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FOOD SECURITY IN INDIA: ISSUES AND CHALLENGES

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 FOOD SECURITY IN INDIA: ISSUES AND CHALLENGES
Pramod Kumar1, P. Anbukkani2, D.R. Singh3and Amit Kar4
1,2,3,4
Scientists, Division of Agricultural Economics, IARI, New Delhi-12
Abstract
India’s half of population is struggling to find food on their plate, coping with stern starvation and
droughts with on the flipper side. India is home to the largest number of hungry people in the world
with over 200 million people. The Global Hunger Index (GHI) 2013 ranks India at the bottom with
63rd position (out of 84 countries)with a GHI of 23.90, which the index characterizes as “alarming”
food security situation. Major issues of food security in India are what will be the impact of such
large government foodgrain procurement on the open market prices.Given the inefficiencies and
leakages in the current distribution system, identify the principal areas of reform of the PDS and the
alternative mechanisms of reaching the foodgrain/subsidy to the entitled households. Ways to forward
is go for a universal right to food under which everyone is entitled to get subsidised foodgrains from
the PDS. It is also suggested that instead of identifying the poor, it would be much easier to identify
the rich to exclude them. Systems of storage, distribution, accountability and monitoring have to be
put in place to ensure that there is minimal leakage. Provision of decentralized procurement need to
be implemented. More states need to be brought under the procurement net and the procurement of
coarse cereals increased. The food coupon or Aadhaar card-linked entitlement would eliminate the
problem of having to procure and distribute more than 500 lakh tonnes of foodgrains every year as
also the problem of diversion.
Key words- Food security, PDS, Nutritional Indicator

I. INTRODUCTION
Food security is the back bone of national prosperity and well being. The health of any nation is
directly linked to food security. Besides, it is a matter of political stability and peace. India’s half of
population is struggling to find food on their plate, coping with stern starvation and droughts with on the
flipper side. India is home to the largest number of hungry people in the world with over 200 million
people. The Global Hunger Index (GHI) 2013 ranks India at the bottom with 63rd position (out of 84
countries)with a GHI of 23.90, which the index characterizes as “alarming” food security situation. To
tackle this Government of India has notified the National Food Security Act (NFSA), 2013 with the
objective 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. The Act
provides for coverage of upto 75% of the rural population and upto 50% of the urban population for
receiving subsidized foodgrains under Targeted Public Distribution System (TPDS), thus covering about
two-thirds of the population. The eligible persons will be entitled to receive 5 Kg of foodgrains per
person per month at subsidised prices of Rs. 3, 2 and 1 per Kg for rice, wheat and coarse grains
respectively. The existing Antyodaya Anna Yojana (AAY) households, which constitute the poorest of
the poor, will continue to receive 35 Kgs of foodgrains per household per month). The NFSA posses a
number of challenges. Identification of the poor and the scale of operation are the most critical ones.
Apart from the large financial outlay involved, the disincentive impact can lead to a significant fall in

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production of foodgrains unless an effective mechanism is either through Food Corporation of India
(FCI) or state agencies to procure foodgrains from every nook and corner of the country. The paper
deals with the(1) food availability, (2) food management, and (3) food security act.
II. FOOD PRODUCTION AND ITS AVAILABILITY
The foodgrain production in the country has increased over the period of time. Substantial
progress in acreage and production are also recorded for 2013-14 (Table 1). As per the 3rd Advance
Estimates the acreage under foodgrains has increased to about 126.2 million ha and to28.2 million ha
under oilseeds.
Table 1: Trends in production of food grains
Year Production (mt) Per capita availability
(in grams per day)
Rice Wheat Coarse Pulses Foodgrains Cereals Pulses Food
cereals grains
1950-51 20.58 6.46 15.38 8.41 50.83 319.99 63.44 383.43
1960-61 34.58 11.00 23.74 12.70 82.02 410.93 74.75 485.68
1970-71 42.22 23.83 30.55 11.82 108.4 446.42 59.43 505.85
1980-81 53.63 36.31 29.02 10.63 129.5 410.35 34.77 443.12
1990-91 74.29 55.14 32.70 14.26 176.3 520.50 42.34 562.82
2000-01 84.98 69.68 31.08 11.07 196.8 530.21 36.20 566.41
2010-11 95.32 85.93 43.68 18.24 244.7 555.04 39.76 594.80
2011-12 105.3 94.88 42.04 17.09 259.3
2012-13 104.2 93.62 39.50 18.00 255.0 528.7 46.78 568.79
2013-14 106.3 95.8 42.7 19.6 264.4 534.17 42.76 576.94

