India's cabinet may overhaul food-for-poor system to curb theft

Proposals to overhaul the way India distributes subsidized food to the poor will be considered by ministers tomorrow as the government attempts to curb rampant theft that denies nourishment to many of 350 million people living on less than 50 cents a day.

The cabinet will discuss plans to fully computerize the five-decade-old Public Distribution System, the world's largest effort to provide affordable meals, Food Minister K.V. Thomas told reporters Wednesday, without giving further details. Coming amid a slew of policies to open a slowing economy to foreign investment, the move would deliver on a promise by Prime Minister Manmohan Singh to balance bolstering growth with assistance for the nation's poorest.

A Bloomberg News investigation of the distribution system in India's most populous state, Uttar Pradesh, found that food worth $14.5 billion was looted over a decade by politicians and their criminal syndicates, who then sell it for profit in the open market. Computerization would enable the tracking of all food-truck movements and increase transparency, checking the power of corrupt local officials.

In a prime-time address to the nation Sept. 21, Singh said his government would do more to spread the benefits of economic growth in the 18 month leading up to the next election.

His speech followed criticism from opposition parties and allies that decisions to raise diesel prices and open the economy to foreign supermarket chains would erode farmers' incomes and put the jobs of millions of small shopkeepers at risk. The largest partner in the ruling coalition quit in protest, leaving Singh in charge of a minority administration as he bids to force through policy changes after two years of stalled efforts and stem declining popularity.

Thursday's meeting may also approve plans to raise the foreign investment cap in insurance and reform the pensions sector, according to two government officials with direct knowledge of the matter, who asked not to be identified, citing rules.

The government last year spent a record $13 billion buying and storing commodities such as wheat and rice, which it then allocates to ration-card holders through the distribution system. About 10 percent of India's food rots or is lost before it can be handed out, while some 3 million tons of wheat in buffer stocks is more than two years old, according to the government.

In a pilot project it hopes will also curb corruption, Singh's administration has been depositing money in bank or post office accounts of ration card holders in three states rather than distributing food. The cash can then be used to buy grains at market rates.