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  1. 1. CHAPTER-IIREVIEW OF LITERATUREIn this chapter an attempt has been made to examine various studies relatingto food security and insecurity both chronic and transient. Increased food productionis considered to be a necessary, though not a sufficient, condition for improving foodsecurity for the poorest segments of the population. If higher levels of productionlead to cheap food, it would be an effective instrument for food security particularlywhen the poor have adequate entitlements. In the absence of such pre-conditions,even with significant improvement in food supply, the market mechanism may notalways and automatically transfer food to the poor.The concept of food security has undergone considerable modification inrecent years. Food availability and stability were considered good measures of foodsecurity till the seventies and achievement of self-sufficiency was accorded highpriority in the food policies of developing countries. Energy intake of the vulnerablegroups is now given prominence in assessing food security. Historical Evolution offood security and evaluation of the concept of buffer stock policy and itsimplications, have been by some studies (Acharya K.C.S. 1983) covered variousissues relating to provision of food security system in India. It was noted that pricestabilization was beyond the capability of the buffer stock policy, and suggestedtherefore to include coarse grains in the buffer stocks. But it is not practicable oftheir high preservation costs in the godowns.25
  2. 2. Impact of changes in population growth and percapita income on foodsecurity have been studied by a number of scholars. Like most other denselypopulated developing countries India faces a formidable challenge in providing foodsecurity to its population. This is so, because India has a large population of 948million 1997 and its growth rate is quite high. The percapita income is expected torise sharply during the next decade or so. The demand for food grains is estimated togrow at a rate of 3.5 to 4 percent per annum compared to the food grains growth rateof 2.9 percent per annum during the period, 1949-50 to 1989-90.In the early stage of the development process people were poor with highmortality rate, leading to moderate growth in population and slow growth inpercapita income (Mellor, J.W., 1983) Effective demand for food can grow at a ratethat can keep pace with population growth. As percapita income rises, populationgrowth also increases. Rising incomes combined with increasing population lead tohigh demand for food grins, particularly demand for livestock product. In thiscontext food supply has to take a quantitative jump and in addition to increasingdomestic food supply, food imports may also become necessary. It is so becauseonly at a later stage of development when population growth rates decline sharplyand growth in income begins to have little effect on demand for food, then meetingfood demand can become manageable and even surpluses can emerge In theprocess of development, it seems that increasing percapita income is the dynamicfactor underlying the growth in food demand in the third world countries.26
  3. 3. Food Demand ProjectionsFour alternative scenario based on four different assumptions about growth ofthe GDP and the percapita income and further uses four alternative demand modelsto derive demand elasticities and demand projections for food grains-for the year2000 and 2010 was worked by Som Schlores (Kumar, Rosengrant, 1994, and Bouis).Their results in term of quality projections for both household demand and for totaldemand for rice is 87.2 million tonnes, wheat 70.8 m.t. course cereals 33.5 m.t.However, the total demand for food grains is 286.6 m.t.The impact of changes in percapita expenditure on food demand projectionsfor India includes by the method of estimating the total population and the expectedbirth and death rates estimated by world bank (Radhakrishna, and Ravi, 1990) Thenext exercise was to undertake a detailed analysis of the NSS data on expenditure ofdifferent expenditure groups in the base year 1986-87 separately for the rural andurban population The linear expenditure system was then used for analysing thelikely demand pattern of various expenditures groups. This is enabled the authors toestimate the nutrition levels that would be attained by Indias rural and Urbanpopulation. In order to meet the total food demand in 2000, the country should beproducing 234.5 m.t. based on their food demand projections27
  4. 4. At the national level food-insecurity exists due to fall in production or due toinstability, in stocks and imports. At the household level food insecurity exists dueto the low purchasing power this inturn depend on incomes of the people,employment and prices of food grains. Food insecurity is of two types they aretransitory and chronic food insecurity. Who temporarily are subject to hunger duringoff season, drought and inflationary years and so forth. In contrast, the problem ofchronic food insecurity is primarily associated with poverty.The causes of short run food insecurity were divided into internal andexternal in a cross country analysis of nearly 50 countries including India(Diakassavas, 1989). He concluded that although both the types of factors havesignificant bearing on food consumption instability, but instability in domestic foodproduction is the most important single factor. Because variability in productionbrings variability in net availability.At the national level a measure of food security would be production, tradeand availability of food grains. (Parikh, 1997, pp.253-279,). The average percapitaavailability of foodgrains is an indicator of food security at the national level At thehousehold level, food insecurity is mainly due to poverty and poverty is due to lackof employment. He argues a national wide Employment Guarantee Scheme (EGS)with increased wages and easy access to all can provide individual level foodsecurity against both chronic and transient hunger to the employable hungry. Thiscan be done at a cost of about Rs. 14775 crores per year. The long term solution is of2S