Source: Handbook of Indian Economy, RBI, GoI, 2011-12 &Chand (2009), Demand for foodgrains
during 11th Plan towards 2020, Policy brief No 28, NCAP, New Delhi.
Record production of foodgrains at264.4 million tonnes (mt) and oilseeds at 32.4 mt is estimated.
After achieving the goal of increasing foodgrains production by 20 million tonnes, new targets have
been set under the NationalFood Security Mission (NFSM), to produce additional 25 mt of foodgrains
by 2016-17: 10 mt of rice, 8 mt of wheat, 4 mt of pulses, and 3 million tonnesof coarse cereals. Focus is
on cropping systems and on small andmarginal farmers through development of farmer
producerorganizations (FPOs) and creating value chain and providingmarket linkages. Funding under
Rashtriya Krishi Vikas Yojana (RKVY) during the Twelfth Plan will be through production growth (35
per cent), infrastructure and assets (35 per cent), sub-schemes (20 per cent), and 10 per cent flexi-fund.
Bringing Green Revolutionto Eastern India (BGREI), a major sub-scheme with an allocation of Rs 1000
crore in 2013-14, increased paddy production inimplementing states by 7 per cent in 2012-13 over 2011-
12.Given the limitations in expanding agricultural land,improvements in yield levels hold the key for
long-term outputgrowth. However, in the case of most of the major crops, higherproduction in 2013-14
has been achieved by expanding acreage,rather than productivity. Groundnut has shown the largest
jumpin yield; while productivity increases are significant in the case of cotton and tur, as they have been
achieved against declining/stagnant acreage. The compound growth rate of area,production, and
productivity during 2000-01 to 2013-14 has beenhigher than in the previous two decades for coarse
cereals, pulses,oilseeds, and cotton, while it has largely declined for rice and wheat.The Integrated
Scheme of Oilseeds, Pulses, Oil Palm, andMaize (ISOPOM) has resulted in record production of
pulses(19.6 mt), oilseeds (32.4 mt) and maize (24.2 mt) in 2013-14,through area expansion and
productivity increase. The TechnologyMission on Oilseeds and Oil Palm (TMO & OP) introduced in

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theTwelfth Plan, also aims to increase domestic production of edibleoilseeds/oil, which is 50 per cent
short of the domestic demand,through several focused and integrated interventions. The area,production,
and yield figures for the last five years testify to the continued robustness of Indian agriculture.
The rise in foodgrain production has resulted in higher per capital availability of foodgrains in
recent years (Table 1).
The net availability of foodgrains has increased in 2013-14 at 229.1 mt showing a 15 per cent
increase over last year. The per capita net availability of foodgrains spurted to 186.4 kg per year from
164.3 kg per year, and the net availability of edible oils also increased from 12.7 kg per year to 15.8 kg
per year over the same period. The per capita availability of milk at 295 g per day is higher than the
world average, while that of eggs is around 55 eggs per year.
Table 2: Trends in percentage composition of consumer expenditure
Year Cereal Pulses Milk and Edible Egg, Vegetabl Fruits Food Non-
and their milk oil fish and es and total food
products products meat nuts total
Rural
1993-94 24.2 3.8 9.5 4.4 3.3 6.0 1.7 63.2 36.8
1999-2000 22.2 3.8 8.8 3.7 3.3 6.2 1.7 59.4 40.6
2004-05 18.0 3.1 8.5 4.6 3.3 6.1 1.9 55.0 45.0
2009-10 15.6 3.7 8.6 3.7 3.5 6.2 1.6 53.6 46.4
2011-12 12.0 3.1 9.1 3.8 3.6 4.8 1.9 48.6 51.4
Urban
1993-94 14.0 3.0 9.8 4.4 3.4 5.5 2.7 54.7 45.3
1999-2000 12.4 2.8 8.7 3.1 3.1 5.1 2.4 48.1 51.9
2004-05 10.1 2.1 7.9 3.5 2.7 4.5 2.2 42.5 57.5
2009-10 9.1 2.7 7.8 2.6 2.1 4.3 2.1 40.7 59.3
2011-12 7.3 2.1 7.8 2.7 2.8 3.4 2.3 38.5 61.5
Source: Key indicators of household consumer expenditure in India, NSSO report for 68th round
survey (2011-12)
The per capita availability of fruits rose from 114 grams per day in 2001-02 to 172 grams per day
in 2011-12; while that of vegetables increased from 236 grams per day to 350 gram per day over the
same period. The consumption of food items by the people depends on a number of factors like
availability of food, income, taste, preference, etc. It is observed that the consumption of cereals, pulses,
milk and milk products, edible oils are declining over the period 1993-94 to 2011-12. On the other hand,
consumption of food which is definitely going to adversely impact the poor.
III. INDIA’S PERFORMANCE ON GLOBAL HUNGER INDEX
Every year all the countries of the world, Global hunger index (GHI) is prepared by International
Food Policy Research Institute (IFPRI), Washington. The GHI ranges from 0 to 100, where 0 stands for
no hunger while 100 stands for all children died before the age of five, whole population is
undernourished and all the children younger than five are underweight.
Table 3: Performance on Global Hunger Index (GHI)
Year India’s rank in Out of total no Score Status
GHI of countries
1990 - - 30.6 Extremely
Alarming
2007 94 118 25.03 Alarming
2008 66 88 23.70 Alarming
2009 65 88 23.90 Alarming

