Food Security and PDS in India*

Prof. M.K.Ghadoliya*

Abstract

In a democratic country like India, It is the moral duty of the government to provide food to all as this
is one of the MDGs to be achieved by all the governments by 2015. The production and productivity
has increased during past few decades. The possibility of further improvement in the production and
productivity seems to be limited due to limited land resources and declining water availability. To
ensure the economic access of the poor the government of India has come up with a very ambitious
plan of providing food at subsidised rates to almost all the population. The Food Security Act will
boost the requirement for PDS and the government will have to make provisions for huge amount of
subsidy. It is therefore necessary to limit the subsidy by targeting the beneficiaries into three
categories on the basis of the ownership of assets as:

(a) Asset rich-income poor

(b) Asset poor-income poor

(c) Asset less-income poor.

The first target should be the beneficiaries in category (c). This group is most vulnerable and also
most careless. They simply does not care for themselves and also misuse the benefits, subsidies and
charity due to their reckless spending habits. .It is the duty of the government to stop the misuse of
the subsidy by giving the responsibility to the Panchayati Raj institutions. Another suggestion may be
that such beneficiaries should be provided with the benefits in group through a scheme like mid-day
meal so that any one person may not spoil the scheme. The policy intervention through welfare
schemes of the government should make the fate of the poor better or else it should quit queitly. The
wastage in the PDS is known to every Indian and even after the Supreme Court’s suggesstion the
government could not improve upon the system. Such inefficient system may not achieve the targets of
any scheme and it will be better if we leave it on the market forces. The market is efficient and it will
take care of poor in much more efficient way than the government.

Concept of Food Security:

The 12th Plan approach paper says, “The challenge is how to feed India’s growing population with
rising incomes, but limited land and water resources. The economy is expected to grow strongly and
pressure on food demand is likely to remain strong over the 12th plan period.” In the light of these
observations, it is essential to grow enough food because this is the essential condition for ensuring
the food security. Although the production of food grains has increased over the years but experts say,
it is slowing down. For any programme of food security, the rate of growth of food grains must be
above the rate of growth of population. In this context, it is important to review the production
performance of Indian agriculture with a view to understand trends and the major constraints in
achieving physical access to food.

Production Performance:

The increased availability of food is necessary condition for achieving food security in India. Since
dependence on the imported food grains for long is not desirable. Table- 1 reveals that food grains
production in India, which was only 50.82 million tons in 1950-51 doubled in 1969-70 to 108.42
million tons because of adoption of HYV seeds and irrigation popularly known as Green Revolution.
In 1980-81 the total food grains production was 129.59 m. tons that increased to 176.39 million tons
in the year 1990-91 and reached at a record level of 259.32 Mt in the year 2011-12. The food grains
production at present is quite comfortable but any one or two bad monsoons may change the entire
scenario.

Table: 1 Agriculture Production-Food grains

(Million Tons)

Cereals Pulses Total

Year Rice Wheat Coarse Cereals Total (2 to 4) (5+7)

1952-52 22.90 7.50 19.61 50.01 9.19 59.20

1955-56 27.56 8.76 19.49 55.81 11.04 66.85

1960-61 34.58 11.00 23.74 69.32 12.70 82.02

1965-66 30.59 10.40 21.42 62.41 9.94 72.35

1970-71 42.22 23.83 30.55 96.60 11.82 108.42

1975-76 48.74 28.84 30.41 107.99 13.04 121.03

1980-81 53.63 36.31 29.02 118.96 10.63 129.59

1985-85 63.83 47.05 26.20 137.08 13.36 150.44

1990-91 74.29 55.14 32.70 162.13 14.26 176.39

1995-96 76.98 62.10 29.03 168.11 12.31 180.42

2000-01 84.98 69.68 31.08 185.74 11.07 196.81

2005-06 91.79 69.35 34.06 195.20 13.39 208.59

2010-11 95.32 85.93 42.22 223.47 18.09 241.56

2011-12 105.31 94.88 42.04 242.23 17.09 259.32

2012-13 - - - - - 263.30

Data for 2012-13 are based on advance estimates

Source: Compiled by the author from the data of the Ministry of Agriculture, Government of India