  5. 5. core economic growth that can provide productive employment to all. To createskills among the people to enable them to take up jobs more investment is required ineducation. The short term measure used to reduce food insecurity are the variousschemes of subsidized food distribution, such as the public distribution system.Food security in the context of Liberalisation of the EconomyFood security has two aspects, first, availability and the accessibility. Thebasic ingredient of stabilization and structural adjustment programme is thecontraction of public expenditure to reduce fiscal deficit coupled with drasticdevaluation of local currency and general withdrawal of the state from economicactivities vacating the space for market (Bandyapadhyay, 1995). Immediate andinevitable consequence of reduction of Government expenditure is the cut in publicinvestment in the agriculture. Capital formation in the agriculture sector has acrucial role in agricultural development During 1985-90, the average annualincrease in public sector outlay in agriculture and irrigation was Rs.1.3 billion, thiswent down to Rs.0.62 billion. There is a large scale shift from food crops to non-food crops having serious implication for the systematic availability of food there byputting in Jeopardy the first condition of food security. Removal of subsidies toagriculture and allowing the free movement of agriculture products, for internationaltrade will cause the rise in prices. Thus in the process of implementation of the neweconomic policy, there will be large scale alienation of land, fall in wages, rise infood prices, loss of employment, people may not get access to food and starve.29
  6. 6. General poverty scenario in the post reform period is worse than in the pre-reformera.Because of the acute food shortages in the country and large dependence onfood imports, the policy makers sought to meet the challenge of providing food to arapidly rising population, through a two-pronged strategy (G.S. Bhalla, 1994,pp. 133-174). Its first component was accelerating growth in food productionthrough substantial investments in rural infrastructure, including irrigation, power,rise arch, extension and development of new technology. The second component offood system of procurement, storage and public distribution of foodgrains with themain objective of providing food to consumers at reasonable prices and keepingprices of food at reasonable levels through open market operations or throughimports At present, procurement is undertaken by the Food Corporation of India atminimum support procurement prices fixed by the government and is thendistributed through the PDS, which consists of a large chain of fair price shopsspread over rural and urban areas The final component of food management is foodstocks, which enable the functioning of PDS and help stabilize prices through openmarket operations. The PDS has suffered from several limitations First it has notbeen able to cover a large section of the poor, particularly in rural areas and hasfailed to serve poor states like Bihar, and Orissa. Second, since the PDS has beenopen-ended and is not targeted to the poor, the food subsidy has become excessivelylarge. It tends to become even larger because of the inefficiency of the via (a)changes in the rate of growth and consequently employment (b) prices of wage30
  7. 7. goods and the general rate of inflation, and (c) Government policies affecting pricesof food grains and food subsidy.There is a significant change in foodgrain scenario from a scarcity to asurplus situation because of the acceleration in the production of food grains in the1980s more significantly, food grains stocks held by the government have beenincreasing despite a lower growth to its historical growth rate (Radhakrishna, 1996,pp. 1-15). The predictions are that the surplus situation will be sustained, thatagriculture will be diversified and that the exports of rice, wheat and agro productswill increase Domestic price is generally lower than the international price forcereals and higher for other food items If liberalization has its sway and the cerealprice is allowed to increase and other prices are allowed to fall in order to FoodCorporation of India He argued that for a big country like India, with rapidlyincreasing population a policy of near self-sufficiency is necessary not only to avoidthe high risks involved in international trade, but also because of the dependence of alarge proportion of its workforce on food production He, however cautioned thatwhile a pure market approach can be highly risky for food security in India. Asisolationist policy can be no less so, for it would deprive India of the opportunities toderive benefits from world trade. But a necessary condition for this, however isgeneration of large surpluses through a significant acceleration in agriculturalgrowth.31