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2010 67 84 24.10 Alarming

2011 67 81 24.20 Alarming
2012 65 79 22.9 Alarming
2013 63 78 21.3 Alarming
Source: IFPRI (2013) Global Hunger Report, IFPRI, Washington D.C.
Higher the score, worse is the condition. Values less than 4.9 reflect “low hunger”, values
between 5 and 9.9 reflect “moderate hunger”, values between 10-19.9 indicate serious, values between
20-29 are alarming” and values exceeding 30 are extremely alarming” hunger problem. It is revealed
from the Table 3 that over years India’s status on GHI is alarming. Performance wise over the years
India’s score is improving but still it ranks among the last 12 countries in the world.

Performance on Nutrition Indicators

While foodgrains are central to the issue of food security, thediversifying demand patterns from
cereals to protein-rich items alsoneed to be taken into account. As per the key indicators of
HouseholdConsumer Expenditure in India, 2011-12 expenditure on cereals between 1993-94 and 2011-
12 declinedfrom 24.2 per cent of total consumption expenditure to 12 per cent inrural areas and from 14
per cent to 7.3 per cent in urban areas (table 4).
Table 4: Mean per capita consumption of calorie, protein and fats (per day)
Year Calories (Kc) Protein (gms) Fats (gms)
Rural Urban Rural Urban Rural Urban
1983 2240 2070 63.5 58.1 27.1 37.1
1987-88 2233 2095 63.2 58.6 28.3 39.3
1993-94 2153 2073 60.3 57.7 31.1 41.9
1999-00 2148 2155 59.1 58.4 36.0 49.6
2004-05 2047 2021 55.8 55.4 35.4 47.4
2009-10 2147 2123 59.3 58.8 43.1 53.0

The per capita calorie intake for rural population declined from 2240 kcal per day in 1983 to
2047 kcal per day in 2004-05. During the same period, per capita protein consumption declined from
63.5 grams to 55.8 grams per day in rural areas. Per capita fat consumption, however, has not declined
over time. Per capita calorie intake by quartiles in shows that there was significant decline in the case of
the top quartile while for the bottom quartile it has been stagnant. It may be noted that the per capita
calorie consumption for the bottom decile was very low at 1485 kcal per day in 2004-05 (table 5).
This level is much below the norm of 2400 calories in rural areas.
Table 5: Consumption of food interms of calories by decile and quartile groups
Bottom Bottom Second Third quartile Top quartile
decile quartile quartile
Total calories
1983 1359 1580 2007 2328 3044
1987-88 1488 1683 2056 2334 2863
1993-94 1490 1659 2000 2251 2702
1999-00 1496 1658 1978 2250 2707
2004-05 1485 1624 1900 2143 2521
Cereal calories
1983 1150 1309 1589 1738 1974
1987-88 1221 1359 1598 1715 1894
1993-94 1203 1316 1504 1591 1690

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1999-00 1197 1289 1591 1509 1566

