#India- Why the Food Security Bill is neither populist nor unaffordable


 
Cultivatring Food Justice

Cultivatring Food Justice

 
The official poverty threshold is low. Many people above the threshold are also poor and look just like the people below the threshold. As a result, there is no reliable way in which subsidies can be targeted only to the people below the official threshold.
 
 
By Ashok Kotwal, HT
 
 
 
Criticism of the National Food Security Bill (NFSB) has led to the government dropping the idea of issuing an Ordinance and, instead, saying it would try to get the Bill passed in a special session of Parliament.
 
But doubts persist over the very concept of the Bill. Is it not extravagant to subsidise food for such a large part of the population when the poor constitute only 30 per cent of the population? Can a poor country afford such spending? Isn’t the Food Bill just corruption by another name? Wouldn’t the Bill lead to a virtual takeover of the grain trade by the central government? As a rising tide lifts all boats, should we not invest in growth rather than spend on consumption? These are all valid questions and we will attempt to answer them.
 
In a nutshell, we think the Bill is neither populist nor unaffordable. Some of the anxiety over the cost, corruption and the government’s ever-increasing role in the grain market stems from the assumption that PDS will remain forever the main vehicle of delivering the food subsidy. But if the government develops the necessary infrastructure — e.g., UID-linked bank accounts — states will be encouraged to switch to cash transfers. The extra costs of government storage and distribution will then be saved and the problems caused by the distortion of the grain trade will be mitigated. Many worries that arise from the identification of the food Bill with the PDS will disappear.
 
The Right to Food campaign is right to stress the need for a food subsidy with near-universal coverage but is wrong in its visceral opposition to cash transfers. The result is a food Bill written wholly in terms of an expansion of the PDS. Suggestions for reforms such as cash transfers and the use of biometric ID have been shunted to an obscure chapter despite the fact that the Delhi government has already opted for delivering the food subsidy through cash transfers.
 
Anyone who has had a cursory look at the food Bill tends to assume it is just expanding the present PDS and, thus, worsening existing problems of leakage, corruption and high costs of storage and distribution. This makes people antagonistic toward the idea of the food Bill. The opposition of the Right to Food campaign to even experiment with cash transfers has harmed the poor by making people sympathetic to the critics of the food Bill.
 
Cash transfers are often opposed on the grounds of paternalism. “If we give cash to the poor, they might blow it on frivolous things. If we give them food, they will be better nourished.” This can work as an argument for midday meals but not as a justification for PDS, which is nothing but an income transfer: the effect of the subsidy is that households save the money that would have otherwise been used to buy food at market prices.
 
Why do we need such an income transfer? Because about 90 per cent of India’s labour force makes a living in the informal sector. For inclusive growth, we need to invest in education and skills and remove constraints to the absorption of labour by the formal sector. But we also need to improve productivity in the informal sector, which depends on human capital and access to credit. Financial aid that gives the poor some flexibility in managing their affairs helps improve the productivity of their time. What looks like consumption also works as investment.
 
But if “the poor” are only the bottom third or so, why offer food subsidy to the bottom two-thirds of India? We often talk about the poor as if it is a well-defined group, but that is hardly the case. The official poverty threshold is low. Many people above the threshold are also poor and look just like the people below the threshold. As a result, there is no reliable way in which subsidies can be targeted only to the people below the official threshold.
 
Finally, there is the issue of costs. Official projections are that it would cost close to 1.5 per cent of GDP. But even in the most pessimistic scenario, our GDP is expected to grow at 5 per cent per annum in the near future. If we think of the fact that the Bill will cost less than one-third of the growth in the national income next year, it does not seem that unaffordable, especially given its value to the millions who will receive it.
 
(The writer is professor of economics, University of British Columbia. Co-authored with Milind Murugkar, a food policy analyst based in Nasik, and Bharat Ramaswami, professor of economics at the Indian Statistical Institute, Delhi)

 

#India – Cash transfers are bad for food security


MADHAVI CHERIAN, The Hindu 

https://mail.google.com/mail/u/0/h/1prxq6bf9dglx/?view=att&th=13e9475df71ac607&attid=0.1&disp=emb&realattid=c8b88aea509adc8a_0.2&zw&atsh=1″ width=”636″ height=”422″ />
SILO TO BAG: The government’s decision to promote cash transfers in the National Food Security Bill ignores crucial lessons from India’s past at a time when it needs to intervene on both the demand and supply sides to ensure food security for every citizen. Photo: M. Govarthan

The stabilising effect of the Public Distribution System on prices will be lost as beneficiary households turn to the market for their needs

India’s hard won gains in achieving food security are in danger of being undermined by a clause in the National Food Security Bill that encourages States to adopt cash transfers in lieu of food entitlements under the Public Distribution System (PDS). Supporting this view, a recent report by the Commission for Agricultural Costs and Prices (CACP) concluded that the provision of food subsidies in the form of cash would save the government crores of rupees. Additionally, cash transfers will supposedly eliminate middlemen such as dealers and transporters, ensuring that the subsidy reaches intended beneficiaries.

Cash transfers are a solution only if we view the PDS in isolation, rather than as part of a larger food policy. India’s food policy begins with the procurement of rice and wheat and price support operations by the Food Corporation of India (FCI) and the CACP. Each State is entitled to purchase a certain amount of food grains from the FCI at subsidised prices for distribution through its Fair Price (Ration) Shops. It is this distribution end that constitutes the PDS, and what the cash transfers would replace.

Besides not taking into account the devaluing effect of inflation or the role of intrahousehold dynamics when it comes to cash transfers, its supporters do not specify what would happen to the agricultural commodities that are procured by the FCI. As the policy exists today, the government holds millions of tons of rice and wheat, well above the buffer norms required by law. To reduce its stocks, the government has preferred open market operations (to bulk consumers) and export to distribution through the PDS.

Experiments with decontrol

Using those actions as an indicator of the government’s policy orientation, cash transfers arguably are a gateway to greater deregulation of the food market. Relying on cash transfers alone would mean that the beneficiary households would have to turn to the market to meet all their food needs. More importantly, the stabilising effect that the PDS has on consumption and prices would be lost. Cash transfers thus are only a partial substitute to the PDS.

To understand the importance of a broad food policy, we only have to look at India’s brief experiments with decontrol. The government’s policy reaction to the Bengal famine of 1943, which led to the death of 1.5 million people, provides us with a primer of what not to do in a famine situation. At first, there was a complete laissez-faire policy towards food grain trade, which led to hoarding by traders, farmers and consumers. Subsequently, the provincial governments introduced a policy of procurement and distribution of food grains, which failed miserably as they did not have the requisite infrastructure to implement the policy. For example, grains were rotting in Calcutta, the centre of distribution in the eastern region, as the government had not made arrangements to handle incoming stocks. To avoid what was called a “tragedy in unpreparedness,” the government took steps towards setting up a comprehensive food administration, including procurement by the government, the building of buffer stocks and the introduction of rationing.

However, soon after Independence, India abandoned these policies on the insistence of Gandhiji, who by then had started chanting the following prayer, “Controls give rise to fraud, suppression of truth, intensification of the black market and to artificial scarcity. Above all, it (they) unmans the people and deprives them of initiative; it undoes the teaching of self help, they have been learning for generations, makes them spoon-fed.” Shortly thereafter, droughts and floods led to insufficient production, food shortages and price rise. Controls in the form of rationing, price control and distribution had to be reintroduced in March 1949 to deal with the adverse food situation.

The next phase of free markets in food was under the Food Minister, Rafi Ahmed Kidwai, beginning 1952. Improved food grains production in 1953 and 1954 led to declining prices and a temporary break from chronic shortages. Government procurement of food grains was stopped and restrictions on the movement of grains were removed. Paradoxically, even as farmers faced deflationary conditions, there were shortages and price rise in various parts of the country. The instability in prices, combined with adverse weather in the autumn of 1955, had a dampening effect on production.

In 1957, the Ashok Mehta-led Food Grains Enquiry Committee concluded that an expanded money supply, growing industrialisation and urbanisation and increased investment led to enhanced purchasing power. On the other hand, hoarding by traders, producers and consumers as well as speculative activities in anticipation of public investment by the government led to a rise in prices. Additionally, it found that prices were allowed to fall too low in 1955 and that there was no coordinated policy of combating inflation and shortages that began in 1956.

Back to controls

The government had to reintroduce controls and carry-out price support operations to curb the fall in prices. It opened an additional 10,000 ration shops between October 1956 and September 1957, and released its stocks to combat price rise. This episode underscored the need for the government to intervene in the market to influence prices and output. The Food Grains Enquiry Committee recommended the setting up of institutions like the FCI and the CACP for this purpose. The government’s decision to promote cash transfers in the National Food Security Bill presented in the recently concluded session of Parliament ignores these lessons from India’s past.