Experts are of the opinion that there is a limit to increasing the food grains production through
increase in area under cultivation because the country has already reached a plateau in so far as
cultivable land is concerned. The HYV seed which has been the basis of Green Revolution in
seventies has now slowed down. Food grains production increased annually by 3.22 per cent during
fifties mainly because of the Area Expansion. Sixties recorded a low annual growth rate of 1.72 per
cent and again a growth rate of 2.08 per cent was recorded in seventies. The technological
advancement pushed up the growth rate during eighties and an annual growth rate of 3.5 per cent in
food grains production was witnessed that was above the population growth rate. The growth
momentum could not be maintained and during 1990-91to 2010-11 it again fell to only 1.46 per cent
which is much less than the population growth rate. The high prices of fertilisers, scarcity of
electricity, high prices of diesel, irrigation water scarcity and high cost of HYV seeds, have slowed
down the growth momentum in the food grains production which has been highlighted by some
research studies.
 Table: 2 Annual compound Growth rates of food grains Production

(Base triennium ending 1980-81=100)

(Per cent Per annum)

Crop 1950-51 1960-61 1970- 1980-81 1990-91 to 2000-2001 to 2011-

to to 71 to to 1997-98 2012
1959-60 1969-70 1979- 1989-90
80
Rice 3.28 -8.05 1.91 4.29 1.53 1.68
wheat 4.51 5.90 4.69 4.24 3.67 1.14
Coarse 2.75 1.48 0.74 0.74 -0.49 4.39
cereals
Total 3.00 2.51 2.37 3.63 1.84
cereals
Pulses 2.72 1.35 -0.54 2.78 0.76 1.98
Total 3.22 1.72 2.08 3.54 1.66 2.91
food
grains
Source : Economic Survey 2011-12

In fact, the growth rate of food grain production during the 1990s and thereafter has been close to the
annual population growth rate, which implies a stagnant per capita production level. Further, this
growth rate has been achieved with the strategy popularly known as green revolution with the
excessive use of fertilizers and pesticides including heavy dependence on ground water irrigation.
This is dangerous from the point of view of environment. The strategy adopted in the green revolution
period has led to concentration of incremental increases in wheat and rice output and marketed surplus
in few states namely Punjab and Haryana. The revolution was not wide spread in area terms as well as
in terms of crops. In order to take advantage of the large scale procurement for the government PDS
programme the political pressure groups in these states have used the MSP as the remunerative price
as there seems to be no correlation between the price declared by Agricultural Costs and Price
Commission and procurement prices.1

The government under pressure of these groups and the demand by the regional political parties have
yielded continuously to fulfil the demands for higher and higher prices for the government purchases
under PDS and other welfare schemes. The continuation of procurement under PDS and wastage of
the food grains has been referred as Greed Revolution by the famous agricultural scientist
Swaminathan. To justify the procurement under PDS government always prepares new plans and tries
to distribute the excess food grains. The environmental hazards of such actions is also a matter of
serious concern..

M.S. Swaminathan has drawn our attention towards environmental problems associated with the
recent phase of agriculture due to excessive and unscientific use of chemical pesticides and fertilizers
and ground water. He calls it the exploitative agriculture. This phenomenon of increased use of
water and pesticides is unsustainable and is not in the interest of long term food security for the
country.

The declining water availability for irrigation has serious repercussions on food production, demand,
trade and prices. Given the current trends of our water use and water wastage patterns, a severe crisis
can evolve in future. All of us know very well that the biggest user of the water is agriculture sector
particularly irrigation, which accounts for nearly 80 per cent of global water consumption. In

1Swaminathan M.S.(1996) “Science and Technology for Sustainable food security”, Indian Journal of Agricultural
Economics. Vol.51 No. 1&2 ,pp 60-75
developing countries, the percentage is even more. So for any policy for food security should also
look into this aspect and should improve the irrigation management. Further the age old traditions and
methods of water conservation strategies to cope up with the adverse consequences should be
popularized for any such contingencies.

Per capita Production and Availability:

When resources (especially Land) and technology constraints limit the aggregate food production, its
negative impact on food security at the household and individual level can be minimized to some
extent by the efforts on curtailing population growth rates within tolerable rates2. Another way to feed
the ever-growing population is to achieve the higher fertility rates. Table: 3 presents the data of Yield
Per hectare of major food grains in the country.

Fig. 1: Total food grains production from 2000-01 to 2007-08.

