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Food Insecurity and Economic Policy in India

Venkatesh Athreya
Professor of Economics(Retd)
Bharathidasan University
Trends in undernourishment 1990 -2016

• The number of undernourished persons across the world declined from around one
billion in 1990-92 to around 795 million in 2014-16

• Developing regions accounted for 991 and 780 million respectively in 90-92 and
2014-16

• Asia accounted for 741 million of the undernourished in1990-92. In 2014-16, the
figure was 512 million, a decline in percentage terms from 74% in 90-92 to around
63%

• The numbers of UNPs declined most sharply for Eastern Asia from 295 to145 million
over this period, and this was mainly due to China’s remarkable progress.

• The least progress in Asia was in Southern Asia from 291 to 281 million over this
period
Trends in undernourishment 1990 -2016

• The proportion of UNPs in Southern Asia has declined from 23.9 percent in 1990–92 to
15.7 percent in 2014–16. The decline for India is similar, from 23.7% to 15.3%. Bangladesh has
done much better, with the proportion halving from 32.8% in 1990-92 to 16.4% in 2014-16.

• The number of UNPs came down from 289 to 134 million in China between 1990-92 and 2014-
16. Over the same period, the corresponding numbers for India are 210 and 195 million.

• China’s achievements in reducing hunger dominate the overall performance of Eastern Asia.
The country accounts for almost two-thirds of the reduction in the number of undernourished
people in the developing regions between 1990–92 and 2014–16.

• Proportion of children below 5 years underweight has declined more rapidly for India and the
Southern Asian region than the proportion of UNPs.
% Population Undernourished

Country 1990-92 1995-97 2000-02 2004-06 2014-16

India 23.7 20 21 22 15.3

Sri Lanka 27 24 20 21

China 15 12 10 10

Pakistan 22 18 21 23

Viet Nam 28 21 17 13

Bangla Desh 32.8 40 28 26 16.4

Nepal 21 24 19 16

South Asia 23.9 15.7


Food Security
• Key issue for a significant proportion of the
Indian population in both rural and urban areas
• Three important aspects of food security:
Availability, Access and Absorption
• Availability of food at the macro level is a
function of production and net imports. At the
local level, it depends critically on transport
infrastructure and market integration
Food Security
• Access to food is primarily a matter of
purchasing power, and is therefore closely
linked with the issues of access to productive
assets and livelihood opportunities.
• Within the household as well as in the larger
community, access is also characterized by
gender inequality
• Absorption is critically dependent on the
availability of sanitation and safe drinking water
to ensure biological utilization of the food
consumed
Food Security
The key food security issues at the macro level
concern the nature of macroeconomic policies
which impact upon:
• Growth in food grain production and thus its
physical availability,
• The nature of growth in terms of employment,
access to livelihoods and purchasing power
• Agrarian policy in general.
Food Security
• At the micro level, problems of food
security can be location-specific (eg. Hilly
areas, with problems of physical and
economic access).
• They can also be gender-specific, with
women facing unequal access in the intra-
household distribution of food.
Aspects of Food Security
• Availability

• Access

• Absorption
A quick history of availability
• Food grain availability low at around 150
Kg per year at 1950, following five
decades of stagnation
• Increase at 3 % per year up to the mid
1960s, mostly through increase in area
sown
• Crisis in mid 60s, following successive
monsoon failures- “ Ship-to-mouth
existence”, with PL 480 grain shipments
A quick history of availability
• Green Revolution as policy response-not
just new technology, but major role of
State re. credit, public investment, farm
research, extension and assured
procurement as well as PDS
• Growth rate of food grain output higher
than population growth rate between 1950
and 1990 but stagnation in food grain
output from 1999-2000 to 2006-07
Area, Production and Yield of Food
Grain, 1997-98 to 2006-07
Year Area Production Yield
(Million Hectares) (Million Tonnes) (Kg per hectare)

1997-98 123.85 192.26 1552


1998-99 125.17 203.60 1627
1999-00 123.11 209.80 1704
2000-01 121.05 196.81 1626
2001-02 122.78 212.85 1734
2002-03 113.86 174.77 1535
2003-04 123.45 213.19 1727
2004-05 120.08 198.36 1652
2005-06 121.60 208.60 1715
2006-07* 124.07 211.78 1707
Source: Agricultural Statistics at a Glance, 2006-07. GOI
Net availability of Food Grains, grams per
person per day
Year Cereals Pulses Food Grain

