The United Nations celebrates October 16 as the World Food Day every year, with an aim to spread awareness about eradicating hunger and ensuring food security for all.[1]  In this context, we examine the status of food and public distribution in India, and some challenges in ensuring food security for all.

Background

In 2017-18, over Rs 1,50,000 crore, or 7.6% of the government’s total expenditure has been allocated for providing food subsidy under the Targeted Public Distribution System (TPDS).[2]  This allocation is made to the Department of Food and Public Distribution under the Ministry of Consumer Affairs.

Food subsidy has been the largest component of the Department’s expenditure (94% in 2017-18), and has increased six-fold over the past 10 years.  This subsidy is used for the implementation of the National Food Security Act, 2013 (NFSA), which provides subsidised food grains (wheat and rice) to 80 crore people in the country.[3]  The NFSA seeks to ensure improved nutritional intake for people in the country.3

One of the reasons for the six-fold increase in food subsidy is the non-revision of the price at which food grains are given to beneficiaries since 2002.[4]  For example, rice is given to families under the Antyodaya Anna Yojana at Rs 3/Kg since 2002, while the cost of providing this has increased from Rs 11/Kg in 2001-02 to Rs 33/Kg in 2017-18.

Provision of food subsidyTable 1

TPDS provides food security to people below the poverty line.  Over the years, the expenditure on food subsidy has increased, while the ratio of people below poverty line has reduced.  A similar trend can also be seen in the proportion of undernourished persons in India, which reduced from 24% in 1990 to 15% in 2014 (see Table 1).  These trends may indicate that the share of people needing subsidised food has declined.

Nutritional balance:  The NFSA guarantees food grains i.e. wheat and rice to beneficiaries, to ensure nutritious food intake.3  Over the last two decades, the share of cereals or food grains as a percentage of food consumption has reduced from 13% to 8% in the country, whereas that of milk, eggs, fish and meat has increased (see Figure 1).  This indicates a reduced preference for wheat and rice, and a rise in preference towards other protein rich food items. Figure 1

Methods of providing food subsidy

Food subsidy is provided majorly using two methods.  We discuss these in detail below.

TPDS assures beneficiaries that they will receive food grains, and insulates them against price volatility. Food grains are delivered through fair price shops in villages, which are easy to access.[5],[6]

However, high leakages have been observed in the system, both during transportation and distribution.  These include pilferage and errors of inclusion and exclusion from the beneficiary list.  In addition, it has also been argued that the distribution of wheat and rice may cause an imbalance in the nutritional intake as discussed earlier.7  Beneficiaries have also reported receiving poor quality food grains as part of the system.

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.6,7

However, it has also been argued that cash received as part of DBT may be spent on non-food items.  Such a system may also expose beneficiaries to inflation.  In this regard, one may also consider the low penetration and access to banking in rural areas.[7]

Figure 2

In 2017-18, 52% of the centre’s total subsidy expenditure will be on providing food subsidy under TPDS (see Figure 2).  The NFSA states that the centre and states should introduce schemes for cash transfers to beneficiaries.  Other experts have also suggested replacing TPDS with a Direct Benefit Transfer (DBT) system.4,[8]

The central government introduced cash subsidy to TPDS beneficiaries in September 2015.[9]  As of March 2016, this was being implemented on a pilot basis in a few union territories.  In 2015, a Committee on Restructuring of Food Corporation of India had also recommended introducing Aadhaar to plug leakages in PDS, and indexing it to inflation.  The Committee estimated that a switch to DBT would reduce the food subsidy bill of the government by more than Rs 30,000 crore.[10]

Current challenges in PDS

Leakages in PDS:  Leakages refer to food grains not reaching intended beneficiaries.  According to 2011 data, leakages in PDS were estimated to be 46.7%.10,[11]  Leakages may be of three types: (i) pilferage during transportation of food grains, (ii) diversion at fair price shops to non-beneficiaries, and (iii) exclusion of entitled beneficiaries from the list.6,[12]