Source: Agricultural situation in India; March 2008

The fertility of wheat has shown considerable growth from 750 kg/hectare in 1953-54 to 1630
kg/hectare in 1980-81 and to 2281 kg/hectare in 1990-91 and 2708 kg/hectare in 2000-01. The yield
per hectare of wheat was 2938 kg/hectare in 2010-11.

Food grain production trends according to major crops indicate non-uniform trends. The substantially
higher growth rate of above 4 per cent experienced for rice during the 1980s has declined to 1.68 per
cent during 1990s. Food grain production has been almost stagnant for more than 10 years and now
there is a growing gap between supply and demand of food grains3.The emerging trends in India’s
food grains output can be seen in Figure:1 output has been fluctuating sharply.

The availability of food grains, derived from the accounting identity involving production levels,
stock changes and trade balance, can be considered as a good estimate of the aggregate consumption,
and in spite of the limitations imposed by the problems in obtaining stock changes. The average daily
per capita availability of food grains in 1970s remained slightly at a lower level than in the 1960s, but
the 1980s and 1990s witnessed a moderate improvement in the availability level4. Remember it also
includes the grains spoiled by Food Corporation of India. Table -4 presents net availability of food

2 P.S.George,” (1999) “Some reflection on Food security in India”, Presidential address delivered at 59 th annual Conference
of the Indian society of Agricultural Economists ,Vol.54, No. 4,
3 Badar Alam Iqbal and Theo van Der Merwe”Food Crisis in India (A Review Article)”,Asian Journal of Agricultural Economics
4 P.S.George(1999) op.cit. p 473
grains for various years from 1951 to 2010. It also includes data on availability of rice, wheat, other
cereals gram, and pulses.

There is an improvement in the per capita net availability of food grains over the decades but one
cannot notice any perceptible upward trend in the net availability. On the contrary, what one notices is
the YoY variability in the availability. This may be due to fluctuations in area and productivity.
During the 1990s both area and yield levels indicated a reduction in the variability due to increased
production and huge stock position with the government. However it should be emphasized that
physical access alone will not ensure the food security unless it is matched by economic access i.e. the
purchasing power with the poor.

To ensure the economic access of the poor the government of India has come up with a very
ambitious plan of providing food at subsidised rates to almost all the population. Government has
passed a National food security Act-2013 (Right to Food Act) to provide subsidized food grains to
about two third of the indis’s 1.25billion population. Under the provisions of the bill, beneficiaries
are entitled to purchase 5 kilograms per eligible person per month of cereals at the subsidized prices.
Let us now discuss some salient features of the bill.

National Food Security Act 2013:

The Sonia Gandhi-led National Advisory Council (NAC) —, which sets the social agenda for the
UPA—had prepared the initial draft of the Food Security Act-2013. The salient features of the Act
are5:

1. 75% rural and 50% of the urban population are entitled for three years from enactment to five
kg food grains per month at 3, 2, 1 per kg for rice, wheat and coarse grains (millet),
respectively;
2. The states are responsible for determining eligibility;
3. Pregnant women and lactating mothers are entitled to a nutritious "take home ration" of 600
Calories and a maternity benefit of at least Rs 6,000 for six months;
4. Children 6 months to 14 years of age are to receive free hot meals or "take home rations";
5. The central government will provide funds to states in case of short supplies of food grains;
6. The current food grain allocation of the states will be protected by the central government for
at least six months;
7. The state government will provide a food security allowance to the beneficiaries in case of
non-supply of food grains;
8. The Public Distribution System is to be reformed;
9. The eldest woman in the household, 18 years or above, is the head of the household for the
issuance of the ration card;
10. There will be state- and district-level redress mechanisms; and
11. State Food Commissions will be formed for implementation and monitoring of the provisions
of the Act.
12. The cost of the implementation is estimated to be $22 billion (1.25 lac crore), approximately
1.5 % of GDP.
13. The poorest who are covered under the Antodaya anna yojna will remain entitled to the 35 kg
of grains allotted to them under the mentioned scheme.

The following issues need to be resolved to realize the goals of the Act:

 Given the current trends in food grain production and government procurement and the likely
improvements in these over time, will there be adequate availability of food grain with the

5
National Food Security Bill-2013 , Wekipedia
 public authorities to implement the full entitlements for the priority and general category
households?

 What will be the impact of such large procurement on the open market prices?

 What are the subsidy implications for both the phases and can these levels be sustained in
future?

