Indian Journal of Human Development, Vol. 4, No.

1, 2010

Expanding Welfare Entitlements

in the Neo-Liberal Era: The Case
of Food Security in Kerala

T.M. Thomas Isaac* and R. Ramakumar**

This article primarily deals with two official committee reports submitted in 2009—the
Tendulkar Committee and the Saxena Committee—on the estimation and identification of the
poor in India. The recommendations of these reports have been critically discussed and placed
in a comparative perspective, with the recent initiatives to expand food entitlements for the
poor in Kerala. The Tendulkar Committee recommendations, even while they raise the poverty
line marginally, fail to capture the enormity of mass poverty in India. The Saxena Committee,
on the other hand, even while introducing a useful concept like automatic inclusion into the
realm of identification, has chosen to keep the criteria for inclusion narrow and arbitrary. It
is here that the experience of Kerala needs to be highlighted. Kerala continues to believe that
social security systems like the PDS have to be universal in character, if they are to be efficient.
Even as it struggles for a universal PDS, Kerala has adopted a system of automatic inclusion in
the BPL list that is unencumbered by the compulsions of ceilings. The state has adopted a class
approach to automatically bring all households in the unorganized sector into the ambit of
the BPL list, and thereby the PDS. Kerala’s adoption of a class approach, to take social security
systems closer to the goal of universal coverage, presents a picture of sharp contrast with the
policies of the Central Government.

The estimation of the extent of income poverty in India has been a matter of
controversy in the recent years. On the one hand, the controversy arises from the
debate around the impact of economic reforms on the reduction of poverty. On the
other hand, there has been a rising popular interest in the extent and measurement
of poverty. The reason for the popular interest is the shift to targeted, rather
than universal, welfare schemes from the 1990s onwards, and the use of poverty
estimates to decide on the number of households that are eligible to access these
welfare schemes.
The focus of this article is on the use of poverty estimates to decide as to whether
households are eligible for welfare entitlements, such as access to the public distribution
system (PDS). In this context, two official committees submitted their reports in 2009.
The first was the ‘Expert Group on the Methodology for the BPL Census 2009’ chaired
by N. C. Saxena (known as the Saxena Committee). The second was the ‘Expert Group

* Minister for Finance, Government of Kerala, Thiruvananthapuram and Honorary Fellow, Centre for
Development Studies, Thiruvananthapuram.
** Associate Professor, Tata Institute of Social Sciences, Deonar, Mumbai.
100  Indian Journal of Human Development

to Review the Methodology for Estimation of Poverty’ chaired by Suresh Tendulkar

(known as the Tendulkar Committee). The Tendulkar Committee examined the
method of estimation of the total number of poor households using data from the
sample surveys of the NSSO. The Saxena Committee examined the method of actual
identification of poor households through a separate census survey, with the Tendulkar
Committee method having set the maximum for the number of poor households.
In this article, we critically examine the major recommendations of the two reports,
and carry forward the discussion to a state with the best record in governing the PDS
in India: Kerala. We discuss recent initiatives to expand access to the PDS in Kerala in
the context of the Tendulkar and Saxena reports. We argue that while universalization
remains the goal, Kerala’s alternative represents a major advance in the efforts to
expand the access of poor households to welfare schemes, given the constraints of
neo-liberal policies at the Centre.

THE TENDULKAR COMMITTEE REPORT

The Context
In India, poverty is presently estimated by fixing a poverty line based on a differentiated
calorie norm. A task force of the Planning Commission in 1979 defined the poverty line
as the per capita expenditure at which the average per capita per day calorie intake
was 2400 calories in rural areas and 2100 calories in urban areas. The average per
capita expenditures incurred by that population group in each state which consumed
these quantities of calories, as per the 1973-74 survey of the NSSO, were used as the
poverty lines.
Based on the observed consumer behaviour in 1973-74, the poverty lines arrived at
were Rs. 49.09 per capita per month in rural areas and Rs. 56.64 per capita per month
in urban areas. These poverty lines were updated for the following years by simply
accounting for changes in the consumer price indices. Thus, the all-India poverty lines
updated for 2004-05 were Rs. 356.30 in rural areas and Rs. 538.60 in urban areas, per
capita per month. The shares of population below these poverty lines (the head count
ratios or HCRs) were estimated to be 28.7 per cent in rural areas and 25.9 per cent in
urban areas.
These estimates of poverty threw up a number of controversies. First, it was
argued that the poverty lines were extremely low in levels. An amount of Rs. 356.30
per month per person amounted to just Rs. 11.90 per day in rural areas, which was at
best a destitute income. The fact that about one-fourth of India’s population did not
incur even this level of expenditure was in itself instructive.
Secondly, the NSSO estimates were at great variance with the estimates of
nutritional outcomes that other surveys like the National Family Health Survey
(NFHS) provided. For instance, according to the NFHS-3, the share of underweight
children (under 3 years of age) in rural India was 44 per cent in 2005-06.
 Expanding Welfare Entitlements  101

Thirdly, there were major methodological problems in the choice of consumer

price indices, continuously re-weighted keeping the 1973-74 consumption basket
unchanged, to update the poverty lines over time. One striking absurdity that resulted
was that in some states, urban poverty rates were estimated to be higher than the rural
poverty rates.

