Thursday, September 16, 2010

Getting Grain to the Poor: India Grapples with Problems of Plenty - India Knowledge@Wharton

Getting Grain to the Poor: India Grapples with Problems of Plenty - India Knowledge@Wharton

Early in September, the Indian government said it would release 2.5 million tons of rice and wheat to the country's poor over the next six months. It was following orders from India's Supreme Court, which in turn had reacted to television reports that showed stacks of rotting food grain in railway yards.

"Give [the grain] to the hungry poor instead of it going down the drain," the court told the government's counsel. The court also asked the state-owned Food Corp. of India (FCI) to expand and modernize its distribution infrastructure, and noted that 50,000 tons of wheat had already deteriorated. (Only 12,418 tons were damaged, the FCI claimed later.) The case brings renewed focus on the interlinked challenges of feeding India's poor and overhauling its food grain procurement, storage and distribution infrastructure, experts tell India Knowledge@Wharton.

The issue has positioned the Supreme Court on one side and the government on the other. The court was not amused that the government had chosen to interpret an earlier ruling on the issue as a "suggestion" and not an "order." The government felt that the court was exceeding its mandate. Prime Minister Manmohan Singh told a meeting with newspaper editors -- an annual event where the government is traditionally candid about its perceptions -- that he respected the court's "sentiments" and that concessional food should be made available to the poor. However, he suggested that courts should not get into the "realm of policy formulation."

"Inspired by the sight of food grain going to waste, it is often made out to be that our central problem is that of poor food grain storage," noted Kaushik Basu, chief economic advisor to India's finance ministry. In a paper titled, "The Economics of Foodgrain Management in India," published this month, he disagrees with that assessment:

"We have to design the entire food grains policy skillfully in order to ensure that we can fulfill the right to food that we are about to confer on our citizens, and at the same time ensure that our fiscal system is able to withstand the expenditure."

The Supreme Court took umbrage at the response of agriculture minister Sharad Pawar, who had initially said the government was unable to distribute food grain for free as transportation costs were high. In addition, it was already providing generous food subsidies.


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