- Start food for work, specially construction work, all over India.
- Wherever PDS works well, let it accept food stamps. But free internal trade to beat corruption.
- The long-term solution is only to decentralise procurement operations.
The only long-term solution is decentralisation of the procurement operations and freeing of internal trade in foodgrains.
What should be done? Export is a poor option as the government has been able to firm up contracts for about 5 mt of wheat and that too at half the economic cost of Rs 8 a kg. In any case, world markets are depressed and it does seem paradoxical that a poor country should subsidise consumers of other countries. More important, India is not a known supplier of wheat in the world market and it may be difficult to meet future contracts.
A more reasonable option is food for work, particularly construction work, around the country. In areas where the PDS is known to work quite well (e.g. Tamil Nadu, Andhra, Karnataka, Kerala, West Bengal) the food stamps may be exchanged at the PDS shops. However, the real problem is distribution in the Hindi heartland where corruption is endemic. Bankrupt states are unwilling to bear the transport costs and just won’t lift the stocks.
The answer is obvious. Since corruption is not going to go away in a hurry, why not free internal trade in grains? Private traders (who anyway dominate) will move grains to deficit areas thus bringing down open market prices, reducing the leakages from the PDS, bearing the cost of storing grain. It may make it easier to implement food stamps.
Yet, these are all short-term solutions. The only long-term solution is decentralisation of the procurement operations and freeing of internal trade in foodgrains. India is probably the only country in the world where agricultural policy is a state subject, yet all production/input subsidies are the responsibility of the Centre! Who will bell the cat?
(The writer is professor of economics, School of International Studies, JNU.)