Recommendations of the Tendulkar Committee

The Tendulkar Committee (2009) reviewed the present methodology for measuring
poverty and suggested major changes for the future. It recommended the abandoning of
the calorie norm for estimating the poverty line. Instead, the committee recommended
a new method where the present all-India urban poverty line would be the basis for
estimating every other poverty line in the country. With the urban poverty line as the
basis, the parity levels at the state level for rural and urban areas were to be separately
estimated by using a typical purchasing power parity (PPP) method. Thus, the new
state level rural and urban poverty lines were to be at those levels at which the average
national urban consumption levels could be attained.
The suggestion to use the all-India urban poverty line was justified on the basis
of two independent validating reasons. First, the urban population that corresponded
in 2004-05 to the poverty line expenditure consumed 1776 calories per capita per day,
which was close to the calorie norm of 1800 calories per capita per day suggested for
India by the Food and Agriculture Organization (FAO). Secondly, the actual levels of
urban per capita expenditure in 2004-05 were also sufficient to meet a defined ‘normative
level of expenditure on education and health services’. It was thus postulated that
the new poverty lines, fortuitously, met not just food requirements, but also those of
education and health that were important basic needs.
Using the above method, the new poverty lines for 2004-05 were re-estimated by
the committee as Rs. 446.68 for rural areas and Rs. 578.80 for urban areas (per capita
per month). Further, the new HCRs for 2004-05 were estimated as 41.8 per cent in rural
areas and 25.7 per cent in urban areas. These new estimates represent a significant
upward revision of poverty in the rural areas, and a small downward revision of
poverty in the urban areas. As per the new method, the total number of poor people
in India rose from about 403 million in 1993-94 to about 407 million in 2004-05 (see
Ramakumar, 2010).
It is certain that the Tendulkar Committee report would reopen the debate on the
impact of economic reforms on poverty. At the same time, the new estimates would
also help the states expand their BPL coverage in the PDS by using foodgrains from
the Central quota itself.
However, the report is unlikely to stem the deep dissatisfaction around the use
of poverty estimates to ‘fix’ eligibility in the access to welfare schemes. In important
programmes like the PDS, the system of targeting remains firmly in place. As a result,
102  Indian Journal of Human Development

large sections that require welfare assistance are likely to remain excluded from these
programmes even if the new poverty estimates are considered.
Take an illustration: in per capita daily terms, the rural poverty line was raised
from Rs. 12 to Rs. 15—a meagre upward revision. In the urban areas, the increase was
from Rs. 18 to Rs. 19 per day only. It is most revealing that even such a small upward
revision of the poverty line could net in more than 100 million new persons as ‘poor’.
In other words, poverty estimates are extremely sensitive to even minor changes in
the poverty line.
Juxtapose this with the fact that 77 per cent of India’s population lived at an
average monthly per capita consumption expenditure (MPCE) of Rs. 16 per day in
2004-05. If the average expenditure of 77 per cent of the population was Rs. 16 per
day, there is likely to be a sizeable section of the population above the new poverty
line of Rs. 15 per day in rural areas and Rs 19. per day in urban areas. In a targeted
system of welfare provision, these vulnerable sections of the population would
remain excluded.

The Problems with Targeting

Errors of ‘wrong exclusion’ in targeted programmes in India are due to the separation
of the processes of: (a) the estimation of the number of poor, and (b) the identification
of the poor. It is due to the absence of a reliable and feasible method of combining
estimation and identification that political and social movements have been demanding
universalization of welfare schemes like the PDS. It is thus essential that sample-based
poverty estimates from the NSS are not mechanically linked to the eligibility to access
welfare programmes. In a country with such mass poverty as India, universalization
remains the most efficient tool for ensuring livelihood security.
Let us take the case of PDS in India as an example of exclusion through targeting.
In 1997, the government decided to abolish the universal character of PDS and convert
it into a ‘targeted’ scheme. Following the introduction of the Targeted PDS (TPDS),
the population had to be classified into the Above Poverty Line (APL) and Below
Poverty Line (BPL) categories. Only those households classified as BPL were eligible
for subsidized purchase of commodities from the ration shops. In the first phase, the
APL households were eligible to purchase commodities from ration shops, but had to
pay the full ‘economic cost’ of the handling of commodities.
There are two immediate issues here. First, there are major problems associated
with having a classification of households based on a survey in one year, and then
following that classification for many years. The reason is that incomes of rural
households, especially rural labour households, fluctuate considerably. A household
may be non-poor in the year of the survey, but may become poor in another year due
to insecurities in the labour market. Also, the poverty lines that are adopted consider
incomes at a near-destitution level. A household that earns an income just above the
destitution poverty line cannot be judged as not requiring social security assistance.
 Expanding Welfare Entitlements  103

These problems, however, have been allowed to persist in the TPDS (for a detailed
discussion, see Swaminathan, 2000).
Secondly, the fundamental critique of the concept of targeting has centred on the
higher weight that neo-liberal policies give to errors of inclusion as compared to errors
of exclusion (see Cornia and Stewart, 1993; Swaminathan 2000). In other words, the
increase in ‘efficiency’ realized by excluding all the ineligible persons is given more
emphasis as compared to the inclusion of all the eligible persons. The errors of inclusion
have only financial implications, but errors of exclusion have social costs, which have
to be weighed higher. As Amartya Sen has argued:
“…the elementary case for targeting has to be qualified by taking adequate note of the
various costs of targeting, including informational manipulation, incentive distortion,
disutility and stigma, administrative and invasive losses, and problems of political
sustainability. These diverse considerations, which can reinforce each other, limit the
scope for no-nonsense targeting, tempting as it is…To treat poverty not just as low
income but also as capability handicap makes the exercise of poverty removal both
more cogent and, in some important ways, also less subject to targeting distortions”
(Sen, 1995, p. 22).

The Indian experience after 1997 has shown that the fears of massive exclusion of
the needy from the system were truly realized in practice. A widespread complaint
from many parts of rural India after the introduction of the TPDS has been the existence
of a major mismatch between households classified as BPL by the government and
their actual standard of living (Swaminathan, 2000; GoI, 2002). As noted in the report
of the High Level Committee on Long Term Foodgrain Policy (chaired by Dr. Abhijit
Sen; GoI, 2002), “the narrow targeting of the PDS based on absolute income-poverty
is likely to have excluded a large part of the nutritionally vulnerable population from
the PDS.”

Discarding the Calorie Norm

A final issue with the Tendulkar report, of much long-term consequence, relates to
the wisdom of abandoning the calorie norm. It is indeed true that the levels of calorie
intakes are not well correlated with nutritional outcomes. However, abandoning the
calorie norm altogether and taking solace in the fortuitous fact that calorie intakes
appear adequate at the new poverty lines is an arbitrary proposition. It is unclear
whether there is any basis, theoretical or empirical, for this relationship to hold true
across time (see Madhura Swaminathan’s paper in this volume).
In sum, given the miniscule increase in the poverty line, the Tendulkar Committee
recommendations fail to capture the enormity of mass poverty in India. The use of
poverty estimates based on such destitution poverty lines would continue to exclude
large numbers of deprived and disadvantaged households from the ambit of public
welfare schemes.
104  Indian Journal of Human Development

THE SAXENA COMMITTEE REPORT

Given the inherent limitations of a targeted approach to social service provision,
any discussion on the best method of identification of the poor is superfluous. The
Saxena Committee (2009) was primarily concerned with the method of identifying
poor households, given the ceiling on the number of poor set by the sample surveys
of the NSSO. The report of the Committee states that “the list of BPL households
based on our recommendations should be used only for those limited programmes,
where targeting has proved to be more effective than universalization” (2009, p.
3). However, even while it states that food security is for all, the report stops short
of arguing for universalization of the PDS; it only says that “there is every case for
enlarging the category of those entitled to cheaper food from government” (ibid.).

