The Chhattisgarh experience and the National Food Security Act

Many of the reforms introduced under the National Food Security Act are modeled on PDS reforms implemented in Chhattisgarh. These reforms are widely believed to be responsible for the state’s success in improving the distribution of food grains through PDS. However, this column shows that Chhattisgarh’s success pre-dates most of the reforms on which the Act is modeled.

By transforming food aid from a discretionary component of the social safety net to a legal right, the National Food Security Act (NFSA) represents an important policy change. Passed in 2013, the NFSA expands the number of households entitled to receive food grains through the public distribution system (PDS). It also introduces a number of reforms - many of which are modeled on PDS reforms implemented by the state of Chhattisgarh – to improve the distribution of PDS food grains. We find, however, that the improvement in Chhattisgarh´s PDS performance pre-dates most of the reforms on which the NFSA is modeled. Our research (Krishnamurthy et al. 2013) suggests caution in predicting whether the reforms proposed under the NFSA can in fact help other states to replicate Chhattisgarh´s much-touted success.

Chhattisgarh as a model for the National Food Security Act

Beginning in 2004, Chhattisgarh´s newly-elected government led by Chief Minister Raman Singh introduced a series of major reforms to the delivery and procurement of PDS food grains¹. These included transferring fair price shops (FPSs) to local bodies such as Gram Panchayats², providing below-poverty-line (BPL) rations (most subsidised rations) to more households, and reducing the PDS ration price. The state also implemented a number of smaller reforms such as sending ‘SMS alerts’ to report grain movements to citizens who registered to receive them, using electronic weighing machines for rations, visibly marking households to indicate their ration entitlement, and publicly displaying a list of all ration-card holders at the FPSs.

The Chhattisgarh government’s PDS reforms were lauded in the press for effecting a dramatic improvement in PDS performance in the state, leading the Supreme Court to demand why Chhattisgarh could not serve as a model for the rest of the country. In the debate preceding the passage of the NFSA, the Chhattisgarh PDS reforms were repeatedly touted as a model for the Act.

Chhattisgarh´s PDS success

Our research assesses the impact of Chhattisgarh´s PDS reforms through a ‘natural experiment’ that compares changes in its PDS performance to that of border districts in neighbouring states. Although the neighbouring states comprise a diverse group³, the population in the border districts is remarkably similar to that of Chhattisgarh. We demonstrate this similarity across a number of social and economic characteristics, such as food and non-food expenditures, rural/ urban status, employment, religion, and caste. Using household survey data (National Sample Survey (NSS)) spanning the years 1999 to 2010, our analysis reveals a number of important facts. First, PDS performance in Chhattisgarh at the state´s inception⁴ was much poorer than that of the border districts. Only about 10% of Chhattisgarh´s households were consuming PDS rice as compared to over 25% of the households in the border districts. Second, the cumulative effect of the various PDS reforms in Chhattisgarh was substantial. The fraction of households consuming PDS rice increased to over 33% by 2010, and the quantity of PDS rice consumed increased ten-fold to 1,500 calories per household per day. Third, in contrast to Chhattisgarh, PDS performance improved only modestly in the border districts and in other parts of India from 1999 to 2010.

In short, our analysis confirms Chhattisgarh´s remarkable and well-publicised success with its PDS. Moreover, not only did people in Chhattisgarh eat more PDS rice, they also improved the quality of their diet by eating more pulses, produce, and animal meat products. This increased the amount of proteins and nutrients such as minerals and iron in their diet.

Success has many fathers

Can we attribute Chhattisgarh’s success to its PDS reforms and, if so, to which ones? Prior to the PDS reforms of the Raman Singh government, the previous state government under the leadership of former Chief Minister Ajit Jogi implemented two key reforms between 2000 and 2003, just after the formation of Chhattisgarh. First, the Jogi government allowed private dealers to apply for licenses to run FPSs. Privatisation almost doubled the number of FPSs in the state. This jump in the number of FPSs is important because PDS access in Chhattisgarh was especially poor. Compared to its neighbouring states, Chhattisgarh started off with less than half the number of FPSs per 1,000 persons. The reform significantly narrowed this gap.

