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Dr Jean Drèze (born 1959) is a Belgium-born development economist who has been influential in the economic policy making of India. His work include issues like hunger, famine, gender inequality, child health and education, and the NREGA. He made important contributions to the first draft of the National Rural Employment Guarantee Act (NREGA)

His co-authors include Nobel laureate in economics Amartya Sen, with whom he has written on famine, Nicholas Stern, with whom he has written on policy reform when market prices are distorted and Nobel laureate in economics Angus Deaton. He has written a dozen of books with his co-authors and more dozen of his articles published in Indian newspapers and abroad. He is currently an honorary Professor at the Delhi School of Economics, and Visiting Professor at the Department of Economics, Ranchi University. He was a member of the National Advisory Council of India in both first and second term.

Food Security Act: How are India’s poorest states faring? - Ideas for India

Food Security Act: How are India’s poorest states faring? 

Posted On: 29 Jun 2016

Jean Drèze 

Ranchi University; Delhi School of Economics

jean@econdse.org - See more at: http://www.ideasforindia.in/article.aspx?article_id=1655#sthash.rHY62zG9.dpuf

Prankur Gupta 

Indian Institute of Technology, Delhi

prankur.brains@gmail.com - See more at: http://www.ideasforindia.in/article.aspx?article_id=1655#sthash.rHY62zG9.dpuf

Reetika Khera 

Indian Institute of Technology, Delhi

reetika.khera@gmail.com - See more at: http://www.ideasforindia.in/article.aspx?article_id=1655#sthash.rHY62zG9.dpuf

Isabel Pimenta 

European Commission

isabel.pimenta@coleurope.eu - See more at: http://www.ideasforindia.in/article.aspx?article_id=1655#sthash.rHY62zG9.dpuf

The National Food Security Act was passed in 2013. This column reports findings from a recent survey on the status of the Act in six of India’s poorest states. Chhattisgarh, Madhya Pradesh, Odisha and West Bengal are doing quite well - the PDS is in good shape and most people are covered; however, Bihar and Jharkhand are yet to complete essential PDS reforms. 

A survey of the National Food Security Act (NFSA) was conducted during 1-10 June 2016 by student volunteers in six of India’s poorest states: Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Odisha and West Bengal. In each state, investigators went from house to house in six randomly-selected villages spread over two districts and enquired about people’s ration cards, PDS (Public Distribution System) purchases, and related matters. About 3,600 households were covered – further details are given here along with a brief introduction to the NFSA.

As expected, Chhattisgarh emerged as the leading state in food security matters. Chhattisgarh enacted its own Food Security Act in December 2012, and implemented it without delay. Prior to that, the state had carried out extensive PDS reforms. Today, Chhattisgarh has a well-functioning, near-universal PDS which guarantees 7 kgs of foodgrains (more than the NFSA’s 5 kgs norm) per person per month to rural households along with some pulses and fortified salt. Most of the sample households were receiving their full entitlements without fail.

The PDS reforms in Chhattisgarh have inspired similar reforms in Odisha for some years. Odisha, too, now has a well-functioning PDS – most people get the correct amount of foodgrains each month at the right price. Madhya Pradesh’s progress is more recent – it happened during the last two years, in tandem with the implementation of NFSA. A survey conducted last year in Mandla and Shivpuri districts of the state found evidence of a dramatic improvement in the reach and effectiveness of the PDS. The June 2016 survey consolidates these findings: Madhya Pradesh is more or less on par with Chhattisgarh and Odisha in terms of basic indicators of the functionality of the PDS in the sample districts (see Table 1 at the end).

The latest entrant in the league of successful PDS reformers is West Bengal. In the run-up to the recent Assembly elections, the West Bengal government went out of its way not only to implement the NFSA but also to universalise the PDS in rural areas. This is a significant development as West Bengal’s PDS used to be among the worst in India. The survey findings suggest that West Bengal is rapidly catching up with the leading PDS reformers: most people have a ration card, PDS distribution is regular, and leakages have dramatically reduced. These findings, however, require corroboration as the sample is relatively small and further evidence on recent PDS reforms in West Bengal is not available as things stand. Also, it remains to be seen whether the surge of political interest in the PDS during the pre-election period will be sustained.