Recommendations of the Saxena Committee

Despite their limitations, however, the Saxena Committee recommendations may be
examined as an interim measure for expanding access until the PDS is universalized.
The Committee’s recommendations are based on three principles: (a) identify the
households that need to be automatically excluded; (b) identify the households that
need to be automatically included; (c) grade the rest of the households in an order of
deprivation so as to be able to apply a cut-off. The report suggests that the following
groups should be automatically excluded from the BPL list, as they are ‘visibly above
the poverty line’:
l Households that own double the district average of the per household
agricultural land owned, if partly or wholly irrigated (triple the district
average, if unirrigated);
l Households that own either three-wheeled or four-wheeled motorized
vehicles;
l Households that have at least one mechanical farm equipment, such as a
tractor, tiller or thresher;
l Households with any one member drawing a salary of over Rs. 10,000 per
month or employed in a government job on a regular basis; and
l Households that pay income tax.
The report then goes on to list the features of households that should be
automatically included:
l Designated primitive tribal groups (PTGs);
l Designated ‘Maha Dalit Groups’, or the most discriminated against Dalit
groups;
l Single women-headed households;
l Households with disabled persons as the bread-earners;
l Households headed by minors;
l Destitute households that depend on alms for survival;
 Expanding Welfare Entitlements  105

l Homeless households; and

l Households with bonded labourers as members.

For the rest of the households, the Committee suggests a set of questions and an
associated scoring procedure, which would rank the households on the basis of a
composite scoring index. The scores for a household would be higher if it belongs to a
more backward caste group or is a landless agricultural labour household. Once a list
of households with ranks is available, any cut-off suggested by the government can be
applied to extract a list of BPL households.

The Problem of ‘Narrow Inclusion’

It is important to note that the Saxena Committee only offers a method to identify
the poor. The maximum number of poor is already set by the Central Government.
When a ceiling is already identified, any tinkering with the method of selection can
only moderate the errors of exclusion. While the concepts of automatic inclusion
and exclusion suggested in the report are useful, we would argue that the methods
and criteria used to determine inclusion and exclusion are debatable. The suggested
criteria for automatic exclusion are such that many needy households are likely to be
excluded. Similarly, the use of the district average of the per-household land owned for
comparison with the actual household ownership of land does not take into account
the large intra-district variations in soil quality and irrigation status.
On the other hand, the criteria set for automatic inclusion are too narrow in their
coverage. While the categories listed therein need automatic inclusion, there are wider
sections of the society that need similar treatment. For instance, a progressive social
policy should automatically include all adivasis as part of the BPL list. One could even
argue that all Dalits in rural India would also deserve automatic inclusion in the BPL
list. By pushing Dalits and adivasis into the general list, and then subjecting them to
the scoring method is likely to exclude a large number of the deserving among them
from the BPL list. Ramachandran, et al. (2010) have argued that the use of scoring
methods to identify the poor “is inevitably—in theory and practice—arbitrary, unfair
and inequitable”.
Finally, it needs mention that the nature of the survey schedule and the methodology
of the scoring procedure are such that the complex nature of the employment status of
rural households is considered inconsequential. There appears to be an assumption in
the report that the multiple sources of income of households and multiple job-holding
statuses of household members (widely termed as ‘pluri-activity’ in labour studies) can
be satisfactorily tackled by using simple and open-ended questions in the survey. Any
comprehension of the complexities of village life and work in India would show that
a large number of errors are likely to creep into any survey schedule that is simplified
for the sake of convenience.
106  Indian Journal of Human Development

In our view, the overarching problem with the Saxena Committee report is that
its conception of automatic inclusion is narrow and devoid of any ‘class dimension’.
While the automatic exclusion criteria are likely to exclude most of the organized sector
workers from the BPL list, the automatic inclusion criteria are likely to exclude a large
section of disadvantaged households in the unorganized sector. The most important
shortcoming of the automatic inclusion criteria is that the criteria are deliberately kept
narrow in order to match the size of the final BPL list with the pre-determined and
narrow upper limit. Any further expansion of the automatic inclusion criteria is likely
to result in the size of the final BPL list overshooting the ceiling by a wide margin.
It is in this context that we would like to highlight the experience of Kerala in
generating a meaningful BPL list. It is our argument that the method followed by the
government of Kerala offers a major improvement over the method suggested by the
Saxena Committee. In the discussion on Kerala’s experience, we intend to bring the
additional dimension of food security into the discussion. The reason is that the debate
on the preparation of the BPL list in Kerala is intertwined with the efforts of the state
government to sustain the PDS as an instrument of social welfare. In the next section,
we briefly introduce the challenges faced by the PDS in Kerala. In the fourth section,
we discuss the improvements made by the state government in the preparation of the
BPL list, whose implications for the PDS are the most visible.

TPDS IN THE CONTEXT OF KERALA

Kerala is a hugely food-deficit state. It produces only 15 per cent of its required quantity
of foodgrains by itself, or a marketable surplus of just about four lakh metric tonnes
(MTs) of paddy. The cropping pattern in the state is dominated by cash crops, which
are largely export-oriented. The problem of food production in Kerala is closely related
to its problem of nutrition security. From the time of its formation, the per capita cereal
consumption levels in Kerala, as well as the per capita calorie consumption levels,
have been lower than in India. In 1961-62, the per capita calorie consumption in Kerala
was 1620 Kcal, while the corresponding average for India was 2445 Kcal (Panikar,
1980).