Since the 1950s, India has made major strides in agricultural production as evidenced by the large government-held stocks of wheat and rice. However, problems of inadequate nutrition, starvation and double digit food price inflation remain. Strengthening of the PDS, as seen in Chhattisgarh and Tamil Nadu, would serve the purpose of ensuring food security for the nation through stabilising prices, production and consumption. As seen in the past, government withdrawal from the food sector can lead to a decline in production and an increase in hoarding and speculative activity. Unlike the PDS, cash transfers cannot counter the resultant shortages and price rise. In a growing economy like India with constantly increasing demand, the government needs to intervene on both the demand and supply sides to ensure food security for all its citizens.

(Madhavi Cherian is a PhD scholar at the Department of Sociology, New York University.)

 

#India – Counting the costs of direct cash transfers


Madan Sabnavis  April 22, 2013  BS
The government urgently needs to consider 5 ‘Ss’ before it launches itself into this commitment
As a rule, the government likes creating new structures without fully understanding their implications and then disbanding them once criticism inundates the newspaper columns. A lot of time and money is invested in creating these structures and, often, these costs could be higher than the cost they are trying to lower to begin with. The direct cash transfer (DCT) scheme runs a similar risk, since our enthusiasm levels are currently high, and we could go off the track unless certain preconditions are addressed.
It is generally felt that DCTs are a more efficient system than, say, physical subsidies. This does hold when conditions are ideal and back-end structures are in place. Otherwise, there could be contradictions that will make the DCT scheme unsuccessful.
DCTs come into play for two kinds of transfers. The first is where a new structure is created for transferring cash-for-cash transactions. This holds for, say, salaries, pensions and scholarships and so on. The existing scheme has various departments sending cheques to the recipients, who, in turn, deposit them in their own accounts. The second pertains to cash-for-kind transfers. Here, instead of providing the good to the household, a cash transfer of an equivalent amount takes place and can be used to buy the product.
The concept of DCT is based on the much-publicised Aadhaar project where a unique identity (UID) has been provided to people. Since every UID has an account linked to the person, such a transaction would be automatic provided the disbursing authority is linked with the banking systems. Given the volumes involved, this would be a logistical challenge. The advantage for cash-for-cash transactions is efficiency and reduction of leakages provided the identification process is robust. Prima facie, there is nothing amiss here.
When it comes to cash-for-kind transactions, the situation is different because we have to give up the existing structures since substitution takes place. There are essentially five “Ss” that have to be tackled before bringing about any change in the transfer system.
The first is “structures”. We have an elaborate procurement system for food grain that is motivated by, one, procurement for distribution and, two, creation of a buffer. The procurement policy is an open-ended one where farmers can sell a fair average quality to the Food Corporation of India (FCI) at a predetermined price. The idea here is to protect the farmer’s income. Have we thought of what will happen to this policy or FCI (an institution set up for this purpose) when we provide cash transfers, and FCI will then have to address only the issue of buffer stocks?
Second, “systems” have been created for distribution – the public distribution system (PDS). If we have a “conditional cash transfer” in which money given has to be used to buy grain from fair price shops, then the status quo would be preserved – along with the current inefficiencies. However, if it is not a conditional transfer system, then new issues emerge. There are around 500,000 fair price shops across the country that on an average employ one million workers. By introducing cash transfers and disbanding PDS, there will be an issue of unemployment, since it will be hard for these people to reinvent their stores that are mostly located in rural areas. Today, when there is opposition to foreign direct investment in retail, we are talking of the local kirana shops. There will be a lot of noise when we think of displacing these one million workers. Do we have a solution here?
Third, “selection” is an important consideration for a successful DCT scheme. The problem with PDS, besides the ubiquitous leakages, is adverse selection. A lot of people who are not poor take in these entitlements. This becomes acute as we move to kerosene and liquefied petroleum gas. The new scheme on UID is no different from the existing policy of self-declaration; since no proof of income is asked for it runs the risk of adverse selection. In fact, there are a large number of people holding on to the coloured ration cards and not drawing rations. In the new dispensation of the scheme, this could mean free money for them. Do we have a way of screening households or else will we be back to also helping those who do not require assistance?
Fourth, the government is talking aggressively of food “security” with an ambitious target of covering two-thirds of the population. Clearly, there is a major contradiction here. If we are to provide cash transfers, then how do we reach the food grain to the needy, which requires PDS?
Fifth, there has been debate on the food “subsidy” burden. The subsidy is the difference between the economic cost and the issue price for wheat and rice. The economic cost varies between Rs 17 and Rs 24 a kg, and the issue price is around Rs 5 to Rs 8 a kg. This is when the food grain is sold at a fixed price. Now, once the people are paid cash, they have to buy food grain on their own from the market. Based on government data, the price of wheat and rice varies from Rs 15 to Rs 35 a kg in different parts of the country. Two practical problems arise here. The cash to be paid in lieu of subsidy will be substantially higher than the present subsidy amount. Second, with inflation being variable, fixing the prices and, hence, subsidy level across states will be difficult, and one can see a lot of politics coming in the way of arguing for higher levels of allocations.
To make the DCT scheme effective, we need to fix these five “Ss” first or else we would be running conflicting parallel systems. We also need to evaluate the exact benefits of the cash-for-cash transfers before embarking on the more onerous cash-for-kind transfers. Besides, the cash-for-cash transfers alter the mode of payments without addressing the issue of selection. It is, therefore, advisable that we move one step at a time and not get carried away.
The author is Chief Economist, CARE ratings. These views are personal

 

 

#India – Food Security Bill is affordable


REETIKA KHERA, The Hindu
The subsidies meant for the poor are always under attack, while the rest are able to retain their privileges.
The additional allocation in grain and money terms will neither distort the grain market nor place a burden on the fisc.
Many recent commentators have portrayed the National Food Security Bill (NFSB) as an “unbearable burden” on the exchequer. The facts, however, do no substantiate the claim.
The NFSB has been trashed from time to time in the English dailies. For instance, Business Line (March 21, 2013) published an article titled “Food Security Bill will torpedo Budget”.
Another national daily claims that the Bill has a “fundamental flaw” that places “an unbearable burden” and “distorts agriculture” (Indian Express, March 19, 2013). Quite often, the claims are partly due to a misconception that the government is making new financial and grain commitments under the NFSB.
In fact, the NFSB does little more than turning into legal entitlements pre-existing food security schemes such as the Integrated Child Development Services (ICDS) Scheme, Mid-Day Meal (MDM) Scheme, Public Distribution System (PDS) and maternity entitlements.
UNJUSTIFIED FEARS
Some commentators have said that it is precisely the legal commitment that will lead to problems in the future — for example, the fear of the emergence of a government monopoly in the grain market. This fear is not borne out by the facts.
Under the PDS, ICDS and MDM, the government currently allocates about 58 million tonnes of grain. To meet this commitment, the government currently procures about 30 per cent of grain. The NFSB commits 62 million tonnes, i.e., an additional 4 million tonnes.
The Budget of 2013-14 allocates Rs. 31,000 crore for two children’s food schemes — school meals and the ICDS which reaches children under six. The Budget allocation for the food subsidy in 2013-14 is Rs 90,000 crore.
According to our estimates, the food subsidy will increase from Rs 80,000 crore (in 2012-13) to Rs 1,11,221 crore, under the NFSB.
Thus, the NFSB implies an increase of just over Rs 30,000 crores in financial terms and 4 million tonnes in real (grain) terms.
Can India afford this? Speaking at a panel discussion at IIT Delhi in February, Deputy Chairperson of the Planning Commission, Montek Singh Ahluwalia, said “it would be dishonest” to say that we cannot afford the Food Bill, and that the subsidies that we need to target are those enjoyed by the middle classes (e.g., fuel).
Speaking at the same discussion, Amartya Sen made a pertinent point — that the reason why it is more difficult to reduce subsidies enjoyed by the middle classes (fuels such as LPG, petrol and diesel) is that the beneficiaries of those are more vocal than the rural poor or children under six who benefit from the food subsidies.
DOUBLE STANDARDS
This point is well illustrated by the events following last year’s Budget. The Budget 2012-13 announced a 1 per cent excise duty on unbranded jewellery and doubled custom duty on gold to 4 per cent. Gold is the country’s second biggest import, after crude oil. This burden on the current account deficit was an important reason for doubling the customs duty.
Following this, the All India Gems and Jewellery Trade Federation and others initiated a strike which went on for 21 days. They argued that the industry, including the “large” number of people it employs, and buyers of gold, would suffer. A massive media campaign was launched, following which the Finance Minister withdrew the excise duty.
According to the revenue foregone statement presented along with the Budget 2013-14, the revenue foregone from the gold and diamond industry for the previous financial year was Rs. 65,000 crore.
Such tax breaks are often justified on the grounds of the employment potential of the gems and jewellery industry. According to Invest India, a website of the Ministry of Commerce and Industry, “The sector provides employment to around 1.8 million people. In the next five years, the sector is expected to create additional employment for around 1.1 million people.”
According to the National Sample Survey Organisation, 2009-10, the size of the Indian workforce is between 430-471 million persons. If the gems and jewellery industry employs 3 million people as per the Ministry’s target, this would be 0.7 per cent of the workforce.
An industry that employs less than one per cent of the Indian workforce is currently enjoying tax benefits amounting to Rs 65,000 crore (nearly 20 per cent of all revenue foregone). The Food Bill will benefit 67 per cent of the population at an additional cost of Rs 30,000 crore, yet it is said that it will “torpedo” the Budget.
NOT ENOUGH
If anything, the NFSB does not go far enough. The NFSB tabled in Parliament in December 2011 included special provisions for the destitute and other vulnerable groups (e.g., community kitchens and social security pensions).
These have been discarded in the version cleared by Cabinet on March 19, 2013. In many rural areas, the Block is already too far to go to complain, yet for violations of rights under the NFSB, grievance redressal only begins at the District level.
Viewed in this comparative perspective (for example, it is approximately 1 per cent of the GDP), few can question the affordability or desirability of the NFSB. In absolute terms it is not a small amount. One might argue whether such expenditure is worth it, given the “fact” that the programmes in its ambit, for example, the PDS, are “dysfunctional” (Indian Express, March 19, 2013).
However, recent data from the National Sample Survey of 2004-05 and 2009-10 suggest that while the functioning of the PDS is far from perfect, we do need to update our “facts”. In joint research with Jean Drèze, we show that the implicit subsidy from the PDS eliminates 18 per cent (14 per cent) of the “poverty gap” — or the difference between the poverty line level of income and the median income (or monthly per capita consumption expenditure) of poor households — among poor rural (urban) households.
Again, there are marked inter-State contrasts — in Tamil Nadu the corresponding figure is 60 per cent and in Chhattisgarh and Andhra Pradesh it is nearly 40 per cent.
The real question then is not whether India can afford to have a right to food but as the Food Minister said in a recent interview, “Can we afford not to?”
(The author teaches economics at IIT, Delhi.)