In Bihar and Jharkhand, the process of PDS reform is far from complete. The coverage of the PDS has vastly improved post-NFSA, but substantial exclusion errors persist – many poor households are still waiting for a ration card, and even if they have one, some family members are often missing from the card. Also, PDS distribution is far from regular and leakages remain high. In Bihar, especially, many households reported that they had to skip an entire month’s PDS ration from time to time as corrupt dealers siphoned it off.

It is important to mention that even in Bihar and Jharkhand, the PDS is improving. In both states, PDS leakages were as high as 80-90% throughout the 2000s. The progress made in the last few years suggests that nothing prevents Bihar and Jharkhand from achieving the same standards of PDS effectiveness as the other sample states.

Needless to say, much progress remains to be made even in Chhattisgarh, Madhya Pradesh, Odisha and West Bengal. Missing names in ration cards (an important issue since NFSA provides for per-capita entitlements) are a major issue in all states, including Chhattisgarh. In Madhya Pradesh and West Bengal, there are major complaints about the quality of PDS foodgrains (wheat and flour, respectively). In Odisha, there have been massive cuts in the number of Antyodaya cards, causing severe hardship to the poorest of the poor. In West Bengal, despite some simplification under NFSA, the PDS remains too complicated, with numerous entitlements categories and special packages. Last but not least, the battle against corruption in the PDS is far from over.

Table 1. NFSA survey 2016: Selected findings

	Proportion of sample households with a ration card (%)		Average purchase of PDS foodgrains, as % of entitlementsa		Proportion of “missing names” in ration cardsb (%)	Proportion of households who felt quality of PDS grain is “good” or “fair” (%)
	Before NFSA (BPL/AAY)	After NFSA (Priority/AAY)	May 2016	“Normal month”
Chhattisgarh	81	95	96	97	15	99
Odisha	62	88	96	99	8	86
Madhya Pradesh	55	84	100	98	6	72
West Bengal	51	86	95	95	13	57
Jharkhand	50	76	55	84	12	91
Bihar	64	83	15	(84)	17	58
All six states	58	85	71	92	13	69

Notes:

a. All households (both Antyodaya and priority) eligible under NFSA are considered here. “Entitlements” refers to what a household is entitled to as per its ration card. Temporary disruption in the supply chain led to low distribution levels in Bihar and Jharkhand in May 2016. The figure for “normal month” in Bihar is an over-estimate, as it ignores “gap months” when there is no distribution at all (a resilient problem in Bihar).

b. Priority households only (all eligible households under NFSA minus Antyodaya households); missing name = household member not listed in ration card. 

Source: House-to-house survey of 3,600 households in 40 randomly-selected villages (3 or 4 in each of two sample Blocks, located in separate districts) in each state, June 2016. The sample is biased towards deprived districts and small villages. All figures are provisional.

- See more at: http://www.ideasforindia.in/article.aspx?article_id=1655#sthash.rHY62zG9.dpuf

A drought of action - Jean Dreze - The Hindu

April 27, 2016

A drought of action

• JEAN DRÈZE

Safeguard: “It is arguable that the PDS is even more important than MGNREGS as a tool of drought relief.” In Beed district in Maharashtra.

India has a lasting infrastructure of public support that can, in principle, be expanded in drought years to provide relief. But business as usual seems to be the motto

Droughts in India used to be times of frantic relief activity. Large-scale public works were organised, often employing more than 1,00,000 workers in a single district. Food distribution was arranged for destitute persons who were unable to work. Arrangements were also made for debt relief, cattle camps, water supply and more. The drought relief system was best developed in the western States of Maharashtra, Gujarat and Rajasthan, but the basic framework was much the same elsewhere even if its implementation often fell short.

This year, nothing like the same sense of urgency can be observed, despite 256 districts being declared drought-affected. To some extent, of course, people’s ability to withstand drought on their own has increased: incomes have risen, the rural economy is more diversified, and water supply facilities have improved. Also, a semblance of social security system has emerged in rural India, with permanent income support measures such as the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), the Public Distribution System (PDS), midday meals and social security pensions. This also reduces people’s dependence on special relief measures in drought years.

None of this, however, obviates the need for active intervention in a drought situation. Despite rapid economic growth and some entitlements, the rural poor in India continue to live in conditions of appalling deprivation and insecurity. And in some respects, notably water scarcity, the impact of drought may be worse than before. Recent reports from Bundelkhand and elsewhere confirm that without emergency support, drought continues to plunge millions of people into intolerable hardship.