In 2016, the Comptroller and Auditor General (CAG) found that states had not completed the process of identifying beneficiaries, and 49% of the beneficiaries were yet to be identified.  It also noted that inclusion and exclusion errors had been reported in the beneficiary lists.[13]

In February 2017, the Ministry made it mandatory for beneficiaries under NFSA to use Aadhaar as proof of identification for receiving food grains.  Through this, the government aims to remove bogus ration cards, check leakages and ensure better delivery of food grains.10,[14]  As of January 2017, while 100% ration cards had been digitised, the seeding of these cards with Aadhaar was at 73%.14

Figure 3

Storage:  As of 2016-17, the total storage capacity in the country is 788 lakh tonnes, of which 354 lakh tonnes is with the Food Corporation of India and 424 lakh tonnes is with the state agencies.[15]

The CAG in its performance audit found that the available storage capacity in states was inadequate for the allocated quantity of food grains.13  For example, as of October 2015, of the 233 godowns sanctioned for construction in Maharashtra, only 93 had been completed.  It also noted that in four of the last five years, the stock of food grains with the centre had been higher than the storage capacity available with Food Corporation of India.

Quality of food grains:  A survey conducted in 2011 had noted that people complained about receiving poor quality food grain which had to be mixed with other grains to be edible.6  There have also been complaints about people receiving food grains containing alien substances such as pebbles.  Poor quality of food may impact the willingness of people to buy food from fair price shops, and may have an adverse impact on their health.[16]

The Ministry has stated that while regular surveillance, monitoring, inspection and random sampling of all food items is under-taken by State Food Safety Officers, separate data for food grains distributed under PDS is unavailable.[17]  In the absence of data with regard to quality testing results of food grains supplied under PDS, it may be difficult to ascertain whether these food items meet the prescribed quality and safety standards.

[1] About World Food Day, http://www.fao.org/world-food-day/2017/about/en/.

[2] Expenditure Budget, Union Budget 2017-18, http://unionbudget.nic.in/ub2017-18/eb/allsbe.pdf.

[3] National Food Security Act, 2013, http://indiacode.nic.in/acts-in-pdf/202013.pdf.

[4] “Prices, Agriculture and Food Management”, Chapter 5, Economic Survey 2015-16, http://unionbudget.nic.in/budget2016-2017/es2015-16/echapvol2-05.pdf.

[5] The Case for Direct Cash Transfers to the Poor, Economic and Political Weekly, April 2008, http://www.epw.in/system/files/pdf/2008_43/15/The_Case_for_Direct_Cash_Transfers_to_the_Poor.pdf.

[6] Revival of the Public Distribution System: Evidence and Explanations, The Economic and Political Weekly, November 5, 2011,

http://www.epw.in/system/files/pdf/2011_46/44-45/Revival_of_the_Public_Distribution_System_Evidence_and_Explanations.pdf.

[7] ‘Report of the Internal Working Group on Branch Authorisation Policy’, Reserve Bank of India, September 2016, https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/IWG99F12F147B6E4F8DBEE8CEBB8F09F103.PDF.

[8] Working Paper 294, “Leakages from Public Distribution System”, January 2015, ICRIER, http://icrier.org/pdf/Working_Paper_294.pdf.

[9] “The Cash Transfer of Food Subsidy Rules, 2015”, Ministry of Consumer Affairs, Food and Public Distribution, September 3, 2015, http://dfpd.nic.in/writereaddata/Portal/News/32_1_cash.pdf.

[10] Report of the High Level Committee on Reorienting the Role and Restructuring of Food Corporation of India, January 2015, http://www.fci.gov.in/app2/webroot/upload/News/Report%20of%20the%20High%20Level%20Committee%20on%20Reorienting%20the%20Role%20and%20Restructuring%20of%20FCI_English_1.pdf.

