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Amit Verma/Forbes India

Famines and Public Distribution System in India

18th April 2016

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Debarshi Das writes: The neoliberal State seeks to cut down welfare expenditure, hence it is against PDS. It also relies on the market. Although contemporary advocates of free market are not motivated by extraction of colonial revenue, in terms of policy prescription they do not differ from the advocates of free market of colonial era.

Debarshi Das, Sanhati

India’s Tryst with Famines

Starvation and famine are not new in India. Before the arrival of colonialism, there had been scarcities due to droughts, floods, locust attacks. But they would seldom turn into a generalised phenomenon which spread across regions. With the coming of the colonial rule things changed. Consider the following pieces of statistics.

If we take four major famines which occurred between 1757 to 1947, the total death toll was between 25.2 million to 44.3 million (estimates of death vary because different researchers have come up with different figures). These four famines are,

1. 1769-70, affected present day West Bengal, Bihar, Jharkhand, Bangladesh. Death toll: 10 million, about a third of the population of the Bengal province died.
2. 1876-79, affected present day Tamil Nadu, Andhra Pradesh, Karnataka, Maharashtra, Rajasthan, Madhya Pradesh, Uttar Pradesh, Punjab. Death toll: 6.1 to 10.3 million.
3. 1896-1902, affected present day Gujarat, Maharashtra, Madhya Pradesh, Chhatisgarh, Odisha, Bihar, Uttar Pradesh, Rajasthan, Haryana, Punjab, Karnataka, Telengana, Andhra Pradesh, Pakistan. Death toll: 6.1 to 19 million.
4. 1943, affected present day West Bengal and Bangladesh. Death toll: 3 million.

These were only a few big ones. There have been numerous others. This series of devastations adversely affected productive capacity of the country and its demography. In the second half of the nineteenth century, which saw notable episodes of famines and epidemics, per capita income probably fell by more than 50%. In 1947 the yield of food grain in the Deccan region was between 50% to 67% of the 1870 level. Between 1872 to 1921 average life expectancy fell by 20%. In the thirty years between 1891 and 1921 India’s population hardly grew from 282 million to 302 million.

Interestingly, at the same time, hectic activity was going on in international trade. Between 1840 and 1886 India’s seaborne foreign trade volume increased eight times. Between 1875 to 1900 grain export increased from 3 million tons to 10 million tons. Around 1900 one-fifth of England’s wheat consumption was imported from India. By 1867 Berar (present day Vidarbha) was supplying as much raw cotton to Manchester textile mills as the whole of Egypt. We shall return to this link between colonial trade and famines later.

The contrast between pre-colonial and colonial period is so sharp that one wonders what changed in between. Some of the reasons which may have been behind less famines in pre-colonial era are, firstly, the localised nature of the economy. There could be scarcity, and high price of grains, at a particular place. But it would not get transmitted to other places. Lack of transportation and trade links would ensure that although the epicentre of famine would bear the brunt of it, it would not spread.

The second reason had to do with the administration. There were instances when the tax the ryot was liable to pay depended on the amount of harvest. Thus the ruler would partially share the damage of the harvest failure suffered by the ryot. When the harvest is bad tax would go down too. Local tax collectors would have discretionary powers. To encourage irrigation, they would grant tax relief to farmers who spent money on constructing a well, let us say. There were other measures which Mughal rulers used to implement when famines would erupt: embargos on food exports, anti-speculative price regulation, tax relief and distribution of free food (without the beneficiary requiring to prove that she is a genuine victim).