  8. 8. Three major forms of social assistance to the unorganized sector, viz, foodsecurity, employment security and health security, are discussed by (Parthasarathy,1996, pp.73-79). The most important social security need of the poor is foodsecurity. But, food security cannot be ensured without access to adequate purchasingpower for the wage earners. Since, the means of obtaining purchases is employmentat a minimum wage, employment security is essential for achieving food security.According to him. In India, chronic food insecurity persists, it was found to bestrongly related to poverty. Though there is a moderate success in combatingtransitory food insecurity. Structural adjustment is expected to have effect on foodsecurity, integrate the domestic market with the international market, the poor maybe hurt in the transition since cereals are by far the major and cheapest source ofcalories. Raising the real income of the poor to enable them to buy more food,though an important instrument of improving nutrition would be a slow process.Hence there is a need for better targeted Public distribution system and nutritionsupport programs. Another study says that India has achieved some success incombating transitory food insecurity caused by droughts or floods, it has failed tomake much dent on chronic food insecurity reflected in low energy intake(Radhakrishna, 1998). The improvement in the nutritional status has also been verylow high growth sustained for more than a decade would significantly reduce incomepoverty by 2010 but the chronic food insecurity is likely to persist. Moreover, withthe recent shift to a more market oriented and outward looking macro-policy, thepoor are likely to be exposed to the risk of market uncertainties more likely in thefuture.32
  9. 9. Agriculture Trade Liberalization and Food SecuritySince the prices of food and clothing are to increasing with agricultural tradeliberalization even without devaluation, and since further devaluation is likely tobecome necessary to keep the current account deficit in the balance of paymentswithin manageable proportions, an increase in the degree of opens of economyfollowing liberalization is bound to increase domestic prices in absolute terms, andalso lead to relative price change, which hurt the poor more than the rich or even thenon-poor. If India was to operate in the world as a significant food exporter, size ofthe market being what it is, world market prices would fall. However, the worldprices may fall below our domestic prices, creating a situation where India should beimporting rather than exporting food in her own interest. A recent study done for theWorld Bank (Parikh, Narayana and other 1995) on agricultural trade liberalizationprovides an empirical evidence for this assertion in respect of rice, where India issaid to have a comparative advantage, under certain assumptions about rice demandelasticity (0.1) and supply elasticity (0.4) about the rest of the world, the studyconcludes that anything beyond 4 million tonnes of rice export from India pushesdown world market prices below domestic pricesBased on the results of an exercise which calibrated the effects of agriculturaltrade liberalization using a computable general equilibrium, concludes that there will33
  10. 10. be no improvement in agricultural GDP in India, in the long run that the number ofhungry persons will increase (Kirit, Parikh, 1992). He argues that "the grains fromagricultural liberalization may not be as large or as unambiguous as some partialequilibrium analysis suggest. It is therefore, not obvious that India should liberalizeits agricultural trade.Using a social accounting brought out the following results of the effects ofexternal trade liberalization, the effect of liberalizing Indias agricultural trade onagriculture would be small and comparatively more on non-agriculture(Subramanian, Shankar, 1993). If the liberalization is extended to non-agriculture,the impact on agriculture would be significant since industry was highly protectedand even if agriculture were to improve in the long-run due to liberalization, the ruraland urban poor may be adversely affected in the short run because of higher foodgrain prices. Subramainan also argues that if global agriculture prices rise, and ifIndia liberalizes its agriculture this price rise would be transmitted to Indianagriculture and result will be decrease in rural income for the rural poor and all urbanclasses but the real incomes of larger farmers would increaseIt is undoubtedly true that liberalization would enable a large number of richfarmers specially in the well endowed irrigated regions to diversify their productionstructure and start producing for exports. The rich farmers could also fruitfullynegotiate with the trading organizations and could avert excessive risks (Bhalla G.S.,1995, pp.7-24). But this may not happen in the case of the small and marginal34
