Indian Minister Denies Looting a Problem in Food Program

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Children hold bowls of sprouts outside their home in the Dharavi slum area of Mumbai, India. The government will spend a record $14 billion this fiscal year on wheat, rice and other food, adding to an 82 million ton stockpile in a country where half the children and one in five adults are malnourished.

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Children hold bowls of sprouts outside their home in the Dharavi slum area of Mumbai, India. The government will spend a record $14 billion this fiscal year on wheat, rice and other food, adding to an 82 million ton stockpile in a country where half the children and one in five adults are malnourished. Close

Children hold bowls of sprouts outside their home in the Dharavi slum area of Mumbai, India. The government will... Read More

Photographer: Sanjit Das/Bloomberg

A pedestrian walks past a closed fair price shop in Gomti Nagar, Lucknow in Uttar Pradesh, India. Close

A pedestrian walks past a closed fair price shop in Gomti Nagar, Lucknow in Uttar Pradesh, India.

Photographer: Sanjit Das/Bloomberg

A day laborer walks past piles of covered grains and trucks laden with grains at an open storage area of the Uttar Pradesh state warehouse in Mishrikh in Uttar Pradesh, India. Close

A day laborer walks past piles of covered grains and trucks laden with grains at an open storage area of the Uttar... Read More

Photographer: Sanjit Das/Bloomberg

A day laborer moves a sack of rice at the Uttar Pradesh state warehouse in Mishrikh in Uttar Pradesh, India. Close

A day laborer moves a sack of rice at the Uttar Pradesh state warehouse in Mishrikh in Uttar Pradesh, India.

Photographer: Reveendran/AFP/Getty Images

This file photo from Feb. 8, 2012 shows K.V. Thomas, minister of consumer affairs, food & public distribution, right, standing with Pranab Mukherjee, India's then finance minister, center, and Sharad Pawar, minister of agriculture & food processing industries, attending the conference of Food and Agriculture Ministers of the States on prices of essential and public distribution systems and storage, in New Delhi. Close

This file photo from Feb. 8, 2012 shows K.V. Thomas, minister of consumer affairs, food & public distribution, right,... Read More

India’s system of distributing food to the poor isn’t corrupt, according to Food Minister K.V. Thomas, who rejected findings by the World Bank, Supreme Court and news investigations that rampant theft is depriving as many as 160 million families of nourishment.

About 5 percent to 10 percent of the food meant for the poor is lost, and that is due to mismanagement, Thomas said in an interview at his office in New Delhi. The World Bank pegged the figure at 58 percent, in a 2011 report based on government data, and blamed it on graft and wastage. A Supreme Court fact- finding commission declared in the past year that the distribution system in major states had failed in its mission.

“I am not concerned about the World Bank,” said Thomas. There is “some kind of mismanagement there, I do agree with that, but not to the extent of an alarming stage,” the minister said, growing visibly angry at questions on corruption before abruptly ending the half-hour interview. “I don’t agree with the word corruption.”

The government will spend a record $14 billion this fiscal year on wheat, rice and other food, adding to an 82 million ton stockpile in a country where half the children and one in five adults are malnourished. While some rots in inadequate storage facilities, still more is siphoned off by corrupt politicians and their criminal gangs, data compiled by Bloomberg in August showed. As much as $14.5 billion of food meant for the poor was looted over a decade in the state of Uttar Pradesh alone.

‘Shocking’

“It is shocking that someone in his position is not willing to accept the scale of the problem,” said Naresh Saxena, a commissioner of the Supreme Court who monitors hunger- based programs across the country. “I think he is very badly misinformed. This is a very worrying sign.”

Sitting behind a large, wooden desk in his office overlooking the Rajpath, the ceremonial avenue running between the presidential palace and the memorial arch called India Gate, Thomas grew increasingly agitated at questions about the failings in the system he has overseen for the past two years.

Thomas said it wasn’t his responsibility to probe individual cases of corruption and it was down to the state government to ensure the food reaches the poor and the national government only delivers grain from warehouses.

“I don’t depend on news stories,” he said in the Oct. 17 interview.

When asked whether he was surprised by the level of corruption in the distribution system and whether he felt frustrated by his inability to combat it, Thomas asked to change the topic. “Let us forget about this and leave this subject,” he said.

Food Corporation

India has run the world’s largest public food distribution system for the poor since the failure of two successive monsoons led to the creation of the Food Corporation of India in 1965. As the country moved from a precarious existence depending on monsoon rains and overseas aid to one of surplus and exporter- status today, it has largely failed to dent some of the world’s worst malnourishment statistics.

The Planning Commission, a governmental body that assesses the country’s resources in the struggle to improve living conditions, asked the World Bank in 2005 to survey India’s social security safety nets. The commission had already found that 36 percent of subsidized grains were “siphoned off the supply chain.” In fiscal 2004, $791 million worth of food, out of $1.4 billion set aside for 16 states, didn’t reach the poor.

