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Managerial Economics

What Stands in the Way of Food Security

The main problems in delivering food security in India, from poor grain quality and skewed MSP incentives to storage gaps, and the fixes: DBT, automation, Aadhaar and decentralised procurement.

By 4 min read

Sev­eral prob­lems stand in the way of deliv­er­ing food secu­rity through the food sub­sidy.

  1. Ben­e­fi­cia­ries have com­plained of receiv­ing poor qual­ity food grains.
  2. Farm­ers receive Min­i­mum Sup­port Price (MSP) from the Gov­ern­ment for crops such as wheat, paddy, and sug­ar­cane. The MSP is often higher than the mar­ket price, while there is very lit­tle gov­ern­ment pro­cure­ment of other crops at MSP. Due to this fac­tor farm­ers do not have the incen­tive to pro­duce other crops such as pulses. This puts immense pres­sure on the water table as the above crops are highly water-inten­sive.
  3. A diet based mainly on sub­sidised cere­als can worsen nutri­tional imbal­ance, so the Gov­ern­ment needs to widen the sub­sidy to include pro­tein-rich foods.
  4. Under the National Food Secu­rity Act, the iden­ti­fi­ca­tion of ben­e­fi­cia­ries is to be com­pleted by State Gov­ern­ments. As per the find­ings of the Comp­trol­ler and Audi­tor Gen­eral in 2016, a mas­sive 49 % of the ben­e­fi­cia­ries were yet to be iden­ti­fied by the State Gov­ern­ments.
  5. The avail­able stor­age capac­ity in states was inad­e­quate for the allo­cated quan­tity of food grains as per the report of the Comp­trol­ler and Audi­tor Gen­eral (CAG).

Solu­tions to Prob­lems in Food Sub­sidy Deliv­ery

The fol­low­ing solu­tions will help in address­ing prob­lems asso­ci­ated with PDS.

  1. Replac­ing the 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 (FCI), DBT would reduce Gov­ern­ment sub­sidy bills by more than Rs 30,000 crores.
  2. 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 the instal­la­tion of Point of Sale (PoS) devices, for authen­ti­ca­tion of ben­e­fi­cia­ries and elec­tronic cap­tur­ing of trans­ac­tions.
  3. Aad­har and the intro­duc­tion of Bio­met­rics were rec­om­mended to plug leak­ages in PDS. Such trans­fers could be linked to Jan Dhan accounts, and be indexed to infla­tion. It helps remove 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.
  4. 100% of ration cards had been dig­i­tized.
  5. Between 2016 and 2018, the seed­ing of Aad­haar helped in the detec­tion of 1.5 crores fake, dupli­cate, and bogus ration cards, and these cards were deleted.
  6. Increase the pro­cure­ment under­taken by states known as Decen­tralised Pro­cure­ment (DCP), and reduce the expen­di­ture on cen­tral­ized 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 had adopted decen­tralised pro­cure­ment.
  7. The Fair Price shops oper­ate at very low mar­gins as per the 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 not to resort to unfair prac­tices in the dis­tri­b­u­tion of Gov­ern­ment-sub­si­dized food grains meant for ben­e­fi­cia­ries of Gov­ern­ment schemes.
  8. Greater and more active involve­ment of the pan­chay­ats in the PDS can sig­nif­i­cantly improve access at the vil­lage level.
  9. There is also an urgent need to set up a proper and effec­tive griev­ances redres­sal sys­tem for both fair price shops and ben­e­fi­cia­ries.

Inter­na­tional Organ­i­sa­tions Ensur­ing Food Secu­rity

  1. Food and Agri­cul­ture Orga­ni­za­tion (FAO) – It was estab­lished in 1945 and is head­quar­tered in Rome, Italy. It is a spe­cialised agency of the United Nations that leads inter­na­tional efforts to defeat hunger and improve nutri­tion and food secu­rity.
  2. World Food Pro­gramme (WFP)– It is the world’s largest human­i­tar­ian orga­ni­za­tion address­ing hunger and pro­mot­ing food secu­rity. It was estab­lished in 1961. It is head­quar­tered in Rome, Italy. It is a food assis­tance branch of the United Nations.
  3. Inter­na­tional Fund for Agri­cul­tural Devel­op­ment (IFAD) – It is an inter­na­tional finan­cial insti­tu­tion and a spe­cial­ized agency of the United Nations that works to address poverty and hunger in rural areas of devel­op­ing coun­tries. It is head­quar­tered in Rome, Italy.
  4. World Bank – It was estab­lished in 1944 and is head­quar­tered in Wash­ing­ton, D.C.
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