  11. 11. farmers, specially in the under developed regions. If agricultural exports are to betreated as a vent for surplus, then the amount of food grains unless special efforts aremade to augment output.The undeclared aim of liberalization policies appears to be the restricting ofdomestic income growth and absorption of the products of development countries bythe populations of developing countries in order to release resources for growth ofthe exportable products demanded by the developed world (Utsa Patnaik, 1996,pp.2429-2449). She argues given the marked downward shift in the trend growth rateof the economy over the last four years of the new economic policies, and the rise inthe rate of inflation which erodes the real incomes of the unorganized labour forceIt lead to rise in poverty level sharply, with the rising agricultural exports foodavailability will fall leading to food insecurity.The impact of trade policy reform in the national context and multilateraltrade liberalization was analysed by some scholar (Deepak Nayyar and Abhijit Sen,1994, pp.62-95). Accordingly, food and clothing prices are likely to increase withagricultural trade liberalization even without devaluation, and the degree of opennessof the economy following liberalization is bound to increase domestic prices inabsolute terms, and also lead to relative price changes, which hurt the poor more thanthe rich. Reduced self-sufficiency and reduced government procurement may erode,the ability of the state to carry out the market intervention needed for an adequatebuffer-stock policy and to avoid or mitigate, through PDS, the possibility of sudden35
  12. 12. rise in food price, inflation following unforeseen local shortage He suggests thereshould be some tariff or non-tariff wedge between world prices and domestic pricesis retainedPublic Distribution System (PDS) and Food SecurityThe public distribution system (PDS) in India represents a direct interventionby the government of food market. It involves subsidized distribution of limitedquantities of essential food such as cereals, sugar, edible oil etc. Among them,distribution of cereals assumes crucial importance it is supposed to provide foodsecurity to the poor. Of late, however, PDS has come under severe criticism for itsurban bias, its ineffectiveness in reaching the poor and its inefficiency with referenceto cost of distribution.Growth of the PDS, functioning, coverage and effect of the PDS on providingfood security was discussed by (Bapana, 1993, Bhatia, 1983). Bapana presented thegrowth and functioning, coverage and other effects of the PDS in India. He saysseveral developing countries including India achieved food self-sufficiency but alarge section of the population still faces the risk of food insecurity There is foodsecurity at the international level, at the country level for several countries and at theregional level on the average, but there, is insecurity for individuals in the worldparticularly in the developing countries. The main reason for this insecurity is lackof purchasing power. The PDS makes food accessible and transfers income in theform of subsidy. If the PDS could be managed properly, it has a direct impact on36
  13. 13. nutrition, the PDS should be considered as a short term substitute for provision ofaccess to food by providing purchasing power through development and employmentschemes. The PDS is used as a device for buffer stock operations.Evaluating the procurement and distribution policies, Bhatia suggested anindependent buffer stock policy which he claimed to have many advantages over thepresent system for the better management of the PDS. (Bhatia, 1983).Two important aspects of PDS are impact of PDS and the equity aspects ofdistribution The database for most of these studies includes the National SampleSurvey Organisation (NSSO) data on PDS for the year 1986-87 and the reports andrecords of food-supplies and civil supplies. The equity aspect of the PDS has beenexamined in terms of the percentage of the poor covered under PDS, the share ofrural areas in the total and so on using the 42nd round of NSS data (Dev andSuryanarayan, 1991, pp.2357-2366). It is found that PDS is pro-urban at the AllIndia level of rice and coarse cereals Their study also showed that the rural poordepend on PDS for the meager 16 percent of their foodgrain consumptionrequirements. This finding implies that the poor mainly draw their foodrequirements from the open marketAbout 40-50 percent of the population buys subsidized rice and wheat andabout half of them are non poor (Jha 1991) It means that a substantial part of PDSbenefits accrues to the non-poor. However, welfare gains to the poor are substantial37
  14. 14. wherever the PDS supplies are targeted well as in Kerala and Andhra Pradesh(George 1979, Radha Krishna and Indrakant, 1988).The issue of targeting, and the extent of leakages out of the programme wasexamined by (Deepak Ahluwalia, 1993). The results show that there are no easilyidentifiable criteria that determine central allocations of foodgrains across states innormal years. There is however, evidence to suggest that during drought year someconsideration is given to the price environment and relative poverty levels acrossstates. There is no evidence of any serious urban bias. Use of the programme is, byand large, fairly widespread in the rural areas of Andhra Pradesh, Kerala, Karnataka,Tamilnadu, Maharashtra and Gujarat. On targeting, the current practice of universaleligibility has to change if the PDS is to act a viable safety net. Leakage are a majorproblem in the PDS.An important study regarding inter-variations has been done by (Geetha, andSuryanarayana, 1993 pp.2207-2213). They have reviewed the objectives of foodpolicy pursued in different, five-year plans. Examined inter-state PDS disparities,and their implications for the current ongoing PDS reform Their study confirms thegeneral impression that there have been significant disparities in the state-wise PDSquantities, be it with respect to total population or population covered by the PDS.This is largely in conformity with the objects of global coverage as enunciated in thesixth plan. Part of the reason seems to be the lack of proper infrastructure for thePDS in some states and hence their inability to lift their allotted quota, by the centre.38
