table below in the first two columns. The third column is a calculation of the total percentage of beneficiaries in each state (rural and urban) on the basis of the Planning Commission’s inclusion ratios.

As can be seen from the table, out of 21 selected states, 13 states will have an inclusion percentage less than the national average of 67 percent, including Andhra Pradesh, Tamilnadu and Kerala while eight states will have a higher percentage including Uttar Pradesh, Bihar and Madhya Pradesh. In 12 states the percentage of rural population beneficiaries is less than the 75 percent declared for rural India. In 12 states the percentage of urban population decided is less than 50 percent.

There are several problems with this list and the approach behind it.

ANOTHER FRAUDULENT

EXERCISE?

How have these figures been decided? What is the criteria used by the Planning Commission? Government spokespersons claim that the discredited Planning Commission methodology of poverty estimates which is the basis for the  APL/BPL divisions has been given up for purposes of the FSO. But in fact, the same ratios which were used in the past to distribute quotas to the states have been retained by the Planning Commission with some “adjustments” to make it a national average of 67 percent. 

The right of the state governments to “decide criteria” is utterly compromised by these caps set by the Planning Commission. The guidelines drafted by the state governments have to be such so as to ensure exclusion of the population so as to limit the coverage to the percentage decided by the Planning Commission.

Say for example, a state government frames guidelines, that all sections of those workers who are in the unorganised sector with no fixed income will be eligible for benefits under the law. This is a perfectly logical criteria for automatic inclusion, since workers in the unorganised sector do not have a fixed income or the benefit of Dearness Allowance and are most vulnerable to high food inflation, malnutrition and hunger. Identification on the basis of such a guideline could mean that the numbers would cross the urban inclusion percentage lakshman rekha decreed by the Planning Commission for that particular state.  So the state government cannot use the criteria of its choice since it may mean higher figures of beneficiaries than decreed by the Planning Commission. It is a mockery therefore to claim that state governments are given the right to decide the criteria.

Informally, the central government is telling the states to use the data being collected through the questionnaires being used for the Social and Caste Census for the exclusion.

It is also being suggested that the Planning Commission will on the basis of the SECC census data available for most states, help the state governments to “doctor” their guidelines so as to “fit in” with the percentages given, by asking only such questions as will ensure that percentages add up. This is a most cynical exercise which is as fraudulent as the discredited poverty lines of the Planning Commission.

ELIMINATING THE RIGHTS

OF APL CARD HOLDERS

What will be the result if these “state quotas” are implemented? As is known in at least 12 major states, governments have covered a much larger population in their food security schemes than advocated through the fraudulent numbers put out by the Planning Commission. This has meant a larger number of BPL cards have been issued and more people have had access to foodgrains at subsidised prices in these states. These States include Tamilnadu,, Karnataka Kerala, Andhra Pradesh, Jharkhand, Orissa Bengal, Tripura, Rajastahan, Madhya Pradesh, Chattisgarh,Gujarat.

APL card holders have also had access to foodgrains, in these and other states. If the state governments actually implement the law in its present form it will mean the cancellation of the rights of crores of these  card holders.

According to the food ministry figures (Pg 53, Foodgrains Bulletin, May 2013) as on March 31, 2013, there are 13.17 crore APL ration cards in the country, 8.68 crore BPL cards and 2.43 crore AAY cards adding up to a total of 24.29 crore cards. Considering that there are 24.70 households according to the 2011 census, if the ration card figures are correct this makes it a very high coverage of the population who have ration cards.

The government charges that there are a large number of “ghost cards.” It is true that the numbers do not match up, because there are still substantial numbers of people without any ration cards. Also in a state like West Bengal the number of cards is high because it is individual based. But even taking all these factors together, there is little doubt, that far more than 67 percent of the population have ration cards and therefore have an entitlement to food subsidy, whether or not they use that entitlement.

Implementing the quotas set up by the Planning Commission will mean the elimination of the rights of APL card holders to subsidised foodgrains. It needs to be reiterated that the above poverty line (APL) ration card holders have been designated as such by utterly fraudulent data. Their vulnerability to high food inflation is shown by the fact that a large percentage of APL cardholders are actually lifting their quotas. The offtake of rice by APL card holders has been consistently above 70 percent and upto 90 percent between 2010-2011 to 2013-2014 (upto April 2013).

The legal mandate under the FSO is for the state governments to “adjust” to another fraud being committed through irrational exclusions of people. Will it be possible for any state government to do this?