The condition in the brackets above is noteworthy. Unlike the Mughals, the British administration, had a dim view about the natives’ moral fibre. It was suspected that they were pretending to be starving and trying to pick her majesty’s pocket [1]. To qualify for relief the victims would have to pass ‘distance test’ and perform hard labour. During the Deccan famine of 1870s, relief camps of the government were purposefully set up far away from villages. No adult male or older children who lived within a 10 mile radius of the camp could apply for relief. This meant that relief seekers would have to walk more than 10 miles to prove that they are not faking. Beneficiaries would be required to perform hard manual labour under the relentless famine sun. Fines would be deducted from their wage if the work failed to meet the standards specified by the government. These tests would filter out cheats, it was hoped. However, contemporary nationalists perceived them as insults. In Bombay Deccan farmers started ‘relief strike’ – a kind of passive resistance – refusal to take government handouts. The strike would be supported by the nascent middle class nationalists (Sarvajanik Sabha of Poona). But we are getting ahead of the story. Let us start from the famine of 1769-70.

Free to Starve

The famine of 1769-70 left an indelible mark on Bengal’s popular culture. It is remembered as chhiyattorer manwantor: the famine of seventy six. Seventy six refers to the Bengali calendar year 1176, the year of the famine. Bankimchandra Chattopadhyay’s novel Anandamath, which was to inspire Hindu nationalists for decades and which contains the Sanskrit-mixed Bengali poem Bande Matarang, was set in the backdrop of this famine and the religion-tinged rebellion it gave rise to. Like many famines in India, it was preceded by a drought. The fact that so many died, a third of the province population, points toward the existing fragile state of the rural economy. It also indicates the lack of response from government as the famine unfolded.

In 1765 the British East India Company had obtained the right to collect tax, the diwani, in Bengal. Eager to extract as much revenue as possible, the land tax rate was raised several times. Even at the height of famine in 1770, land tax rate was raised by 10%.

The goal to maximise revenue went hand in hand with the lack of initiative on the part of the administration to take corrective steps. Those steps increase expenditure, which defeats the very purpose of extracting revenue from the colony. This inaction would be repeated in subsequent famines that the country would suffer through.

Interestingly, academic support had been forthcoming in support of such apathy. Advocacy for free market was consistent with no government intervention. The argument is, when there is a shortage the government would do best to do nothing, and let the market work its wonders. If the government takes steps, such as fixing an upper limit to grain price, it would end up making matters worse. Sellers would be discouraged from selling when there is an upper limit of price. This would increase the dearth. An upper limit would also encourage buyers to consume more food and increase scarcity.

It is as if there exists a natural law whereby market functions. Any human intervention in the functioning of market (fixing upper price limit in this case) goes against the law and makes matters worse. Market should be made free, so that its invisible hand can ensure maximum welfare. Adam Smith, the discoverer of the hand and the father of modern economics, wrote in 1776 in The Wealth of Nations,

The drought in Bengal, a few years ago, might probably have occasioned a very great dearth. Some improper regulations, some injudicious restraints imposed by the servants of the East India Company upon the rice trade, contributed, perhaps, to turn that dearth into a famine.

Such a mechanical way of looking at the events of society, which is subject to many more complexities, is fraught with errors. For example, what if the speculators and hoarders are behind rising prices? If the government remains inactive would it not encourage them to hold back grains even more and make conditions worse? By the time they release grains and earn windfall profits, will not thousands have already perished? Will it not help if government takes a long run view and intervenes, such as by maintaining a stock of grains over time and releasing it when price rises? But these measures would require a bigger government spending, which is against the very purpose of colonial administration.

If Adam Smith’s political economy treaties were eminently convenient, the Raj could also draw upon Thomas Malthus’s teachings against helping the expendables. Such helps were, according to Malthus, against another natural law: that of food production growth and demographic growth. The following remark by Sir Evelyn Baring (then finance minister of British India) on the 1876-79 famine would have made Malthus proud: “[E]very benevolent attempt made to mitigate the effects of famine and defective sanitation serves but to enhance the evils resulting from overpopulation.”

In short, two founding principles of the British Raj were behind the Bengal famine of 1769-70 and the procession of famines that would follow. First, extraction of maximum possible revenue from the colony, and second, non-intervention in the market when the famine starts taking its toll.