 

#India – All in the Name of the Poor #UID #Aadhaar


 

Vol – XLVIII No. 13, March 30, 2013 , Editorial

Who will be the real beneficiaries of the Direct Benefit Transfer scheme?

Why is there little or practically no information in the 2013-14 budget on Prime Minister Manmohan Singh and Finance Minister P Chidambaram’s pet scheme to bring about direct cash transfer payments to eventually replace price subsidies for food, fuel and fertiliser products? Who are going to be the real beneficiaries of the direct cash transfers via Aadhaar-linked bank accounts using the unique identification (UID) platform?

Food will not immediately be replaced by direct cash transfers, but the ultimate objective is to do so, especially with the impending passage of the National Food Security Bill. The union cabinet has approved the draft legislation which is expected to be introduced in the current session of Parliament. An election promise of 2009, the bill has had few supporters in the United Progressive Alliance (UPA) government. If it is now being pushed through it is surely on account of electoral considerations with an eye to the next Lok Sabha elections. But the food subsidy budgeted for 2013-14 is only Rs 90,000 crore (compared to the revised figure of Rs 85,000 crore in the current financial year), though the finance minister has said he will provide Rs 10,000 crore more. This will still be grossly inadequate for any food security programme. The fertiliser subsidy, on its part, has actually come down quite significantly, from the actual figure of Rs 70,013 crore in 2011-12 to the budgeted Rs 65,971 crore in 2013-14. The revised petroleum subsidy was Rs 96,880 crore in 2012-13 (revised estimates) and has been put at a mere Rs 65,000 crore next year. Should we not see all these figures in the light of what is on the anvil?

For political reasons, the government has been promoting the direct cash transfer scheme as an anti-corruption measure. But the real objective of the government is, of course, that it sees this as the way to reduce the “major subsidies” bill. On food, for example, given food inflation at more than 10% per annum, if the government keeps a check on the direct cash transfer payments, indeed, ensures that its real value per average household, i e, relative to consumer food price inflation rate, is not protected, then it will gradually reduce the major subsidies bill as a proportion of the gross domestic product (GDP).

Beginning this year, the government has initiated the Direct Benefit Transfer programme in 26 schemes (mainly for payment of scholarships of various kinds), confining it to persons who have a UID card and a bank account linked with the UID interface. But next month, the direct cash transfer scheme is to be introduced in the public distribution system (PDS) in six union territories. So the government will eventually presumably do away with the PDS in these union territories. But the direct cash transfer scheme is to be eventually scaled up to the national level. To understand the implications, keep in mind that the UID is not just for the poor or those eligible for cash transfers who have to procure UID cards. The UID involves the recording of photographs, fingerprints and iris scans of the whole population, and the entire information is then stored in a centralised, national security database. In 2013-14, some 600 million persons are expected to be photographed, fingerprinted and iris scanned. Most of the 6,00,000 villages in the country do not have a bank branch, but the government envisages the opening of some 200 million accounts, all interfaced with the UID. What is, in effect, being created is an information technology (IT) infrastructure that links all bank accounts to the UID, and, this, at the public expense.

The poor, in whose name all this is being done, have no savings worth the name and the banks do not give them loans because they lack the collateral security. We are not exaggerating; the pilot schemes that we just referred to are going to be “expanded nationwide to various transfer of all benefits” (“Statements…as required under the Fiscal Responsibility and Budget Management Act”, Union Budget 2013-14). Of course, the poor will have to deal with the banks via their banking correspondents (BCs) who will no doubt get their cut from the banks via the government coffers, but who is to stop these BCs from charging their customers more than the banks’ approved rates?

Think of it, a whole centralised, national security database is being created that can potentially be used to monitor the people enrolled in the UID, all this with no democratic accountability. Besides, via the banks, the financial system, much of it private-profit oriented, will have in place access to this database and thousands of crores of rupees under direct cash payment transfers, in effect very large additional sums of money, routed through them. And, the increasing flow of such benefits will be accompanied by the gradual dismantling of the PDS.

What then about diesel, kerosene, LPG, fertiliser and electricity subsidies? Basically, the pricing policy for subsidised goods will change to make the total amount of the subsidy “affordable” to the government and the subsidies will be better targeted, once more via Aadhaar-linked bank accounts using the UID platform. Overall, the expenditure on “major subsidies” will be targeted to come down from 2% of GDP in 2013-14 to 1.8% in 2014-15 and 1.6% in 2015-16. After all, doesn’t the UPA government fully agree with Moody’s, Standard and Poor’s, and Fitch that its major subsidies bill is “unproductive expenditure”? And, isn’t the Bharatiya Janata Party also won over to this idea of direct cash transfer payments? The biggest two beneficiaries of the whole operation, especially of the UID platform and the integrated database it has created, will, of course, be so-called national security and the financial, especially the banking, system.

#India – summary of the National Food Security Bill, 2013


March 24, 2013

1. Preliminaries

The Bill seeks “to provide for food and nutritional security in human life cycle approach, by ensuring access to adequate quantity of quality food at affordable prices to people to live a life with dignity and for matters connected therwith and incidental thereto”.

It extends to the whole of India and “shall come into force on such date as the Central Government may, by notification in the Official Gazette appoint, and different dates may be appointed for different States and different provisions of this Act”.

2. Entitlements

Public Distribution System (TPDS)

Priority households are entitled to 5 kgs of foodgrains per person per month, and Antyodaya households to 35 kgs per household per month. The combined coverage of Priority and Antyodaya households (called “eligible households”) shall extend “up to 75% of the rural population and up to 50% of the urban population”.

The PDS issue prices are given in Schedule I: Rs 3/2/1 for rice/wheat/millets (actually called “coarse grains” in the Bill). These may be revised after three years.

Children’s Entitlements

For children in the age group of 6 months to 6 years, the Bill guarantees an age-appropriate meal, free of charge, through the local anganwadi. For children aged 6-14 years, one free mid-day meal shall be provided every day (except on school holidays) in all schools run by local bodies, government and government aided schools, up to Class VIII. For children below six months, “exclusive breastfeeding shall be promoted”.

Children who suffer from malnutrition will be identified through the local anganwadi and meals will be provided to them free of charge “through the local anganwadi”.

