Franklin D Roosevelt pushed 15 major pieces of legislation through Congress in his initial 100 days as part of the New Deal that pulled the US economy out of depression during 1930s and created much of the modern US social safety net. Since then, may new governments in the democratic world often show their commitment to the people by getting into high gear in the first 100 days, be it the Obama administration in the United States or the Manmohan Singh government in India.
With shackles of the Left gone, there is high expectation of reforms from the Manmohan Singh government that can get the economy back on the 8-10% growth trajectory and also give a New Deal to the poor. The implementation of the promised National Food Security Act (NFSA) is high on the agenda, and so is putting agriculture on a 4% growth path, besides several other big ticket items like divestment in PSUs, reviving exports, and so on.
The big question is not whether the government can do it, but how best it can manage within the limited resources. Let me concentrate on two key issues — NFSA and agriculture, that may fall within the purview of the ministry of agriculture and consumer affairs.
The President of India hinted in her speech to the joint session of Parliament on June 4, 2009, that the government will bring in NFSA that will entitle by law all below-poverty-line (BPL) families 25 kg of grain (wheat and rice) per month at Rs 3/kg. Many fear that this permanent commitment may cost the government more than Rs 50,000 crore, creating a big hole in the already precarious government finances.
But I strongly feel if the government plays smart, it can easily fulfil this commitment with much less resources, and can take this major step towards a hunger-free India, giving it a huge political mileage. How? Here is a back of the envelop calculation and common sense approach to do it in a smart way.
With the economic cost of grain to be around Rs 15/kg, the subsidy will be Rs 12/kg. The commitment of 25 kg per month to BPL families translates to Rs 3,600 food subsidy to BPL families per year. This can be given in the name of the woman in the BPL family in the form of food coupons, a sort of conditional cash transfer, to buy any of the, say, 10 listed food items from any shop.
And these coupons can then be reimbursed to the shopkeeper through post offices or designated banks on a commission basis. The total bill for such a scheme will depend upon the number of BPL families in the country, and that’s where there is a lot of confusion and bungling. Going by the Planning Commission’s approach, as on March 2009, there are not more than 60 million BPL families. This means the total subsidy bill will come to Rs 21,600 crore.
But the BPL families are already getting grains at less than Rs 6/kg. If this is taken into account, the extra cost is only Rs 4,500 crore. The problem, however, is that the current number of BPL cards issued in the country under the PDS system is almost 107 million.
In fact, in some states, like Andhra, almost the entire population is shown as BPL, whereas in other states where real poverty is much more, the majority does not have BPL cards. This is ridiculous and speaks of an utter failure of governance, leading to 30% to 40% leakage from the current PDS system, which needs to be corrected once for all, in a transparent, fool proof, and ingenious manner, if we really want to help the poor.
How can we do it? We may have to think out of the box and combine new technology with desi (local) ways of identifying the real poor in the country. Can we say that all those who have motorised vehicles, or electricity bills above a minimum cut off, or a regular job in the organised sector, or a cell phone with some minimum bill, are not BPL?
All such people are registered at one place or another and can be scanned through computers and taken off the BPL list. Some of my colleagues tell me that even real BPL may also have a cell phone. Fine, but you combine this with a sort of social audit. Mr Naveen Jindal, MP from Haryana, tells me that they experimented with an idea to paint the outer wall of a BPL family with specific visible sign (may be a tri-colour with the number of the BPL family in the village on that).
This acted as a powerful social audit and several families opted out of the BPL list as they wanted to graduate to non-BPL status. There could be many such innovative approaches that can be used along with modern ICT tools to identify the poor.
The success of NFSA critically hinges on this identification process, and we need to put a lot of effort and creativity to do it right. The returns will be enormous, else it can prove to be another mismanaged ‘flagship’ programme with high cost; and hunger will still continue to haunt several million people in this country.
But the long-term food security lies not just in food coupons, but in raising production of staples and augmenting farmers’ incomes through other agri-commodities, especially through high-value agriculture such as horticulture, livestock and fishery. This will dovetail with the 4% targeted rate of growth in agriculture. How does one achieve this?
Foodgrain production needs a switch in strategy; from the heavy reliance on north-west to a move to eastern India (Uttar Pradesh, Bihar, West Bengal, Assam, Orissa and Chhattisgarh). This is where water is, and this is where the future grain basket of India lies. But it needs large investments in controlling floods, building infrastructure of roads and markets, having electricity for shallow tubewells, and so on.
The technologies are there, which can raise yields significantly by 50% to 100% in three to five years, but it needs the right policy environment and investments in basic infrastructure. The bill could be Rs 10,000 crore a year for the next three to five years, to ensure food security of the nation for the next 20 years.
Such a strategy will have high pay-offs, as the country can then get going aggressively on diversification towards high-value agriculture. And it is here that the future sources of growth in agriculture will come from. These high value commodities are perishable in nature and need a very different development strategy than has been the case in grains.
The private sector will play a lead role linking production at farms to processing and organised retailing in compressed and efficient value chains. But the government has to create an enabling policy environment by changing the APMC Act on the lines of the Model Act, by freeing land lease markets, by encouraging food processing and removing all hurdles in the path of organised retailing by domestic and foreign players.
A well integrated value chain will also help the infusion of new farming technologies and investments in logistics, helping the small and large farmers alike. Organised retail can also help in mainstreaming the kirana shops and other small vendors, if the policy suggests that 20% of their space has to be through the franchise route.
The target of achieving 4% rate of growth in agriculture is not an impossible task. During 2000-01 to 2007-08, while the all-India agri-GDP growth rate was 2.9%, there are states like Gujarat where agri-growth rate was 9.6% p.a. It is time for many other states to show a similar stellar performance, and the Centre’s job is to encourage, enable, and reward such states!
