Nos. 36 & 37, March 2004
Nos. 36 & 37
Introduction: Growth Suppressed, Parasitism to the Fore
II. Six Years of Depressed Industrial Investment
III. Where Are Corporate Profits Coming from?
IV. Finance Divorced from Production
V. Deepening Regional Inequality
VI. Who Benefits from Suppression of Public Sector InvestmentAppendix I: The Real Scale of Unemployment
Appendix II: Starving and Stunting the People
The Real State of India's
Different indicators — chronic energy deficiency among adults, low weight and height among children, and anaemia among women and children — indicate that roughly half the population is physically sub-standard for sheer lack of food. In this light, the Government's drive to wind up the public distribution system has already had terrible effects, which will only worsen in the times to come.
During the period of 'liberalisation', under World Bank instruction, the Government repeatedly hiked the price of foodgrains in the Public Distribution System. Between 1990-91 and 1999-2000 cereals prices rose 30 per cent more than the prices of other commodities. As a result, people were forced to reduce their annual consumption of cereals between 1991 and 1998 by 16.3 kg per capita, or 81.5 kg for a household of five.
In 1997 the United Front government instituted the Targeted Public Distribution System, which was implemented thereafter by the BJP-led NDA government. The TPDS raised the prices for those arbitrarily deemed "above the poverty line" (APL) to market prices prevailing or even higher, as a result of which these sections stopped buying PDS grains, and in fact reduced their grain consumption. The price was raised even for those declared "below the poverty line" (BPL), as a result of which they could not draw their full quotas. Moreover, in this period overall economic growth and employment stagnated, as a result of which the vast mass of working people were even less able to afford food. The drop in cereals consumption per capita during the period 1998 to 2001 would therefore have been much sharper than the earlier period.
Cereals consumption in 1998 was already as low as 144.9 kg per capita — against the minimum norm of 157 kg. In fact the real cereal requirement in India would be even higher, since the diet actually consumed in India is not as varied as that norm assumes. Cereals are a much cheaper form of calories and protein than other foods. The poorest 40 per cent of the population spend one third of their food budget on cereals, but get three fourths of the nutrition from them. So they are particularly dependent on cereals for their nutrition.
As the offtake by the APL sections dropped steeply, and the BPL were unable to draw their quotas, foodgrains stocks soared from 18 million tonnes in December 1997 to 58 million tonnes in December 2001. That is, the growth in foodgrains stocks was the result of the deprivation of the poor of food. The so-called food subsidy rose from Rs 6,066 crore (Rs 60.66 billion) in 1996-97 to Rs 24,200 crore (Rs 242 billion) in 2002-03; half this sum was spent for holding stocks in excess of buffer stock levels. In other words, it was not so much a food subsidy as a subsidy for the World Bank-dictated policy.
Using the fact of this grotesque build-up of foodgrain stocks, the Government and various learned economists and editorial writers began arguing that that there was less demand for grain now. Official documents declared that people's tastes and lifestyles had changed; they no longer were as interested in food, but in other expenditures; even within their food expenditures they had shifted to eating higher quality foods, such as milk, meat and vegetables. Some other eminent economists argued that changes in the economy, such as agricultural mechanisation and public transport, meant that people did less physical activity and therefore needed less calories now. As a result the nation did not need all that grain, and the prime minister exhorted farmers to grow less of it.
Strangely, now, in February 2004, it turns out that the grain stocks have been nearly wiped out, and wheat stocks are indeed below minimum buffer stocking norms! Where did the grain go? No doubt in 2002-03 there was a considerable hike in PDS distribution in comparison with the recent past. Moreover, the Government off-loaded a substantial quantity through various other welfare schemes such as food-for-work and midday meals in schools. However, three other heads accounted for a huge amount of subsidised grain: exports, open market sales to traders, and theft.
Between April 2000 and November 2003 the Government exported 24.8 million tonnes of foodgrain. The Government subsidised this export, much of it at a higher rate than for BPL. The subsidy on these exports would have been of the order of Rs 12,500-15,000 crore (Rs 125 to 150 billion) over three and a half years.
Further, during April 2000-November 2003 13.7 million tonnes of open market sales were made to private traders, again at subsidised rates (the subsidy was around Rs 7,000-8,000 crore [Rs 70 to 80 billion]). The traders of course themselves made a profit on the difference between the subsidised price and the open market price.
Thirdly, huge quantities of grain simply disappeared from the FCI stocks. Although some of the stocks may have rotted and become unfit for consumption, that cannot account for most of the 14.7 million tonne gap in the accounts of foodgrain stocks.
Despite procurement of 64 million tonnes between April 2002 and November 2003, foodgrain stocks dropped by November 2003 to just 22 million tonnes, and even further by February 2004. By January 2004 there were only 7 million tonnes of wheat remaining in FCI stocks — which is below minimum buffer stock norms for that time of the year.
In the coming years, as has been discussed in a separate piece in this issue, there is a danger that the country will be forced to make large foodgrain imports once more. Moreover, worldwide the stocks of foodgrains are declining and production is falling below consumption. In such circumstances international prices might rise to levels where the imperialist countries can eliminate the subsidies on their wheat and rice, and sell their expensive grain to food-deficit countries like India.
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