2004-05 1189 1259 1690 1430 1471
Source: Deaton, Angus and Jean Dre’ze (2009)
IV. FOODGRAIN MANAGEMENT
“A large public distribution system, supplemented by arrangements for moderating prices in the
open market and concerted efforts for achieving self-sufficiency in food grains, coupled with measures
for maximising procurement from surplus areas, have been the twin objectives of food policy in modern
India, ever since the Bengal famine of 1943. Currently, the food security system and price policy,
basically consist of three instruments: procurement prices/minimum support prices (MSP), buffer stocks,
and the public distribution system (PDS).
Minimum Support Prices
Price Policy for agricultural commodities seeks to ensure remunerative prices togrowers for their
produce with a view to encouraging higher investment andproduction, and at the same time,
safeguarding the interest of consumers bymaking available supplies at reasonable prices. A lot of
publicity is still neededwith regard to minimum support prices (MSP) as only 19 per cent of the
farmersknew about MSP, while another 10 per cent knew about it but did not knowwhere to sell their
produce (NSSO 59th Round 2003).
There has been significant increase in MSP during the period 2004-05 to 2009-10 as compared to
the period 2000-01 to 2004-05. For example, MSP for paddy(common variety) increased by 69.6 per
cent during 2004-05 to 2009-10 ascompared to a 9.8 per cent rise during 2000-01 to 2004-05. Similarly,
MSP forwheat increased by 71 per cent in the second half of this decade as compared to8.6 per cent in
the first half. The MSPs for the years 2008-09 and 2009-10,especially, are a clear departure from earlier
years, in order to achieve the broadobjectives of building buffer stocks of foodgrains to meet the
situation of scarcityarising out of crop failures and of encouraging farmers to grow more for
foodsecurity concerns. Overall, procurement of rice and wheat has increasedsignificantly in recent years.
The economic cost of foodgrains that comprises MSP (andcentral bonus if applicable), procurement
incidentals and the costof distribution, has risen significantly in the last few years owingnot only due to
increases in MSPs, but also due to increasedprocurement and incidentals.
Procurement
The nodal agency that undertakes open-ended procurement,distribution, and storage of
foodgrains is the FCI with other central and state agencies. Coarse grains areprocured by state
governments and their agencies. The NationalAgricultural Cooperative Marketing Federation of India
Limited (NAFED), National Cooperative Consumers’ Federation of IndiaLimited (NCCF), CWC, and
SFAC are the central nodal agenciesthat undertake procurement of oilseeds and pulses under the
PriceSupport Scheme (PSS) when the market rates of these commoditiesfall below MSP. However,
procurement operations are found to besuccessful largely for rice and wheat and that too only in a
fewstates like Punjab, Haryana, Andhra Pradesh, and Madhya Pradesh.To enhance efficiency in
procurement and public distributionand to extend the benefits of MSP to local farmers, the
Decentralized Procurement Scheme (DCP) is adopted by some state governments. For paddy it has been
adopted by West Bengal, Madhya Pradesh, Chhattisgarh, Uttarakhand, Andaman and Nicobar Islands,
Odisha, Tamil Nadu, Gujarat, Karnataka, Kerala, and Bihar;and by Andhra Pradesh in 2013-14 in 10
districts. Gujarat,Madhya Pradesh, Uttarakhand and Bihar have DCP for wheat, andRajasthan has
adopted it only in Alwar district since 2013-14.It is observed from the Table 6 that production and
procurement of cereals has overall been increasing since 2000-01 (coarse cereals are also supposed to be
provided under NFSA and have been included here although currently very low quantities are procured).
The current procurement at about 30% of production is sufficient for the implementation of the NFSA.

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Table 6: Production and procurement of cereals (2000-13, million tonnes)

Year Production Production (Rice, Procurement of Procurement as % of total
(Rice + Wheat) Wheat and coarse cereals (including cereal production
cereals) coarse cereals) (including coarse cereals)
2000-01 154.7 185.7 35.9 19.3
2001-02 166.1 199.5 43.0 21.6
2002-03 137.6 163.7 35.5 21.7
2003-04 160.7 198.3 39.3 19.8
2004-05 151.8 185.2 42.3 22.8
2005-06 161.1 195.2 43.5 22.3
2006-07 169.2 203.1 34.3 16.9
2007-08 175.3 216.0 40.1 18.5
2008-09 179.9 219.9 58.2 26.5
2009-10 169.9 203.4 57.8 28.4
2010-11 182.9 226.3 56.9 25.1
2011-12 200.2 242.2 63.4 26.2
2012-13 197.8 237.4 70.6 29.8

