UPA folly: Giving food security to those who need it less and less

As campaigning for elections hots up, both the Congress and the BJP are going to vie with each other to take the credit for an economically unwise piece of legislation - the National Food Security Act, which promises 5 kg food grain for every poor person per month at a highly subsidised price. It will be left to the next finance minister to deal with the enormity of the financial mess this will create.

And a question that has often been brushed aside as the law was being debated will demand an answer - is this the right way to ensure that people don’t go hungry? Is it cereals alone that people lack and want?

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The National Sample Survey Organisation’s Level and Pattern of Consumer Expenditure 2011-12 provides yet more evidence (there was enough already) that the focus on cereals is wrong and misplaced.

[caption id=“attachment_76424” align=“alignleft” width=“380”]  ar. People are not going to eat more of something just because they are getting it cheap. Reuters[/caption]

There’s no disagreement, really, over the fact that as people’s incomes rise, their expenditure on food falls (and, within that, cereals) relative to their expenditure on other items of consumption.

But let’s just reiterate that point anyway, with the latest figures from the survey, which show that the share of cereals in total consumer expenditure has seen a sure and steady fall from 24.2 percent in 1993-94 to 12 percent in 2011-12 in rural areas and 14 per cent to 7.3 percent in urban areas.

But it’s not that share of food and cereals are falling because the prices of other consumption items is increasing faster and thus accounting for a larger proportion of money spent - the argument trotted out by the right to food advocates. Actual consumption too is falling. In rural areas, consumption of cereals came down from 13.4 kg per person per month in 1993-94 to 11.23 kg in 2011-12. In urban areas, consumption fell from 10.6 kg to 9.32 kg over the same period.

These are aggregate numbers, covering consumption by all income groups - from the poorest to the richest. As the report points out, cereals account for 19 percent of the food basket of those in the bottom 10 percent and just around 5 percent for those in the topmost 10 per cent in rural areas. Corresponding figures for the urban areas are 15 per cent and 3 percent respectively.

Since the food security law is all about the poor, let’s look at whether or not the food habits of the poor are changing.

Well, it turns out that even the poor are reducing their consumption of cereals, though admittedly much more gradually than the higher income groups. Cereal intake fell by 0.9 percent between 1993-94 and 2011-12 in the case of the bottom most 10 per cent in rural areas and by 1.7 per cent in the urban areas. The fall was much sharper in the top two income brackets in both rural and urban areas - around 20 percent in the former and 13 percent in the latter.

Interestingly, the second lowest income group (some of whom will be covered by the NFSA) showed a faster moving away from cereals. Their consumption fell by 10 percent in the rural areas and 11 percent in the urban areas.

So these figures pre-date the full-scale roll out of the food security legislation and its advocates would argue that these figures show that the poor are not eating enough because they cannot afford to, hence the need for the law.

So let’s then take a look at three states which right to food hardliners hold up as exemplars in providing cheap foodgrains - Chattisgarh, Madhya Pradesh and Tamil Nadu. Have people started eating more cereals or at least maintained the levels they ate because they get them virtually free since 2004-05 (the cheap foodgrains schemes in these states came around this time or just a year later)?

Surprise, surprise, they haven’t. Consumption of cereals in the rural areas of Madhya Pradesh (Chattisgarh figures are included in this since the state was undivided during the 1993-94 and 1999-2000 surveys) declined from 12.16 kg per person per month in 2004-05 to 11.80 kg in 2011-12. In the urban areas, consumption fell from 11.3 kg to 1031 kg.

Ditto for Tamil Nadu, where cereal consumption in rural areas declined to 9.59 kg per person per month in 2011-12 against 10.89 kg in 2004-05 and in urban areas, to 8.60 kg from 9.48 kg during the same period.

But these are aggregates again. Does the picture change for the poorest sections in these states? Not quite.

In rural Chattisgarh and Madhya Pradesh, the overall consumption of cereals has fallen in the lowest two income classes between 2004-05 and 2011-12. Among the poorest in the rural areas, it has fallen by 9 percent and 2 percent in Chattisgarh and Madhya Pradesh respectively. Among the urban poor, the decline has been quite sharp in Chattisgarh (23 percent).

The picture is somewhat similar in the second lowest income group. In rural Chattisgarh and Madhya Pradesh, this section saw a 6 percent and 7 percent drop in cereal consumption respectively. In the urban areas, once again in Chattisgarh the consumption of cereals fell 13 per cent against 9.9 per cent in Madhya Pradesh for this group. In Tamil Nadu, cereal consumption among the urban poorest and the second poorest in rural and urban areas declined by 5 per cent, 2.5 percent and 3.9 percent respectively.

The only exceptions to this trend were the poorest groups in urban Madhya Pradesh (which logged a 8.2 percent increase in cereal intake) and in rural Tamil Nadu (where cereal consumption rose 4.8 percent).

Before the food fundamentalists start arguing that all this is actually a sign that people are not getting enough cereals - and not that preferences are changing - let’s take a look at the consumption of pulses. There is clear proof that people in the bottom two income groups are eating far more pulses than they used to. The increase in pulses consumption ranges from 11 percent among the second poorest section in rural Madhya Pradesh to 83 percent among the poorest section in rural Tamil Nadu. It’s only in urban areas of Chattisgarh that the poorest two groups ate less pulses than before, with consumption falling 13 percent in the case of the poorest and 15 percent in the case of the second poorest.

Within cereals, the decline in consumption among the lowest income groups hasn’t been uniform across various items. Consumption of rice has increased at the expense of wheat in some groups in Chattisgarh and that of wheat at the expense of rice in some groups Madhya Pradesh and Tamil Nadu.

The message from these figures is pretty clear. People are not going to eat more of something just because they are getting it cheap.

That raises two questions. One, when there is overwhelming evidence of changing food preferences, should an elaborate and inefficient architecture of procuring and distributing food grains continue to be nurtured? Is the enormous fiscal cost justified? Could the money not be put to better use?

Two, will this not hugely distort the market for cereals? Won’t a situation where consumption of something for which demand is declining is being pushed by extremely low prices, encourage diversion? Right now, foodgrain allocations for states under the Act are being decided on the basis of average offtake of three years, but there is a fair bit of scope for corruption and diversion. Even the most foolproof system to check malpractice can be subverted. Besides, what is to stop beneficiaries themselves from selling excess cereals with them?

As the new government wrestles with the problem of a ballooning food subsidy bill, it might be best for it to keep these questions in mind. If it doesn’t, what we will get is a distorted food economy, which will prove detrimental to the economy itself.

We just can’t afford that.

Seetha is a senior journalist and author