India: No Mercy For the Poor | Jean Drèze (The Wire 17 June 2015)

The Wire - 17 June 2015

Even as it claims to be fighting the perception that it is anti-poor, the Modi government has just dealt a big blow to the poorest of the poor: the planned phasing out of the Antyodaya programme under the Targeted Public Distribution System (Control) Order 2015. This move is unjust and illegal.

Antyodaya is a programme of social support for destitute households. It involves the provision of 35 kg of foodgrains at nominal prices (Rs.3/kg for rice and Rs.2/kg for wheat) to the poorest households in every village. Some marginalised social groups, such as the Particularly Vulnerable Tribal Groups, are entitled to Antyodaya cards as a matter of right, under Supreme Court orders in the Right to Food case. The programme covers more than 20 million rural households, and its effectiveness is well documented. It has become a lifeline for many widows, elderly persons and other vulnerable groups.

The National Food Security Act (NFSA) calls for the continuation of Antyodaya, but it also empowers the central government to specify the coverage of the programme. Stretching these powers, the PDS Control Order mentioned earlier prescribes that “when an Antyodaya household becomes ineligible on account of migration outside the State, improvement in social or economic status, death, etc., no new Antyodaya household shall be identified in that State and the total number of Antyodaya households shall be reduced to that extent†. In other words, no new Antyodaya cards for anyone and zero coverage in due course.

From the point of view of an administrator, this may seem like a step forward, since it means that all PDS cardholders will ultimately belong to a single category: “Priority households†entitled to 5 kg of subsidized foodgrains per month under the National Food Security Act. This convenient view, however, overlooks the critical complementarity between the Priority and Antyodaya categories in the Act.

Major loss of entitlements

This complementarity is related to the transition, under the NFSA, from “household entitlements†to “per-capita entitlements†. Prior to NFSA, most Indian states had a system of household entitlements for the PDS, e.g. 25 or 35 kg per household per month. Under the NFSA, entitlements are defined in per-capita terms: 5 kg per person per month for Priority households. This is a more logical and equitable approach, but the transition from household to per-capita entitlements is a major loss for small households, including for instance, for widows and elderly persons who live alone or with their spouse. It is partly to provide a means of protecting the poorest among these small households that the Antyodaya category was retained under the NFSA. Another reason is that the Antyodaya programme is a means of providing special support to the poorest of the poor – for instance by adding dal and edible oil to their PDS entitlements. In any case, any phasing out of Antyodaya would be a violation of Supreme Court orders.

This is a particularly critical issue for the state of Jharkhand, where the Act is to be launched from July 1, 2015. In Jharkhand, BPL households are currently entitled to 35 kg of rice per month at Re.1/kg. Any BPL household with fewer than seven members stands to lose from the NFSA. One way of controlling this damage would be to raise per-capita entitlements from 5 kg per month to 7 kg per month, as in Chhattisgarh. The Government of Jharkhand, however, is showing little interest in contributing additional resources to the NFSA. Another option would be to expand the Antyodaya category, so that at least the poorest among small BPL households can be protected from a decline in entitlements. This option, however, has just been scuttled by the PDS Control Order.

More rollbacks to come

It is a safe bet that the next target for rollback will be the National Social Assistance Programme (NSAP). Under NSAP, small monthly pensions are disbursed to widows, the elderly and disabled persons. Recent evaluations of the programme are quite positive, and there is a strong case for expanding it. Instead, the central government is allowing NSAP to wither. The central contribution to old-age pensions has stagnated at a measly Rs 200 per month since 2006 – an insult to the dignity of the elderly. Further, NSAP allocations were reduced in the latest Union Budget, making it difficult to sustain even that insignificant amount. As the real value of the central contribution goes down year after year, pension schemes are effectively being palmed off to state governments.

Instead of consolidating non-contributory pension schemes that are already in place and are working reasonably well, the central government has initiated a new pension scheme (the Pradhan Mantri Atal Pension Yojana) in a very different mode – contributory and largely self-financed. Under this scheme, there is a minimum contribution period of 20 years, and a person aged 40 years today would have to pay Rs.291 per month for 20 years in order to be eligible for a pension of Rs.1,000 per month from then on. The monthly contribution of Rs.291 is to be paid through auto-debit from a bank account. Under these modalities, the new scheme may have some appeal for those with a steady minimum income, but it is of little use for people who live on the margin of subsistence. For the government, of course, it is a good deal, since it means collecting pension contributions for the next twenty years without any liability. Ironically, this is being done in the name of Atal Bihari Vajpayee, who initiated the Antyodaya programme fifteen years ago.

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