KV Thomas, Union minister for consumer affairs, food and public distribution interviewed by Nitin Sethi
Union minister for consumer affairs, food and public distribution KV Thomas tells Nitin Sethi that it makes better sense to distribute stocked foodgrain to people of the country than subsidise exports.
Possible spread of drought that the government is looking at...
At the moment, monsoon rainfall is 23% below the long term average. But we have to wait another 15 days to know the full situation. We had discussion in the presence of the agriculture minister with meteorology departments and scientists. They informed of 23% deficit in rainfall.
There are several parts suffering drought even as on average across the country things may seem on margin. How do you manage that?
One advantage now is that we get the information in advance. We sat with the meteorology department and we know this is going to happen now.
In parts of states such as Karnataka and Maharashtra, the rain deficit is much worse than the country-wide average deficit. Can one presume there is a drought in these states?
Definitely so. During our discussion in presence of the agriculture minister, we had suggested that the farmers should be prepared in these states for better and right technologies to tackle the situation - like the right kind of seeds. He has directed some experts to find out how the farmers in these pockets can be helped. That is what I understood.
So what parts are under absolute threat of drought as of now?
Karnataka, parts of Maharashtra, Gujarat and Rajasthan. These are the main areas of concern.
And Andhra Pradesh?
Not to that extent at the moment. So once we get these predictions from the meteorology departments then we can act upon it - different sowing mechanisms and other assistance can be provided. Also, our internal assessment is changed. Say, for example, we know pulses are going to come under strain; we have to manage import in advance. In 2009, when I took over, onion prices had spiked high. My immediate job was to bring it down. Now we monitor it regularly and see that if production is up, we can export. There is no doubt we should have an export policy. What happens in India is when we have a bumper production, immediately we start exporting and do not get the price in the international market that could have been secured. When our production comes down, I try to import, then the international prices shoot up. There should be a policy to have a mechanism in place to decide when and how to import or export.
But why has progress not been made on having such a clear export-import policy?
I advocate such a policy even in case of wheat and sugar. We should have some kind of transparent mechanism and policy. Similarly, we should have a clear policy in the case of milk powder where there is a regular flow. I agree there has to be a policy on that or we shall not get the correct prices. We have to work it out.
The impact of drought on production...
The food grain production and sugar cane will remain more or less the same. The problem is with pulses and oilseeds. These are the two crops where production will come down.
Now coming to the food grains, wheat and rice, we already have a bumper production and record storage, to the tune of about 82 million tonnes. Out of that, 77 million tonnes is wheat. The requirement at the moment for TPDS with the 2000 census figures being used is 55 million tonnes. Even when the Food Security Bill is passed, it will be 62 million tonnes so we can manage in the existing situation. We have taken a policy decision in this ministry that we will distribute these food grains within the country. For example, our additional allocation under BPL has been 5 million tonnes and another 1 million tonnes under APL and 3 million tonnes under the Open Market Sale Scheme.
Under this Open Market Sale, the subsidy component is much, much lower than the subsidy incurred in exporting the food grains. Already, the export is taking place under open general license. Already 55.4 lakh tonnes of non-basmati rice has been exported. Another 1 lakh tonne will be exported further. About 13 lakh tonnes of wheat has already been exported and another 6 will go out under OGL - where there is no subsidy component. We are trying to export more with some subsidy but let us see the international situation. Drought is impacting other countries too and altering the international market. Some of the people accuse that we are being hasty with exports. We are not. Under the OGL system, exports are already taking place. Our contention is that if you are going to export with subsidy why you don't distribute it within the country to the maximum limit possible. Distribution within the country is better. Let us give more within than export with a subsidy. The subsidy we shall give on exports is higher than the subsidy on distributing it through the OMS within India. That is the point we have decided upon.
Is it politically difficult for you to justify the fact that you are exporting food grains for cattle-feed when there is an impending drought in the country? Does that worry you?
If we export outside, how the other countries use it is not my concern. But I am concerned that the first preference should be to the people of the country. That is why we allowed 5 million tonnes to be distributed to the BPL which involves a subsidy. The Open Market Sales does not bring much burden on us because we sell at the price we procure from farmers and there are only additional costs to be borne by the government.