The utter hypocrisy of the central government lies in the clause 32.2 in the ordinance which states “Notwithstanding anything contained in this ordinance, the state government may, continue with or formulate nutrition based plans or schemes providing for benefits higher than the benefits provided in this ordinance, from their own resources.” In fact it should be the other way around. Any food security Bill for the country should use as its benchmark the better and “higher benefits” existing in different states. For this, the only way would be a universal public distribution system backed up by the law. Instead what will happen is that the state governments will be burdened by high costs of procuring the grains they will require to maintain their better system of food security. Therefore the centre is shifting its responsibility and the financial burdens to the states.

STATE

VARIATIONS

Apart from the elimination of rights of a substantial section affecting all states, there will be a varied impact on other issues. The following assessment is based on various reports of the food ministry. It may require correction for certain states. Also the ratio of rice and wheat allocations which have state wise differences which are subject to change must also be factored in.

The states which have not initiated any pro-poor food schemes but have accepted the central government BPL numbers and prices include Maharashtra, Uttar Pradesh, Bihar, Assam, Punjab, Haryana, Himachal Pradesh. In these states BPL families will lose out on the allocations. At present they are getting 35kgs but will now get 25 kgs. The current market price of common rice is around 25 rupees a kilo. Thus they will incur an expenditure of 250 rupees for ten kilos to maintain the pre-FSO level of 35 kgs. For wheat (flour) present market prices are 20 rupees a kilo or an added expenditure of 200 rupees for 10 kilos.

However the BPL families in these states will gain through price benefit offered in the FSO. At present they are paying an average of six rupees per kilo of rice. The FSO offers rice at three rupees a kilo. For twenty five kilos of rice they will make a saving of 75 rupees from what they are paying now. For wheat the average is 4.50 rupees a kg at present. The price of wheat in the FSO is two rupees a kg.. Thus the saving on 25 kgs of wheat would be 82.50 rupees.

Thus if a five member BPL family is to maintain the 35 kgs level there would be a net loss in monetary terms after the implementation of the FSO to the extent of 185 rupees for rice and 117. 50 rupees for wheat per family per month. This is the additional expenditure at  present market prices which as we know are relentlessly increasing.

In addition, in particular UP and Bihar a benefit accruing from the FSO will be that a substantial number of APL families will benefit by gaining access to the FSO through the inclusion ratios for these states.

OTHER

STATES

Tamilnadu  has a unique universalised system where 20 kgs of rice is given free of cost to everyone. After the FSO all “eligible” families will have to be given 5 kgs more. However the inclusion ratio for Tamilnadu is set at just 50.55 per cent so there will be a drastic reduction in the allocations from the centre. If Tamilnadu wants to maintain the universal system it will have to buy more much grain in the open market at high costs. This is clearly unfair, unjust and a mockery of food security for the people of Tamilnadu.

The state government will save some money through the price differential between the central government’s issue price and the state subsidy of free rice. At present it is buying APL rice at over eight rupees a kilo and BPL rice at over four rupees a kg from the centre and giving it free to the people. Now rice will be available from the centre at three rupees a kg. But in total the cost borne by the state government will go up.

In Kerala there will be a loss on all three counts, cut in allocations, higher prices, as well as exclusion of APL card holders as the coverage in Kerala is near universal. In Tripura also, there will be a cut on all three counts as will be so in Orissa and Jharkhand.

In Andhra Pradesh and Madhya Pradesh where the allocation is 20 kgs for a five member BPL family, there will be a gain of 5kgs but at higher prices, since rice is available at two rupees.

In other states like Chattisgarh, Bengal, Rajasthan, a five member BPL family will not gain in allocations as they are currently getting 25 kgs per month. However they will lose out on price benefit as in these states the price of rice is just two rupees or one rupee a kilo thus they will have to pay that much more for the same allocation of rice/wheat. In Gujarat there is a graded price benefit for 35 kgs so BPL families will lose out.

The main question which arises is how can the central government claim to be providing food security as on many counts entitlements are being cut which will cause food insecurity ? The ordinance in Clause 10 (b) states that “the state government shall continue to receive the allocations of foodgrains from the central government under the existing targeted public distribution system, till the identification of households is complete.” In other words once the fraudulent ratios of the Planning Commission are implemented and “eligible” beneficiaries identified, the allocations will be cut and allocations made only according to the figures given by the Planning Commission. This is a most dangerous clause which must  be amended so that at least the present allocations will not be reduced for any state.

ACTUAL

CRITERIA

In fact, the actual criteria is that the central government has decided the “quotas” simply on the basis of what it wants to spend – of gaining the maximum political mileage with the least amount of additional expenditure rather than of any moral or ethical responsibility to meet the needs of food security.

