Arshad Shaikh studies the latest controversy over the refusal of the Centre to sell wheat and rice to the States under the Open Market Sales Scheme (OMSS). While the State of Karnataka, now ruled by the Congress, blames the government for vendetta politics and depriving the poor of their legitimate rights, the Central Government asserts that it is curbing the sale of these commodities to the States to control inflation and by keeping in mind the interests of the entire country. Is the supply of food to citizens a zero-sum game? Who is right, the Centre or the States? Ultimately, the poor have to pay a heavy price for the idiosyncrasies of our leaders and the inadequacies in our way of governance.
On June 13, the Centre issued a notification to stop the sale of wheat and rice from its central stock pool to the state governments under the Open Market Sales Scheme (OMSS). This decision will affect many states, especially Karnataka as the newly formed Congress government had promised 10 kgs of free rice supply per person under the Annabhagya scheme. The beneficiaries would be all those below the poverty line (BPL) and Antyodaya cardholders. Assembly polls are scheduled in Rajasthan, Madhya Pradesh and Chhattisgarh; where it is very likely that similar populist schemes may be announced.
The Karnataka government was supposed to implement the scheme from July 1. The sudden (the Centre disputes this) closure of rice supply via OMSS put the Siddaramaiah government in a tight spot. It claims that the Food Corporation of India (FCI) agreed to sell 2.22 lakh million tons (LMT) to the Government of Karnataka on June 12. The Centre says the decision to stop the sale was taken on June 8 but the notice could be sent out only on the 13th.
The Congress leadership came down heavily on this decision. Jairam Ramesh tweeted – “By this move, the government is hurting the most marginalized sections of society.” Randeep Singh Surjewala said, “The question is, can the PM and the BJP be so blinded by their defeat that they deny food grain to the poor? Kannadigas demand answers. Let it be remembered that despite roadblocks put up by the BJP, the Congress will implement ‘Anna Bhagya’ but Kannadigas will not pardon the State BJP leadership or Modi government for its enmity towards the SCs (Scheduled Castes), STs (Scheduled Tribes), OBCs (Other Backward Classes) and the poor.”
The Centre remained unfazed by the allegations. As reported by the Hindu, the Union Minister for Food and Civil Supplies, Piyush Goyal defending the government’s decision said, “How can you add five kilos the Centre is giving and write in your manifesto that you will give 10 kgs [of foodgrains]? If you have to give 10 kgs of foodgrains, you need 73 LMT rice. Even if you take 25 LMT of rice, you will not be able to meet the promise of your choice, I have to look after 140 crore Indians. Should I keep the stock to make it available to 140 crore Indians? If the rate of rice goes up, what is the tool we have? It is OMSS by which we can check the prices. We were able to manage inflation better than many other countries because of efficient management.”
The OMSS
The Food Corporation of India (FCI) sells food grains via the Open Market Sales Scheme (OMSS) through e-auctions. The prices of food grains are set at the start of a cycle (Rabi and Kharif marketing season) and revised routinely based on procurement levels. The Centre has to first block food grain for 80 crore beneficiaries under the National Food Security Act (NFSA). Every state corporation gets its share (based on the number of beneficiaries) from that central pool.
The OMSS is used to supply food grains to states that need additional quantities beyond what they get from the central pool. After this distribution, surplus food grains are sold in the open market to private traders, bulk customers and retail chains. The OMSS is a transparent and efficient way to sell food grains in the open market. It helps to ensure that food grains are available at fair prices to all consumers. It helps to curb food grain inflation and moderate prices.
FCI THE NEW POLITICAL TOOL
With a new policy in place, a single bidder can purchase only between 10-100 metric tonnes (MTs). Earlier, a maximum of 3,000 metric tonnes (MTs) per bid for a buyer was permitted. Moreover, besides stopping its OMSS sales to states, even private bidders were disallowed to sell food grains to state governments.
The Centre’s logic is that this restriction will ensure wider and faster reach to the public. Food inflation was running high because of the Ukraine war and the climate changes (El Nino effect). Hence, the Centre had to intervene and regulate the sales to maintain buffer stock. The broad message that the Centre wants to give is that welfare will be doled out exclusively by New Delhi. How are states trying to help the poor over and above what we provide?
However, the latest news on the OMSS front as reported by the Indian Express says – “No takers in FCI rice e-auction, Centre hints at tweaking policy. In the e-auction conducted on July 5, the Food Corporation of India (FCI) received bids for only 170 MT rice against a quantity of 3.86 lakh MT on offer.”
This is clear proof that the Centre’s decision to stop selling rice to states was political and not economic.
THE FOOD SECURITY THAT ISN’T
India’s Public Distribution System (PDS) is not the best in the world though it may be touted as the biggest. What would explain the presence of a large population in our country that still lives under food insecurity? The Global Food Security Index 2022 says that the prevalence of undernutrition in India is 16.3%. Of our children – 30.9% are stunted, 33.4% underweight and 3.8% are obese.
According to the Human Development Report 2021-22, we have gone down in our ranking from 130 in 2020 to 132 in 2022 on the Human Development Index (HDI). The Global Multidimensional Poverty Index MPI 2022, tags India as the nation with the largest number of poor people at 22.8 crore.
The Targeted Public Distribution System (TPDS) continues to remain off-target as the identification of people eligible to benefit from it is still a work in progress. The criterion to identify households as Below the Poverty Line (BPL) is not uniform and changes from state to state.
According to the Rangarajan Committee (2014), the daily per capita expenditure has been set as `32 for rural India and `47 for urban India, to qualify as BPL. It estimated, by those criteria, the number of rural poor in India is around 26 crore, the urban poor are 10 crore and a total number of poor is around 30 crore. Does this mean that anybody who earns more than `1500 a month in any city of India is not BPL and so cannot avail of the TPDS facility?
India has launched the Chandrayaan-3 and may very well become only the fourth country in the world to land a spacecraft on the Moon. However, it would be in the fitness of things to eliminate poverty too and ensure food security for all.