As 2023 Comes To A Close, Govt Must Increase Coverage Of Free Foodgrain

Under the NFSA, the government provides more than 800 million people with subsidised foodgrains like rice, wheat, or coarse cereal. In December 2022, the Union government decided to integrate it with PMGKAY, which was implemented in 2020 following the Covid-19 pandemic.

Since the merger with NFSA, each priority household beneficiary under the NFSA is provided with 5 kg of foodgrains, and the poorest of the poor (Antyodaya Anna Yojana or AAY) households get 35 kg for free as NFSA entitlements. Priority households under NFSA are those identified by states’ scheme guidelines, while AAY beneficiaries are based on scheme guidelines issued by the Union government. While this sounds good on paper, this effectively reduces the quantity available to priority households in the Public Distribution System by half. Priority households which were effectively getting 10 kg of foodgrains per person--including the extra free 5 kg of grains under PMGKAY until December 2022--will now get only 5 kg per person, but at no cost.

Further, the issue is not only about quantity. In the aftermath of the pandemic, access to an affordable healthy diet has become a global challenge. A December 2023 report by the Food and Agriculture Organization of the United Nations (FAO) says that in 2021, 3.1 billion people worldwide were unable to afford a healthy diet; of these, 45% live in southern Asia.

The report said that in 2021, nearly three out of every four people in India were found to be unable to afford a healthy diet, which ranks India lower than neighbouring Bangladesh (66%) and Sri Lanka (56%).

In the year just ending, government data show that the economy has shown high growth compared to the pandemic years, and that India has become the “fifth largest economy”. However, economists told IndiaSpend that given stagnant wages and high unemployment rates, the focus needs to be on increasing the coverage of PMGKAY beneficiaries.

In India, food is cheap but unaffordable

In the 28 months between April 2020 and December 2022, nearly 111.8 million tonnes of foodgrains were allocated under PMGKAY, at a financial outlay of about Rs 3.91 lakh crore. The scheme covered 802.4 million beneficiaries, against the intended coverage of 813.5 million based on Census 2011. There is scope for state governments to identify 11.1 million additional beneficiaries under the Act, the Union government told Parliament in August 2023.

The government's priority should be to increase coverage based on the current population, and not based on a census that is 12 years old, Dipa Sinha, an economist at Ambedkar University, pointed out. “Presently, there are entire households that are left out, and even within households, new members would have been added since the last census,” she said. “Inflation has made food expensive, and the Rs 3 saving [on foodgrain costs per beneficiary] is only symbolic, not significant.”

At 5.55%, inflation increased in November 2023 compared to the previous month, which was pegged at 4.87%, according to the Consumer Price Index. Double-digit inflation in cereals continued, compared to the previous months.

Based on the last available household consumption expenditure survey data from 2011-12, 11.22 kg of grains were consumed per capita per month in rural India, including around 6 kg of rice.

The State of Food Security and Nutrition in the World 2023 report found that there are 401.6 million undernourished people in Asia, of which 233.9 million were reported in India.

While the cost of a healthy diet per person is lowest in India among southern Asian countries, it has the highest number of people who cannot afford it--there are 269.3 million people living below the poverty line in India as per official estimates. Even households earning enough to stay above the poverty line can still be deprived in numerous ways, IndiaSpend had reported in April 2022.

The International Labour Organization’s India Wage Report 2018, which predates the Covid pandemic, said that “low pay and wage inequality remain a serious challenge to India’s path to achieving decent working conditions and inclusive growth”. However, the point gets lost in hair-splitting, with poverty estimates being contested due to a lack of quality and regular updating of data.

More Than A Billion Indians Were Unable To Afford A Healthy Diet In 2021

Source: The State of Food Security and Nutrition in the World 2023 report

PDS coverage needs to be expanded

According to a 2020 analysis by Jean Drèze, Reetika Khera and Meghana Mungikar, the PDS leaves more than 100 million people excluded from its reach because the Union government uses data from the 2011 Census, already 12 years out of date, to calculate state-wise PDS coverage.

Drèze told IndiaSpend that the government has little interest in food security, and has persistently undermined the NFSA by defunding midday meals in schools and anganwadis, restricting maternity benefits to one child per family, and failing to conduct the 2021 Census, thus making it difficult to calibrate PDS coverage in line with population growth.

Drèze said the PMGKAY scheme serves no purpose other than allowing the government to take credit for rations that people are already entitled to under the NFSA. “PMGKAY is just another name for NFSA rations, with a tiny price subsidy added," Drèze said. "The additional cost to the government is very small, and so are additional benefits to the public.”

Food subsidy accounts for nearly half the budgeted subsidies. According to the government, the PMGKAY will cost Rs 11.8 lakh crore ($142 billion) for the five-year period ending 2028, or nearly Rs 2.4 lakh crore annually. In Budget 2023-24 the government, however, reduced the food subsidy by one-third, to Rs 1.97 lakh crore as compared to the revised estimates for the previous year.