 Given the inefficiencies and leakages in the current distribution system, identify the principal
areas of reform of PDS and the alternative mechanisms of reaching the target households.

Large requirement for PDS and uncertainty in production:

The foodgrains requirement would go up to 63.98 million tonnes (million tons) in the final phase. The
NFSB proposed by NAC is a revolutionary Bill with almost universal coverage. The Bill will have
huge impact on the economy. Indian agriculture is highly dependent on Monsoon God. During
drought years production falls significantly in such eventualities the government will have to be
dependent on the imports. As a result of this bill there will be sharp increase in the procurement of
wheat and rice which may adversely affect the open market prices of foodgrains. Now let us have a
look at the Procurement, off take and stocks of the wheat and rice under public distribution system in
our country.

Table: 4 Public Distribution System – Procurement, Off-take and Stocks

(Million Tons)

Procurement Off-take Stocks

Year Rice Wheat Total Rice Wheat Total Rice Wheat Total
1 2 3 4 5 6 7 8 9 10
1980-81 5.34 5.86 11.20 5.88 7.51 13.39 6.69 3.07 9.87
1985-86 9.62 10.35 19.97 7.40 11.72 19.12 10.34 10.21 20.75
1990-91 12.92 11.07 23.99 7.91 8.58 16.49 10.21 5.60 15.81
1995-96 9.93 12.33 22.16 11.63 12.72 24.35 13.06 7076 20.82
2000-01 18.93 16.36 35.29 10.42 7.79 18.21 23.19 21.50 44.98
2005-06 26.69 14.79 41.48 25.08 17.17 42.25 13.68 2.01 16.62
2010-11 31.13 25.92 56.79 29.80 23.07 52.87 28.82 15.36 44.35
2011-12 37.91 28.33 66.35 32.12 24.16 56.28 33.35 19.95 53.44
2012-13 33.53 38.15 71.67 32.63 30.14 62.78 35.47 24.21 59.79
2013-14 7.85 25.08 32.93 7.04 5.20 12.24 27.92 39.44 67.38
1. Total Stocks Include coarse cereals.
2. Procurement for 2013-14 is for April-July 15, 2013; Off-take for April-June 2013 and
Stocks at end-August 2013.
Source : Ministry of Food, Consumer Affairs and Public Distribution, Government of India.

Large subsidy Unsustainable in the long-run

In addition to the physical food grain requirement, the proposed bill has large subsidy implications.
The total subsidy out go is expected to be much higher than the government projections. Again, the
extra foodgrains required for the distribution will have to be produced either through area expansion
or through productivity growth. The production cost to the government will have to be added in the
subsidy cost to know the total financial burden to the government. According to an estimate, If
Parliament passes the Bill, the food subsidy bill is expected to rise by Rs. 27,663 crore at nearly Rs.
95,000 crore only in the first year of the implementation of the Bill. The production cost of producing
extra 20 to 25 million tons of foodgrains has been estimated at Rs. 1,10,600 crore.

Limited Land

If the extra foodgrains required for is produced through an area expansion the problem is that the
arable land is shrinking. ISRO mapping shows 81 million hectare has undergone desertification. India
has net sown area of 140 million hectare only and there is ever growing pressure of urbanisation and
land going to non-agricultural uses. The food corporation of India has limited storage capacity and
every year lakhs of tons of foodgrains is destroyed due to open storage. The cost of inefficiencies of
FCI will further cause problems for the authorities.

Decling productivity:

Again if the foodgrains required is produced through the gain in productivity the trend witnessed do
not favour the argument. Already the Per-capita availability of foodgrains has started showing a
declining trend. In the year 2000 the per-capita availability of rice was 203.7 grams per day while that
of wheat was 160 gms per day. The availability has declined by 2009 to 188.4 gms and 154.7 gms
respectively. A number of measures will have to be taken to increase the foodgrains production.