[11] Third Report of the Standing Committee on Food, Consumer Affairs and Public Distribution: Demands for Grants 2015-16, Department of Food and Public Distribution, http://164.100.47.193/lsscommittee/Food,%20Consumer%20Affairs%20&%20Public%20Distribution/16_Food_Consumer_Affairs_And_Public_Distribution_3.pdf.

[12] Performance Evaluation of Targeted Public Distribution System, Planning Commission of India, March 2005, http://planningcommission.nic.in/reports/peoreport/peo/peo_tpds.pdf.

[13] Audit on the Preparedness for Implementation of National Food Security Act, 2013 for the year ended March, 2015, Report No. 54 of 2015, Comptroller and Auditor General of India, http://cag.gov.in/sites/default/files/audit_report_files/Union_Civil_National_Food_Security_Report_54_of_2015.pdf.

[14] Unstarred Question No. 844, Lok Sabha, Ministry of Consumer Affairs, Food and Public Distribution, Answered on February 7, 2017, http://164.100.47.190/loksabhaquestions/annex/11/AU844.pdf.

[15] Annual Report 2016-17, Department of Food & Public Distribution, Ministry of Consumer Affairs, Food & Public Distribution, http://dfpd.nic.in/writereaddata/images/annual-140217.pdf.

[16] 30 Food Subsidy, The Economic and Political Weekly, December 27, 2014, http://www.epw.in/system/files/pdf/2014_49/52/Food_Subsidy.pdf.

[17] Unstarred Question No. 2124, Lok Sabha, Ministry of Consumer Affairs, Food and Public Distribution, Answered on November 29, 2016, http://164.100.47.190/loksabhaquestions/annex/10/AU2124.pdf.

The budget session of Parliament every year starts with the President’s Address to both Houses.  In this speech, the President highlights the government’s achievements and legislative activities in the last year, and announces its agenda for the upcoming year.   The address is followed by a motion of thanks that is moved in each House by ruling party MPs.  This is followed by a discussion on the address and concludes with the Prime Minister replying to the points raised during the discussion.

Today, the Budget Session 2019 commenced with the President, Mr. Ram Nath Kovind addressing a joint sitting of Parliament.  In his speech, he highlighted some of the objectives that the government has realised in the past year.  The President also highlighted the progress made by the government under various development schemes such as the Swachh Bharat Abhiyan, the Pradhan Mantri Jan Dhan Yojana, and the Pradhan Mantri Gram Sadak Yojana. 

Given that today’s address comes at the end of this government’s term, we examine the status of some key policy initiatives announced by the current government, that have been highlighted in speeches made in the past five years.  

Policy priority stated in President’s Addresses 2014-2018

                                                                       Current Status

Economy and Finance

Despite a global economic downturn, the Indian economy has remained on a high growth trajectory.

 

  • Growth Rate: The GDP is estimated to grow at 7.2% in 2018-19.[i]  In the last five years, GDP growth rate stayed within 7% and 8% per year, with a dip to 6.7% in 2017-18, the year of demonetisation.[ii],[iii]
  • Inflation: A target of 4% for the Consumer Price Index (CPI) inflation was notified by the Ministry of Finance for the period 2016-2021.[iv] CPI stayed within this band for most of the period between 2014 and 2018.
  • Foreign Exchange Reserves stood at USD 397 billion on January 2019, as compared to USD 313 billion in May, 2014.[v],[vi]

Measures to deal with corruption, black money and counterfeit currency will be introduced

 

  • Demonetisation:  On November 8, 2016, the Government announced the demonetisation of Rs 500 and Rs 1000 notes.[vii]  During the period from November 2016 to October 2017, undisclosed income of over Rs 24,800 crore was detected.[viii]
  • The Fugitive Economic Offenders Bill, 2018 was passed in July, 2018.  The Bill seeks to confiscate properties of economic offenders who have left the country to avoid facing criminal prosecution.[ix]
  • The Prevention of Corruption (Amendment) Bill, 2013 amends the Prevention of Corruption Act, 1988.  Under the 1988 Act, taking of a bribe by a public official was an offence.  The Bill also makes the giving of a bribe an offence.[x] 