The two big famines of 1876-79 and 1896-1902 underline the point. Viceroy Lytton, busy arranging finance for the first Anglo-Afghan War (1878-1880), could not be bothered with trivialities such as famine relief. He issued orders to the effect that there is to be no interference of any kind on the part of the government with the object of reducing the price of food, and denounced “humanitarian hysterics” back home in England.

Sir Richard Temple, the lieutenant governor of Bengal, was sent to oversee the relief work in the Bihar and Bengal famine of 1873-74. Temple did his job well by importing a million ton grains from Burma and distributing it among the starving. Not surprisingly, Temple was chastised for profligacy. The Economist wondered how he could encourage the Indians to believe that it was the duty of the government to keep them alive. Top bureaucrats averred, it was a mistake to spend so much money to save a lot of black fellows. To give the poor chap another chance in 1877 viceroy Lytton sent him to Madras Presidency which was particularly hard hit.

Temple proved to be a quick learner. He enacted the distance test and hard work test which we discussed earlier. The relief camps also became infamous for “Temple ration”. It contained half the quantity of food allotted to jail inmates of that time. Buchenwald Nazi concentration camp ration contained more calorie than Temple ration.

To shirk responsibility the colonial administration often blamed nature (besides scheming native elites and cheating famine victims). To be sure, natural phenomena do affect harvest and starvation. But famines take place in a society, and are affected by man-made factors. During the nineteenth century India rural economy was getting reengineered by the empire. Export-oriented farming was pushed through. Crops which served the British interest were promoted: Cotton, wheat, opium, indigo, etc. Exports rose sharply, but price fall in global market spelt disaster for farmers. Farming on which peasants depended for survival was pushed to less fertile land. Village commons, forests became out of bounds. When rain failed, government would not grant tax relief. Famines became more probable.

After Independence

Ironically, the foundation of food security system in India was laid by the British. But this is understandable, for it was war time. During the Second World War the colonial government required its industrial and military infrastructure to work without disruption. Workers engaged in those facilities had to be kept secure against price rise which became a certainty due to the war. In 1942 the primary structures of public distribution of food and other necessary items were erected in a few urban centres. That poor peasants and rural artisans starved to death in the streets of Calcutta where industrial workers were protected is a tragedy we shall skirt here.

The post-colonial State took PDS forward. The idea of PDS was in line with the semi-welfare State that Nehruvian socialism entailed. PDS protected the urban industrial proletariat against volatile food price. Such protection was helpful to the industrial capitalist as well: since PDS ensured that food bundle of the worker is protected the capitalist would not have to pay higher money wage when food price rose. The contradiction between worker and capitalist got negotiated through PDS.

The contradiction between village and town also got managed through PDS. The village sells grains to the town. Without PDS there is a direct contradiction between consumers (the town, industry) and producer (the village, agriculture). High price harms town, helps village; low prices does the opposite. Now consider PDS. The government buys grains from the farmer at a price called the procurement price. The grain is sold to consumers at a price called the issue price. The government can buy price at a high procurement price and sell it a low issue price. As there is a government in between, the contradiction between agriculture and industry gets mitigated.

But PDS, the shock absorber, itself came at a price. The gap between procurement and issue price has to be paid for. This gap constitutes food subsidy. It is an expenditure the government has to bear. As an expenditure item, PDS would have raised the hackles of the British Raj. Interestingly, it attracts criticisms from the present Raj, too. Before coming to that, let us look at the different stages PDS has travelled through since 1947.

• 1947–1960: PDS was taken beyond select cities. The country was majorly dependent on food import.
• 1960–1978: Organisational changes were brought in. A commission to oversee purchase from farmers was set up. Food Corporation of India was set up to store and transport grains. Green Revolution eased the supply of food grain.
• 1978–1991: Period of consolidation, PDS coverage was extended to all areas across the country.
• 1991-till date: Liberalisation of the economy transformed universal PDS to targeted PDS (TPDS) in 1997. Below-poverty-line (BPL) households became entitled to more grain, at less price, than above-poverty-line (APL) households. National Food Security Act (2013) rendered many households with no entitlement at all. This act proposed to start cash transfer in lieu of provision of food in kind.