The present food security system in India is marked by strange paradoxes6. Under this system the
relatively affluent farmers in the better of irrigated areas are given incentives in the form of a high and
rising support price. The Procurement and distribution of foodgrains involves a subsidy and it is
believed to go not to the consumers of PDS grains but to make good the losses incurred by the FCI.
PDS has remained untargeted for years and even today the benefits do not reach the targeted
population. It can also be easily seen that poor seem to prefer to purchase foodgrains in the open
market despite all government efforts. The system originated as a response to a critical food crisis and
it works well in the situation of crisis. Rao further mentions if earnestly implemented liberalization
could enable the food security system to much more effectively help the poor at much less cost. The
food security system has to aim at three objectives:

 Keeping the aggregate production at or above the level necessary for self sufficiency
 Reducing the instability in food grain markets
 Making dependable arrangements for helping the poor to get adequate access to food

Regarding the first two objectives mentioned above, they may be better served by phasing out the
government interventions rather than by continuing the present price support cum procurement
operations. Given the recent strong and broad based trend in production of foodgrains and its likely
continuance it makes little economic sense to continue with a highly centralised and subsidized
arrangements for procuring large quantities of foodgrains in one corner of the country, to store them
for long periods often in the open in the absence of storage space and to move them over long
distances for distribution to consumers who appears to be increasingly turning to the market for
meeting their requirements.

Again this system is confined to rice and wheat- has hardly much relevance in stabilising the
foodgrains markets which comprise besides rice and wheat coarse cereals and pulses marked by
considerable instability in prices. So long as the production and supply situation continues to be
comfortable, the best policy would be to leave the markets free and gradually diminish the present

6V.M. Rao (1996), Policy Research for Liberalized Agriculture: Some illustrative Research Areas, Indian Journal of
Agricultural economics, Vol.51 No.1&2, Jan-Jun. pp. 138
large scale procurement operations. FCI may be allowed to work as an autonomous company on
commercial principles but during the time of draught/crisis it should take control of the entire system.

Regarding the third objective, viz., making dependable arrangements to ensure adequate access to
food for the poor, it is necessary to keep the following points about the PDS in mind:

The families purchase part of their requirements from the open market. Sharma (1995) Indrakant
(1995) Rao (1996) Radhakrishna (1996) find a number of poor depends totally on market. It would be
necessary to find out how far the poor turn to the market because of absence of PDS or its poor
quality and how far due to positive preference?. It would also be important to know how is the grain
purchased by the poor from the market is utilised.

The NSS data on consumer expenditure indicates that over the recent years the lowest three deciles of
the population rural as well as urban have increased the consumption of non-foodgrains food items
like milk edible oil sugar and Gur and other food while their consumption for cereals has remained
unchanged or even declined. There are reports that upper strata among the poor tries to catch up the
consumption pattern of the strata above them. Such people may sale off the PDS grains in the open
market to finance their purchases on non-food grain items below the price of their purchase. Some
members of the family may sale the grain to finance their liquor consumption or the consumption of
tobacco products.

The PDS and food security provisions therefore need to design in such a way to prevent such types of
misappropriations. The present thinking of issuing the Smart Card to the beneficiary of the scheme
of Cash Transfer may simply assure that the foodgrains reaches in the hands of the targeted
beneficiary. The beneficiary in the target group should be classified on the basis of the ownership of
assets as:

(a) asset rich-income poor

(b) asset poor-income poor
(c) asset less-income poor.

The first target should be the third category of beneficiaries. This group is most vulnerable and also
most careless. They simply does not care for themselves and also misuse the benefits by reckless
expenditure pattern. This is the only reason for their not having any productive asset. If cash benefits
are transferred to them they may misuse use it for financing their bad habits. If the beneficiary
himself is misusing the benefits who is going to stop them and how?

One possible way is to give this responsibility to the Panchayati Raj Institutions at local level. It is
believed that the decentralisation will make the system more transparent and the active participation
of the needy poor will definitely improve the food security system meant for them.

Another suggestion may be that such beneficiaries should be provided with the benefits in group
through a scheme like mid-day meal so that any one person may not spoil the scheme.

Thus, at last it can be concluded that the concepts of Poverty and hunger (including APL/BPL) need
to be clearly defined. It is a matter of great concern that even today the Government does not have any
acceptable definition of these concepts. The international agencies working on these themes may not
provide us a clear understanding of these concepts. There are so many areas where we will have to do
the serious research. I am of the considered opinion that the over centralisation of the administration is
not going to provide us any relief therefore the local problems should have local solution. The burden
of the inefficiencies of the government functionaries and machineries should not be subsidised by the
public money. Either a government intervention should be helpful or else it should quit quietly. The
market is efficient and it will take care of poor in much more efficient way than government.

__________________________
*Director, School of Distance Education and Learning, Jaipur National University, Jaipur.
Former Professor and Head, Department of Economics, Vardhaman Mahaveer Open University, Kota.