Thursday, June 18, 2015

No Mercy For the Poor BY JEAN DRÈZE ON 18/06/2015

No Mercy For the Poor by  JEAN DRÈZE  
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.

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