Food Security and WTO

Bharat Jhunjhunwala

The Food Security Act proposes to provide subsidized food grains to  nearly 70 percent of Indians. The Government will have to procure and distribute about 70 percent of the food grains produced in the country for this purpose. This would be a violation of WTO rules which provide that any member country will not make a subsidized distribution of more than 10 percent of its domestic production.

The Government has found a creative solution to this problem. Developed countries have been demanding simpler rules and better facilities at the ports in the developing countries. They say that their exporters are facing problems in exporting goods to India. The WTO is set to discuss these problems under the banner of 'Trade Facilitation' at the Ministerial Meeting scheduled for this December at Bali. Technically trade facilitation applies equally to imports by the developed and developing countries. However, practically this is more beneficial for the developed countries who are major exporters of goods. Goods exports from India are less and imports are more because India exports large amounts of services such as software that are supplied via the internet and do not pass through the ports. Secondly, India receives large amounts of remittances which are used to import goods. Thus, effectively, trade facilitation is more beneficial for the developed countries. "Trade facilitation is nothing but import facilitation."

The developed countries have indicated that they would be willing to give a waiver of 2 or 3 years to allow distribution of food in excess of permissible 10 percent under programmes such as the Food Security Act. In return they expect India to move forward in trade facilitation, that is, to make imports easier. India has conceptually agreed to the proposal but it is demanding a waiver for 9 years. Settlement is likely to take place somewhere in between 3 and 9 years. In other words, the Food Security programme is a temporary paying guest. It will have to be dismantled within a few years after this waiver comes to an end.

The programme does not solve the basic problems of malnutrition anyway. Former Member of the Planning Commission Arvind Virmani writes that access to better sanitation and improved water sources, not availability of food grains, explains the high level of malnutrition in India. Improvements in environmental sanitation are the clearest and most effective policy-programme tool to reduce if not eliminate the excessively high levels of malnutrition in India, he says. Therefore, the strategy should be to first focus on public health and then take up food distribution.

But distribution of food grains to meet the obligations of Food Security Act will be done through the same decrepit Public Distribution System that was distributing food till now. Most money spent by the Government on food subsidy actually goes to cover up the inefficiency and corruption in the Food Corporation of India. The large number of genuine poor that are left out of the PDS; and equally large number of well-off persons are covered. Implementing the Food Security Act through the same system will get enmeshed in these same inefficiencies. The Central Government should have take a leaf out of the experience of Chhattisgarh. In an interview to the Wall Street Journal, Chief Minister Raman Singh said, "We de-privatized the ration shops by shifting the management of the public distribution system outlets from private licensees to community-based organizations such as gram panchayats, female self-help groups and co-operative societies. We organize a Rice Festival at each ration shop during the first week of every month, which helped ensure that all food items are adequately stocked in each shop by the last day of the previous month. Food items are delivered directly to the doorstep of ration shops by yellow government and private trucks to help curtail diversion and ensure timely stocking of food items in shops." It was necessary for the Central Government to adopt these practices.

Also, a healthy diet consists of not only carbohydrates but also other nutrients—especially protein. Only food grains will be provided to the BPL families under the present programme. Availability of cheap grains will lead families to consume excessive quantities of grains and cut consumption of pulses and vegetables. Health of the people is likely to, therefore, deteriorate. This is the lesson to be learnt from the shift of gears in fertilizer subsidy. The Government was providing subsidy on nitrogenous fertilizers only. This led farmers to use excessive quantities of Nitrogen to the exclusion of phosphates and potash. The nutrient balance of the soil got disturbed such that crop yields became immune to the use of nitrogen. The Government was forced to abandon that policy and to provide subsidies on all three major nutrients. A similar reversal of the policy of providing food grains alone will have to be made. But much loss of health would have taken place by then.

Vol. 46, No. 22, Dec 8 - 14, 2013

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