The International Monetary Fund (IMF) recently lauded India’s food subsidies for their role in helping minimise the impacts of COVID-19 on food and economic insecurity. India avoided any increase in extreme poverty during the pandemic, whereas a March 2022 report by the Asian Development Bank notes that ASEAN member states saw an increase of 4.7 million people living in extreme poverty.
The IMF report highlights India’s Pradhan Mantri Garib Kalyan Anna Yojana emergency safety net policy of distributing subsidised food to eligible households. This policy builds on India’s National Food Security Act through which the government allocates grain for subsidised redistribution to lower-income households. Seventy-five per cent of India’s rural population and 50 per cent of the urban population are eligible for subsidised redistribution.
Digital technologies play an important role in the National Food Security Act. India’s Aadhaar national identification system gives individuals a unique biometric digital identity. The World Bank touts this as the world’s ‘most expansive’ digital identification system, covering 1.3 billion people as of March 2022. Digital identities also reduce the misallocation of limited welfare 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. Over 222 million DRCs have been issued as of March 2022. Approximately 200 million cards were issued to ‘priority households’ with low incomes and 20 million cards for households in extreme poverty. The DRC system is supported by electronic point-of-sale machines used for the accurate, electronic weighing of grain. Over 166 million tonnes of subsidised grain has been distributed by India’s fair price shops using this mechanism.
India’s success builds on its unique digitalisation of food distribution. Yet such initiatives are absent from ASEAN’s approach.
In 2021, the 43rd Meeting of ASEAN Ministers on Agriculture and Forestry endorsed the ‘ASEAN Guidelines on Promoting the Utilisation of Digital Technologies in the Food and Agriculture Sector’. Digitalisation in ASEAN member states has been focussed on enhancing food security and supply chain stability while maintaining laissez-faire market settings. The digitalisation of food production aims to use ‘smart farming’ technologies, including Internet of Things technologies, to boost crop productivity amid changing agroclimatic environments.
The digitalisation of ASEAN member states’ supply chains includes using e-commerce platforms to help farmers increase their income by selling directly to consumers and traceability technologies to assure food quality and safety. ASEAN member states’ policies contribute to greater food availability and affordability by helping farmers increase their productivity and market competitiveness.
India is also pursuing pockets of digitalisation in food production and supply chains through digital farmer advisory, e-commerce and traceability. What distinguishes India is its expansive subsidised grain distribution system that supports its nation-wide DRC system. This system is not governed by laissez-faire principles alone, it is also supported by food security objectives.
India’s low GDP per capita of around US$2000 means it is loath to adopt a purely laissez-faire approach which risks having insufficient food stocks during disruptions — forcing reliance on expensive imported grains. Instead, the Indian government intervenes in food production and supply chains to ensure sufficient domestic grain production and supplies. The government commits to purchasing any quality-standard crops farmers produce at a minimum support price that is recommended by India’s Commission for Agricultural Costs and Prices.
Setting a higher minimum support price incentivises farmers to adopt agricultural technologies like fertiliser supplies and better-quality seeds. Still, it can also incentivise farmers to devote more water and land to subsidised crops like wheat, rice and sugar. This can increase the price of non-essential produce and lead to a less efficient use of resources and greater CO2 emissions.
The government’s Food Corporation India, which procures crops and manages India’s grain stockpiles, provides information on expected stockpile shortages owing to farming disruptions. This signals the need for the government to raise the minimum support price to bridge potential food supply gaps.
India’s combination of laissez-faire and food-security-focussed stockpile management minimises the country’s reliance on expensive grain imports. This allows India to subsidise a greater quantity of its domestically produced food. In contrast to India, ASEAN member states, which follow a purely laissez-faire approach, make no such grain purchasing commitments.
ASEAN is seeing successive disruptions to food supply beyond COVID-19, including rising food and energy prices and the impact of Russia’s invasion of Ukraine on food supply chains. India’s effective ‘shock-proofing’ of its food supply system should be closely investigated by ASEAN. But India’s food security approach is not readily applicable because ASEAN member states do not guarantee to purchase crops at pre-identified prices.
By not offering such a guarantee, ASEAN member states are effectively leaving farmers to decide how much food to produce. They are failing to ensure sufficient food supplies during disruptions, including the current Russia–Ukraine war and the COVID-19 pandemic. Still, security of supply is another consideration and India, relying heavily on domestic production, may find itself exposed to natural disaster or climatic risks that leave it looking for imported food from elsewhere.
With these costs in mind, it is worth re-evaluating the merits of the current laissez-faire approach to food security and whether alternative approaches like India’s could improve ASEAN member states’ preparation for future disruptions.
A version of this article was first published here in the S. Rajaratnam School of International Studies Commentary.
Jose Ma Luis Montesclaros is Research Fellow with the Centre for Non-Traditional Security Studies at the S. Rajaratnam School of International Studies, Nanyang Technological University, Singapore.