Entitlements of Pregnant and Lactating Women

Every pregnant and lactating mother is entitled to a free meal at the local anganwadi (during pregnancy and six months after child birth) as well as maternity benefits of Rs 6,000, in instalments.

[Notes: (1) “Meal” is defined in the Bill as “hot cooked meal or ready to eat meal or take home ration, as may be prescribed by the Central Government”. All “meals” have to meet nutritional norms specified in Schedule II. (2) The entitlements of women and children are to be delivered by state governments through schemes “in accordance with the guidelines, including cost sharing” to be prescribed by the Central Government. (3) Every school and anganwadi is to have “facilities for cooking meals, drinking water and sanitation”. (4) For purposes of issuing ration cards, the eldest woman in the household (not less than 18 years of age) shall be considered head of the household.]

3. Identification of Eligible Households

The Bill does not specify criteria for the identification of households (Priority or Antyodaya) eligible for PDS entitlements. The Central Government is to determine the state-wise coverage of the PDS, in terms of proportion of the rural/urban population. Then numbers of eligible persons will be calculated from Census population figures. The identification of eligible households is left to state governments, subject to the scheme’s guidelines for Antyodaya, and subject to guidelines to be “specified” by the state government for Priority households. The lists of eligible households are to be placed in the public domain and “displayed prominently” by state governments.

4. Food Commissions

The Bill provides for the creation of State Food Commissions. Each Commission shall consist of a chairperson, five other members and a member-secretary (including at least two women and one member each from Scheduled Castes and Scheduled Tribes).

The main function of the State Commission is to monitor and evaluate the implementation of the act, give advice to the states governments and their agencies, and inquire into violations of entitlements (either suo motu or on receipt of a complaint, and with “all the powers of a civil court while trying a suit under the Code of Civil Procedure 1908”). State Commissions also have to hear appeals against orders of the District Grievance Redressal Officer and prepare annual reports to be laid before the state legislature.

The State Commission may forward “any case” to a Magistrate having jurisdiction, who shall proceed as if the case has been forwarded under Section 346 of the Code of Criminal Procedure 1973.

5. Transparency and Grievance Redressal

The Bill provides for a two-tier grievance redressal structure, involving the District Grievance Redressal Officer (DGRO) and State Food Commission. State governments must also put in place an internal grievance redressal mechanism which may include call centres, help lines, designation of nodal officers, “or such other mechanisms as may be prescribed”.

Transparency Provisions

Mandatory transparency provisions include: (1) placing all PDS-related records in the public domain and keeping them open for inspection to the public; (2) conducting periodic social audits of the PDS and other welfare schemes; (3) using information and communication technology (including end-to-end computerisation of the PDS) “to ensure transparent recording of transactions at all levels”; (4) setting up vigilance committees at state, district, block and fair price shop levels to supervise all schemes under the act.

District Grievance Redressal Officers

DGROS shall be appointed by state governments for each district to hear complaints and take necessary action according to norms to be prescribed by state governments. If a complainant (or the officer or authority against whom an order has been passed by the DGRO) is not satisfied, he or she may file an appeal before the State Food Commission.

Penalties and Compensation

The Food Commissions have powers to impose penalties. If an order of the DGRO is not complied with, the concerned authority or officer can be fined up to Rs. 5,000. The Commission can authorise “any of its members” to act as an adjudicating officer for this purpose.

In case of “non-supply of the entitled quantities of foodgrains or meals to entitled persons”, such persons will be entitled to a food security allowance from the state government, as prescribed by the central government.

6. Other Provisions

PDS Reforms

In Chapter VII, the Bill states that central and state governments “shall endeavour to progressively undertake” various PDS reforms, including: doorstep delivery of foodgrains; ICT applications and end-to-end computerisation; leveraging “aadhaar” (UID) for unique identification of entitled beneficiaries; full transparency of records; preference to public institutions or bodies in licensing of fair price shops; management of fair price shops by women or their collectives; diversification of commodities distributed under the PDS; full transparency of records; and “introducing schemes such as cash transfer, food coupons or other schemes to the targeted beneficiaries in lieu of their foodgrain entitlements” as prescribed by the central government.

Obligations of Government and Local Authorities

The main obligation of the Central Government is to provide foodgrains (or, failing that, funds) to state governments, at prices specified in Schedule I, to implement the main entitlements. It also has to “provide assistance” to state governments to meet local distribution costs, but on its own terms (“as may be prescribed”). The Central Government has wide-ranging powers to make Rules.

The main obligation of state governments is to implement the relevant schemes, in accordance with the guidelines issued by the Central Government. State governments also have wide-ranging powers to make Rules. They are free to extend benefits and entitlements beyond what is prescribed in the Bill, from their own resources.

Local Authorities and Panchayati Raj Institutions are responsible for proper implementation of the act in their respective areas, and may be given additional responsibilities by notification.

7. Schedules

The Bill has three schedules (these can be amended “by notification”). Schedule 1 prescribes issue prices for the PDS. Schedule 2 prescribes “nutritional standards” for midday meals, take-home rations and related entitlements. For instance, take-home rations for children aged 6 months to 3 years should provide at least 500 calories and 12-15 grams of protein. Schedule 3 lists various “provisions for advancing food security”, under three broad headings: (1) revitalization of agriculture (e.g. agrarian reforms, research and development, remunerative prices), (2) procurement, storage and movement of foodgrains (e.g. decentralised procurement), and (3) other provisions (e.g. drinking water, sanitation, health care, and “adequate pensions” for “senior citizens, persons with disability and single women”).

 

Amenities elude Sardar Sarovar evictees


ANNU ANAND, The Hindu

Makeshift existence: Life at Anjanwada village. Photo: Annu Anand
Makeshift existence: Life at Anjanwada village. Photo: Annu Anand

Displaced by the Sardar Sarovar Dam project, hundreds living on the hills lining the Narmada banks are denied basic amenities

A satisfied smile flashes across Chuna’s face. At least for few months, she won’t have to worry about feeding her children. Leaving behind all the day’s work, 35-year-old Sarla was also rushing to the village outskirts. She didn’t want to let this opportunity go.

Just like Chuna and Sarla, all men and women were running towards the village end, near the bank of the river, where in the name of a ration shop, wheat, sugar and salt were scattered on the ground. The village was getting PDS grains after a gap of six months. Running towards this makeshift ration shop, the villagers were simultaneously worried by the thought that the PDS shopkeeper may leave before they reach and their children may have to face hunger and starvation again.

This was the scene in Bhitada village in Madhya Pradesh’s Alirajpur district — one of the villages that have been affected by the Sardar Sarovar Dam project. One can reach this village only after travelling 44 km by road followed by a one-hour travel boat ride and a three-km-long walk. The whole village has been divided into five clusters or falias and these clusters are inhabited by about 350 families. Each cluster is at a distance of about two km.

According to the draft Food Security Bill, it is the responsibility of the State government to ensure that each family below the poverty line gets subsidised ration from the PDS shops. But families living on the bank of Narmada — affected by the Sardar Sarovar project and inadequate rehabilitation — are forced to live on the mercy of government officials for their day-to-day sustenance. They get rations after months on end and that too for only a few hours. By the time the news of ration arriving spreads in their scattered homes in the village, the makeshift PDS shop gets dismantled. Nandla Bhai who came to deliver PDS ration was selling the salt costing Re. one a packet for Rs. 5 to the villagers. He justifies his action saying, “Transporting the ration over such a distance increases the cost of the goods.” But transport charges are being paid by the government! Nandla didn’t have any answer.

There are 15 villages in the Alirajpur district that are surrounded by the Narmada due to the dam project. As the dam’s height kept on increasing, these villages got submerged leading to loss of land and homes. Improper rehabilitation has led these villagers to struggle for their basic needs like food, health and livelihood. Government schemes like PDS, mid-day meal, MGNREGA and anganwadi are implemented in these villages in the official records but because of inaccessibility, their scattered nature and inefficiency and corruption on the part of the government, most of these schemes remain exist only on paper.

Around 13 years ago, these villages were filled with lush green fields. There was a road to reach the village. But beginning from 1996, these villages started getting affected. By 2000, their farms and houses were completely submerged. In this situation, many villagers had to seek shelter in the hills that line the bank of Narmada. The rocky nature of these hills makes it difficult for the villagers to even find a place to set up their homes.

Anjanwada is one such village. The health, school facilities and nutrition for children here remain a challenge. The population of this village is around 360. The government has started a primary school for the children in the village but for most of the children, the school is only accessible by an arduous boat ride or an hour long walk through the rocky terrain. The school and the anganwadi are situated at the same place. The anganwadi is unable to provide nutrition to needy children since it is difficult for them to cross the river or cover the long distance daily. There is no health centre in the village. Electricity and roads still seem like a distant dream for these villagers.