Second, the Jogi government increased the amount of PDS rice that it procured directly from farmers within the state. Starting in 2002, Chhattisgarh began to participate in the decentralised procurement scheme in which state governments procure rice and wheat directly from local farmers. As a result, between 2002 and 2004, PDS rice procurement rose from just under one million metric tonnes to just under two million metric tonnes - an increase of approximately 100%.

A striking picture emerges when we look separately at PDS performance between 2000 and 2004 and the post-2004 period. PDS performance improved rapidly in Chhattisgarh during 2000-2004 while PDS performance in the border districts slightly worsened. In contrast, after 2004 Chhattisgarh continued to improve its PDS performance, but PDS performance also improved in the border districts. Compared to border districts, about 90% of the increase in PDS access and about 70% of the increase in PDS rice consumption in Chhattisgarh took place before 2004. Therefore, Chhattisgarh´s PDS success story started as early as 2000. In fact, its PDS performance does not look particularly impressive compared to its neighbours in the post-2004 period.

We think it likely that Chhattisgarh’s early reforms under the Ajit Jogi government played an important role in its strong PDS performance relative to its neighbours. Consistent with this hypothesis, we find that the biggest jump in PDS usage in Chhattisgarh came from families entitled to the largest PDS subsidies. We also rule out one plausible alternative hypothesis. Chhattisgarh was carved out formerly remote and neglected districts of Madhya Pradesh. As a newly independent state, it may have benefitted from more resources and better governance. This could improve the PDS independently of any specific reforms. However, if this were true, we would expect to see a similar pattern in the states of Jharkhand and Uttarakhand that were formed at the same time. However, our analysis shows no such PDS improvement in those two states.

We are skeptical, however, that Chhattisgarh’s strong PDS performance after 2004 can be fully attributed to the Raman Singh government’s reforms. After all, its neighbours also shared this performance. What, then, accounts for the similar improvement in PDS performance in Chhattisgarh and neighbouring states after 2004? In our view, the answer lies in global trends. This period was marked by a dramatic increase in global food prices and a global financial crisis. Consequently, PDS food grains became attractive to many non-poor families, who are entitled to PDS rations but do not get the full subsidy. In normal times, these families prefer to buy the higher-quality food grains from the market because the price difference is not too large.

Implications for the National Food Security Act: A note of caution

Our research suggests that the PDS success story in Chhattisgarh was driven by multiple factors. The major reforms undertaken by the Raman Singh government starting in 2004 might have played a role, but earlier reforms by the Ajit Jogi government may be at least as important. Post-2004, national trends likely played a major role, and other political and social factors might also have been at work over the entire period.

Our research provides qualified support for the claim that the NFSA can increase PDS consumption. It is difficult to predict how the NFSA might affect the distribution of subsidised food grains in states where delivery is poor. The post-2004 reforms in Chhattisgarh which are included in the NFSA may have improved the availability of subsidised food grains, but they were clearly operating in conjunction with earlier reforms that increased the number of FPSs and rice procurement, as well as the political will to make efficient delivery of food aid a priority. Therefore, the NFSA may not improve the availability of subsidised food grains in states where households lack easy access to shops distributing food aid. However, our research strongly suggests that if states — pushed by both the NFSA and national attention on the issue — do improve the distribution of subsidised food grains, then millions of households will receive an extra layer of income support and will use the savings on food grains to improve their nutritional status.

Notes:

The PDS distributes a dumber of essential commodities to households across India. These commodities primarily consist of food grains, kerosene and sugar. Prior to 1997, the programme was in principle available to almost all households and was intended to stabilise food prices and provide food security. Since 1997, there has been an emphasis on targeting the programme at the most deprived households. The PDS commodities are distributed through a network of fair price shops (FPSs). Eligible households receive ration cards that entitle them to different quantities and rates of PDS grains. Households below the poverty line (BPL) receive the most preferential rates.
Between 2000 and 2004, FPSs were run by private dealers and the state government.
The neighbouring states are Andhra Pradesh, Jharkhand, Maharashtra, Madhya Pradesh, Odisha, and Uttar Pradesh.
In 2000, three new states, Chhattisgarh, Jharkhand and Uttarakhand, were carved out of the existing states of Madhya Pradesh, Bihar and Uttar Pradesh. The creation of the new states was in response to longstanding demands from communities in those regions for greater autonomy and control over local resources.