With shackles of the Left gone, there is high expectation of reforms from the Manmohan Singh government that can get the economy back on the 8-10% growth trajectory and also give a New Deal to the poor. The implementation of the promised National Food Security Act (NFSA) is high on the agenda, and so is putting agriculture on a 4% growth path, besides several other big ticket items like divestment in PSUs, reviving exports, and so on.
The big question is not whether the government can do it, but how best it can manage within the limited resources. Let me concentrate on two key issues — NFSA and agriculture, that may fall within the purview of the ministry of agriculture and consumer affairs.
The President of India hinted in her speech to the joint session of Parliament on June 4, 2009, that the government will bring in NFSA that will entitle by law all below-poverty-line (BPL) families 25 kg of grain (wheat and rice) per month at Rs 3/kg. Many fear that this permanent commitment may cost the government more than Rs 50,000 crore, creating a big hole in the already precarious government finances.
But I strongly feel if the government plays smart, it can easily fulfil this commitment with much less resources, and can take this major step towards a hunger-free India, giving it a huge political mileage. How? Here is a back of the envelop calculation and common sense approach to do it in a smart way.
With the economic cost of grain to be around Rs 15/kg, the subsidy will be Rs 12/kg. The commitment of 25 kg per month to BPL families translates to Rs 3,600 food subsidy to BPL families per year. This can be given in the name of the woman in the BPL family in the form of food coupons, a sort of conditional cash transfer, to buy any of the, say, 10 listed food items from any shop.
And these coupons can then be reimbursed to the shopkeeper through post offices or designated banks on a commission basis. The total bill for such a scheme will depend upon the number of BPL families in the country, and that’s where there is a lot of confusion and bungling. Going by the Planning Commission’s approach, as on March 2009, there are not more than 60 million BPL families. This means the total subsidy bill will come to Rs 21,600 crore.
But the BPL families are already getting grains at less than Rs 6/kg. If this is taken into account, the extra cost is only Rs 4,500 crore. The problem, however, is that the current number of BPL cards issued in the country under the PDS system is almost 107 million.
In fact, in some states, like Andhra, almost the entire population is shown as BPL, whereas in other states where real poverty is much more, the majority does not have BPL cards. This is ridiculous and speaks of an utter failure of governance, leading to 30% to 40% leakage from the current PDS system, which needs to be corrected once for all, in a transparent, fool proof, and ingenious manner, if we really want to help the poor.
How can we do it? We may have to think out of the box and combine new technology with desi (local) ways of identifying the real poor in the country. Can we say that all those who have motorised vehicles, or electricity bills above a minimum cut off, or a regular job in the organised sector, or a cell phone with some minimum bill, are not BPL?
All such people are registered at one place or another and can be scanned through computers and taken off the BPL list. Some of my colleagues tell me that even real BPL may also have a cell phone. Fine, but you combine this with a sort of social audit. Mr Naveen Jindal, MP from Haryana, tells me that they experimented with an idea to paint the outer wall of a BPL family with specific visible sign (may be a tri-colour with the number of the BPL family in the village on that).
This acted as a powerful social audit and several families opted out of the BPL list as they wanted to graduate to non-BPL status. There could be many such innovative approaches that can be used along with modern ICT tools to identify the poor.
The success of NFSA critically hinges on this identification process, and we need to put a lot of effort and creativity to do it right. The returns will be enormous, else it can prove to be another mismanaged ‘flagship’ programme with high cost; and hunger will still continue to haunt several million people in this country.
But the long-term food security lies not just in food coupons, but in raising production of staples and augmenting farmers’ incomes through other agri-commodities, especially through high-value agriculture such as horticulture, livestock and fishery. This will dovetail with the 4% targeted rate of growth in agriculture. How does one achieve this?
Foodgrain production needs a switch in strategy; from the heavy reliance on north-west to a move to eastern India (Uttar Pradesh, Bihar, West Bengal, Assam, Orissa and Chhattisgarh). This is where water is, and this is where the future grain basket of India lies. But it needs large investments in controlling floods, building infrastructure of roads and markets, having electricity for shallow tubewells, and so on.
The technologies are there, which can raise yields significantly by 50% to 100% in three to five years, but it needs the right policy environment and investments in basic infrastructure. The bill could be Rs 10,000 crore a year for the next three to five years, to ensure food security of the nation for the next 20 years.
Such a strategy will have high pay-offs, as the country can then get going aggressively on diversification towards high-value agriculture. And it is here that the future sources of growth in agriculture will come from. These high value commodities are perishable in nature and need a very different development strategy than has been the case in grains.
The private sector will play a lead role linking production at farms to processing and organised retailing in compressed and efficient value chains. But the government has to create an enabling policy environment by changing the APMC Act on the lines of the Model Act, by freeing land lease markets, by encouraging food processing and removing all hurdles in the path of organised retailing by domestic and foreign players.
A well integrated value chain will also help the infusion of new farming technologies and investments in logistics, helping the small and large farmers alike. Organised retail can also help in mainstreaming the kirana shops and other small vendors, if the policy suggests that 20% of their space has to be through the franchise route.
The target of achieving 4% rate of growth in agriculture is not an impossible task. During 2000-01 to 2007-08, while the all-India agri-GDP growth rate was 2.9%, there are states like Gujarat where agri-growth rate was 9.6% p.a. It is time for many other states to show a similar stellar performance, and the Centre’s job is to encourage, enable, and reward such states!
No comments:
Post a Comment