Source: GoI (2013-14), Agricultural Statistics at a Glance, Department of Agriculture and Cooperation,
Ministry of Agriculture, GoI.
Even without including coarse cereals, the required procurement will not be higher than about
32% of production.
Buffer Stock
The importance of building up a buffer-stock of foodgrains normally rice and wheat is to provide
food security to the country. The argument in favour of buffer-stocking is that where there is large
variation in foodgrain output, either due to weather conditions or due to man-made factors, it becomes
essential for the state to ensure food security for the large mass of people by building adequate buffer
stocks from the surpluses in good production years and/or by arranging to import the requisite amounts
of foodgrains in times of need. Various committees have suggested the optimal size of the buffer-stock,
which varies from 15 to 25 million tonnes, depending on the season.Higher procurement leads to stocks
that exceed the buffer norm, which the FCI is forced to carry over to thenext year. This suboptimal
management of stocks leads to wastageof economic resources.Wide fluctuation in the buffer stock of
foodgrains across different years is observed. Some years have shown prevalence of higher stocks way
above the normal while some years it was farbelow. This wide fluctuation causes lot of stress on
government exchequer or distree to the population endangering food security.
Public Distribution System (PDS)
It is feared that the National Food Security Act (NFSA) would harm the economy. One is in
relation to the amount of foodgrains required and its impact on farmers, production and procurement. It
is being debated that the NFSA will be “money down the drain” because of the high leakages/diversion
and wastage in the PDS. The extent of leakages in the PDS certainly is a cause for concern, but it is not
right to assume that nothing can be done about it. The NSSO data shows that the leakages in PDS
reduced from 54% in 2004-05 to 44% in 2007-08 and further down to 35% in 2011-12. A leakage of
35% is still unacceptably high. However, it is encouraging that there has been a declining trend. The
states doing well are those where coverage has been expanded, prices have been loweredand/or where
reforms in PDS such as deprivatisation, doorstep delivery, computerisation, effective grievance redressal

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mechanisms, etc, have been put in place (Himanshu 2013 Khera 2011). Therefore, there is reason to
expect leakages to go down further as a result of the implementation of the NFSA.
Table7: Buffer stock of foodgrains: Rice and Wheat (in mt)
Year 1st July actual buffer stock 1st July norm of buffer stock
2002 63.0 24.3
2003 35.2 24.3
2004 29.9 24.3
2005 24.5 24.3
2006 19.4 24.3
2007 23.9 24.3
2008 36.2 24.3
2009 52.5 24.3
2010 57.9 24.3
2011 64.0 24.3
2012 80.5 24.3
2013 77.7 24.3
2014 69.84 31.90
Source: Department of food and Public Distribution system, GOI, 2009 and GoI (2013-14), Economic
Survey 2013-14, Ministry of Finance, Government of India.
With the implementation of the NFSA, coverage under theTPDS has increased from36 per cent
to about two-thirds of the population. During2013-14, while 44.5 mt of foodgrains were allocated under
TPDS, 5.0 mt were allocated under other welfare schemes (OWS). Additional allocations were made to
offload surplus foodgrains to states/UTs in order to control prices in the open market. All states/UTs
were allocated 50 lakh tonnes of foodgrains in September 2013for lifting by 31 March 2014 for
distribution to additional BPLfamilies at Below Poverty Line issue price. Besides 14.58 lakh tonnes of
foodgrains was allocated to states for festivals, calamity relief, etc. 8.74 The core concern regarding the
PDS is the fixing of CIPs. Historically, CIPs were aligned to market price. The CIPs have remained
unchanged since 2000 for BPL and AAY households and July 2002 forAPL families, although
economic costs have increased by more than127 per cent (for rice) and 119 per cent (for wheat) in 2013-
14 over2002-03. This divergence has led to leakages,added to the subsidy bill, and fuelled inflationary
pressures. In fulfilling its obligation towards provision of minimum nutritional support to the poor
through subsidized foodgrains and ensuring price stability in different states, the government incursfood
subsidy. The difference between the economic cost and CIP is the consumer subsidy, which is
reimbursed to the FCI. The foodsubsidy has increased substantially in the past few years was Rs 92,000
crore in 2013-14.
Targeted Public Distribution System (TPDS)
The Public Distribution System (PDS) is one of the instruments for improving food security at
the household level in India. The PDS ensures availability of essential commodities like rice, wheat,
edible oils, and kerosene to the consumers through a network of outlets or fair price shops. These
commodities are supplied at below market prices to consumers. With a network of more than 462,000
fair price shops (FPS) distributing commodities worth more than Rs. 300 billion annually to about 160
million families, the PDS in India is perhaps the largest distribution network of its kind in the world. The
PDS evolved as an important instrument of government policy for management of scarcity and for
distribution of foodgrains at affordable prices. Supplemental in nature, the scheme is not intended to
make available the entire requirements of foodgrains of the households.
Access to Public Distribution System

