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'Food security bill provides fertile playground for siphoning off'

June 13, 2013 14:35 IST

Image: A slum in New Delhi. One size fits all won't work for the urban poor and rural poor, argues R S Seshadri
Photographs: Adnan Abidi/Reuters Sheela Bhatt in New Delhi

RS Seshadri, director at Tilda Riceland, is an appropriate agro-industry expert to speak on the Food Security Bill which the Union Cabinet on Thursday proposed that it be passed in Parliament through a special session instead of taking the ordinance route.

The historic move to tackle the hunger of the poor has many sides to it. Tilda, one of the largest Basmati rice exporters in India, has set up a Rs 200 crore rice plant at Gurgaon, Haryana. With high-tech silos to store rice in, Tilda has acquired the capacity to process over Rs 2 lakh tonnes of paddy. Tilda has a database of around 85,000 farmers who it advises on the handling of seeds and selection of fertilisers.

While food security for India’s poor is a noble idea, it is contested by experts like Seshadri. In an interview to Sheela Bhatt, he explains why the idea of almost free food to the poor may not be a workable idea.

Since you are in the agro industry, can you tell me what is your understanding of the Food Security Bill? Are you for it or against it, and why?

Certainly I am not for it in the current form. This is not a Tilda view, this is my personal view. Tilda does not have a view on the matter.

Let us not forget it was 25 years ago that I think (then Andhra Pradesh chief minister) N T Rama Rao came up with scheme to offer rice at Rs 2 per kg. Twenty-five years later you cannot offer it at Rs 2 or 3 per kg. Effectively, this is giving it away for free.

So, if you are planning to give it away free it is bad enough but in this case it will be given away with a subsidy for free because the transportation, the logistics and the storage are all to be subsumed into this Rs 3 cost.

Now, the economics of this is silly and at the end of the day I suspect it provides a fertile playground for various interests to siphon it off. I suspect nobody is really interested in really opposing it because I can only imagine all the vested interests see this as a huge opportunity to siphon money from the taxpayer.

This is a fantastic way of doing it and nobody is going to be able to have the guts to stand up and say it for what it is, and whoever stands up against it will be called anti-poor or some such label.

It is sad but the country will pay a price for it and ultimately it will be the poorer persons who will pay the price for it because you will not have the guts to reduce the price you pay to the farmer. The Minimum Support Price to the farmer will keep going up and finally it will lead to inflation which will pay for this issue and inflation will affect the very section who we presume are going to be benefited from this. It is going to affect them more than anybody else.

You are at ground zero. I understand that you get farmers motivated to grow better quality rice, have better technology. You also have wonderful storage systems at Tilda because you have built silos where millions of tonnes of rice can be stored, and you are also good at understanding the transportation of food. Just imagine that the Food Security Bill has been implemented. Can you tell us what exactly will happen on the ground?

What will really happen is, because the economics is not viable, poor people are not going to get it. Poor people are going to take it and sell it in the open market. How does migrant labour store rice securely…? They live from day to day.

Now, the rural population does not mean a poor population. There is a very big difference… To believe that rural India is ALL poor is wrong. Certainly in Haryana, the indigenous population is not poor per se. There are pockets of poverty. Rural is not equal to poor.

Let’s say the Food Security Bill is passed by Parliament or through an ordinance route. What will happen next?

What will happen is there will be a huge, thriving black market which will be siphoning material off this government supply chain and selling it in the open market and the person for whom it is intended to will not have the voice to say I am not getting it. That is what is going to happen.

But there are options of cash transfer, food coupons etc.

That is towards intention… The act gives intention… The instrumentality for it (delivery systems) is the issue. First let us have the instrument for implementation, and then decide whether it will deliver. We don’t even have the instrument for it.

Let’s start with direct cash transfer. It is going in very small baby steps. How is it going to be done on a large scale? Are they then going to say that this entire food security will happen only by cash transfers? No. There will be a large physical delivery which will go in parallel with food coupons and direct cash transfer.

Let’s take rice as an example. India grows about 100 million tonnes of rice. The government plans to buy 35-40 million tonnes, if this bill comes in. Now, can you imagine the government buying 40 percent of your production from all over the country and delivering it thousands of miles away to a place that is deficient in rice? It’s a logistical nightmare for an honest man, and something that dishonest will people salivate on.

'Potential for corruption is far greater in food security bill than MNREGA'

Image: Krishnendu Halder, Reuters
Photographs: Workers at an MNREGA site on the outskirts of Hyderabad, Andhra Pradesh. (Inset) R S Seshadri Sheela Bhatt in New Delhi

But in the life of any government, ‘how to deliver’ is the issue. You can also look at the national issue from the ground level where you see poverty, beggars, incapacitated people, youth without skills etc… They need some kind of food security. Is it not a shame that you see such people in the 21st century?

I fully agree but I am not so sure whether food security needs to be focussed only on rice and wheat. You need to deliver calories to the people you mentioned.

Now, for calories there are 18 million tonnes of coarse cereals which can be used. White rice, polished rice is not the panacea for all evils. If there is a man who is dying, he is not worried if he is getting bajra or getting rice. He wants calories. The beggar or the handicapped is going to carry 25 kg of rice??

So let us decide the constituency we are discussing. If the constituency is someone who is going to die of hunger I guarantee there will be no problem, but if the constituency is to be populist to the exclusion of the poorest of the poor, well, then that is politics. That cannot be cloaked in social issues.

Just because the delivery system is not in order does not mean that some 25 percent plus population should go hungry. So, why not worry about the 25 percent of the people’s problems? Why do you keep harping on delivery systems only? Why can’t you begin somewhere?