Nutritional Status and the PDS In Kerala

However, what keeps Kerala apart from India as a whole are two major achievements
between the 1960s and 2000s. First, in spite of the falling production of foodgrains,
Kerala was able to raise significantly the per capita intakes of calorie, protein and fat
(see Table 1). Between 1972-73 and 2004-05, the per capita calorie consumption in rural
Kerala increased from 1559 Kcal to 2014 Kcal. During the same period, the per capita
calorie consumption in rural India fell from 2266 Kcal to 2047 Kcal. In 2004-05, the per
capita calorie consumption in rural Kerala and rural India were almost the same. In
the case of proteins and fat also, there are similar catching-up trends for Kerala vis-à-
vis India (see Table 1). Nevertheless, it is notable that the levels of intake of calories
were lower than the recommended dietary intakes in 2004-05.
 Expanding Welfare Entitlements  107

Secondly, even while nutrition intakes in Kerala were lower than the national
average and the recommended dietary intakes, nutritional outcomes in Kerala were
better than in the other states. One of the reasons cited for this is that NSS surveys
may have been under-estimating the levels of consumption in Kerala, as they do not
account for all the components of the diversified diet pattern, such as home-produced
tapioca and coconut (CDS, 1975; Ramachandran, 1996). A second argument has been
that unlike in other Indian States, the intra-household distribution of food may be
more equitable in Kerala, with respect to gender (Swaminathan and Ramachandran,
1999). A third argument has been that the utilization of nutrients may have been better
in Kerala as compared to the other states due to the more efficient interactions between
nutrition, awareness on healthcare and education in Kerala (Soman, 1992). As a result,
the overall nutritional outcomes from a given level of consumption are better in Kerala
than in the other states.
Table 1
Levels of Per Capita Intake of Calories, Proteins and
Fat, Kerala and India, Rural, 1972-73 to 2004-05
(In Kcal and Gm)
Item Kerala India
Calorie intake (Kcal)
1972-73 1559 2266
1983 1884 2221
1993-94 1965 2153
1999-00 1982 2149
2004-05 2014 2047
Protein intake (gm)
1972-73 38.0 62.0
1983 47.0 62.0
1993-94 50.8 60.2
1999-00 52.4 59.1
2004-05 55.4 57.0
Fat intake (gm)
1972-73 19.0 24.0
1983 32.0 27.0
1993-94 32.7 31.4
1999-00 38.8 36.1
2004-05 40.8 35.5
Source: NSS reports, various issues.

There is a consensus among scholars that the significant catching up of Kerala in

terms of the intake of calories after 1960-61 was due to the presence of an efficient PDS in
the state. The per capita off-take of foodgrains from the central pool in Kerala has always
been higher than in the other states. The NSSO household survey on the use of PDS in
1986-87 also showed a significant spread of the PDS within the state. In terms of the
share of people who purchased rice only from the PDS as well as in terms of the share of
the quantity of rice purchased from the PDS, Kerala was in a different league in 1986-87
(see Tables 2 and 3). The share of the quantity of rice purchased from the PDS, as a share
of the total rice purchase, was 51.4 per cent in rural Kerala and 46.2 per cent in urban
Kerala. The corresponding shares for India were 16.8 per cent and 19 per cent (Table 3).
108  Indian Journal of Human Development

Table 2
Percentage of Persons Purchasing Rice from PDS Alone,
By Fractile Group, India and Kerala, 1986-87
(In Per Cent)
Fractile Group Rural Areas Urban Areas
Kerala India Kerala India
0-10 24.1 15.0 24.2 13.0
10 to 20 15.1 11.5 13.7 10.5
20 to 40 15.2 24.2 18.6 25.3
40 to 60 13.8 19.6 19.7 24.0
60 to 80 19.3 18.4 17.6 16.4
80 to 90 6.8 6.8 4.7 6.8
90 to 100 5.7 4.5 1.5 4.1
All 100.0 100.0 100.0 100.0
Source: NSSO (1990).

Table 3
Percentage of Quantity of PDS Purchase of Rice to Total Purchase of Rice,
By Fractile Group, India and Kerala, 1986-87
(In Per Cent)
Fractile Group Rural Areas Urban Areas
Kerala India Kerala India
0-10 64.9 16.9 54.4 21.5
10 to 20 58.6 15.3 54.1 21.0
20 to 40 51.6 17.6 51.5 18.5
40 to 60 51.9 15.5 45.2 19.6
60 to 80 47.1 17.9 38.9 18.2
80 to 90 40.7 17.8 37.5 16.7
90 to 100 38.8 16.3 23.6 14.7
All 51.4 16.8 46.2 19.0
Source: NSSO (1990).

In Kerala, the share of households in the lower fractile groups (households with
lower monthly per capita consumer expenditure, or MPCE) was generally higher
than in the upper fractile groups (households with higher MPCE) in terms of both
participation in the PDS and purchase from the PDS. At the same time, in India, the
range of the quantity purchased between households in the lower fractile groups and
households in the higher fractile groups was generally narrower than in Kerala (see
Tables 2 and 3). In other words, poorer households in Kerala used the PDS more than
richer households, while in India, this was not necessarily true. The absence of ‘elite
capture’ of the PDS, even in its universalized format, was an important element in the
functioning of PDS in Kerala. Some scholars have argued that this amounted to self-
targeting of the rich out of a universal system (Koshy, et al. 1989). Such self-targeting
considerably raised the efficiency of the PDS in Kerala. It may be instructive here to
quote Amartya Sen, who uses the capability perspective to analyse the benefits of self-
targeting in social security schemes:
 Expanding Welfare Entitlements  109

“There is a particular connection between the use of self-selection as a method

of targeting and the valuational perspective to be used. If the selection can be left
to the potential recipients themselves…, the actual choices made will depend
on all the values that influence the choices of the potential recipients…Thus,
through the choices made, the self-selecting potential recipient will tend to reflect
a wider class of values than simply income maximization. Since the rationale of
the capability perspective relates closely to this wider class of values, there is a
clear connection between the move toward self-selection and the rationale of the
capability perspective” (Sen, 1995, p. 18). 