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The proportion of consumables obtained from PDS to total consumption provides some idea
about the role of PDS in catering to the needs of the population. PDSconsumption constituted only 11
per cent of the total per capita consumption in rural India (Table 8).
Table 8: Per capita monthly PDS foodgrains purchases and their share in total Per capita
monthly foodgrain consumption in rural areas by quintiles in 2004-05
PDS purchases as % to total consumption
Q1 Q2 Q3 Q4 Q5 All
Jammu & 33.12 32.59 31.43 18.50 13.71 25.53
Kashmir
Himachal 45.96 35.05 33.17 28.94 15.50 32.74
Pradesh
Punjab 0.27 0.29 0.05 0.40 0.01 0.21
Haryana 4.58 3.62 1.67 0.61 0.41 2.27
Rajasthan 19.76 14.08 9.25 4.76 5.10 10.28
Uttar Pradesh 6.18 3.48 2.53 2.35 1.46 3.27
Bihar 2.16 0.89 1.19 0.58 0.61 1.09
Assam 7.60 5.13 2.65 1.38 1.86 3.74
West Bengal 6.06 3.51 3.03 2.24 1.49 3.29
Orissa 15.98 8.66 5.56 3.62 1.80 6.79
Madhya 22.57 12.76 12.65 8.80 4.95 12.45
Pradesh
Gujarat 25.46 18.08 14.81 10.88 3.15 14.32
Maharastra 39.46 29.83 23.30 17.77 10.41 23.90
Andhra 32.77 26.05 23.09 19.92 13.87 22.99
Pradesh
Karnataka 68.47 58.98 44.09 41.43 26.95 47.53
Kerala 40.73 23.71 17.85 11.87 7.51 20.63
Tamil Nadu 50.24 44.26 42.23 38.01 26.72 40.36
Other States & 32.22 14.10 11.03 11.39 10.35 15.91
UT
Total 17.04 12.37 10.52 8.51 5.59 10.85
Note: Bihar, MP and UP refer to pre-reorganized states; A household is said to access PDS if itreports making purchases
from PDSSource: Estimated from NSS Round Unit level data
This share was higher for southern states Maharashtra, Himachal Pradesh, and Jammu and
Kashmir, and lower for theeastern and northern states. The share for the poorest quintile was 17 per
cent,and 6 per cent for the richest quintile. Here too, the share for the poorest quintilewas higher for
southern and western states, including Rajasthan, as compared tothe eastern and northern states.The
share of PDS consumption for urban India (7.7 per cent) was lower than thatof rural India. This is true
for most states. For example, inKarnataka, the PDSconsumption share in rural areas was 47.5 per cent
while it was 17.4 per cent inurban areas. Parikh (2013) observed the following weakness in the PDS
system:
(i) PDS provides only a fraction of foodgrain consumption of the poor households.
(ii) The money value of income transfer through PDS grains is also modest.
(iii) The poor get a bit more than 10 % of the total subsidy expense of the government
(iv) More than 40% of the PDS grain do not reach the consumers.

The Targeted PDS (TPDS) was introduced in 1997 and under this scheme special cards were
issued to families below poverty line (BPL) and foodgrains were distributed at a lower price for these
families compared to those above the poverty line (known as APL families). The entire population was
divided into three categories – BPL (Below Poverty Line), APL (Above Poverty Line) and AAY –
Antyodaya Anna Yojana (destitute). The BPL population are provided 35 kg of foodgrains per month at
subsidized price. AAY, the destitute households (part of BPL households) are provided a monthly
provision of 35 kg of foodgrains at specially subsidized rates (Rs. 2 per kg for wheat and Rs. 3 for rice).
About 25 million (38 per cent of BPL) people have been covered under AAY. The central government

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allocates foodgrains to different states of India based on poverty ratios. According to the central
government there are around 65 million poor households in the country. States in turn distribute
foodgrains based on the BPL list. Targeting is done by states based on 13 non-income indicators to
select BPL population. TPDS is subsidized by the central government, and to some extent by
stategovernments. The total subsidy for TPDS is distributed as follows: 18 per cent forAPL, 46 per cent
for BPL and 36 per cent for AAY households.
Major Concerns about PDS
The main problem with regard to PDS is its inability to reach to the target groupsin most parts of
the country. PDS foodgrain purchase constituted only 11 percent of the totalper capita monthly food
grains consumption in 2004-05. Therewas marked regional disparity and although the impact of PDS on
southern andnorth-eastern states is much better, it has hardly any impact on some of thepoorest states
(Bihar, Assam, U.P.).
There are basically four problems in the presentTPDS:
(i) high exclusion errors;
(ii) non-viability of fair price shops;
(iii) notfulfilling the price stabilization objective; and
(iv) leakages from PDS
(v) Burden of food subsidy
(vi) Diversion of subsidised grain.
Some other problems are:
i. low quality of foodgrains,
ii. infrequent supply of foodgrains,
iii. inefficiency of Food Corporation of India (FCI),
iv. political interferenceand corruption,
v. no system of inspection of entitlements, and
vi. Viability of Fair Price Shops (low margins, etc.).