Khajan Singh of Anjanwada lost his 12-year-old daughter and 18-year-old son three years ago as he couldn’t provide them timely treatment. The nearest health sub centre is located in Kakrana, 12 km away and can only be reached by a two-hour-long boat ride from Anjanwada.

The Madhya Pradesh government claims that all 45,000 displaced in the Sardar Sarovar Project have been given adequate compensation. Meera Kumari of Narmada Bachao Andolan (NBA), however, says, “ Nearly 3,300 families have been given the first instalment of cash component. But due to the Fake Registry Scam, they have been unable to buy the land. As of now, the matter is in High Court.”

 

#India -GM crops will sow food insecurity


KAVITA SRIVASTAVA, The Hindu

Farmers destroying GM crops in Karnataka. GM crops are input-intensive and labour-displacing. — K. Bhagya Prakash

Farmers destroying GM crops in Karnataka. GM crops are input-intensive and labour-displacing. — K. Bhagya Prakash

The recent affidavit filed by the Ministry of Agriculture in the Supreme Court arguing that if India does not walk the path of genetically modified (GM) food, then it will starve, gives a scary picture of how the highest court of the country can be misguided in order to protect global corporate interests.

This is a lie, because the situation of hunger, malnutrition and food insecurity of the people in the country is not due to inadequacy of production (we have had record production in the last three years), but due to distribution and purchasing power. The Indian Government is one of the world’s biggest hoarders of foodgrains, about 667 lakh tonnes as on January 1, 2013. This makes the current stock 2.5 times more than the Government’s own benchmark for buffer stocks. One wonders why our Government continues to insist that lack of food production is the cause for hunger in this country?

The question to ask is, why are these mountains of foodgrains not being distributed to the people when a third of the children are born malnourished, half of children are underweight and a third of the adult population has a body mass index (BMI) of below 18.5, one of the worst in the world.

Corporate interests

The Planning Commission’s estimate of the required subsistence calorie intake for defining the poverty line is set at 2,400 calories per person per day in rural areas and 2,100 calories per person per day in urban areas. Going by that figure, at least 80 per cent of the population in rural areas and 50 per cent in urban areas fall below the required subsistence intake. We stand way down the Global hunger Index at 65th out of 88 nations, worse than many sub-Saharan African countries.

Despite repeated Supreme Court orders regarding distribution of foodgrains to the poor at Antyodaya prices, the Government does not comply and refuses to allow food to be distributed through the public distribution system (PDS), although clandestine ways are used to export the grain abroad. And now we have this attempt of the Agriculture Ministry with its GM promotion to push for global corporate interests by riding on the backs of our starving millions. It is important to ask whether GM crops are a solution much worse than the problem that is being sought to be addressed.

The decision of bringing in GM food may not only harm Indian agriculture overwhelmingly but also push a majority of people to the brink of starvation. GM crops are an extension of input-intensive and labour-displacing model of industrial agriculture. Hence, they would harm small and marginal farmers and farm labourers, majority of whom are women. It is important to observe that agriculture, unique among sectors of production, plays the dual role of providing an enormously important source of livelihood and of producing the means of life.

Output Mirage

To link GM to increased food production, and hence food security, is a fallacy. Evidence is emerging that food security indicators have not improved but only deteriorated in countries that have adopted GM crops elsewhere in substantial areas. A recent letter from hundreds of Indian scientists, sent to the Minister for Environment and Forests, presents clear and strong evidence on this.

From our experience with Bt cotton it is clear that cultivation of GM crops, though it failed to increase yields, definitely increases input costs because of the royalty attached to seeds. It also includes increased irrigation and agrochemical requirements. Food security also means availability of safe food. There is growing scientific evidence questioning the safety of GM food. This shows the irresponsibility of the Ministry of Agriculture towards the people of this country, in advocating the introduction of yet-to-be-proven-safe technologies with several potential hazards as a part of our food systems.

Comprehensive provisions

Hunger and malnutrition are the greatest threat to India’s national security. The National Food Security Bill is a crucial opportunity to address this. We hope that this will not be missed when Parliament deliberates the report of the Standing Committee on Food and Consumer Affairs on the National Food Security Bill 2011. The present Bill and the Standing Committee recommendations have undermined the issues of farmers and consumers, by not recommending measures to ensure sustainable food production, guaranteeing MSP at real input costs, or providing safe food which is free of contamination from GMOs or agrochemicals.

Instead, the committee has recommended the provisioning of fortified foodgrains andatta (flour) under the PDS which opens the door for commercialisation of both agriculture and the food system; fortification of food grains could also open the doors for GM technologies.

The committee’s recommendations have also undermined the right to food of children, by provisioning maternal entitlements for only the first two children, thus denying the exclusive breast feeding rights of subsequent children born to the family and also not providing legal cover to the Anganwadis. It has undermined the vulnerable people’s right to food by not bringing Community Kitchens under the law, and undermined nutritional security by only talking of distribution of cereals.

Further, it falls far short of providing adequate food to all (universal) through the PDS, by only covering 67 per cent of the population with as little as 5 kg of cereals per head per month. It, finally, has not provided for criminal penalties or independent grievance redressal systems, essentially diluting the legal guarantees given by the Supreme Court in the “right to food” case. We hope that Parliament will undo what the Ministry of Agriculture is trying to do through the courts and bring in the wisdom that food security must address issues related to access to resources (land, forests and water), provide for revival of agriculture, protect livelihoods of food producers, especially small & and marginal farmers, and preserve local food systems.

In order to ensure that we are a society free of malnutrition and hunger, the need of the hour is to immediately legislate a truly comprehensive food security Bill rather than the myopic one that is being proposed.


By arguing that GM crops are essential to food security, the Government seeks to conceal the underlying reality.


(This article was published in the Business Line print edition dated February 20, 2013)

 

#India- A ‘Cost-Benefit’ Analysis of #UID #Aadhaar #mustread


200 px

200 px (Photo credit: Wikipedia)

 

Vol – XLVIII No. 05, February 02, 2013 | Reetika Khera

A cost-benefi t analysis by the National Institute of Public Finance and Policy of the benefits from Aadhaar integration with seven schemes throws up huge benefi ts that are based almost entirely on unrealistic assumptions. Further, the report does not take into account alternative technologies that could achieve the same or similar savings, possibly at lower cost.

Reetika Khera (reetika.khera@gmail.com) is at the Institute of Economic Growth on a ThinkTank Initiative Associate Professor Fellowship.

I would like to thank Jean Drèze for helpful feedback.

A recent study released by the National Institute of Public Finance and Policy (NIPFP) presents an innovative “cost-benefit analysis” of the Unique Identification (UID) or Aadhaar project. This is, in principle, a welcome step towards more informed discussion and greater transparency of this project. On close examination, however, the widely-publicised conclusions of this study turn out to have a fragile basis.

In a nutshell, the NIPFP report covers the potential use of Aadhaar in seven major welfare schemes and subsidies. These are the public distribution system (PDS), Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA, or simply NREGA), school education (including teacher salaries, mid-day meals, textbooks and uniforms), fertiliser subsidy, liquefied petroleum gas (LPG) subsidy, Indira Awaas Yojana (IAY), and payments in other schemes (pensions, Janani Suraksha Yojana, accredited social health activists and the Integrated Child Development Services). It estimates that linking these programmes to Aadhaar will lead to a “saving” of Rs 1 lakh crore over 10 years (Mathew 2012), and that after accounting for the costs of integration with Aadhaar the internal rate of return of the project will be over 50%.

Benefits from UID-Integration

The main question pertains to the benefits of integration with UID. The NIPFP report recognises that not all leakages in these programmes can be fixed by UID-integration. Only “bogus” beneficiaries, i e, ghosts (e g, a dead person whose name remains on government records) and duplicates (one person getting benefits twice), can be weeded out.1Estimates of bogus beneficiaries are available for only two of the seven programmes considered in the NIPFP report (the PDS and NREGA).

For the PDS, the report uses the leakage estimates from a report of the Planning Commission published in 2005, based on the outdated data pertaining to 1997-2001.That study estimated that 57% of PDS grain is diverted, of which, 17% was attributed to “ghost cards”. The definition of ghost cards includes (a) below the poverty line (BPL) cards that are not in possession of their owners, and (b) the excess of the total number of ration cards over that of total households (ibid: 82). It is worth-mentioning here that PDS entitlements are fixed per household. It is quite possible that in some cases several members of a joint household obtained separate ration cards for their respective nuclear families. Whether this should count as a case of “ghost” cards, as the Planning Commission report assumes, is not entirely clear. In any case, there is no reliable and up-to-date estimate of the share of bogus cards in circulation.