To promote the concept of cooperative federalism through One Nation-One Tax and One Nation-One Market, the government introduced the Goods and Services Tax

  • Goods and Services Tax was introduced across the country from July 1, 2017.[xi]  

Agriculture

Agriculture is the main source of livelihood for a majority of people.  For holistic development of the agricultural sector, the Pradhan Mantri Fasal Bima Yojana was launched in 2016

  • Pradhan Mantri Fasal Bima Yojana (PMFBY):  PMFBY was launched with the aim of providing insurance coverage and financial support to farmers in the event of crop failure.  The number of farmers enrolled under the scheme declined from 5.7 crore in 2016-17 to 5.2 crore in 2017-18.[xii]  

Employment and Entrepreneurship

The government has continuously worked for reforms of labour laws.  Minimum wages have increased by more than 40%

 

  • Over the last three years, the Ministry of Labour and Employment has introduced three draft Codes to simplify labour laws.  These are: (i) the draft Labour Code on Industrial Relations, (ii) the draft Code on Social Security and (iii) the draft Code on Occupational Safety, Health and Working Conditions.60  Additionally, in 2017, the Code on Wages Bill, 2017 was introduced in the Lok Sabha.
  • In 2017, the central government increased minimum wages by 40% through a gazette notification.  Minimum wages (per day) for non-agricultural workers increased from Rs 250 to Rs 350 for unskilled workers and Rs 523 for skilled workers.[xiii],[xiv],[xv]

Infrastructure

Cities are the engines of economic growth.  The Smart City programme was initiated to build modern amenities and infrastructure.

 

  • Smart Cities and the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) have an outlay of Rs 48,000 crore and Rs 50,000 crore for the period 2015-2020, respectively.[xvi]
  • As of January 19, 2018, 100 smart cities have been selected.  As of 2018, the total proposed investment in these cities is Rs 2,05,018 crore.[xvii],[xviii]

All rural habitations will be connected with all-weather roads. So far, 73,000 kilometres of roads have been laid in rural areas.

 

  • The Pradhan Mantri Gram Sadak Yojana (PMGSY) aims to connect all eligible unconnected habitations in rural areas with all-weather roads by March 2019.[xix],[xx]  As of January 29, 2019, of the target of 1.52 lakh habitations to be covered since the inception of the scheme, 1.46 lakh (96%) habitations have been connected.[xxi]  

Housing is a fundamental right.  All households shall have a dwelling unit under the Mission Housing for All by 2022.

 

  • Pradhan Mantri Awas Yojana (PMAY) was launched in 2015.  The Yojana has two components: rural and urban. 
  • Under PMAY-Urban, 5,33,000 have been completed in 2018-19.  Under PMAY-Rural, 14,21,850 have been built in 2018-19. [xxii],[xxiii]

Health and Sanitation

Poor sanitation weakens the economic wherewithal of a poor household.  The Swachh Bharat Abhiyan aims to ensure health and sanitation. 

  • Swachh Bharat Mission: Swachh Bharat Mission (SBM) was launched on October 2, 2014 to achieve a clean and open defecation free India.  It has two components: SBM Urban and SBM Rural. [xxiv],[xxv]
  • Under SBM Urban, as of January 29, 2019, 24,130 individual household toilets have been constructed.[xxvi]
  • Under SBM Gramin, as of January 30, 2019, 919 lakh individual household toilets have been constructed (98.81% of target). [xxvii],[xxviii]

The government is committed to providing affordable and accessible healthcare to all its citizens, particularly the vulnerable groups.

