According to the Food and Agriculture Organization (FAO) of the United Nations, their recent report, ‘The State of Food Insecurity in the World 2017’, reveals that 14.5% of India’s population is undernourished, 21% of children under five years are severely underweight, and 28.4% are stunted due to chronic undernourishment. India made modest progress in reducing the number of people facing hunger, from 210.1 million in 1990-1992 to 190.7 million in 2016-2017. In contrast, China, which initially had a higher number of undernourished people than India, reduced its figures significantly to 134.7 million in 2016-2017 from 289 million in 1990-1992. Undernourishment greatly affects child development, impacting adult productivity and the country’s economic growth. India accounts for approximately one-quarter of the world’s food-insecure population, and improving its nutritional status is a major challenge, despite having surplus food production.

From 1950-1951 to 2016-2017, the production of food grains in India increased from about 50 Mt to over 272 Mt, a fivefold increase attributed to the Green Revolution. India is the world’s leading producer of milk, pulses, and jute, and ranks second in producing rice, wheat, sugarcane, groundnuts, vegetables, fruits, and cotton. It is also a major producer of spices, fish, poultry, livestock, and plantation crops. Despite surplus production, India’s food sector performance is hampered by issues such as mono-cropping, flawed procurement policies through Minimum Support Prices (MSP), storage in Food Corporation of India (FCI) godowns, a malfunctioning Public Distribution System (PDS), and changing consumer patterns.

The Green Revolution in the 1960s was initially beneficial in addressing malnutrition in the developing world. However, it has led to negative consequences such as cereal-based mono-cropping, unbalanced food security, indiscriminate use of fertilizers and pesticides, excessive depletion of groundwater, and destruction of forest land.

Indian Food Chain

India’s procurement policy aims to address four key issues: safeguarding against food crises caused by natural calamities like drought, stabilizing commodity price fluctuations due to macroeconomic imbalances, preventing black marketeering and speculation, and supporting the extensive PDS network.

The PDS, established during the British Raj to combat famine and expanded post-independence, is overseen by the Central Government. The government procures food grains through the FCI, paying MSP to farmers. With over 4.62 lakh fair price shops (FPS) distributing commodities to around 160 million families annually, India’s PDS is one of the largest of its kind globally. Operating the PDS costs over Rs. 30,000 crore, accounting for 5.2% of the total Central Government expenditure, largely due to procurement prices, logistics, and state taxes. The MSPs increase annually, adding to the purchase costs. The country also stores almost double its grain needs in FCI godowns, with annual carrying costs as high as Rs 5 per kg, including rent, management, maintenance, and interest.

The PDS is plagued with corruption, handling losses, theft, pilferage, wastage, and inefficient logistics, leading to exorbitant costs. An RTI application revealed that FCI godowns across the country lost 62,000 tonnes of food grains over four years. Although some losses are due to natural disasters like cyclones and floods, they also indicate poor storage facilities and transit issues.

High-quality rice and wheat are sometimes illicitly diverted by corrupt PDS officials to hotels or private parties. Many bogus ration card holders also exploit the system. FPSs, primarily located in urban and semi-urban areas, often fail to reach the genuinely needy in remote villages. The PDS primarily includes cereals, with no provision for protein. Malnutrition and stunted growth in children are largely due to protein-energy malnutrition.

The National Food Security Act (NFSA), enacted in September 2013, aims to significantly expand India’s food distribution program. It extends the distribution of wheat and rice and provides up to 5 kg per person per month for 67% of the population at subsidized prices. However, as of now, this program has been implemented in only a few states.

FCI, MSP, Agricultural Produce Market Committee (APMC), and the Essential Commodities Act have created a government-managed monopoly in the food sector, leading to a severe agrarian crisis and escalating farmer suicides. Although agricultural income is tax-free, farmers end up spending up to 15% of their production costs in various fees and taxes.

The Indian diet is predominantly vegetarian, diverse, with significant regional variations and changing patterns over time. Grains supplied by the PDS often do not align with the staple diet of various regions, leading to their sale in the black market or use as livestock feed.

To achieve economic growth and food security, the government must reform its agricultural policy, MSP, FCI, and PDS structures. It needs to address internal challenges with the same rigor as it does external threats.

Several suggestions to address these issues include:

  1. Eliminating mono-crop MSPs, which lead to agricultural complacency. For instance, in Punjab and Haryana, farmers have stopped growing pulses and oilseeds, leading to increased imports. Crop rotation should be encouraged with MSPs for diverse agricultural products.
  • Decentralizing FCI operations to state and district levels, reducing the grain supply chain’s length. Local FCI branches should purchase and distribute staple grains locally.
  • Implementing new technologies in supply chain and warehouse management, such as using RFID-coded tamper-proof bags and GPS-equipped vehicles, to improve traceability and quality control.
  • Utilizing private, APMC, or rural granaries for grain storage. Ancient Indian rural underground granaries can extend grain shelf life up to three years. Grains should be packaged in RFID-coded tamper-proof packages and stored using just-in-time methods, with farmers compensated through Warehouse Cash receipts.
  • Expanding the PDS to include sources of protein, such as corn, chickpeas, egg, or milk powder, addressing protein-energy malnutrition.

These reforms could significantly improve India’s food security and agricultural sustainability.

Prof. Dr. Prahlada N. B
07 October 2017

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