The Hindu Business Line : Grains, at what cost?

In the run-up to the elections to the Lok Sabha and some State Assemblies, political parties across the country are promising to sell wheat and rice between Re 1 and Rs 3 a kg to those below the poverty line (BPL) through the public distribution system (PDS). These parties have incorporated their assurances in their manifestos. Some States such as Tamil Nadu are already selling rice and wheat to BPL families at such low costs.

Those below poverty certainly deserve our sympathies but distribution of foodgrains at throwaway prices does not seem a wise move. Surely, the officials in the Food Ministry must be squirming. In fact, a Government official, who did not wish to be identified, said that a few months ago the Government had written to the States, asking them to do away with such schemes.

The real problem

It is not that the States or the political parties are unaware of this, but vote-bank politics is making them turn a Nelson’s eye to the real issue. What, then, is the issue?

Well, here is an example provided by an official. Suppose a BPL family is entitled to 20 kg of rice through the ration shop, the person manning it offers to give 10 kg free if the family doesn’t stake a claim to the entire 20 kg.

The rest 10 kg is then sold in the open market, which translates into a gain for the ration shop staff. Let’s look at the economics. The BPL family saves Rs 10 or 20, depending on whether the grain is distributed at Re 1 or Rs 2 a kg, by getting it free. On the other hand, the person manning the ration shop could sell the rest at Rs 10 kg and pocket Rs 80 or Rs 90 after the gain of the BPL family is deducted.

Sometimes, it also happens that the person who buys this rice at Rs 10 could even inject it back into the PDS.

But people in Chennai can tell you that some of the eateries in the city make liberal use of the rice that is distributed through ration shops for their preparations. And there are a few who use the cheap grains as cattle-feed.

For argument, one can say families availing of cheap grains should buy the entire quantity. The point is there is no guarantee that the next time you will get the supply. You could be told politely that stocks are over and you may have to make several trips to the shop to get your ration.

Wheat availability

One good example of how things disappear from the ration shops was the availability of wheat even for above poverty line families in Tamil Nadu, especially during 2007 and 2008. Those two years when wheat prices in the retail outlets climbed to Rs 19 a kg, not a grain of wheat was available in the ration shops.

Wheat offtake by Tamil Nadu from the Central pool got reduced during the two years, but most of the ration shops reported nil stocks at least 20 days in a month.

Getting back to the letter sent to the States, it never received publicity. Not surprisingly, we now have political parties vying with one another to offer voters grains at throwaway prices through the PDS.

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