  • Ayushmaan Bharat: In the General Budget 2018-19, the Government announced two major initiatives in health sector as a part of the Ayushman Bharat program.  These were: Health and Wellness Centres and the Pradhan Mantri Jan Arogya Yojana (PMJAY).[xxix]
  • Ayushmaan Bharat aims to create 1,50,000 health and wellness centres providing comprehensive primary healthcare. Rs 1200 crore has been allocated for this purpose.[xxx] PMJAY will cover over ten crore poor and vulnerable families. [xxxi]  It will provide coverage of up to five lakh rupees per family per year for secondary and tertiary care hospitalisation.  For the year 2018-19, Rs 3,125 crore has been allocated for this scheme.[xxxii]

Source: President’s Addresses 2014-2018; PRS.

For important highlights from the President’s address in 2019, please see here.  For a deeper analysis of the status of implementation of the announcements made in the President’s addresses from 2014 to 2018, please see here.

 

[i] “Press Note on First Advance Estimates of National Income: 2018-19”, Ministry of Statistics and Program Implementation, Press Information Bureau, http://www.mospi.gov.in/sites/default/files/press_release/Presss%20note%20for%20first%20advance%20estimates%202018-19.pdf.

[ii] “Second Advance Estimates of National Income, 2017-18”, Ministry of Statistics and Program Implementation, Press Information Bureau, http://pib.nic.in/newsite/PrintRelease.aspx?relid=176847

[iii] “Second Advance Estimates of National Income, 2016-17”, Ministry of Statistics and Program Implementation, Press Information Bureau, http://pib.nic.in/newsite/PrintRelease.aspx?relid=158734

[iv] Overview-Monetary Policy, Reserve Bank of India, https://www.rbi.org.in/scripts/FS_Overview.aspx?fn=2752

[v] “Foreign Exchange Reserves,”  Reserve Bank of India, January 25, 2019, https://www.rbi.org.in/Scripts/WSSView.aspx?Id=22729.

[vi] RBI Database, https://dbie.rbi.org.in/DBIE/dbie.rbi?site=home.

[vii] Table No.  160, Handbook of Statistics on the Indian Economy, Reserve Bank of India, https://www.rbi.org.in/Scripts/AnnualPublications.aspx?head =Handbook%20of%20Statistics%20on%20Indian%20Economy

[viii] Lok Sabha Unstarred Question No.  1319, Ministry of Finance, December 22, 2017, http://164.100.47.194/Loksabha/Questions/QResult15.aspx?qref=59329&lsno=16.

[ix] “The Fugitive Economic Offenders Bill, 2018”, PRS Legislative Research, March 16, 2018, http://www.prsindia.org/sites/default/files/bill_files/Fugitive%20Economic%20Offenders%20Bill%20-%20Bill%20Summary.pdf.

[x] “The Prevention of Corruption (Amendment) Bill”, PRS Legislative Research, February 12, 2014, http://www.prsindia.org/sites/default/files/bill_files/Bill_Summary-_Prevention_of_Corruption_1.pdf.

[xi] “GST roll-out – Complete transformation of the Indirect Taxation Landscape; Some minute details of how it happened, Ministry of Finance”, Press Information Bureau, June 30, 2017, http://pib.nic.in/newsite/PrintRelease.aspx?relid=167023.

[xii] Lok Sabha Unstarred Question No. 17, Ministry of Agriculture and Farmers Welfare, December 11, 2018, http://164.100.47.190/loksabhaquestions/annex/16/AS17.pdf.

[xiii] “Year End Review, Ministry of Labour and Employment”, December 18, 2017, http://www.pib.gov.in/PressReleseDetail.aspx?PRID=1512998.

[xiv] Rate of Minimum Wages, Ministry of Labour and Employment, March 1 2017, https://labour.gov.in/sites/default/files/MX-M452N_20170518_132440.pdf.

[xv] Gazette Number 173, Ministry of Labour and Employment, January 19, 2017, Gazette of India, http://egazette.nic.in/WriteReadData/2017/173724.pdf.

