It may be recalled that the World Food Summit and the Millennium Summit had set the target of reducing world poverty and hunger by half from 1990 to 2015. According to World Bank data, these targets have been achieved by 2010 – well in advance of the target year. Is there room for complacency?
Fresh thinking on poverty and under-nourishment has made some analysts question this conclusion. According to the Food and Agriculture Organisation (FAO), hunger and calorific undernourishment have increased in absolute terms, over the last decade (The State of Food Security in the World, 2008). Basically, the World Bank’s poverty line – money-metric of $125 a day at 2005 prices – is methodologically flawed and is hardly useful for policy purposes. For instance, from the policy point of view, it is the absolute number of hungry people that is really important and not so much proportions. Jorno Kwane Sundaram of FAO, in a recent thought-provoking essay on “Poverty Matters”, makes out a strong case for social provisioning for and protection of the hungry in developing countries including middle-income countries like India. Further, he stresses that “a basic social protection floor” is affordable in most countries (Economic and Political Weekly, December 8, 2012). These issues need to be debated widely.
At the aggregate level, the decline in poverty level has been influenced by China, which recorded a sharp decline in its poverty. By virtue of their size, China and India taken together had accounted for 42 per cent of the chronically hungry people in the developing a world. This has now changed. In the 1990s, 93 per cent of the world’s poor lived in low-income countries (LICs). In 2007-08, 75 per cent of the poor lived in middle-income countries (MICs). Four countries, India, Pakistan, Indonesia and Nigeria account for the shift, as these have now graduated into middle-income countries,
Turning to India, we do take pride in the fact that it has been possible to reduce the poverty levels over the years. This is clearly reflected in the poverty ratio figures. The Planning Commission figures indicate that poverty declined from 36 per cent of the population in 1993-94 to 27.5 per cent in 2004-05, a reduction of 8.5 percentage points. Even if one were to go by the Tendulkar Committee estimates, although the headcount ratios for both 1993-94 and 2004-05 are higher than the Planning Commission data, the extent of poverty reduction over the period is almost the same, at 8.1 percentage points. What is important to underline is this reduction has not prevented the extent of undernourishment from rising. According to FAO, the number of under-nourished rose from 207 million in 1990-92, to 231 million in 2003-05. That is 24 million more undernourished persons were added during this period. This was a result of deceleration of food supply per capita, which was accompanied by higher food requirements per capita. From the policy point of view therefore it is not enough to take into account the head count poverty ratios alone but also superimpose undernourishment data on them. The policy responses would have to be more nuanced to tackle the complex situation.
Apart from these supply-demand imbalances, there are what one might call “external shocks” which impinge on the poor. The sharp rise in world food prices played havoc with the poor. For instance, the FAO Index of real food prices began rising in 2002, after four decades of primarily declining trends; and spiked sharply in 2006 and 2007. By mid-2008, real food prices were 64 per cent higher than their 2002 levels. FAO estimates that mainly as a result of high food prices, the number of chronically hungry people in the world rose by 75 million in 2007 to reach 923 million. The devastating effect of high food prices on the number of hungry people is thus clear. Similarly, the global financial crisis occurred close on the heels of the sharp rise in food prices. The U.N. estimates that between 47 million and 64 million additional people fell into and were thus trapped in extreme poverty because of the crisis (UN Report on World Social Situation, 2012).
Methodologically, critics point out the weak empirical basis for the country and global poverty numbers, used by the World Bank. Further, the inadequacy of measures based on food intake – calorific intake – for nutritional assessment has now been recognized. Long ago, Dr. Sukhatme, in his pioneering work on nutrition, explained that the conversion efficiency of food into energy of an individual depends on his access to safe drinking water, health care and environmental hygiene. In a broader perspective, the experience of poverty is now being viewed as multi-dimensional. Deprivation, social exclusion and lack of participation – all these form part of the poverty phenomenon. We are therefore moving towards the new Multi-dimensional Poverty Index (MPI), which covers some ten indicators of social development.
All these have important implications for policy. Growth is necessary for poverty reduction and correction of nutritional deficiencies; but not enough. Growth should be job-rich. We need to adopt heterodox development policies to mitigate the negative impact of external shocks to prevent people from falling in deeper poverty. It is in this context that a basic social protection floor becomes necessary. ILO estimates that only about 20 per cent of the world’s working population has access to comprehensive social protection. Hence the need to provide some sort of insurance against hunger.
At present we are trying to provide food security by an omnibus approach, namely the Food Security Act. There are apprehensions that the proposed arrangements are not workable. First, given the track record of the Food Corporation of India (FCI), procurement and distribution of foodgrains on such a mass scale implicit in the Food Security Act is not easy to implement. Second, subsidising the total quantum of foodgrains which is implicit in the Food Security Act is not fiscally feasible. As it is, the incidence of large subsidies on the budget is reflected in the deficits which are beyond comfort level. We therefore need to take a second look at our basic approach to food security. A more nuanced policy response is warranted. We should identify the most vulnerable sections of the population and offer protection to this section, if necessary by offering full subsidy for foodgrains supplied to them through the public distribution system (PDS). The food requirements of the rest of the population can be met through the normal market mechanism. This will not impose any additional burden on food administration. This offers a pragmatic solution to food security, a solution which is fiscally viable.
DR.N.A. MUJUMDAR