Reforming the Procurement and Distribution

There is need for certain reforms in procurement and distribution for betterfunctioning of TPDS.
These are:
(i) decentralization of procurement anddistribution;
(ii) involving panchayats (elected village representatives) in PDS;
(iii) streamlining FCI and involvement of private sector farmers’ cooperatives, SHGs,etc. in
procurement and distribution;
(iv) viability of FPSs, giving them highermargin, making monitoring compulsory;
(v) computerization of records forcross-checking, opening of grievance cells, and
strengthening the role of Panchayats and NGOs;
(vi) devising an appropriate criterion for selection and strict enforcement of the criterion; and
(vii) Punishment system for the defaulters.

It is suggested that food coupons should be introduced. States like Andhra, Rajasthan, and
recently Bihar, introduced food coupons and considerable improvements have been reported as a result.
This measure has helped in reducing the number of bogus ration cards and has been effective in
checking PDS grains being diverted into the open market. The basic problem in PDS is lack of public
accountability.
V. RIGHT TO FOOD AND NATIONAL FOOD SECURITY ACT

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The Presidential address to Parliament in 2009 indicates that implementation of the National
Food Security Act will provide a statutory basis for a framework which assures food security for all.
According to this proposed law, every family below the poverty line in rural as well as urban areas will
be entitled by law, to 25 kilograms of rice or wheat per month at Rs. 3 per kilogram. It is felt that the
statutory guarantee to food with fixed entitlements to the poor would be an important step in the
direction of ensuring food and nutritional security of the country. Although the ongoing TPDS is
supposed to provide subsidized foodgrains to the BPL population, the legislative measure may lead to
better accountability by making the PDS system more responsive in reaching out to the targeted
population.
Issues under the Proposed Right to Food
Issues under PDS: There has been a serious debate on the question: should the PDS be targeted
or universal? The advantage of universal PDS is that targeting errors can be minimized, particularly the
exclusion error (exclusion of poor). Also, a right generally implies applicability to the entire population
of the nation.
The second issue is, who should be covered under BPL and get ration cards?
According to Planning Commission estimates, there are 6.52 crore households below the poverty
line (based on 1993-94 poverty estimates and population estimates for 2000 from the Registrar General
of India. The states are demanding that all the 10.68 crore card holders should be included in the BPL
list under the Right to Food Act. This would have serious financial implications in terms of food
subsidy.
Implementation expenses:
Bhalla (2013a) has argued that implementation of the bill will annually cost over Rs 3 lakh crore
or 3% of GDP. Ashok Gulati et al (2012), have argued that to meet the requirements of the NFSA, the
burden on the government will be about Rs 6.8 lakh crore over three years (roughly Rs 2.3 lakh crore a
year). Mishra (2013) estimated that the annual incremental cost of the NFSA will be anywhere between
Rs. 44,411 crore to Rs. 76,486 crore in 2013-14.
Foodgrains Required for Implementing the NFSB
NAC has estimated the entitled food grain requirement (PDS) for phase 1 at 49.36 mt and for the
final phase at 55.59 mt (Table 9). These estimates are based on the assumption of 85 per cent off take of
food grain during Phase 1 and 90 per cent off take of food grain during the Final Phase. It is understood
that NAC has used the population projections of the National Commission on Population for October
2010 for estimating the grain requirement for both the phases.
Table 9- Food grain Requirement for implementing the proposed NFSB
NAC Projections* Scenario 2* Off take- Scenario 3* Offtake-
Scenario I priority 95%; general- 100%
85%
Phase 1 Final Phase 1 Final Phase 1 Final
Phase Phase Phase
Priority 34.40 36.42 38.91 39.83 40.96 41.93
households
General 14.36 55.59 54.04 58.58 58.76 63.98
households
Sub-total 49.36 55.59 54.04 58.58 58.76 63.98
Other welfare 8.00 8.00 8.00 8.00 8.00 8.00
schemes
Buffer stock - 2.00 2.00 2.00 2.00

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Total 57.36 63.59 64.04 68.58 68.76 73.98

