Author: José Ma Luis Montesclaros, NTU
The International Monetary Fund (IMF) recently rented India’s Food Subsidies for their role in reducing the impacts of COVID-19 on food and economic insecurity. India avoided any increase in extreme poverty during the pandemic, when in March 2022 report by the Asian Development Bank notes that ASEAN member states have seen an increase of 4.7 million people living in extreme poverty.
The IMF report sheds light on Pradhan Mantri Garib Kalyan Anna Yojana’s India emergency safety net policy of distributing subsidized food to eligible households. This policy is based on India’s National Food Security Act whereby the government allocates grain for subsidized redistribution to low-income households. Seventy-five percent of India’s rural population and 50 percent of the urban population are eligible for subsidized redistribution.
Digital technologies play an important role in the national food safety law. The Indian national identification system Aadhaar gives individuals a unique biometric digital identity. The World Bank touts it as the “most extensive” digital ID system in the world, covering 1.3 billion people as of March 2022. Digital identities also reduce the misallocation of limited social resources to unintended beneficiaries, according to the Abdul Latif Jameel Poverty Action Lab.
India’s digital identity system supports the provision of food subsidies through its Digital Ration Card (DRC) system. More than 222 million DRCs were issued in March 2022. About 200 million cards were issued to low-income “priority households” and 20 million cards to households in extreme poverty. The DRC system is supported by electronic point-of-sale machines used for accurate electronic grain weighing. More than 166 million tonnes of subsidized cereals have been distributed by Indian shops at fair prices through this mechanism.
India’s success is underpinned by its unique digitalization of food retail. Yet such initiatives are absent from the ASEAN approach.
In 2021, the 43rd ASEAN Agriculture and Forestry Ministers Meeting endorsed the “ASEAN Guidelines on Promoting the Use of Digital Technologies in the Food and Agriculture Sector”. “. Digitalization in ASEAN member states has focused on improving food safety and supply chain stability while maintaining laissez-faire parameters in the market. The digitalization of food production aims to use “smart agriculture” technologies, including Internet of Things technologies, to boost crop productivity in changing agroclimatic environments.
The digitalization of supply chains in ASEAN member states includes the use of e-commerce platforms to help farmers increase their income by selling directly to consumers and traceability technologies to ensure food quality and safety. . The policies of ASEAN member states contribute to increasing food availability and accessibility by helping farmers to increase their productivity and market competitiveness.
India is also pursuing pockets of digitalization in food production and supply chains through digital farmer advisory, e-commerce and traceability. What sets India apart is its extensive subsidized grain distribution system that supports its national system in the DRC. This system is not only governed by laissez-faire principles, it is also supported by food safety objectives.
India’s low per capita GDP of around $2,000 means it is reluctant to adopt a purely laissez-faire approach which risks having insufficient food stocks during disruptions, forcing reliance on of expensive imported cereals. Instead, the Indian government is intervening in food production and supply chains to ensure sufficient domestic grain production and supply. The government undertakes to purchase all standard quality crops that farmers produce at a minimum support price recommended by the Indian Agricultural Costs and Prices Commission.
Setting a higher minimum support price incentivizes farmers to adopt agricultural technologies such as the supply of fertilizers and better quality seeds. However, it may also encourage farmers to devote more water and land to subsidized crops such as wheat, rice and sugar. This can increase the price of non-essential products and lead to less efficient use of resources and increased CO2 emissions.
The government’s Food Corporation India, which buys crops and manages grain stocks from India, is providing information on expected stock shortages due to agricultural disruptions. This signals the need for the government to increase the minimum support price to fill potential gaps in food supply.
India’s combination of laissez-faire and food-security oriented inventory management minimizes the country’s dependence on expensive grain imports. This allows India to subsidize more of its locally produced food. Unlike India, ASEAN member states, which follow a purely laissez-faire approach, do not make such grain purchase commitments.
ASEAN is experiencing successive food supply disruptions beyond COVID-19, including rising food and energy prices and the impact of Russia’s invasion of Ukraine on supply chains. food supply. The effectiveness of the “shock-proofing” of its food supply system in India should be thoroughly investigated by ASEAN. But India’s approach to food security is not easily enforceable because ASEAN member states do not guarantee the purchase of crops at pre-identified prices.
By not offering such a guarantee, ASEAN member states are effectively leaving it up to farmers to decide how much food to produce. They are failing to ensure sufficient food supplies during disruptions, including the current war between Russia and Ukraine and the COVID-19 pandemic. Yet security of supply is another consideration and India, which relies heavily on domestic production, may find itself exposed to natural disasters or climatic hazards that force it to seek imported food from elsewhere. .
Given these costs, it is worth reassessing the merits of the current laissez-faire approach to food security and whether alternative approaches like India’s could improve the preparedness of ASEAN member states. to future disruptions.
A version of this article first published here in the Commentary from the S. Rajaratnam School of International Studies.
Jose Ma Luis Montesclaros is a research fellow at the Center for Non-Traditional Security Studies, S. Rajaratnam School of International Studies, Nanyang Technological University, Singapore.