  15. 15. Thus PDS revamping is not merely a question of targeting but also involves thecreation of the necessary infrastructure.District-wise requirements of PDS and comparison was made withproduction and procurement potentials of rice and quantities actually distributed ineach district of A.P. (Subba Rao, 1980). He found that 10 out of 21 districts of A.P.are deficit, therefore the entire state cannot be called as a surplus in rice as is claimedby the government. He criticized the foodgrain movement restrictions which madethe prices of rice in deficit districts disproportionately high. The net impact of theprocurement cum-distribution in the state on the poor consumers will be nil or evennegative.Procurement method of levy system was discussed by (Gulati and Krishnan,1975). To improve the levy system they have suggested a proposal of gradedproducers levy. In normal years, they emphasized the need for procurement offoodgrains from all surplus producers irrespective of whether they belong to surplusor deficit states. They quantifies the cereal requirements through PDS for all Indiafor the year 1973.The consistency between share of PDS and the level of poverty among statehas been examined by (Tyagi, 1990, pp.55-83). He concluded that there was nopositive correlation between the poverty levels of a state and its share in PDSsupplies. His results show that during 1983-88, states with high incidence of poverty39
  16. 16. such as Bihar, Madhya Pradesh, Orissa and U.P. received a low share in thedistribution of food grains through the PDS and in percapita terms there statesreceived less than 10 kgs. Per annum. On the other hand, states with a moderateincidence of poverty such as Kerala, A.P. Gujarat etc. received a high share in PDSwith the annual percapita PDS quantity distributed from central pool being about 26kgs in Kerala and 22-23 kg. In A.P. and Gujarat. More recent data on the allocationto states from the central pool also reveal the persistence of imbalance across states.In 1993, around 20 percent of the population was estimated to be below thepoverty line (Sengupta, 1995) Total off-take of wheat and rice in 1993 was 13million tonnes of which 4.2 million tonnes were consumed by the poor and 9.1million tonnes were consumed by the relatively better-off sections. If we had aschemes in 1993 to enable 51 million families of the poor to receive a ration of 20kg. Of rice and wheat per month at 50 percent of market price the off-take of thepoor from PDS would have increased from 4.2 million tonnes to 12.1 m.t. thisaccording to him, will also reduce the maintenance loss of stocks by FCI. Further,the problem of identification of the poor so that the scheme could be targeted only tothem is recognized to be not easy. The task of identification should be left to thejurisdiction of local panchayats which should also supervise and estimate the totalcost of additional subsidy is less than Rs. 2,200 crores which is less than a quarter ofone percent of the Gross Domestic Production (GDP).40
  17. 17. REFERENCES1. AcharyaK.C.S. (1983)2. Bhalla G.S. (1994)3. Bhalla G.S. (1995)4. Bandyopadhyay, D. (1996)5. Diakossavas, D. (1989)6. KiritsParikh(1979)7. (1992)8. Kumar, Praduman, Mark, W.Rosengrant and Howarth E.Bouis(1994)9. Mellor, J.W.(1983)10. Nayyar, Deepak andSenAbhijit(1994)11. G.Partasarathy, (1996)Food Security system of India, Concept PublishingCompany, New Delhi."Policy for food security in India", in G.B. Bhalla (ed)1994, Economic Liberalization and Indian A.G. ISID,New Delhi."Globalisation and A.G. Policy in India", IJAE."Food Security and Liberalization", MemorialLecture."On The Causes Of Food Insecurity In LessDeveloped Countries", An Empirical Evolution",World Development."Food Security. Individual and National: IndiasEconomic reforms and development, essays forManmohan Singh, Ed By Isher Judge Ahluwalia andI.M.D. Little."Importance of food and agriculture policies in thesuccess of structural reforms in India", invited paperfor the 29thEuropean Association of AgriculturalEconomists Seminars, Hohenheim, Germany, Sept.21-25."Demand for rice and other foodgrains in India",Indian A.G. Research Institute, New Delhi andInternational Food policy research Institute,Washington D.C., USA, September."Food Policy for the developing countries", AmericanEconomic Review, vol.93, No.2"International trade and Agricultural sector in India"in G.S. Bhalla (ed) Economic Liberalization andIndian Agriculture, ISID, New Delhi, 1994, Chap.III"Social security and Structural adjustment", the IndianJournal of Labour Economics, Vol.39, Number.1,January-March, 1996.41
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  19. 19. 24. Sengupta, Arjun (1995) "The Economic Reform and Poverty:" Ravi NarayanaReddy Memorial Lecture, September, 7.25. Subbarao K. (1980) "What is a Surplus State Public Distribution of Rice inA.P." Artharijnana, Vol22, No.l, March.26. Tyagi D.S. (1990) Managing Indias Food Economy, Sage Publications,New Delhi.43