To some extent, the nature of the required interventions has changed. The simplest way of preventing starvation in a drought situation today is to intensify the permanent income support measures mentioned earlier, for instance by expanding employment under MGNREGS, providing special food rations under the PDS, and arranging for improved school meals. That may not be enough, but it would be a good start.

The MGNREGS funds crunch

There are, however, no sign of this happening. According to official data, the MGNREGS generated 230 crore person-days of work in 2015-16. This essentially restored MGNREGS employment generation to the level it had reached before crashing to 166 crore person-days in 2014-15, when a new government took charge at the Centre. However, the Finance Minister had not provided for this recovery. The result was a mountain of arrears at the end of 2015-16 — more than Rs.12,000 crore. Yet the Finance Minister continued the unspoken policy (initiated by the previous government) of keeping the MGNREGS budget more or less constant in money terms year after year. If last year’s employment level is to be maintained this year, the Central government would need to spend at least Rs. 50,000 crore, rising to more than Rs. 60,000 crore if arrears are to be cleared — a legal obligation since MGNREGS workers have a right to payment within 15 days. Yet the allocation for MGNREGS in this year’s Budget is only Rs. 38,500 crore. Unless the Central government accepts the need for a large injection of funds, MGNREGS employment is all set to contract again, or wage payments will be postponed — both would be a disaster in a drought year as well as a violation of people’s entitlements under the law.

Slipping up on food security

It is arguable that the PDS is even more important than MGNREGS as a tool of drought relief. Monthly food rations under the PDS are more regular and predictable than MGNREGS work. They also cover a much larger fraction of the rural population — 75 per cent under the National Food Security Act (NFSA). A well-managed PDS is a major safeguard against hunger and starvation.

It is no accident that the worst reports of food deprivation come from Uttar Pradesh, which is nowhere near implementing the NFSA. No Indian State has more to gain than U.P. from the NFSA. Before the Act came into force, barely one-fourth of the rural population in U.P. benefited from the PDS under the “below poverty line” (BPL) category. The rest received nothing as the “above poverty line” (APL) quota was routinely sold in the open market by corrupt middlemen. Further, even BPL cards were often in the wrong hands. The NFSA is a chance for the government of U.P. to clean up this mess and cover 80 per cent of the rural population under an improved PDS, as many of the poorer States have already done to a large extent.

Unfortunately, recent reports on the status of the NFSA in U.P. are most alarming. Rapid investigations conducted recently in Moradabad, Rae Bareli and Lucknow districts (the last one just 23 km from the State Assembly) all came to the same conclusion: NFSA ration cards are yet to be distributed, many people are not even aware of the Act, and the same flawed system continues much as before. So much for Chief Minister Akhilesh Yadav’s upbeat statement (made twice, on record, on April 7, 2016) that “we have implemented the Right to Food Act”. One wonders whether he knows that elections are coming up next year in U.P., and whether he thinks that this is the way to win them. Opposition parties, it seems, are equally blind to the situation.

In other States, the status of the NFSA varies a great deal, from dismal (e.g. in Rajasthan) to reasonably promising (in many of the eastern States). Alas, these developments are receiving very little attention. Few issues are more important at this time than the successful roll-out of the NFSA, yet it seems to be off the Central government’s radar. The Finance Minister’s recent Budget speech, for instance, did not make a single reference to it, or for that matter to nutrition in general. In fact, the Central government (led by the Prime Minister’s Office) is making things worse by pushing for Aadhaar-based biometric authentication of PDS beneficiaries. This wholly inappropriate technology has already caused havoc in Rajasthan, and is all set to disrupt the PDS across the country if the Central government has its way.

For the first time, India has a lasting infrastructure of public support that can, in principle, be expanded in drought years to prevent hunger and starvation. Business as usual, however, seems to be the motto. The price is paid by millions of people who are not just exposed to intense hardship but also losing valuable human and physical capital, condemning them to further poverty in the future.

Jean Drèze is Visiting Professor at the Department of Economics, Ranchi University.