It is undeniable that the food situation after Independence improved a great deal. Starvation deaths have reduced. But it has not been a smooth journey. Consecutive droughts in the mid-1960s pushed up food price and led to a phase of political turmoil throughout the country. The State responded by promoting a technology-centric solution to raise agricultural output: the Green Revolution. Green Revolution mitigated supply side difficulties. But it created problems of its own in terms of loss of land of smaller peasants. We also need to remember that high production of food does not guarantee that people are able to access it. They may be jobless, their income could be insufficient, food price may be too high. As an illustration, we can refer to the data of declining calorie intake in the recent years. The decline in per capita calorie is occurring at a calorie level which is appallingly low compared to the global standard. And at a time when India is exporting food! PDS could act as a corrective measure to bridge the gap between production of food and its availability to the poor. But the neoliberal State is set to dismantle it.

The neoliberal State seeks to cut down welfare expenditure, hence it is against PDS. It also relies on the market, which is why there is an advocacy to move to a system where money would be distributed to consumers which they would exchange for food in the market. Although contemporary advocates of free market are not motivated by extraction of colonial revenue, in terms of policy prescription they do not differ from the advocates of free market of colonial era.

Cash Transfer and Food Transfer

The critics of PDS have a powerful argument. In this system the government buys grains, transports them, stores them in godowns and distributes to consumer through an intricate system. The price which the consumer pays to the fair price shop (FPS) dealer  is low compared to the market price of similar quality grain. The dealer, according to the critics, has an inbuilt incentive to be corrupt. She can divert the grain and sell it at a higher price in the open market. The consumer can be told a lie that grain has not arrived. The critics recommend a system where no grain is supplied. This would save a lot of money spent on buying, storing and transporting the grain. It would also eradicate corruption at the FPS level. The consumer is transferred cash directly by the government to buy food. It is argued that third world countries like Brazil (Bolsa Familia) and Mexico (Oportunidades) have been implementing successful cash transfer schemes. India should follow a world-wide trend rather than wasting money on a leaky corrupt system.

To bolster the case, data of high rate of stealing in PDS is cited. In 2004-05, for example, more than half of rice and wheat which the government released did not reach intended beneficiaries. That is, the “leakage” was more than 50%.

The arguments seem forceful. But, on closer examination many of them appear to be misplaced. Petty corruption and bureaucratic delay is common in India, which are adversely affecting the operation of PDS. Same troubles could resurface in distribution of cash as well. India has many government schemes where cash is distributed, for example, wage payment to the MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme) workers. For months, it has been found, many workers have not received their payments. There have been difficulties in opening bank accounts, through which the payment could be made. India’s rural infrastructure is deficient. Power, banks, post offices are scarce. This deficiency works as a bottleneck in case of money transfer. For this reason, comparison with Brazil and Mexico is misplaced: both these countries have a high degree of urbanisation compared to India. Moreover, the acts of visiting a bank or post office to open an account or make a withdrawal can be alienating for people who cannot read or write. It is not surprising that in surveys it’s found that most of the beneficiaries do not prefer cash transfer (except in states like Bihar where PDS functioned dismally till very recently).

Another problems with cash transfer is lack of indexing with inflation. As prices rise, if the money transfer does not increase proportionately, the beneficiary loses out. This does not happen when the distribution is in-kind: grain is inflation-proof. There is ample doubt whether the bureaucracy will be sensitive to inflationary revisions. In the case of MGNREGS wages, government wage rate was found to be lower than the minimum wage in some states. No corrective measures were forthcoming. The question of gender and intra-family disparity is also important. Commentators have expressed apprehension that cash, being easier to spend and control by the male members of the family, is likely to be spent on non-food items or to pay pressing debt, rather than on food. The purpose of food security would be defeated if that comes to pass. This also implies food distribution through PDS (as opposed to cash distribution) can lead to rise in calorie intake. Research indicates that a reason for the decline in calorie intake in India has been the falling access of the poor to food because they are being compelled to spend more on other goods for mere survival.