Nobody is harping that you should not have a social programme. Anybody who says that the economics is bad is labelled against social issues. That is not correct.

Yes, we know that the vessel is leaking but no matter, let us put more water into it. Maybe it is fine but let us call it for what it is. We know that 30 to 40 percent is going to be siphoned away, but so be it. Let us accept that and accept that that is going to be a price society has to pay. That is fine.

In MNREGA, you know, there is a lot of money being siphoned off. There are many reports also which have proved that it is leaking. I mean, there is a lot of corruption but at the same time two great results have come up. One, that in rural India you can see people’s minimum wage going up and there is a shortage of farmers in Punjab and elsewhere which is good from the farm labour’s point of view.

So, something has been achieved in spite of huge corruption. See, if rich people indulge in huge corruption in building factories and they incur huge bad debts in banks which we call non-performing assets we do not mind, but here everybody is talking about leaking delivery system and corruption only.

OK. Well, I understand the points that you make and somewhere the points are valid but at the end of the day you have to understand that the issues of MNREGA are different. In the food security system you are going to physically transport the material. Believe me, the potential for corruption is far greater in the food security bill than MNREGA. The controls needed are far greater.

Secondly, can you just imagine the last mile connectivity on this? The so-called last mile… It is going to be very difficult. I agree they already have existing schemes like the PDS etc. Nevertheless, is it to be done in this big bang way or should it be done in any other way?

Clearly, one section of the argument will be we have waited for 60 years and we must do it. Well, it is a valid argument, one cannot argue against that. The other side is, should we get this right and naturally someone is always going to argue the point and say delivery systems are never going to be done right and therefore why delay it? Let us put it in a leaking vessel and let us do it. As long as we recognise it is a leaking vessel, that is it.

'This is a political game and let us accept it for what it is'

Image: The rural population does not mean a poor population, suggests RS Seshadri
Photographs: Ajay Verma, Reuters

But you know, any socio-cultural, socio-political and socio-economic change comes only when there is political daring. It will not come from a businessman’s insecurity or calculation. So, MNREGA got some results. It won the Congress the 2009 election too. Congressmen may think why not one more time?

Whether the increase in farm labour is the effect of MNREGA, I don’t know. I don’t know which is the cause, which is the effect, but there is no doubt there has been an increase in farm labour rates in Punjab and in Haryana. No doubt about it. Whether it is due to MNREGA or increase in general prosperity, I don’t know.

I am familiar with villages in Punjab and Haryana, there is not much MNREGA effect there. It is more probably in UP and Bihar and other areas but in villages in Haryana, Punjab I have not seen much impact of it on the ground, and even if it is there it has not affected farm labour because in any case local labour does not do work on the farm.

So, the love for the poor is not absolute, it is certainly guided by their love for 2014 and so on. So, all I am saying is, let us all not take the high moral ground on this.

Do you have any other solution to feed at least, say, 25 percent of Indians?

Now, I want to ask you a counter-question. Do you believe there are a lot of poor people in, let us say, a five square km area of where we are sitting?

Yeah… There are genuinely poor people around us.

Correct… Now, I want to ask you… They are going to give them, how many kg of rice you said? 35 kg of rice. In my experience, I deal with an orphanage in Noida, I ask them how can I help you? One of the biggest problems the lady who runs the orphanage came up with is about storage. She actually used to say don’t give me 100 kg of wheat because I can’t store it. So please give 15 kg every week. So if there is a lady living in a ,hut how is she going to store 35 kg of rice and ensure its security? I doubt it. She is not going to be able to do it. The rice will take up important space.

I agree there is a need for food. Personally, left to myself, the other problem for poor people is actually -- fuel and time. Maybe I am wrong, maybe I have a bizarre idea. I would urge that like in the US they have soup kitchens. There are so many gurdwaras in the city and so many temples in the city. For some reason, barring the large temples, most people associated with gurdwaras or temples do it for a missionary zeal.

If they can be made to provide readymade food, which is a khichdi, I believe it will be of far greater value. We are talking about poor people in the city, or are you talking about poor people in the villages? One size fits all will not work for both. That is exactly what I am saying. If you are in the city, do it like this. Do not have any physical delivery within urban areas, because that is where the potential for selling it in the open market is highest.

If you are a big farmer, how will you view the Food Security Bill?

The farmers care for MSP. It’s believed that if FS bill comes then all the other schemes will get subsumed into one. I don’t know how it will work. All the other schemes like the PDS, Antyodaya, will get subsumed into one.

The farmer in Haryana, Punjab has such a buoyant export market, I don’t think he even cares about it. If he doesn’t get the MSP, the open market will buy it from him and in any case the government is going to buy 40 percent of your production, the pressure on the open market sale will be much higher… Prices will go up for the people who are not poor and that is fully valid.

I mean, just give you an example. You and I get the benefit of subsidised LPG cylinders. Do you deserve it? But you still take it. It will raise prices in the open market, it will help farmers.

What kind of silos and storage facilities will be required? Any idea?

Yes, take the number. One silo will at most take 3,000 tonnes of rice. Now do the numbers. Silos will cost Rs 3000 to 4000 a tonne . Well, all over India, to make food security idea successful, we will require around 3,000 silos. The economics are way out.

I know you are thinking that my view is not to help the poor. All I am saying is, there are other ways to help. This is a political game and let us accept it for what it is. It is a price you pay for being in a democracy. Nobody can stand up and say don’t do it. It suits everybody and ultimately one thing is certain, the gap… The fiscal gap will be met with inflation. And let’s accept it, no harm.

Let’s also accept that under any government, if inflation goes into double digits for say, six-eight months continuously, food security or no security, governments will fall. That’s for sure.