foodgrains

(Million tonnes)
*Population-Scenario 1-October 2010; Scenario 2&3- Phase 1-October 2011; Phase 2-October 2013
Source: Report of the expert committee on National Food security bill, eac.gov/reports_NFSB.pdf
The food grain required for implementing NFSA has been estimated for two other scenarios
considering higher proportion of offtake and population projection. It is observed that the food grain
requirement would be much more and with the prevailing levels of procurement would not permit us to
implement the programmes.
Identifying the major issues
The major operational issues which need to be resolved to realize the goals of NFSB:
 Given the current trends of foodgrain production and government procurement, and the likely
improvements in these over time, will there be adequate availability of grain with the public
authorities to implement the full entitlements for the priority and general category as proposed in the
NFSB?
 What will be the impact of such large government foodgrain procurement on the open market
prices? This is relevant since both the priority and general category will be purchasing a part of their
consumption needs from the open market.
 What are the subsidy implications for both the phases and can these levels be sustained in the future?
 Arriving at a clear definition of priority and general households and the methodology of
identification of these households especially the feasibility of involving the Registrar General of
India and Census Commissioner in this task.
 Given the inefficiencies and leakages in the current distribution system, identify the principal areas
of reform of the PDS and the alternative mechanisms of reaching the foodgrain/subsidy to the
entitled households.
Way Forward
 One way to deal with the problem of exclusion error it to go for a universal right to food under which
everyone is entitled to get subsidised foodgrains from the PDS.
 It is also suggested that instead of identifying the poor, it would be much easier to identify the rich to
exclude them.

 Although the bill expands coverage to 67% of the population, it does not provide any identification
criteria based on which beneficiaries will be chosen. The Socio-economic and Caste Census data can
give some direction on how his can be done. It is suggested that an exclusion approach under which rich
are kept out and the rest are all covered will work better. This can easily be done with the increased
coverage, especially in rural areas. The Chattisgarh Food Security Act (CFSA) proposes four such
criteria-excluding income tax payees, households owning a pucca house in urban areas that has a carpet
area of more than 1000 square feet, and/ or liable to pay property tax and households in non-scheduled
areas that hold more than 4 hectares of irrigated land or more than 8 hectares of non-irrigated land. Such
simple and objective criteria can be developed for each of the states.
 Systems of storage, distribution, accountability and monitoring have to be put in place to ensure that
there is minimal leakage.
 Provision of decentralized procurement need to be implemented. More states need to be brought under
the procurement net and the procurement of coarse cereals increased.
 To overcome the weakness of PDS system, food coupons could be used. A person can go to any shop
and buy food items at market price paying part of the cost through food coupons. The traders can

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exchange the coupons for money at any bank. It would involve the problem of printing and distributing
the coupons to the poor, who will have to be identified. The problem of printing and periodically issuing
coupons could be overcome by use of Unique Identification Number under the Aadhaar Scheme.
 The food coupon or Aadhaar card-linked entitlement would eliminate the problem of having to procure
and distribute more than 500 lakh tonnes of foodgrains every year as also the problem of diversion.
 In remote areas the selected area cooperative societies and even fair price shops may be encouraged
which stick to the prices announced every week by the government.
 This would save transport costs, transit losses, and other leakages and simultaneously increase food
availability, reduce food prices in the open market, and ultimately reduce the food subsidy.
 The continued emphasis on procurement and distribution of rice and wheat is contrary to the ground
reality that shows changing preference functions of consumers. A shift to a direct cash transfer system or
food stamps would anchor our food policy to the requirements of the people and would additionally
reduce the fiscal deficit.
BIBLIOGRAPHY
[1] Bhalla, G.S., P. Hazell, and J. Kerr (2001), “Prospects for India’s Cereal Supply and Demand to 2020, Food, Agriculture
and the Environment”, Discussion paper 29, International Food Policy Research Institute (IFPRI), Washington, D.C.
[2] Deaton, Angus and Jean Dre’ze (2009), Nutrition in India: Facts and interpretations, Economic and Political Weekly, Vol
44(7).
[3] GoI (2013-14), Agricultural Statistics at a Glance, Department of Agriculture and Cooperation, Ministry of Agriculture,
GoI.
[4] GoI (2013-14), Economic Survey, Ministry of Finance, Government of India
[5] Gulati, Ashok, JyotiGujral, T. Nandakumar (2012), National Food Security Bill: Challenges and Options, Discussion
Paper No 2, Commission for Agricultural Cost and Prices
[6] Himanshu (2013), PDS: A story of changing states, Mint, 7 August.
[7] IFPRI (2013) Global Hunger Report, IFPRI, Washington D.C.
[8] NSSO (2011-12), Key Indicators of Household Consumer Expenditure in India, 2011-12 (July 2011-June 2012), vol. KI
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[9] Parikh, K.S. (2013), Right to food and foodgrain policy, Economic and Political Weekly, Vol 48(11), March 16, 2013.
[10] Prachi Mishra (2013), Financial and Distributional Implications of the Food Security Law, Economic and Political
Weekly, Vol 48(39), September 28.
[11] Ramesh Chand (2009), Demand for food grains during 11th Plan towards 2020, Policy brief No 28, NCAP, New Delhi.
[12] RBI (2011-12), Handbook of Indian Economy, RBI, 2011-12

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