1997 466.0 37.1 503.1


1998 414.2 32.8 447.0
1999 429.2 36.5 465.7
2000 422.7 31.8 454.5
2001 386.2 30.0 416.2
2002 458.1 35.4 493.5
2003 408.5 29.1 437.6
2004 426.9 35.8 462.7
2005 390.9 31.5 422.4
Annual Rates of Growth
Period Food Grain All Agriculture
1950-51 to 64-65 3.0 3.3

1965-66 to74-75 3.4 3.2

1975-76 to 84-85 2.5 2.6

1985-86 to 94-95 3.1 4.1

1994-95 to 04-05 0.7 0.6


Source: The Progress of Accessed at
C.P.Chandrasekhar Reform and the www.macroscan.com
Retrogression of
Agriculture
The Agrarian Crisis/Distress
• Tens of thousands of farmers’ suicides since
1998

• Slowing down of agricultural growth

• Stagnation in foodgrain output 1999-2004

• Little increase in farm productivity


Agricultural Performance under
Reforms
• Decline in public investment in agriculture

• Slow Growth of rural employment

• Crisis of food security


Reform Policies
• Dismantling controls and “freeing” private
players

• Privatization, with related “incentives”

• Opening up the economy to “free” cross border


flows of capital and commodities

• Exclusive focus on reducing the fiscal deficit by


reducing expenditure
Agricultural Policy : Deflationary
• Focus on fiscal deficit reduction: Subsidies cut,
leading to rise in input costs
• Import controls removed, resulting in a sharp
rise in agricultural imports and crash in output
prices
• Financial liberalization leading to reduction in
institutional credit and rise in interest rates
• Reduction in rural development expenditure
affecting both supply infrastructure and demand
• Collapse of the PDS from ill-advised targeting
Imports of Agricultural Products
into India
Access and Absorption, 1991-2005
• Slow growth of employment

• Sharp rise in issue prices of PDS grain and reduction in


entitlement between 1997 and 2005

• Targeted PDS drives out APL HHs

• Declining terms of trade for farmers

• Deflationary policies lead to loss of purchasing power for a


majority of the rural population

• Rising education, health, transport and energy costs

• Limited social sector outlays constrain improved absorption


What is to be done?
• Recognizing the problem:
International trade not a perfect substitute for
domestic production
Access needs to be addressed by focussing on
employment, asset ownership and
purchasing power
Reversal of deflationary macroeconomic
policies a must to address all three As
Fiscal responsibility has to be revenue-led as
well
Food Subsidies Released, 2006 -15

YEAR FOOD SUBSIDY (Rs Crores)

2006-07 23827.6
2007-08 31259.7
2008-09 43668.1
2009-10 58242.4
2010-11 62929.6
2011-12 72370.9
2012-13 84554.0
2013-14 89740.0
2014-15 1,07,823.8

Source : Department of Food and Public Distribution.


Note : Figure for 2014-15 as of 9 January 2015
Area, Production and Yield of Food
Grains, 2007-08 to 2014-15
YEAR AREA PRODUCTION YIELD
MHA MT Kg/Ha
2007-08 124.1 230.8 1860
2008-09 122.8 234.4 1909
2009-10 121.3 218.1 1798
2010-11 126.7 244.5 1930
2011-12 125.0 259.3 2059
2012-13 120.8 257.1 2129
2013-14 126.0 265.0 2101
2014-15 252.7
Enhancing Availability
• Focus on enhancing production
through empowering small farmers
• Ensuring prompt procurement at
reasonable prices
• Extending price support and
procurement to nutritious millets
• Expanding PDS basket to include
millets
Enhancing availability
• Increased public investment in
agriculture and rural development
• Revamp and strengthen Extension
System as per NCF recommendations
• Strengthen NARS
• Restore input and credit support to
small farmers
Access and Absorption
• Employment focus for enhancing purchasing
power
• Life cycle approach, taking into account age
and sex-specific nutritional needs
• Strengthening Delivery Systems: PDS, ICDS,
MDMS, NREGS, AAY
• Nutrition Education
• Enhanced and effective spending on drinking
water, sanitation and environmental hygiene
Summing up
• Recognize and address availability
crisis, keeping in mind the climate
change challenge

• Enhance all three ‘A’s by reversing


neoliberal policies

• Move towards strengthening the NFSA

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