Experts said that the PDS provides cereal or food security, but due to the limited availability of cereals and coarse grains, it did not offer nutritional security. There is, experts say, a need to diversify procurement for PDS, thus also incentivising farmers to diversify their cropping systems. Currently, the majority of the procurement is mostly from Punjab and Haryana under the Minimum Support Price regime, which does not necessarily support small and marginal farmers who form the majority of farmers in India.

“The 10 kg of PDS was a major support [for NFSA beneficiaries] because the main cereal requirement was taken care of,” said Sinha. “Although from a nutritional perspective it may not be adequate, it at least met the cereal requirements.”

In an response to a question in Parliament on diversification of PDS to include nutrient-rich options like millets and seafood, the Union government, in December 2023, said that the states can “formulate food or nutrition based plans or schemes providing for benefits higher than the benefits provided under PMGKAY”.

An added dimension to the problem is the question of accessibility of rations. While the government's ration card portability scheme, One Nation One Ration, has been implemented in all states and Union territories ostensibly to ensure that migrant workers have access to PDS, IndiaSpend reported in July 2023 that the majority of interstate migrants accessing PDS are from Delhi, largely because of lack of awareness among migrants and state governments, and a lack of clarity regarding the allocation of stock for locals and migrants at Fair Price Shops.

IndiaSpend has written to the Department of Food and Public Distribution for comment on additional food support, fall in real wages, and diversity in the procurement of food for the PDS. We will update the story when we receive a response.

Rural job demand remains relatively high

Uttar Pradesh and Bihar form nearly 30% of beneficiaries under the NFSA. Of all interstate migrants in India, 23% are from Uttar Pradesh (UP) and 14% from Bihar. Of the 11.4 million workers estimated by the government to have returned home during the 2020-21 pandemic lockdown, 42% were from Uttar Pradesh and Bihar.

This reverse migration led to a 43% increase in the demand for jobs under the Mahatma Gandhi National Rural Employment Scheme (MGNREGA). In 2020-21, demand for work under MGNREGA was highest in UP, at 11.8% of the nationwide demand. Until December 10, 2023--with more than three months to go in the current fiscal--the rural job demand in UP was nearly 10% of the nationwide demand, the highest along with Rajasthan, Tamil Nadu and Andhra Pradesh. In Bihar, too, the demand accounted for more than 6%, higher than pre-Covid levels. The numbers indicate that rural job demand remains high, likely due to slow economic recovery.

But wages are also a problem, data show. The average daily wage rates in rural India for male agricultural labourers in 2022-23 in both UP and Bihar (Rs 309) are 10% lower than the national average of Rs 345.7. The notified MGNREGA 2023 wages are lower than the average daily male agricultural labour wages, with Haryana offering the most at Rs 331 a day among the large states.

The unemployment rate has fallen compared to the peak of Covid, but is still higher relative to 2012, while around 60 million people were added to agriculture from 2020 to 2022, said economist Santosh Mehrotra. “We were supposed to pull people out of agriculture. With more than 42% of the workforce pre-Covid in agriculture and producing 15% of GDP, there was already a lot of unproductive labour in the sector.”

The 2022-23 economic survey showed that nominal wages had risen, but “...growth in real rural wages has been negative due to elevated inflation. Going forward, as inflation is expected to soften with the easing of international commodity prices and domestic food prices, it is expected that this will translate into a rise in real wages.”

However, said Drèze, though the government claims economic recovery on the basis of a rise in GDP, this is not a particularly useful indicator of actual living conditions. “Real wages are far more informative," Drèze said. "Judging from available data, there has been little growth of real wages in the informal sector during the last 10 years. This is another reason why social security measures should be expanded.”

Real wages have fallen or are stagnant in rural areas for years, which will have a knock-on effect in urban areas, said Mehrotra. With PMGKAY providing support at the rate of only 5 kg of grains per person, families are forced to buy from the open market because the per capita consumption of grain is over 10 kg per month.

Difficulties in sustaining additional food support

According to Food Corporation of India data, wheat procurement at 18.8 million tons in 2022-23 was the lowest in over a decade, due to extreme heat and unseasonal rains. An August 2023 parliamentary standing committee report on PMGKAY also reported the shortfall of wheat procurement between April and September 2022, leading to increased provision of rice for distribution. This required an additional financial outlay of around Rs 4,987.7 crore ($601 million).

Given that there are no current Census data available to update NFSA beneficiary coverage, the Union government could, in principle, allow states to issue additional ration cards on a temporary basis up to a certain ad hoc limit, and provide the requisite foodgrain allocations, said Drèze.

“Alternatively, the Centre could provide additional cash or foodgrain to the states to run food security schemes of their own," he said. "However, the Centre is unlikely to do that because it wants to get credit for food security. I do not think there is any substitute for prompt completion of the Census and expenditure surveys.”

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