The Struggles for Universal PDS in Kerala

The history of PDS in Kerala is a history of struggles of the working and poor people
of the state. The origins of today’s institutionalized PDS in the state can be traced back
to the peasants’ and workers’ struggles in Malabar as well as the industrial workers’
struggles in Travancore. For the same reason, the issue related to shortage of foodgrains
has always been a politically sensitive issue in Kerala.
In Malabar, even in the 1940s, only about 45 per cent of the foodgrains were
domestically produced, and imports from Burma (and the surplus regions of south
Malabar) constituted a significant part of consumption. Prakash Karat (1973) notes
that between 1911-14 and 1923-26, imports of ‘grain, pulses and flour’ at the Calicut
port increased by 165 per cent; during the same period, exports of coconut, coir, spices,
tea and rubber also increased considerably. With the advent of World War II, food
imports from Burma stopped completely. Overall, the rice imports at the Calicut port
fell from an annual average of 32,000 tonnes in 1938-40 to just 13,000 tonnes in 1941
(Menon, 1992). There was a huge increase in the hoarding of grains and rice prices
increased manifold.
The struggles for rationing of food began with the struggles of the Communist
Party of India and the peasant movement to establish Food Committees and ‘Producers
and Consumers Co-operatives’ (PCCs) in 1942 (Sivaswamy, 1946; also Ramachandran,
1996). The food movement in Malabar demanded the distribution of paddy stored
in the godowns of landlords to hungry peasants and labourers, who were suffering
from severe food shortage. The activists of the peasant movement forcibly entered the
godowns of the landlords, confiscated paddy and distributed it to the poor through
the PCCs, which were essentially ration shops. Many communist activists were killed
by the goons of landlords and the police in these struggles. Trade unions in sectors
like weaving and beedi-making distinguished themselves with their support to the
food committees and PCCs (Isaac, et al. 1998). Finally, in October 1944, rationing was
officially introduced by the government in Malabar.
In Travancore and Cochin too, food shortage was acute during the War and
famine conditions had developed in many regions. The coir belt in Ambalapuzha and
Sherthallai taluks was most severely affected due to the disruption of coir exports and
limited food cultivation in the sandy tracts. The price of a meal in Alleppey town
110  Indian Journal of Human Development

increased four-fold from 0.09 paisa to 0.38 paisa during the War. The severe labour
unrest resulted in a strike agitation in August 1942 (Isaac, 1984). The Travancore
government was forced to respond by issuing subsidized rice to 14 hotels in Alleppey
and Sherthallai to provide subsidized meals to workers. The coupons for the meals
were distributed from the trade union offices. Interestingly, the workers voluntarily set
apart a portion of the coupons for the starving labour households in the countryside.
Ultimately, in 1943, a skeletal rationing system was introduced in both Travancore
and Cochin.
In parts of Madras Presidency outside Malabar, the rationing system was abandoned
after the War. However, sustained resistance from the peasant organizations made
sure that the rationing system continued in Malabar, as well as in Travancore and
Cochin (Ramachandran, 1996).
When the first Communist Ministry led by E.M.S. Namboodiripad (EMS) took over
in 1957, food distribution was one of its predominant concerns. The state government
took up the issue of increased supply of foodgrains to Kerala from the Central
Government. It established local food committees to supervise the food distribution
shops and ration shops. The Central Government had, in the 1950s, established a
southern food zone constituting the states of Kerala, Andhra Pradesh, Madras and
Mysore; the effort here was to direct the surplus production in Andhra Pradesh to
deficit regions like Kerala within the same zone. Selling rice from Andhra Pradesh to
regions outside the southern food zone was made illegal.
However, the zone system faced serious crises over a period due to the failure to
ensure the supply of adequate quantities of rice from Andhra Pradesh (Krishnakumar,
1997). As stock-holders in Andhra Pradesh refused to sell rice at the administered
prices, the supply of rice to Kerala’s ration shops was frequently interrupted. In
the address of the Governor to the Assembly in 1958 itself, the EMS government
had referred to the “cutting of supply by the Central Government following the
formation of the Southern Food Zone and the difficulty which my Government is
facing in securing stocks even within the Southern Zone”. By 1964, the failure to
ensure adequate supplies had snowballed into a problem of acute food shortage in
Kerala, leading to a sharp rise in food prices. Following protests across the state,
the southern food zone was abolished. At a Chief Ministers’ meeting in 1964, it was
decided to introduce a system of ‘informal rationing’ in Kerala to “ensure an equitable
distribution of the available supplies at a specified price.” In 1965, food struggles, led
by the communist parties, swept the state. Out of concern that the struggle would
lead to a sharp leftward shift in Kerala’s politics, the Central Government formally
undertook to provide a minimum ‘universal statutory ration’ for the state. Thus was
born the modern PDS in Kerala.
With the introduction of the PDS, the Central Government gave an undertaking
that it would meet all the requirements of Kerala directly from the Central quota and
that the state need not procure food directly from other states. It was this undertaking
that had continued to guide food distribution policy in Kerala till the 1990s, when
 Expanding Welfare Entitlements  111

the Centre abolished the universal PDS. The importance of continuing with Central
assistance to Kerala to meet its food shortages was reiterated in the policy statement of
the second Communist government in 1967:
“A difficult problem that any government in Kerala has to face is the food problem.
That it has become so serious is due to the wrong policies pursued by the Centre.
Though this state is deficient in food production, it earns foreign exchange so sorely
needed by the country and as such it is the responsibility of the Centre to see that its
people are not made to starve but enough foodgrains are provided to meet the needs
of the state.
“The government will demand of the Centre to provide in time all the rice
requirement of the states’ people at prices within the capacity of the poor people
of Kerala… It is our opinion that to solve the food problem, substantial changes
will have to be made in policies at present pursued by the Central Government. For
instance, it is necessary to bring wholesale trade in foodgrains into the state sector…
[and] guarantee fair prices to cultivating peasants, while at the same time organizing
distribution in such a way as to make food available to consumers at low prices. All
this cannot be done by a state government alone, specially the government in a food-
deficit state like Kerala. What the Kerala government will do is to exert pressure on
the Centre to concede the demand that Kerala should get the rice it needs at low
prices.”
It is through such mass struggles and conscious public policy that Kerala developed
the best functioning PDS among all states in India. It is this PDS that has been gravely
endangered by the system of targeting after economic reforms began.