Fake Cards

The World Bank used data from the commission and the National Sample Survey Organization, a branch of the Statistics Ministry. Among the findings of the bank’s report, only published last year, was that as much as 36 percent of the food meant for those below the poverty line in the early 2000s was diverted or disappeared in the distribution channels set up by the government. A further 22 percent was sold to people with fake ration cards, who did not qualify for the subsidy.

Using another method, comparing the amount of rice and wheat given to each state to distribute with the amount citizens reported buying from ration stores, only 41 percent of the food meant for the poor was consumed by them in 2005.

While there were wide variations across states, the World Bank had noticed some improvement over time, according to an e- mailed statement from New Delhi-based lead economist John Blomquist.

“Nonetheless, overall, the leakage rates remain relatively high for India as a whole,” said Blomquist.

‘Gigantic Proportion’

A continuing examination of the public distribution system ordered by the Supreme Court and headed by Justice D. P. Wadhwa has examined 22 Indian states. The system had “fallen into a shambles” with large-scale diversion onto the black market, Wadhwa declared. The number of forged ration cards in Andhra Pradesh led to “a fraud of gigantic proportion.”

The food minister “is detached from reality,” said Mohan Guruswamy, chairman of the Centre for Policy Alternatives in New Delhi, who has written about changes needed for the public distribution system. “He should own up to the problem and say he is going to do something to rectify it. ”

India’s Cabinet this month approved a $745 million program to computerize public distribution of food. The system will be modeled on pilot programs in states like Chattisgarh and Kerala that have introduced photo-identity cards, said Thomas.

‘Ask the Experts’

The first phase, already under way, allows grain shipments to be tracked from central government warehouses to state godowns, and then onward to the approximately 400,000 Fair Price Shops where citizens purchase their subsidized quotas. This process is a year behind schedule, said Thomas, who expects it to be completed by 2013.

In a second phase, the shops themselves will be given computerized systems, where photo-identity cards issued under a separate biometric I.D. program run by the government will be used to monitor rationing to individuals. This process could be further delayed if the identity-card push does not complete the process of registering the entire population, said Thomas.

When asked about the benefits computerization would bring, he said: “Go talk to some experts.”

Thomas, 66, who is a professor in chemistry and ran the department at Sacred Heart College in the southern state of Kerala for two decades, declined to comment on specific measures he had taken to improve the distribution system or assess his performance since taking over the ministry. “I am not going to make an assessment of that,” Thomas said. “We are doing it better, things have improved.”

Satisfied

Thomas also said he was satisfied with the system of leaving it up to individual states to distribute food, while his ministry oversees procurement. In Uttar Pradesh, that means Thomas’s ministry works with the state food minister, Raghuraj Pratap Singh, who stands charged with attempted murder, kidnapping, armed robbery and electoral fraud.

“We have a democratic system in the country, we have state governments and state governments may be run by different parties, but I cannot go into all those things,” Thomas said. “This is a federal structure. We have to respect the state governments. We can only suggest, we cannot impose.”

In Uttar Pradesh, home to the largest number of poor and malnourished people in India, as much as 100 percent of the food in several districts was looted, according to the Central Bureau of Investigation. One politician, O.P. Gupta, the local legislative representative from the district of Sitapur, was indicted for the theft. He died in April and his son says he was innocent. A whistleblower, Rajeev Yadav, told Bloomberg News that Singh received as much as $200,000 a week as his cut from the scam. Singh has not been charged over the food theft and has denied any wrongdoing.

Corruption Perception

Seventy-four percent of Indians believe that the country has grown more corrupt, and only a quarter feel that the government of Prime Minister Manmohan Singh has been effective in fighting graft, according to Transparency International’s 2010 Global Corruption Barometer. Indians consider political parties to be the most corrupt institutions in the country, the report said.

“I compliment our system, because with such a huge population and different terrains we are able to distribute the food grains satisfactorily,” Thomas said.

After being asked about how the computerization of the distribution system would help reduce corruption, Thomas tossed his papers down on the desk, picked up his phone and called an assistant to escort the British-born Bloomberg News reporter from the office.

“If you put questions like this” then the interview has to end, Thomas said. “I wish you would not put it like this. Sorry, we should stop with this now.”

Foreign journalists have an agenda to portray India in a negative light, he said.

“You should not paint India as a corrupt country,” Thomas said, jabbing his fingers as his assistant ushered the reporter from the room. “We are the largest democracy in the world and doing a lot better than Western nations.”

To contact the reporters on this story: Andrew MacAskill in New Delhi at amacaskill@bloomberg.net; Mehul Srivastava in New Delhi at msrivastava6@bloomberg.net

To contact the editor responsible for this story: Ben Richardson at brichardson8@bloomberg.net

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