Keywords: drought conditions, water scarcity, MGNREGS, public distribution system, NFSA, Right to Food Act

JAM and the Pursuit of Nirvana by Jean Dreze - The Wire

JAM and the Pursuit of Nirvana

BY JEAN DRÈZE ON 06/11/2015 • 4 COMMENTS

The Finance Ministry’s proposals for high-tech cash transfers as a foundation for social policy in India are fraught with dangers

No easy path. Finance Minister Arun Jaitley during the International Conference on “Networking the Networks”, in New Delhi on Monday. Credit: PTI

“Fantasy is like jam. . . . You have to spread it on a solid piece of bread. If not, it remains a shapeless thing . . .
out of which you can’t make anything.” – Italo Calvino

Learned economists and policy-makers are meeting at Vigyan Bhawan today to discuss the unfolding “revolution of social welfare policy” led by the JAM (Jan Dhan, Aadhaar, Mobile) trinity. I was initially invited to address this Economics Conclave, but the Finance Ministry informed me at the last minute that my presence was not required after all. I take this opportunity to share my views with the public rather than behind closed doors.

In case you have not heard of it, the said revolution was announced in the New York Times on July 22, 2015 by Chief Economic Advisor Arvind Subramanian and his colleague Siddharth George. It involves a straight jump “from a bank-less society to a cashless one”, on the back of the JAM trinity. Using this infrastructure, the authors propose “rolling all subsidies into a single lump-sum cash transfer to households” – nothing less. The same vision is outlined in the Finance Ministry’s latest Economic Survey which modestly concludes that “Nirvana today seems within reach”.

Touching as this faith may seem, a single-minded focus on high-tech cash transfers as a foundation for social policy in India is fraught with dangers.

First, the required infrastructure is not in place and is unlikely to be ready any time soon. Recent experiments with high-tech cash transfers in Jharkhand, Rajasthan, Delhi, Puducherry and elsewhere have been quietly wound up after sobering results. Andhra Pradesh has fared a little better, but even there, the main lesson of recent experience is the need to adopt appropriate technologies in a gradual manner rather than plot a revolution.

Second, the process of putting a new infrastructure in place can be extremely disruptive. So-called “teething problems” often translate into massive hardships for the underprivileged. The hasty, top-down transition to bank payments of wages under the National Rural Employment Guarantee Act (a valuable arrangement in principle) is a prime example – the entire programme is yet to recover from the disruption that accompanied this and subsequent redesigns of the payment system. Even the relatively successful experiment with biometric smartcards in Andhra Pradesh would have led to disaster had orders making smartcards compulsory not been subverted – and that was baby technology by JAM standards.

Third, even with the required infrastructure in place, there is no reason to privilege cash transfers as a tool of social policy. In-kind transfers and public services, too, are extremely important. Midday meals, bicycles for schoolchildren and free medicines are some examples. The public distribution system, too, is now an invaluable source of economic security for millions of vulnerable families. It is far from obvious that cash transfers would do better, especially in the poorer states.

Last but not least, the JAM vision raises some troubling questions of political economy. For instance, a transition to cash transfers could easily be used by the government as an opportunity to dilute people’s entitlements, e.g. by imposing conditionalities, restricting eligibility, or going slow on the indexation of cash transfers to the price level. It could also become a stepping stone towards state withdrawal from many essential services. Indeed, some influential economists are advocating precisely that.

All this is without bringing up fundamental issues of privacy and civil liberties associated with Aadhaar, an integral part of the JAM vision.

Brazil spends a full 25% of GDP on the social sector (health, education and social security), of which less than 0.5 per cent goes to cash support; by contrast social spending in India is just 6% of GDP

Reference is often made to the international experience with cash transfers, such as the Bolsa Família programme in Brazil. As it happens, Brazil spends a full 25% of GDP on the social sector (health, education and social security), of which less than 0.5 per cent goes to Bolsa Família. Brazil provides a wide range of services and facilities to its citizens (including universal health care) aside from income support. This is a general pattern in Latin America, not confined to Brazil. In India, by contrast, social spending is around 6% of GDP. Public expenditure on health is among the lowest in the world, as a proportion of GDP. The international experience provides little support for the idea that social policy should be based on “rolling all subsidies into a single lump-sum cash transfer to households”.

None of this is to deny that some cash transfers are useful. Social security pensions, scholarships for schoolchildren and maternity entitlements are some examples. Incidentally, the Central government is quietly undermining these useful schemes even as it swears by cash transfers. The right of women to maternity entitlements under the National Food Security Act (Rs 6,000 per child) has been studiously ignored for more than two years. The Centre’s contribution to old-age pensions has remained at a measly Rs 200 per month (yes) since 2006, and this year, for the first time, even this token amount is proving difficult to pay due to budget cuts. There is some homework to do before getting on with the revolution.

The author is Honorary Professor at the Department of Economics, Delhi School of Economics