For NREGA the report assumes that UID integration will lead to savings of 12% of total expenditure – 7% from “automation of muster rolls” and another 5% from linking NREGA bank accounts to Aadhaar (without explaining how these would curb corruption, e g, how automation of muster rolls helps to reduce leakages). If the idea is that some people who do not work manage to have their names on the muster rolls and wages are credited to their accounts (i e, are “bogus” beneficiaries), then this fraudulent practice can continue even if muster rolls are automated.

The real protection from wage corruption in NREGA comes through bank accounts as it separates the payment agency from the implementing agency.3 With bank accounts, wage corruption can still continue in three forms: collusion (where the bank staff and NREGA functionaries collude to inflate work attendance and credit wages into accounts of people who have not worked), extortion (when an official forcibly takes money from NREGA workers after it has been withdrawn from the bank account) and deception (when a worker’s account is operated by NREGA functionaries without his or her knowledge). In the first two cases (collusion and extortion), linking accounts to UID will not help to reduce corruption. Only in cases of deception (or “identity fraud”) can biometric authentication at the stage of withdrawal of wages help.4 Estimates of the breakdown of the different types of corruption are not available.

The NIPFP report also recognises that estimates of duplicates and ghosts are not available for many schemes. What is the correct way to make assumptions on benefits of UID-integration in such cases? There is no easy answer to this, so what the NIPFP report does is either to apply the estimates of leakages due to bogus beneficiaries for one scheme to another (e g, in the case of fertiliser and LPG subsidies, the estimates applicable to the PDS are used),5 or – for the remaining schemes – to apply an arbitrary rate of 7-10%.6

Although these assumptions are termed “conservative” (Patnaik 2012), available evidence – patchy as it is – suggests otherwise. For example, an estimate of fraud in six pension schemes has been made by the Society of Social Audit Accountability and Transparency (Department of Rural Development, Government of Andhra Pradesh) for July-October 2012. Six types of corruption are documented: “dead persons”, “dual beneficiaries”, “partial payments”, “ineligible beneficiaries”, “not paid but drawn” and “other”. These social audit reports suggest that the total discrepancies in disbursement of pensions are around 2%. Discrepancies due to dead beneficiaries and dual pensions – problems that Aadhaar can fix – are a subset of this 2%. The rate assumed by the NIPFP report is 7%.

While the report admits that there are no “robust” estimates of duplicates and ghosts, it provides little justification for the rates assumed in the cost-benefit analysis. Anticipating questions about the assumptions, the anonymous authors of the NIPFP report do upload the spreadsheet with their calculations, inviting readers to “modify the assumptions and explore alternative outcomes”.7

Alternative Technologies

Biometric technology (of which Aadhaar is one variety) can help when there are bogus beneficiaries – ghosts or duplicates. Other, cheaper technologies (e g, computerisation) can also help weed out bogus cards and help plug other leakages. Tamil Nadu has a fully computerised PDS database and overall PDS leakages are very small (4% in 2009-10). In states such as Chhattisgarh, overall leakages in the PDS have fallen from 50% (in 2004-05) to 10% (in 2009-10) without any use of Aadhaar, but through computerisation and other measures (Khera 2011b). The question a cost-benefit analysis should really address is whether Aadhaar is more cost-effective than these and other alternatives, including local biometrics (used in Andhra Pradesh). This question is raised in passing, but not answered in the NIPFP report (Patnaik 2012).8

Concluding Comments

In short, NIPFP’s widely publicised cost-benefit analysis of UID is far from persuasive. It is almost entirely based on assumptions, not estimates, of the benefits of integration with Aadhaar. Where estimates (not assumptions) of bogus beneficiaries are used, they are unreliable or out of date. Further, the report does not take into account alternative technologies that could achieve the same or similar savings, possibly at lower cost.

The report also briefly considers the “costs” of integration of these schemes with Aadhaar. However, it makes no mention of the potential disruption that the integration exercise might cause. Disruption could be at the stage of integration (e g, old age pensioners may be unable to complete the required formalities) or during operations (e g, software, connectivity or biometric failures). By assuming, with touching optimism, that the UID system is reliable and seamless, the report fails to address crucial concerns that have been raised about this adventurous project.

Notes

1 For a detailed discussion on the types of corruption Aadhaar can weed out, see Khera (2011a).

2 “The reference period for the study was from 1997 to 2001 – the four-year period of the operation of TPDS. The household level information referred to the period from May to December 2001” (Planning Commission 2005: 13).

3 This practice has been in operation since 2008, except in Tamil Nadu. A few remote pockets were allowed to return to cash payments by Minister of Rural Development Jairam Ramesh in late 2011.

4 Note also that once those who were using “deception” to defraud the system, may turn to extortion and collusion once identity fraud becomes impossible.

5 The report states, “Using the estimates for PDS and MGNREGS as benchmarks, we assume that using Aadhaar-enabled system would result in a benefit of 7% of the total value of subsidies” (p 11) and “in the absence of such robust studies estimating the leakage from the system towards commercial use, we assume that use of Aadhaar would result in a benefit of 10% of the total value of the subsidy (similar to PDS)” (p 12).

6 See, for instance, p 10 where the report says, “In the absence of data on the extent of leakages that exist on account of fake and duplicate beneficiaries, we have assumed this figure to be 10% of the total expenditure incurred by the government on books and uniforms for school children”.

7 Initial attempts (twice, at a three-day interval) to download the spreadsheet revealed that the spreadsheet was password protected. Now one out of seven worksheets can be modified. The practice of posting reports without author names is also observable with the documents on NREGA and PDS on the Unique Identification Authority of India (UIDAI’s) website.

8 The cost-benefit work has been done by the MacroFinance group at NIPFP, a government-funded institution. The group has a project from UIDAI on financial inclusion which is perhaps why they focus only on UID. At the time of writing, no other paper on UID or financial inclusion was available on their website, raising the question whether the cost-benefit analysis itself was effectively sponsored by the UIDAI. Even if that is not the case, funding from the UIDAI to the MacroFinance group does create a possible conflict of interest, which would merit at least a short disclosure in the report.

References

Khera, Reetika (2011a): “The UID Project and Welfare Schemes”, Economic & Political Weekly, Volume 46, No 9, 26 February.

– (2011b): “Revival of the Public Distribution System: Evidence and Explanations”, Economic & Political Weekly, Volume 46, Nos 44-45, 5 November.

Mathew, Joe C (2012): “Big on Savings, Low on Leaks”, Business World, 24 November, available online athttp://www.businessworld.in/en/storypage/-/bw/big-on-savings-low-on-leak…

NIPFP (2012): “A Cost-Benefit Analysis of Aadhaar”, MacroFinance Group, National Institute of Public Finance and Policy, 9 November, available online at http://macrofinance.nipfp.org.in/FILES/ uid_cba_paper.pdf

Patnaik, Ila (2012): “Identify This”, The Indian Express, 3 December, available online at http://www.indianexpress.com/news/identify-this/ 1039542/

Planning Commission (2005): “Performance Evaluation of Targeted Public Distribution System”, Programme Evaluation Organisation, Planning Commission, Government of India, March, available online athttp://planningcomission.nimc.in/reports/peoreport/peo/peo_tpds.pdf

 

 

 

IMMEDIATE RELEASE- Cash Transfers and UID: Essential Demands


200 px

200 px (Photo credit: Wikipedia)

 

 

 

We support cash transfers such as old age pensions, widow pensions, maternity entitlements and scholarships. However, we oppose the government’s plan for accelerated mass conversion of welfare schemes to UID-driven cash transfers. This plan could cause havoc and massive social exclusion. We demand the following:

 

 

1. No replacement of food with cash under the Public Distribution System.

 

 

The PDS is a vital source of economic security and nutrition support for millions of people. It should be expanded and consolidated, not dismantled.

 

 

2. Immediate enactment of a comprehensive National Food Security Act, including universal PDS.

 

 

Instead of diverting the public’s attention with promises of mass cash transfers before the 2014 elections, the government should redeem its promise to enact a National Food Security Act (NFSA).

 

 

3. Cash transfers should not substitute for public services.

 

 

While some cash transfer schemes are useful, they should complement, notsubstitute for the provision of public services such as health care, school education, water supply, basic amenities, and the PDS. These services remain grossly under-funded.

 

 

4. Expand and improve appropriate cash transfers without waiting for UID.

 

 

There is no need to wait for UID to expand and improve positive cash transfer schemes such as pensions, scholarships and maternity entitlements. For instance, social security pensions should be increased and universalized.

 

 

5. No UID enrolment without a legal framework.

 

 

Millions of people are being enrolled for UID without any legal safeguards. The UIDAI’s draft bill has been rejected by a parliamentary standing committee. UID enrolment should be halted until a sound legal framework is in place.