The highly inflated figures of the amount of money required for the FSO of over 3 percent of GDP by right wing economists is laughable. The food ministry has calculated that with the increased population in 2011 over 2001, (which would have meant an increased expenditure regardless of the FSO) as well as the price difference between present BPL prices and the proposed price in the FSO, added expenditure would come to an additional 24,000 crore rupees over the approximately One lakh crore being spent on the food subsidy.

The entire cost is less than one percent of the GDP.

By cutting down the BPL entitlement by 10 kgs per family and by eliminating a large number of APL cardholders from the list of beneficiaries the government is juggling around the same amount of foodgrains presently being allocated to the PDS. According to estimates given by the food ministry, the implementation of the food security law will not require any substantial increase in the foodgrain requirement.

The annual allocations to the PDS for all ration card holders has ranged from 48.87 million tones in 2011-2012 to 50. 46 million tones in 2012-2013. If one includes all the allocations including the additional for welfare schemes like mid-day meal scheme, the total allocation of foodgrains for 2013-2014 is 53.12 million tonnes. The calculation of the ministry is that the FSO will require at most around 4 million tonnes more.

For the last several years India has a buffer stock of foodgrains more than double its requirement. As on June 1, 2013, the stocks with the FCI and State agencies were 7.76 million tonnes while the buffer stock requirement is just 3.19 million tonnes. The expenditure on maintaining these stocks is also high. The government could have easily maintained the entitlement of 7 kgs per capita instead of cutting it down to 5 kgs

SECOND NEW CLAUSE :

IN THE RULES

As part of the procedure towards implementation of an Act, the government has to frame Rules for its concrete implementation. The Bill in its main body has a chapter on introduction of ‘reforms’ in the PDS. The first draft of the Bill placed before the Standing Committee had an obnoxious clause which linked the rights of APL card holders to get the benefits of the law, to the actions of the state government to implement the reforms including cash transfers instead of foodgrains. After strong objection the linkage was deleted in the Bill placed before parliament. The redrafted clause read “ that the central and state governments shall endeavour… to progressively introduce reforms… such as cash transfers etc.” No time frame was set.

In the ordinance however there is a reintroduction of the mandatory nature of introduction of cash transfers this time in the section about the right of the central government to frame the rules. The clause 38.1 (d)  reads “ the Rules may provide for all or any of the following .. “introducing cash transfer schemes to the targeted beneficiaries in lieu of their foodgrains entitlements in such areas and manner .. as may be prescribed by the central government.

As is known the Rules do not require any consultation with the state governments. Thus this provision in the law will make it mandatory for state governments to implement the cash transfer scheme even if they oppose it, if the central government so decides.  Moreover since the Rules are framed by the central government the states will have no say at all on this important issue.

Thus the Bill is being used as an instrument to make it compulsory for all state governments to accept the UPA version of “reform” in the PDS overriding the objections of the states even where it concerns direct cash transfers as a substitute for foodgrains.

IMPROVE

THE BILL

The earlier critiques of the Bill remain valid for the ordinance too. The CPI(M) had in the last session of parliament moved amendments to all those flawed clauses. The amendments included:.

(1) The Bill retains the targeted system by excluding 25 percent in rural areas and 50 percent in urban areas. The Party’s amendment is ‘to make it universal excluding only income tax payees.”

(2)  The Bill is limited only to foodgrains. The CPI(M) amendment is to include “ adequate quantities of sugar, pulses and cooking oil.”

(3) The allocation in the Bill is only for 5kgs of foodgrains per person per month. The CPI(M) amendment is ; “7 kilograms of foodgrains per month or 35 kilograms per household, whichever is higher.”

(4)The Bill in Schedule 1 puts the price of rice at three rupees a kilo. The CPI(M) amendment is for “Rs 2 per kg for rice.”

(5) The Bill includes a clause that the current prices will be valid for only three years after which they may be raised as long as it is not above the MSP price for foodgrains. This is a most obnoxious clause as it is designed to cut the subsidy on issue price of foodgrains in the PDS, wrongly linking the issue prices to MSP. The CPI(M) amendment is to delete this clause in the Schedule 1

(6) In all sections where the central government has arrogated to itself the right to take arbitrary decisions, including those on cost sharing, the CPI(M) amendment is “ only in consultation with state governments.” The CPI(M)s fresh amendment will include the words “in consultation and with the agreement of state governments.” This is necessary because the Bill is highly centralised and with the additions in the ordinance, agreement of the state government is essential before any step is taken.

(7) The present Bill has omitted the earlier clauses for food security for particularly deprived sections through community kitchens. The CPI(M) amendment is to retain these clauses and for the cost to be born by central government.

(8) A fresh amendment will include a clause that present allocations will not be reduced.

(9)Amendment to remove the reference to cash transfers and AADHAR.