Fiscal Deficit Vs. Starvation Deaths: What You Should Know

The Government of India has excess foodgrain stocks so why are poor Indians starving through the lockdown? Jean Dreze makes a strong appeal for an urgent policy intervention. Here are the key points.

Even before the Rabi crop was harvested this year, the Food Corporation of India had 77 million tonnes of foodgrains in March. This means that people should not be starving through this lockdown but they are. Here is why:

- The govt has promised extra rations under the PDS system but the targeting (so that benefits reach the beneficiaries they are intended for) system does not work for those who have been excluded due to errors or other reasons by the PDS system. In Jharkhand alone, 7 lakh families are waiting for their ration cards to come through. In West Bengal those who have mortgaged their ration cards are starving to death. 

- The cash promised in the relief package under the Jan Dhan Yojana is a paltry sum and very difficult to access due to multiple reasons. 

- This problem could be solved if the central government released excess stocks and make them available to states to cover anyone and everyone who is in need right now.

- One of the reasons they might be reluctant to do this is the complex accounting system that creates a fiscal deficit when foodgrains are released from the FCI even though in economic terms releasing the excess supply is costless. 

- Jean Dreze argues that the govt should disregard the fiscal deficit for the time being and open up the reserves to prevent starvation death due to the coronavirus lockdown. 

Read the full article here.

Jean Dreze has taught at the London School of Economics and the Delhi School of Economics and is currently visiting professor of economics at the Ranchi University.