Finally, and most importantly, the present system can be reformed without throwing out the baby with the bathwater. We have seen the high leakage data in 2004. But since then, states have become more vigilant. As a result, leakage of grains has gone down from 54% to 42% in seven years. It has been observed that some states (Tamil Nadu, Andhra Pradesh, Chhattisgarh, Himachal Pradesh) have low rate of leakage compared to others. This gives an indication and hope that if laggard states take corrective steps their leakage figure can also go down.

States which have been successful in reducing leakage have not adopted a single formula. There has been a range of experiments performed by pro-active states. Tamil Nadu and Chhattisgarh have disbanded private FPSs. They are run by cooperatives societies, self-help groups. In Chhattisgarh the government has taken over the task of transportation of food grain to FPSs, because it was found a substantial amount of grain got stolen on the way. Himachal Pradesh and Tamil Nadu have universal PDS, rather than targeted PDS. Chhattisgarh and Andhra Pradesh have near-universal PDS. In Tamil Nadu there are FPSs run solely by women: an experiment worth considering because it gives the control of PDS of those who have more stake in its functioning. In many pro-active states beneficiaries are informed of arrival of food grain in corresponding FPSs through SMS.

Final Words

All these inspiring examples may not cut much ice with the government which is dictated by the principle to finishing off welfare, even as we note that only 0.8% of the GDP is spent on food subsidy. Irrespective of who rules Delhi, the war against welfare expenditure remains a constant. The UPA II government put 33% households of the population out of the PDS by the National Food Security Act, the criteria for exclusion were left to be decided by the states. After the NDA came to power in 2014 it appointed the Shanta Kumar committee to review the functioning of the Food Corporation of India. The committee recommended a gradual folding up of distribution of food. This step, the committee estimated, would save the exchequer an annual expenditure of 30 thousand crores of rupees. A prime motive, perhaps the only motive given its flaws, of cash transfer appears to be cost cutting. In other words, the principal aim of the neoliberal State to deny rights to those whom it exploits remains firmly in place [2]. In this sense, the policy makers of today’s India belong to the league of erstwhile colonial masters. The battle for universalisation of PDS versus its curtailing has thus been a long one [3].

Note: The article has been expanded from a presentation made at the Sanhati Panel, Annual Left Forum Meeting, New York City, 2015. It draws upon a number of articles Deepankar Basu and I have been involved in over the years. Citations have been deliberately kept at a minimum level. However, I cannot help acknowledging Mike Davis’s book Late Victorian Holocausts: El Nino Famines and the Making of the Third World, Verso, 2002. The images and a large part of the data used here are borrowed from the book.

Endnotes:

[1] See T Ray, Natural Disasters and Indian History, Oxford India Short Introductions,­ OUP India, 2012, for a reincarnation of such arguments.

[3] The poor need PDS much more than the rich: it is estimated that consumption of PDS food declines as expenditure level of consumers rises.

[3] There is a reasonable case for universal PDS as opposed to targeted PDS. Introduction of targeted PDS created more underserving rich beneficiaries (inclusion errors) than deserving poor non-beneficiaries (exclusion errors). It was estimated that exclusion errors are sometimes twice as high as inclusion errors. A move toward universal PDS will get rid of exclusion errors. It’s true that universal PDS would include the rich in its fold, which was the argument for targeted PDS. Perhaps that is a cost we need to bear in order to make food reach the poor. Moreover, the fact that the rich buy less PDS food than the poor indicates that there is a self-selection process here: the rich tend to opt out of PDS. The cost may not be too high.

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