 

 

6. All UID applications should be voluntary, not compulsory.

 

 

UID should never be a condition for anyone to access any entitlements or public services. A convenient alternative should always be available.

 

 

7. UID should be kept out of the PDS, NREGA and other essential entitlement programmes for the time being.

 

 

Essential services are not a suitable field of experimentation for a highly centralised and uncertain technology. Other applications (e.g. to tax evasion) should be tried first.

 

 

Explanatory Note:

 

Why we Oppose the Rush to Cash Transfers and UID

 

 

We support cash transfers such as old age pensions, widow pensions, maternity entitlements and scholarships. In fact, many of us have been part of struggles to expand social security pensions and improve their delivery. We also support appropriate, people-friendly uses of modern technology for this purpose.

 

 

However, we have serious reservations about the government’s rush to link these cash transfers to “Aadhaar”, the unique identity (UID) number. This is because the linking of these schemes can cause huge disruption – think of an old man who is currently getting his pension from the local post office, but will now have to run around getting his “UID-enabled” bank account activated and then may find his pension held up by fingerprints problems, connectivity issues, power failures, truant “business correspondents”, and what not.

 

 

We are also firmly opposed to the introduction of cash transfers in lieu of food and other commodities supplied through the Public Distribution System, for many reasons. One, subsidized food from the PDS is a source of food and economic security for millions of poor families. In 2009-10, implicit transfers from the PDS wiped out about one fifth of the “poverty gap” at the national level, and close to one half of it in states like Tamil Nadu and Chhattisgarh. Recent experience also shows that it is possible to further revamp and reform the PDS without delay.

 

 

Two, the banking system in rural areas is not ready to handle large volumes of small transfers. Banks are often far and overcrowded. The alleged solution, banking correspondents, is fraught with problems. Post offices could possibly be converted into useful payment agencies, but this will take time.

 

 

Three, rural markets are often poorly developed. Dismantling the PDS would disrupt the flow of food across the country and put many people at the mercy of local traders and middlemen.

 

 

Four, there are concerns of special groups such as single women, disabled persons and the elderly who cannot easily move around to withdraw their cash and buy food from distant markets.

 

 

Last but not least, inflation could easily erode the purchasing power of cash transfers. When the government refuses to index pensions or NREGA wages, how can it be trusted to index cash transfers to the price level? Even if some indexation does happen, small delays or gaps in price information could cause significant hardship for poor people.

 

 

The Kotkasim fiasco is a telling example of the potentially disruptive effects of inappropriate cash transfer schemes. The experiment was launched with much fanfare and immediately projected as a “stunning success” based on the fact that kerosene subsidy expenditure had declined by 80%, but in fact, the main reason for this decline was the collapse of the entire kerosene distribution system.

 

 

An impression has been created that the government is all set to launch UID-enabled cash transfers on a mass scale before the 2014 elections. This is very misleading, and looks like an attempt to make people rush to UID enrolment centres. This announcement also diverts attention from the government’s failure to enact a National Food Security Act. The food security bill, very weak in the first place, has been languishing with a Standing Committee for a whole year. Meanwhile, food stocks are accumulating on an unprecedented scale. The need of the hour is a comprehensive National Food Security Act, not a potentially disruptive rush for UID-driven cash transfers.

 

 

List of Signatories

 