I have another issue to address. What I need for the TPDS system is 55 million tonnes at the moment. When the 2011 census figures are accepted it would be 60 million tonnes. Under the National Food Security Bill it may be 62 million tonnes. But I am procuring more than that. I brought this to the attention of the Prime Minister. Should I purchase whatever comes to the market or some of it? Usually we purchased 25-30% of what was produced in the country. Now we are procuring more than that and we pay the MSP as well as the state-declared bonus and the taxes. So my burden is not because of the PDS it is because I have to buy the huge quantity of food grains coming to the market.
Similarly, I have issues about storage which has nothing to do with PDS. For the PDS, I only need 55 million tonnes and I already have capacity of 64 million tonnes. We are going to construct another 15 million tonnes of storage immediately so I shall have 80 million tonnes capacity in near future. The Union government can easily manage its storage mechanism with the current statistics but the states should build their godowns. I have been suggesting to them for long time you should have intermediate godowns to keep three months requirement in. States get about Rs 7,000 crore now to build these. So this is a joint responsibility of the central and state governments. Last year, I had problems with the supply of jute bags. We do not supply the jute bags. We coordinate between the states and the Jute Commission under ministry of textiles. Last November, we called the states and Madhya Pradesh said it needs 65 lakh bales. We agreed. They said half of that they shall get from private sellers. That too we agreed. Then they come in January and tell us they couldn't get the bags and we should secure more. Then they asked for another 50 lakh tonnes. That is not an easy job at the last moment. So states should also keep a tab on their assessments and requirements.
I have been writing to all the state governments such as Madhya Pradesh, Rajasthan and Uttar Pradesh - these are new emerging producing states - so they should have some mechanism of procurement. FCI cannot procure everything in the country. We have to share this responsibility. Punjab and Haryana being the largest producers traditionally have the experience to manage procurement and storage. But the states coming up such as Madhya Pradesh, Chhattisgarh, Assam, West Bengal and Uttar Pradesh where production is going up they should have a better procurement and storage mechanism.
On the revised plan for National Food Security Bill
We are planning to make it liberal and simpler. The original bill provided that in rural India 75% population will be covered out of which minimum 46% would be priority beneficiaries - the equivalent of BPL beneficiaries. In the urban area the provision was for up to 50% out of which minimum 28% beneficiaries were to be priority.
Out of this emerged the question of APL-BPL. There is already a difference of opinion about this. We have about 6.8 crore families under BPL as directed by Planning Commission. The states' list goes above 10 crore families. There is an existing dispute between Centre and states regarding this but we are at present giving subsidized grains on the basis of Planning Commission's numbers. Take the example of Kerala. We provide 35 kg per family but Kerala has to reduce the grains it gives per family to 25 kg as it has to give to a higher number of BPL families.
When the NFSB was introduced, again this priority-general category came up. We thought that at the end of this year the Socio-Economic Caste Census will be completed and we shall have new beneficiaries identified. But that has been delayed endlessly.
So we decided we will exclude 33% of people and 67% covered under the bill without any difference of BPL and APL categories. Identification of the beneficiaries will be left to the state governments.
That gave rise to some questions. In states such as Kerala where the state government already provides grains to more than 67%, we decided that whatever the states are getting we shall continue to give higher volume of subsidized grains. In 13 states, including 11 special category states, the exclusion will be only 10%. Additionally, in the 22 states coverage in the poorest 250 districts will be 75%.
Then the Antyodaya Anna Yojana is protected. People under that will continue to get 35 kg. The poorest 250 districts. If you look at this in totality 70% of the population will get covered. The ICDS and MDM scheme too will be covered under the law.
But then, wouldn't the states, where PDS is yet not mature, complain that they are being punished with lower allocation?
No, because they are not losing anything, they will also get more grains than they get under the current dispensation. None of the states lose anything, they only get more than what is allocated at present. Coupled with this, the prices would be lower for the grains allocated. Additionally, the APL families have no entitlement at the moment. The Centre is not bound to provide grains at the moment. It depends on availability and offtake of the states. Under the bill some of them would also get assured grains as a right.
Once the food security bill comes, the Centre will be bound to give the subsidized grains.