Kerala’s Experience with TPDS

As mentioned earlier, the major feature of targeted PDS is the differentiation of the
population into BPL and APL households with different allocations and prices. The
problem here was as to how to classify the population into BPL and APL categories.
There was no system to ensure that identification and estimation of BPL households
could go hand-in-hand. Hence, a totally unscientific and arbitrary method was followed
by the Central Government, which further complicated the inherent contradictions in
TPDS.
Although every state in India conducted its own survey to classify households
into BPL and APL categories, the total quantity of commodities supplied by the
Food Corporation of India (FCI) to each state was fixed by using a different criterion.
The Government of India used estimates from the quinquennial rounds of the
NSS to arrive at the proportion of the income-poor in each state. The quantity of
commodities supplied by the Centre to the states was fixed as per the requirements
of this proportion of the income-poor only. For instance, the number of income-
poor people in Kerala was estimated as per NSS data to be about 10 per cent of the
population in 1999-2000. According to the state government, this was a gross under-
112  Indian Journal of Human Development

estimate. However, the FCI provided foodgrains to Kerala that were sufficient to
meet the requirements of only 10 per cent of the population. To meet the requirements
of the remaining share of the population considered as BPL, the State government
had to bear an annual financial burden of about Rs. 480 million (see Suryanarayana,
2001).
With the adoption of TPDS as the official policy of the Central Government, the
APL issue price was regularly raised, and the gap between the market price and the
APL issue price considerably narrowed. This phenomenon, coupled with the poor
quality of rice that was supplied through the PDS, forced a large number of APL
households in Kerala to shift to the open market for grain purchase. As a result, the
ration off-take of the APL households in Kerala declined sharply. Citing the decline in
off-take, the Central Government reduced the APL rice quota for Kerala, which was
113,420 MT up to March 2007, to 21,334 MT from April 2007 and further downward to
17,056 MT from April 2008 onwards. Similarly, the quota of APL wheat was reduced
from 37,325 MT to 11,777 MT between March 2007 and April 2008. Soon after this
drastic reduction in the foodgrain quota, foodgrain markets in India, and globally,
underwent major transformations. In congruence with the global prices, grain prices
in India also began to rise sharply. The shrinkage of official food stocks, speculative
hoarding, and futures trading exacerbated the food crisis.
The introduction of TPDS also destroyed the financial viability of the institutional
network of ration shops in Kerala. The ration shops are private outlets. The owner
of a ration shop receives a profit of about Rs. 0.20 when he sells one kg of rice. The
viability of running such an outlet during the earlier years was based on the large
quantum of business that was transacted. Under the TPDS, the quantum of transaction
declined significantly affecting the viability of ration shops. The reason for the decline
was that APL households, owing to higher issue prices, did not purchase foodgrains
from the PDS. A back-of-the-envelope calculation would show that an average ration
shop owner sold about 60 quintals of rice every week under the universal PDS. Under
the TPDS, the average quantity of rice sold came down to less than 20 quintals per
week. As the business became less viable, ration shop owners began to close shops.
Thus, targeting has been threatening to destroy the institutional network of subsidized
foodgrain supply for the poor in Kerala, thereby raising the possibilities of an end to
PDS itself. 
In spite of all the constraints imposed by the TPDS regime, the efforts of the Kerala
government to protect the PDS from degenerating are obvious from the results of the
NSS 61st Round survey in 2004-05 on the PDS in India. Even in 2004-05, indicators
related to the PDS in Kerala were significantly better than the corresponding national
averages. First, in 2004-05, the share of households reporting purchase from PDS
was 34.6 per cent in rural Kerala and 24.4 per cent in rural India (see Table 4). The
difference between rural Kerala and rural India was wider in the lower MPCE classes.
Thus, while up to 86 per cent of the households in the lower MPCE classes purchased
grains from the PDS in rural Kerala, the corresponding share never exceeded 36 per
cent in rural India as a whole. Similarly, the average quantity purchased by a BPL/
 Expanding Welfare Entitlements  113

AAY (Antyodaya Anna Yojana) household and an average household in rural Kerala,
particularly in the lower MPCE classes, was significantly higher than in rural India as
a whole (see Table 4).
The caste-wise data on the access of households to PDS in 2004-05 also shows the
extent to which households from the Dalit and adivasi caste groups were not allowed
to be completely pushed out of the PDS (see Table 5). If we take the Antyodaya and
BPL cards together, the share of Dalit and adivasi households possessing one of the two
cards was higher in Kerala as compared to India. The Antyodaya scheme in Kerala
covered a significantly large share of adivasi households in Kerala as compared to
India as a whole in 2004-05.
The data in Tables 4 and 5 constitute evidence for the partial success of the state
government in its struggle to maintain the access to PDS at the original levels. At the
same time, the data also show that large sections of the rural populations, especially
Dalits and adivasis, were excluded from accessing the TPDS.
In a sense, the newly proposed Food Security Bill aims to totally abolish the
category called APL households and end their association with the PDS completely.
The demand raised by the government in Kerala has been a total reversal of the policy
of targeting and a restoration of the universal system of PDS. However, without
waiting for universalization, Kerala has gone ahead with expanding access to PDS for
a larger share of the population than dictated by the Centre (see next section).

Table 4
Monthly Consumption per Household from PDS of Rice, Kerala and India, Rural, 2004-05
(In Per Cent and Kg per Household per Month)

MPCE Size- Share of HHs Reporting Average Quantity Consumed Average Quantity Consumed
Class (Rs) Purchase from PDS Last from PDS By BPL/AAY HHs from PDS By All HHs
Month (%) (Kg pr HH per Month) (Kg per HH per Month)
Kerala India Kerala India Kerala India
0-235 57.8 35.7 28.5 11.7 19.4 6.7
235-270 86.0 31.6 29.3 10.6 24.5 5.7
270-320 82.7 30.3 25.6 10.2 24.2 5.2
320-365 59.3 29.1 28.7 9.6 16.7 4.9
365-410 55.8 27.1 17.5 9.1 13.4 4.5
410-455 53.9 26.7 19.3 8.9 13.2 4.4
455-510 58.4 25.8 21.1 9.5 13.7 4.3
510-580 46.2 22.5 18.0 8.9 10.5 3.7
580-690 45.9 22.9 14.4 9.3 8.6 3.7
690-890 33.4 19.1 14.4 8.9 6.8 3.1
890-1155 24.7 14.8 11.0 8.2 4.3 2.4
1155 and more 16.5 11.8 7.9 7.9 2.6 1.9
All classes 34.6 24.4 15.9 9.6 7.3 4.1
Source: NSSO (2007).
114  Indian Journal of Human Development