  1. Sunil Abraham, Centre for Internet and Society

  2. Pushpa Achanta, Writer

  3. Bina Agarwal, Professor, Institute of Economic Growth

  4. Samantha Agarwal, Activist, Raipur

  5. Ankita Aggarwal, Researcher, New Delhi

  6. Ashutosh Agrawal, Student

  7. Anivar Aravind, Entrepreneur, Technology Manager

  8. Chirashree Das Gupta, Ambedkar University

  9. Indu Agnihotri, Director, Centre for Women’s Development Studies

  10. Sohail Akbar, Associate Professor, Jamia Milia Islamia

  11. Evangeline Anderson-Rajkumar, United Theological College Bangalore

  12. Janki Andharia, Tata Institute of Social Sciences

  13. Sadhna Arya, University of Delhi and Saheli Women’s Resource Centre

  14. K.V. Nagesh Babu, Assistant Professor, Tata Institute of Social Sciences

  15. Amiya Kumar Bagchi, Vice Chancellor, Tripura University

  16. Megha Bahl Student, Faculty of Law, University of Delhi

  17. Arindam Banerjee, Jawaharlal Nehru University

  18. Arindam Banerjee, Assistant Professor, Ambedkar University

  19. Sreshtha Banerjee, Social Activist

  20. Sanjay (Xonzoi) Barbora, Tata Institute of Social Sciences (Guwahati)

  21. Kripa Basnyat, PWESCR, Programme on Economic, Social and Cultural Rights

  22. Moushumi Basu, Associate Professor, Jawaharlal Nehru University

  23. Akansha Batra, Junior Research Fellow, Indian Statistical Institute

  24. Anjali Bhardwaj, Satark Nagrik Sangathan

  25. Bharat Bhatti, Student, Ambedkar University

  26. Kiran Bhatty, Senior Fellow, Centre for Policy Research

  27. Praful Bidwai, Journalist

  28. Ramila Bisht, Associate Professor, Jawaharlal Nehru University

  29. Arudra Burra

  30. Kathyayini Chamaraj, Journalist

  31. C.P. Chandrashekhar, Professor, Jawaharlal Nehru University

  32. Sarika Chaturvedi, Ph D scholar, Karolinska Institute, Sweden

  33. Aheli Chowdhury, JOSH, Delhi

  34. Arati Choksi, People’s Union for Civil Liberties, Bangalore

  35. Gowru Chinnapa, Bangalore

  36. Priti Darooka, PWESCR, Programme on Economic, Social and Cultural Rights

  37. Jitu Das, Alghanim Industries

  38. Asit Das

  39. Anirban Dasgupta, South Asia University

  40. Jashodhara Dasgupta, National Alliance for Maternal Health and Human Rights

  41. Saurav Datta

  42. Ashwini Deshpande, Professor, Delhi School of Economics

  43. Ritu Dewan, Mumbai University

  44. Nikhil Dey, Mazdoor Kisan Shakti Sangathan

  45. Harish Dhawan, Associate Professor in Economics, University of Delhi

  46. Arundhati Dhuru, National Alliance of People’s Movements

  47. Gabriele Dietrich, National Alliance of People’s Movements

  48. Sarah Dobinson, PWESCR Programme on Economic, Social and Cultural Rights

  49. Jean Drèze, Visiting Professor, Allahabad University

  50. Ajit Eapen

  51. Warisha Farasat, Lawyer

  52. Jayati Ghosh, Professor, Jawaharlal Nehru University

  53. Kaveri Gill, Independent researcher

  54. S. S. Gill,  Director General, CRRID, Chandigarh

  55. Paranjoy Guha Thakurta, Journalist

  56. Aashish Gupta, Research Assistant, Allahabad University

  57. Ruchi Gupta, National Campaign for People’s Right to Information

  58. Zoya Hasan, Professor, Centre for Political Studies, Jawaharlal Nehru University

  59. Neeraj Hatekar, Professor, Department of Economics, University of Mumbai

  60. Rohini Hensman, Independent scholar and author

  61. Himanshu, Assistant Professor, Jawaharlal Nehru University

  62. Danish Husain, Actor

  63. Indira C, Researcher Public Health, Delhi

  64. Kaveri Rajaraman Indira, Concern, Indian Institute of Science

  65. Jaya Iyer, Khadya Nyaya Abhiyan

  66. Devaki Jain

  67. K.P. Jayasankar, Professor, Tata Institute of Social Sciences

  68. Praveen Jha, Jawaharlal Nehru University

  69. Sadan Jha, Assistant Professor, Centre for Social Studies, Surat

  70. Ravinder Jha, Miranda House, University of Delhi

  71. Rajiv Jha, Shri Ram College of Commerce, University of Delhi

  72. Amrita Johri, Satark Nagrik Sangathan

  73. Sunny Jose, Associate Professor, Tata Institute of Social Sciences

  74. Aleesha Mary Joseph, Student, St. Stephen’s College

  75. Deep Joshi

  76. Vijay Lakshmi Joshi, People’s Union for Civil Liberties

  77. K. P. Kannan, Chairman, Lawry Baker Institute of Habitat Studies, Thiruvantanthapuram

  78. Anirban Kar, Associate Professor, Delhi School of Economics

  79. Ashok Khandelwal, Economist

  80. Madhulika Khanna, Researcher, New Delhi

  81. Sushil Khanna, Indian Institute of Management Calcutta

  82. Reetika Khera, Assistant Professor, Indian Institute of Technology, Delhi

  83. Asha Kilaru, Public Health Researcher, Bangalore

  84. Ashish Kothari, Kalpavriksh

  85. Subasri Krishnan, Filmmaker

  86. Kavita Krishnan, CPI(ML) Liberation

  87. Abhay Kumar, Karnataka

  88. Richa Kumar, Assistant Professor, Indian Institute of Technology, Delhi.

  89. Awanish Kumar, Ph.D. Scholar, Tata Institute of Social Sciences

  90. Madhuresh Kumar, National Alliance of People’s Movements

  91. A.K. Shiva Kumar, Economist

  92. Lawrence Liang, Alternative Law Forum

  93. Kamayani Bali Mahabal, Advocate

  94. Neeraj Malik, University of Delhi

  95. Anubhuti Maurya, Bharati College, University of Delhi

  96. Surajit Mazumdar

  97. Indrani Mazumdar, Centre for Women’s Development Studies

  98. Bhanwar Meghvanshi, Dalit Adivasi Aur Ghumantu Adhikar Abhiyan, Rajasthan

  99. Subhash Mendhapurkar, SUTRA, Himachal Pradesh

  100. Aggie Menezes, Associate Professor, St Xavier’s College

  101. Mira Mehta, Department of Nutrition and Food Science, University of Maryland

  102. Kalpana Mehta, Manasi Swasthya Sansthan, Indore

  103. Ritambhara Mehta, Independent Researcher

  104. Nivedita Menon, Professor, Jawaharlal Nehru University

  105. Rajkishore Mishra, Orissa

  106. Srijith Mishra, Associate Professor, Indira Gandhi Institute of Development Research

  107. Gautam Mody, Secretary, New Trade Union Initiative

  108. Mritiunjoy Mohanty, Professor, Indian Institute of Management, Calcutta

  109. Sanat Mohanty, Associate Professor, Indian Institute of Technology, Delhi

  110. Anjali Monteiro, Professor, Tata Institute of Social Sciences

  111. Vipul Mudgal, Inclusive Media for Change, Centre for the Study of Developing Societies

  112. Prakriti Mukerjee, Yoda Press

  113. Poonam Muttreja, Population Foundation of India

  114. Tithi Nandy, Healthwatch Forum Uttar Pradesh

  115. R. Nagaraj, Professor, Indira Gandhi Institute of Development Research

  116. Farah Naqvi, Writer and Activist

  117. Sudha Narayanan, Assistant Professor, Indira Gandhi Institute of Development Research

  118. Rajendran Narayanan, Visiting Scientist, Indian Statistical Institute

  119. Arvind Narrain, Alternative Law Forum

  120. Saboohi Nasim, Assistant Professor, Aligarh Muslim University

  121. Balaji Narsimhan

  122. Nandini Nayak, School of African and Oriental Studies, University of London

  123. P. Niranjana, Assistant Professor, Tata Institute of Social Sciences

  124. V.P. Niranjanaradhya, National Law School of India University

  125. Claire Noronha, Collaborative Research and Dissemination

  126. Madhurima Nundy, Institute of Chinese Studies

  127. Gangaram Paikra, Right to Food Campaign, Chhattisgarh

  128. Parthapratim Pal, Associate Professor, Indian Institute of Management Calcutta

  129. Sandeep Pandey, National Alliance of People’s Movements

  130. Soma Kishore Parthasarathy, PhD scholar, Indian Institute of Technology Bombay

  131. Medha Patkar, National Alliance of People’s Movements

  132. Prabhat Patnaik, Retired Professor, Jawaharlal Nehru University

  133. Utsa Patnaik, Retired Professor, Jawaharlal Nehru University

  134. Boban V. Paul, NGO professional

  135. Pamela Philipose, Director, Women’s Features Services

  136. Neetha Pillai, Senior Fellow, Centre for Women’s Development Studies

  137. Dr Prabir, Independent Consultant, West Bengal

  138. Pranesh Prakash, Law and Policy Researcher

  139. Mythri Prasad, Researcher, French Institute of Pondicherry

  140. T. V. H. Prathamesh, Research Scholar, Indian Institute of Science, Bangalore

  141. Raghav Puri, Independent Researcher

  142. Pushpendra, Director, Centre for Social Studies, Surat

  143. Kalyani Raghunathan, Ph.D. Scholar, Cornell University

  144. Annie Raja, National Federation of Indian Women

  145. Jawahar Raja, Advocate, Delhi

  146. Suvrat Raju, Reader, International Centre for Theoretical Sciences, Mumbai

  147. R. Ramakumar, Associate Professor, Tata Institute of Social Sciences, Mumbai

  148. Kannama Raman, Associate Professor, University of Mumbai

  149. Usha Ramanathan, Legal Researcher

  150. Ashish Ranjan, Birla Institute of Technology, Patna

  151. Bharat Rastogi, Graduate student, University of California Santa Barbara

  152. Savitri Ray, FORCES Network, Centre for Women’s Development Studies

  153. Mohan Rao, Professor, Jawaharlal Nehru University

  154. E. Rati Rao, People’s Union for Civil Liberties Karnataka

  155. Vidya Rao, Jain Vishva Bharati Institute, Rajasthan

  156. D. Narsimha Reddy, Chair Professor, NIRD, Hyderabad

  157. Rammanohar Reddy, Editor, Economic and Political Weekly

  158. Dr. K. Srinath Reddy

  159. Ira Regmi, Student, Lady Shri Ram College for Women

  160. Rohit, Assistant Professor, South Asia University

  161. Aruna Roy, Mazdoor Kisan Shakti Sangathan

  162. Saheli Women’s Resource Centre Sahyogi, Patna

  163. Preeti Sampat, Independent Researcher

  164. Meera Samson, Collaborative Research and Dissemination

  165. Sunil D. Santha, Assistant Professor, Tata Institute of Social Sciences

  166. Radha Kant Saxena, People’s Union for Civil Liberties

  167. Sukla Sen, EKTA (Committee for Communal Amity), Mumbai

  168. S. Seshan

  169. Sudeshna Sengupta, Mobile Crèches

  170. Mitu Sengupta, Centre for Human Development and Human Rights, New Delhi

  171. Prem Krishan Sharma, President, People’s Union for Civil Liberties, Rajasthan

  172. Saurabh Sharma, JOSH, Delhi

  173. Veena Shatrugna, Former Deputy Director, National Institute of Nutrition

  174. Jeevika Shiv

  175. Dr. Mira Shiva, Initiative for Health & Equity in Society

  176. Rama Shyam, Tata Institute of Social Sciences

  177. Aditya Shrivastava, Advocate

  178. Shankar Singh, Mazdoor Kisan Shakti Sangathan

  179. Bhanwar Singh, Astha

  180. Mahipal Singh, National Secretary, People’s Union for Civil Liberties

  181. Paramjeet Singh, People’s Union for Democratic Rights

  182. Surjit Singh, Director, Institute of Development Studies, Jaipur

  183. Dipa Sinha, Ph.D. Scholar, Jawaharlal Nehru University

  184. Shantha Sinha, National Commission for the Protection of Child Rights

  185. Ahmed Sohaib, Jamia Teachers’ Solidarity Association

  186. Gautam Sonti

  187. Vivek Srinivasan, Stanford University

  188. Nisha Srivastava, University of Allahabad

  189. Ravi Srivastava, Professor, Jawaharlal Nehru University

  190. Shambhavi Srivastava, Graduate student, University of British Columbia

  191. Kavita Srivastava, National Secretary, People’s Union for Civil Liberties

  192. Sulakshana, Right to Food Campaign, Chhattisgarh

  193. Nandini Sundar, University of Delhi

  194. Mayur Suresh, Ph.D. Scholar, University of London

  195. V. Suresh, General Secretary, People’s Union for Civil Liberties

  196. Kamayani Swami, Jan Jagran Shakti Sangathan

  197. Padmini Swaminathan, Tata Institute of Social Sciences, Hyderabad

  198. M.S. Swaminathan, Member of Parliament, Rajya Sabha

  199. Sharmila Tagore

  200. Krishan Takhar, People’s Union for Civil Liberties

  201. Vamsi Vakulabharanam, Reader, University of Hyderabad

  202. Padma Velaskar, Professor, Tata Institute of Social Sciences

  203. G. Vijay, Assistant Professor, School of Economics, University of Hyderabad

  204. M. Vijayabaskar, Madras Institute of Development Studies, Chennai

  205. Vimochana, Forum for Women’s Rights

  206. Achin Vanaik, Retired Professor, University of Delhi

  207. Sujata Visaria, Hong Kong University of Science & Technology

  208. Bezwada Wilson, Safai Karamchari Andolan