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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Mobile phones become pocket banks in poor countries

An Afghan police officer gets his salary in a text message on his mobile phone. A Kenyan worker dials a few numbers to send money to his family.

The rise of banking transactions through mobile phones is giving a whole new meaning to pocket money in parts of the developing world that lack banks or cash machines.

Mobile money applications are emerging as potent financial tools in rural and remote areas of the globe, allowing people with no bank accounts to get paid, send remittances or settle their bills.

"One billion consumers in the world have a mobile phone but no access to a bank account," said Gavin Krugel, the director of mobile banking strategy at GSM Association, an industry group of 800 wireless operators.

"We see it as very big opportunity," he said this week at the Mobile World Congress in Barcelona, Spain, the industry's annual four-day event that ended on Thursday.

Mobile banking began to emerge six years ago in the Philippines and South Africa, where 8.5 million and 4.5 million people, respectively, use such services.

Today, 40 million people worldwide use mobile money, and the industry is growing, according to the GSMA.

"Africa and Asia are the most active regions right now," Krugel said. "We expect Latin America pick up this year."

There are 18,000 new mobile banking users per day in Uganda, 15,000 in Tanzania and 11,000 in Kenya, he said.

Mobile phones can offer a wide range of banking solutions, from sending transfers to a relative to buying goods in a store or putting money aside for a rainy day -- all by dialing a few numbers on one's handset.

Mobile banking can also make life easier for people in parts of Africa where paying a simple bill can be time-consuming, said Reg Swart, regional executive of Fundamo, a company that makes banking applications.

"It takes one day to pay one bill. You have to physically go to the bank, then you must queue, a long queue," he said.

In Afghanistan, the national police has been testing a service from mobile operator Roshan to pay its officers -- a system that helps to limit corruption, the company said.

"We are currently moving from a trial to a full launch in paying the Afghan national police," said Roshan's head of mobile commerce, Zahir Jhoja.

Every month, police officers receive a text message in the language they prefer informing them they have received their salaries, Jhoja said.

A voice message is also left on the phone "because a lot of them are illiterate and cannot read," he said. The officer can then go get his money from an authorised Roshan agent.