Table 5
Share of Households Possessing Different Types of Cards, India and Kerala, Rural, 2004-05
(In Per cent)
Social Group Share of Households Possessing Each Type of Ration Card (%)
Antyodaya BPL Antyodaya Other No Ration All Types
+ BPL Card
Kerala
Scheduled Tribe 30.8 36.5 67.3 16.5 16.3 100.0
Scheduled Caste 2.6 59.5 62.1 27.9 10.0 100.0
OBC 0.8 27.3 28.1 57.4 14.5 100.0
Others 1.4 16.3 17.7 70.0 12.4 100.0
All households 1.8 27.7 29.5 57.1 13.4 100.0
India
Scheduled Tribe 5.0 39.6 44.6 30.8 24.6 100.0
Scheduled Caste 4.4 34.9 39.3 43.7 17.0 100.0
OBC 2.3 24.5 26.8 54.5 18.7 100.0
Others 1.9 17.3 19.2 63.0 17.7 100.0
All households 2.9 26.5 29.4 51.8 18.7 100.0
Source: NSSO (2007).

KERALA’S ALTERNATIVE
The efforts of the Left government in Kerala to develop a more democratic alternative
to the Central Government’s Food Security Bill, which has targeting at its heart, assume
special significance. In many ways, Kerala’s alternative, despite limitations, seeks to
significantly depart from the approach adopted by the Centre as well as the Saxena
Committee. In this final section of the paper, we shall summarize the major points of
departure.

Initiatives to Widen Inclusion in the PDS

The first point of departure in Kerala is with regard to the definition of a BPL household.
As noted, the Central Government follows a narrowly defined per capita monetary
expenditure to fix the total number of BPL households. For the state of Kerala, the
present estimate is 10.2 lakh households, that is, about 16 per cent of all households.
What distinguishes Kerala is an effort to transcend the limits set by ceilings in
generating the BPL list.
Before the limit of 10.2 lakh households was imposed in 2001, the number of
BPL households was arrived at through household surveys conducted by the Rural
Development Department in 1993-94. The number of poor households as per this
survey constituted about 20 lakh households. Even after 2001, Kerala continued
to treat these 20 lakh households as BPL households. After 2001, the Congress-led
UDF government, in the wake of public agitations, decided to moderately reduce the
allocation of foodgrain for BPL households and use the surplus to service the additional
10 lakh households. In other words, no government in Kerala could afford to deviate
from the political consensus to maximize the coverage of the PDS.
 Expanding Welfare Entitlements  115

However, even the broader list of 20 lakh households excluded many vulnerable
sections of the society from the purview of the PDS. For example, about 40 per
cent of the Dalit and adivasi households, and about 60 per cent of the fisherperson
households, were classified as APL. Therefore, from 2009-10, it was decided that all
Dalit households, adivasi households, fisherperson households and destitute persons
would be automatically included as being eligible for subsidized food provision. The
number of BPL households, by this definition, increased from 20 lakh to 26 lakh. All
these 26 lakh households were provided rice at Rs. 2 per kg.
In 2010-11, the Kerala government further expanded the scope of PDS to include
all agricultural labourer households and all traditional industrial worker households
to be eligible for subsidized rice, irrespective of their BPL/APL status. The definition
of poverty was no more based upon a poverty line decided in terms of per capita
consumption expenditure; a more appropriate ‘class approach’ was sought to be
adopted. All the workers and petty producers in the entire unorganized sector were
defined to be automatically included in the BPL list. The number of BPL households
in Kerala by this definition is about 35 lakh, which constitutes about 42 per cent of
all households in the state. Thus, the approach of Kerala, devoid of the burden of a
ceiling, is comprehensive and inclusive in its application of a class-based criterion in
the selection of BPL households.
Secondly, Kerala is distributing rice at Rs. 2 per kg for all the 35 lakh households
from 2010-11 onwards. On the other hand, the proposed Food Security Bill seeks to
provide rice at Rs. 3 per kg for the narrow list of BPL households only. With the passage
of the Food Security Bill, it is expected that the category of APL households would
be permanently deprived of subsidized foodgrain provisions from the PDS. In other
words, any servicing of households classified as APL by the Central Government’s
method would necessitate expensive market purchase of foodgrains by the state
government, far in excess of the additional subsidy that it incurs currently.
Thirdly, the Food Security Bill does not seek to integrate other ongoing schemes
for providing food and nutrition to the poor with the PDS. The first casualty would be
the AAY under which the destitute persons are receiving 35 kg of rice at Rs. 3 per kg.
Under the provisions of the latest draft of the Food Security Bill, the quantity of rice to
the AAY cardholders (that is, the poorest of the poor) is being reduced to 25 kg.
Fourthly, in 2009-10, the mid-day meal scheme was extended in Kerala to high
school students also. Instead of the traditional rice gruel, the schoolchildren are being
provided rice meals and pulses. A large part of the resources required are raised from
the community itself. The local governments have taken an initiative in improving
the nutritional quality of the supplementary feeding programme in the anganwadis.
An innovative experiment—Hunger Free City—has been introduced in the city of
Kozhikode (Calicut). Here, community kitchens operate at various points in the city to
guarantee free mid-day meals to any needy citizen.
Fifthly, there is an urgent need to expand the list of commodities supplied through
the ration shops and include—in the context of Kerala—items like edible oil and pulses.
116  Indian Journal of Human Development

The proposed Food Security Bill is totally silent on this issue. However, Kerala’s
initiatives in this regard are worth mentioning. The network of ration shops in Kerala
is supplemented by 3000 SUPPLYCO outlets run by the Civil Supplies Corporation,
which provides 13 essential commodities, such as seven types of pulses, five types
of condiments and spices, and sugar at subsidized prices. In August 2009, the set of
seven pulses were sold in SUPPLYCO outlets at prices that were less than the market
price by 37 per cent. Condiments and spices were sold at prices that were less than
the market price by 32 per cent. Similarly, CONSUMERFED has its own co-operative
outlets spread all over the state supplying the same set of items at subsidized prices.
Both the above networks, besides the listed items, also provide almost all necessities
and consumer goods at fair prices. They act as an important stabilizing influence
in the consumer markets. Further, during festival seasons like Onam, Ramzan and
Christmas, a large number of special food and vegetable stalls are opened by agencies
like the Horticulture Corporation.