There are some who complain that there is not enough food grain. But I put the argument that at the moment we use 2000 census population figures and require 50-55 million tonnes for distribution. When we start using the latest 2011 census figures the requirement would increase to 60 million tonnes. What we additionally proposing is a mere 2 million tonnes of grains. Who can say we don't have additional 2 million tonnes of food grains when we are exporting so much.
Is lack of adequate food grains the only concern of those opposing the NFSB within the government?
One problem I see them have is that this will become a legal commitment. So far, subsidized grains are not a legal commitment or people's rights. This is what some of the people are afraid of. My answer is, we are bound to give it to the people of this country. Why should we have had the Right to Information Act then or the MNREGA? The RTI Act gave the people the right and its created some headache for the administration but it's a right people should have. Similarly, MNREGA grants people the justicable right. UPA wanted to provide these as rights of the people under the flagship programmes.
The NFSB makes it legally binding to provide food too. But aren't we bound to anyway if we look at the malnutrition levels in our country? It's so high. The benefits of development should go to the lowest strata. That is the policy of UPA and Congress government. Coming to the issues raised by some about financial burden. As of now its Rs 88,000 crore using the beneficiaries cut off drawn on basis of 2000 census. Using 2011 census its Rs 1 lakh crore. Under the food security bill it would be Rs 1.19 crore. So our additional burden is only 19,000 crore. Some people say burden will go higher. What is the reason? The MSP given to farmers is rising. Even if there is no NFSB the burden is bound to go up because the government will still be procuring from farmers at this higher MSP.
Why are controversies arising about sugar exports?
There need to be any controversy. What are we trying to do? There is a five year cycle in the sugar production system. First three years there is a bumper crop and we export with an incentive. Next two years we have a slump and we import with an incentive. What it means is what we export in these three years we import back in the next two. I am trying to break this cycle.
My scheme was that every mill be given an export release order on the basis of their production which is tradeable and all millers across the country can make some money. But with the new decision to route sugar exports through Open General License (OGL) system only a few export houses get this benefit, not every mill in the country - because only these people are exporting. The argument from those pushing for this new system was that export is very slow but if you review even under the new system the exports are still slow because of the constraints and international market.
So even when there was the earlier system that I proposed, the same quantity was being exported. Under this new system too sugar is being exported at the same rate. My contention was that if we did it under the export release order mechanism, all the millers across the country earned something. Now only a handful of exporters are making money. But I agreed to this new system after expressing my reservations. For example, in this current season, we allowed 40 lakh tonnes to be exported. Out of this 20 lakh tonnes was under the RO system and 20 lakh tonnes under the open general license. And regardless of what route you take on a monthly basis 1.5-2 lakh tonne is getting exported. So the argument that under this OGL you can export more is not true. Just that only a handful of export houses are getting the benefits, not the mills in UP or other places. Otherwise, they could have traded their ROs and made some profits too.
But you finally agreed to this proposal...
Yes I did but I made my point. I said the export benefit should go to all the farmers in the country through the mills spread across the country, in states like Uttar Pradesh, Madhya Pradesh and West Bengal. Now what happens? This benefit goes to those mills or export houses in Mumbai. Or in Chennai or in Bangalore. This was my view but I finally agreed to this arrangement.
You said in August you shall review the situation with pulses and oilseeds
This year, we have found out that because of the drought, pulse production will come down. Already we are importing pulses. Some of the pulse prices are going up so we will evaluate the situation. We had a scheme of providing pulses at Rs 10 a kg to states as part of the TPDS. Only some states showed interest so it was dropped. Now we want to reintroduce it. We have discussed it with the Union agriculture minister. Earlier it was for APL and BPL families. This time we are going to offer pulses at Rs 20 a kg to BPL families only. So we have already begun working it out.
But at the same time we are watching the situation. There is hoarding when there is a mismatch of demand and supply and prices go up. States should have a weapon with them to check prices. One of the weapons is stock-holding limits on sellers. I am not particular that such limits should be introduced. It was I who decided to withdraw such limits when they existed on products like sugar. Now if the production goes down and prices rise then hoarding takes place. What is the way to check it? Even in the OMS system there is cartelization. They are all dignified people but when they come to business they have their interests. We have to protect the interests of the consumers so if such a situation arises the government of India can think about such steps.