[xvi] “Union Cabinet approves Atal Mission for Rejuvenation and Urban Transformation and Smart Cities Mission to drive economic growth and foster inclusive urban development”, Press Information Bureau, April 29, 2015, http://pib.nic.in/newsite/PrintRelease.aspx?relid=119925.

[xvii] “Shillong (Meghalaya) gets selected as the 100th Smart City”, Ministry of Housing and Urban Poverty Alleviation, Press Information Bureau, June 20, 2018, http://pib.nic.in/newsite/PrintRelease.aspx?relid=180063

[xviii] “Year Ender- Ministry of Housing and Urban Affairs-2018”, Ministry of Housing and Urban Affairs, Press Information Bureau, December 31, 2018, http://pib.nic.in/PressReleseDetail.aspx?PRID=1557895.

[xix] PMGSY Guidelines, Ministry of Rural Development, last accessed on October 23, 2018. http://pmgsy.nic.in/.

[xx] “Implementation of PMGSY”, Ministry of Rural Development, Press Information Bureau, December 27, 2018, http://pib.nic.in/newsite/PrintRelease.aspx?relid=186837.

[xxi] Online Management, Monitoring and Accounting System (OMMAS), Pradhan Mantri, Gram Sadak Yojana, last accessed on October 23, 2018, http://omms.nic.in/Home/CitizenPage/#.

[xxii] High Level Physical Progress Report, PMAYG, Ministry of Rural Development, last accessed on January 25, 2019, https://rhreporting.nic.in/netiay/PhysicalProgressReport/physicalprogressreport.aspx

[xxiii] “Year Ender-6-PMAY-Ministry of Housing and Urban Affairs, 2018”, Press Information Bureau, December 27, 2018, http://pib.nic.in/PressReleseDetail.aspx?PRID=1557462.

[xxiv] “Swachh Bharat Mission needs to become a Jan Andolan with participation from every stakeholder: Hardeep Puri, 1,789 Cities have been declared ODF conference on PPP model for waste to energy projects”, Ministry of Housing and Urban Affairs, Press Information Bureau, November 30, 2017, http://pib.nic.in/newsite/PrintRelease.aspx?relid=173995.

[xxv] “PM launches Swachh Bharat Abhiyaan”, Prime Minister’s Office, Press Information Bureau, October 2, 2014, http://pib.nic.in/newsite/PrintRelease.aspx?relid=110247.

[xxvi] “Individual Household Latrine Application”, Ministry of Housing and Urban Affairs, last accessed on January 30, 2019, http://swachhbharaturban.gov.in/ihhl/RPTApplicationSummary.aspx.

[xxvii] “Individual Household Latrine Application”, Ministry of Housing and Urban Affairs, last accessed on January 30, 2019, http://swachhbharaturban.gov.in/ihhl/RPTApplicationSummary.aspx.

[xxviii] Swachh Bharat Mission (Gramin), Ministry of Drinking Water and Sanitation, last accessed on January 30, 2019, https://sbm.gov.in/sbmdashboard/Default.aspx.

[xxix] “Ayushman Bharat for a new India -2022, announced”, Ministry of Finance, Press Information Bureau, February 1, 2018,s http://pib.nic.in/newsite/PrintRelease.aspx?relid=176049

[xxx] About NHA, Ayushmaan Bharat, Ministry of Health and Family Welfare, https://www.pmjay.gov.in/about-nha.

[xxxi] “Ayushman Bharat –Pradhan Mantri Jan AarogyaYojana (AB-PMJAY) to be launched by Prime Minister Shri Narendra Modi in Ranchi, Jharkahnd on September 23, 2018”, Ministry of Health and Family Welfare, Press Information Bureau, September 22, 2018, http://pib.nic.in/newsite/PrintRelease.aspx?relid=183624.

[xxxii] National Health Accounts, estimates for 2014-15 Ministry of Health and Family Welfare, https://mohfw.gov.in/newshighlights/national-health-accounts-estimates-india-2014-15.