The BPL Survey, 2009

In order to identify the approximately 35 lakh households eligible for BPL status,
the state government organized a detailed BPL survey in 2009. The first step was
to automatically exclude those households that had linkages with organized sector
employment or any other stable source of income. Households with any of the
following features were considered as automatically excluded from the BPL list:
l Households with at least one worker in government, cooperative, private or
state-aided institutions;
l Households with at least one pensioner with government, cooperative or state-
aided institutions;
l Households with at least one regular salaried worker in a public sector unit
(PSU) or private institution, other than the traditional industries sector;
l Households with a concrete-roofed house with a floor area of more than 1000
square feet;
l Households that own at least one four-wheeler vehicle;
l Households with at least one migrant worker abroad;
l Households, other than tribal households, that own more than one acre of
agricultural land.
As must be clear, the conditions of automatic exclusion in Kerala are considerably
more liberal than those suggested by the Saxena Committee. The upper limit of one
acre needs to seen in the background of the smaller per capita size of land as well as the
higher per unit area value of production in Kerala as compared to India as a whole.
During the second stage, a detailed household survey was undertaken among
the households that were not automatically excluded. The state government is in the
process of finalizing an appropriate scoring method to rank the surveyed households.
All the completed survey schedules of households, which were not automatically
 Expanding Welfare Entitlements  117

Figure 1
A screen shot of the sample list of household schedules uploaded for public scrutiny,
BPL survey 2009, Kerala

excluded, have been uploaded in the website http://bplsurveykerala2009.gov.in for

public scrutiny (see Figure 1 for a screen shot).

CONCLUDING NOTES
This article primarily deals with two official committee reports submitted in 2009—
the Tendulkar Committee and the Saxena Committee—on the estimation and
identification of the poor in India. The recommendations of these reports have been
critically discussed and placed in a comparative perspective, with the recent initiatives
to expand food entitlements for the poor in Kerala.
The Tendulkar Committee recommendations, even while they raise the poverty
line marginally, fail to capture the enormity of mass poverty in India. The use of
poverty estimates provided by the Tendulkar Committee to estimate the number of
poor is likely to result in the exclusion of a large number of disadvantaged households,
who happen to be above the poverty line, from welfare entitlements.
The Saxena Committee, on the other hand, even while introducing a useful concept
like automatic inclusion into the realm of identification, has chosen to keep the criteria
for inclusion narrow and arbitrary. As a result, a large number of disadvantaged
sections in the society, such as Dalits and adivasis, are compelled to compete with the
general population for a place in the BPL list. Given that the maximum size of the BPL
list is fixed, in line with the estimates of poverty from NSSO surveys, the possibilities
of any further expansion of the criteria for automatic inclusion are limited.
118  Indian Journal of Human Development

It is here that the experience of Kerala needs to be noted. First, Kerala continues
to believe that social security systems like the PDS have to be universal in character, if
they are to be efficient. Secondly, even as it struggles for a universal PDS, Kerala has
adopted a system of automatic inclusion in the BPL list that is unencumbered by the
compulsions of ceilings. The state has adopted a class approach to automatically bring
all households in the unorganized sector into the ambit of the BPL list, and thus the
PDS. Thirdly, Kerala has decided to provide rice at Rs. 2 per kg to all households thus
identified and included— numbering about 35 lakh—as BPL households. Fourthly, the
state has established and expanded a number of food outlets that act as supplements
to the PDS, which sell essential commodities other than those distributed through the
PDS at subsidized prices.
The efficiency of social security schemes like the PDS depends on their universal
character. However, the present model of BPL/APL division adopted by the Central
Government is largely exclusionary in character. Kerala’s adoption of a class approach,
to take social security systems closer to the goal of universal coverage, presents a
picture of sharp contrast to the policies of the Central Government.

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 GROWTH, EMPLOYMENT AND LABOUR MARKETS:
Perspectives in the Era of Globalisation in India

Editors
J. Krishnamurty and Rajendra P. Mamgain

2009, Pages: x+488pp, Price: INR 695.00, ISBN: 978-81-89654-64-1 (Hb)

Published by
Daanish Books, Indian Society of Labour Economics and
Institute for Human Development

Introduction
J. Krishnamurty and Rajendra P. Mamgain
Growth, Employment and Poverty
Employment, Equity and Growth—Ashok Mathur; Agricultural Growth, Employment
and Poverty: A Policy Perspective—R. Radhakrishna; Marginalised Sections of Indian
Agriculture: The Forgotten Millions—V.S. Vyas
Employment and Unemployment
Unemployment and Employment in India: An Overview—K.M. Naidu; From
Employment Planning to Employment Policies—Yoginder K. Alagh; Employment
and Unemployment in a Society in Transition—S.R. Hashim; Human Capital Base of
the Indian Labour Market: Identifying Worry Spots—G.K. Chadha
Structural Adjustment and Structural Change
Structural Adjustment, Labour Market Flexibility and Employment—T.S. Papola;
Attack on Poverty and Deprivation: Role of Structural Change and Structural
Adjustment—C.H. Hanumantha Rao; Workforce Restructuring, Wages and Want:
Recent Events, Interpretations and Analysis—Sheila Bhalla
Globalization and Employment
Can Globalisation and Labour Rights Coexist?—Lakshmidhar Mishra; Work, Livelihoods
and Rights—Deepak Nayyar; Challenges of Decent Work in the Globalising World­—
D. Narasimha Reddy; Globalisation and Employment Trends in India—G.S. Bhalla
The State and the Labour Market under Capitalism
State, Market and Labour: A Political Economic Perspective—C.P. Thakur; Labour
Market under Capitalism—Prabhat Patnaik