Food Security Bill

The National Food Security Bill (NFSB) is one of the flagship programs of the UPA government. It is the election promise made by the congress while taking office in 2009.  The idea of implementing the scheme as desired on the national level started in 2010 following the recommendations of Sonia Gandhi, chairperson of the National Advisory Council (NAC). The government soon on her request started to look into the implications of the program under an expert committee lead by Dr. C. Rangarajan as suggested by the Prime Minister Dr. Manmohan Singh. The Food Security Bill was then finally introduced in the Lok Saba on December 2011.The main objective of the bill is to provide food and basic nutritional security to the deserving by ensuring adequate quantity and quality food at affordable prices to people to live life with dignity.

A country can be healthy only if its people are healthy and productive. India as an emerging nation needs to address the health issue seriously to move on to the development path. This has taken a view by seeing the poor health status of her people. India’s high economic growth rate in the past decade has not been fully reflected in the health status of its people, with 22 percent of people undernourished. According to the National Family Health Survey 2005-06, 40.4 per cent of children under the age of three are underweight, 33 per cent of women in the age group of 15-49 have a body mass index below normal and 78.9 per cent of children in the age group of 6-35 months are anaemic. These are disturbing statistics which point to the nutritional deficiencies. The NAC proposal for a National Food Security Bill is perhaps the most important national effort yet to address these deficiencies in India.

The food security mission is said to increase the production and productivity of wheat, rice and pulses on a sustainable basis so as to ensure food security of the country. The food security bill gives two categories of people the right to get food grains at affordable prices namely the priority households and general households. The problem is with identifying a priority household. Priority household will be entitled to 7Kg food grains per person and general household not less than 3Kg. The priority household will also get access to coarse grain for one rupee, wheat for Rs. 2 and rice for Rs. 3 per kg. The basic structure of the bill is to provide subsidized food grains to at least 75% of the country’s population, 90% in rural area and 50% in urban area. The bill has promised that in the first phase food entitlement will be extended to 72 percent of the population and in the final phase to be completed before March 31 2014; full coverage of food entitlement to 75 percent of the population will be ensured. The bill is said to provide legal entitlements for children, destitute and other vulnerable groups. The National Food Security Bill is to be implemented through the Public Distribution System (PDS).

So now that the basic objective of the NFSB is said and cleared let us analyze whether the proposed bill by the UPA government is feasible and bound to achieve its desired results. A country with a huge population, any policy that concerns the public and one that is of public interest needs attention as it is mostly seen as a just another election game played by the politicians to get votes. First, we all know that India presently faces a tough political uncertainty that may call off the general election anytime soon maybe even by this year. No wonder the congress is in a hurry to implement the scheme hastily before the election as promised. Will a policy that is said to address the poor and mass of the population implemented among such criticism and chaos reach and achieve its full objective? The answer is no because many of the policies implemented earlier on such occasions has been a failure.

Given the fact that the bill is proposed to reach on the national level, the first question arises is that is it not extravagant to subsidize food for such a large part of the population when the poor constitute only 30 percent of the population? India is already running a high fiscal deficit and current account deficit. Not only that, India also faces many other serious macroeconomic challenges, sluggish growth and weakening rupee. So in such a scenario isn’t wise for the congress do something to improve the economy rather than running madly to pass the bill successfully? The proposed food security bill would cost the government $23 billion a year and take a third of the annual grain production. Official projections are that it would cost close to 1.5% of the GDP. But even in the most pessimistic case our GDP is expected to grow only by 5% in the near future. This would hurt the already swollen budget deficit of India next year increasing the risk of the rating agencies to downgrade its investment status. If the bill is passed, India needs as much as 1.3 trillion next year, adding to a total subsidy burden that already eats upto 2.4% of GDP. The international oil and coal prices are likely to rise and don’t seem to come down in the short run. The domestic coal production is also weak and coal India is struggling to meet the growing demand. This has already proved costly for the fuel and fertilizer subsidy. The higher imports results in higher prices and will eventually affect the agricultural sector and farmers who is dependent on fertilizers to enhance his production and is the primary supplier to achieve the objectives of the NFSB. The extra cost would be further translated by spending cuts and higher taxes which is not a healthy way of achieving a sustainable development.

In a bid to reduce the fiscal deficit to 4.8 percent of the GDP in the current fiscal, the finance minister has laid out a budget targeting an efficient allocation by the plan and non plan expenditure. The food subsidy has hence been postponed curbing the financial cost. Another important aspect is the distribution system, India already has 54.7 million tonnes of rice and wheat as stocks with the centre and states. Due to the poor storage facilities the piled up stock will get rot and wasted. By piling up huge volumes of grain stock, the government reduces the supply in the open market, putting upward pressures on the prices. Since the scheme is to be passed through the PDS there will exist leakages and corruption as the government holds the control over the grain trade. Another problem is the exclusion, some people do not have access to ration card and hence subsidized food, from which arouse horrifying reports of starvation. The primary problem is also with identifying the beneficiaries. The government often talks about the poor as if it is well defined group but that is hardly the case. The official poverty threshold is low and many people above the poverty line are also poor and look like people below the poverty line. As a result, there is no reliable way in which subsidies can be targeted to people only below the official threshold.

The government among much criticism and argument is still sticking up with the bill and has now taken an ordinance route to pass the bill in the next parliament session. One point to be noted here is that many Indian states like Tamil Nadu, Andhra Pradesh, Karnataka, west Bengal, Chhattisgarh and Madhya Pradesh are already providing subsidized grain. Feeding its poor is a matter of urgency for India, home to 25 percent of the world’s hungry poor. Also india ranks 65 among 79 nations on the global hunger index. Ofcourse, the bill is one of the landmark schemes of the congress but how far is the bill ready to achieve the results in the present situation is a matter of concern. The FSB is not the best way to reach the poor and hungry, who are dispersed across the country. The best way to go about it is through UID linked bank accounts through which states will be encouraged to switch to cash transfers. The extra cost of government storage and distribution will then be saved and the problems caused by the distortion of grain trade will be mitigated. Many worries from the identification of the food bill with the PDS will disappear. The FSB instead through PDS, if implemented by cash transfers will serve as an income transfer. The effect of the subsidy is that households save money that would have otherwise been used to buy food at market price. The objective of serving the people subsidized foodgrain can be achieved only if the agricultural sector is healthy. But India since the beginning of the 21^st century has been continuously ignoring the sector resulting in weak production and disappointment among the Indian farmers. One of the main reasons of slow economic growth is also because of supply constraints and bottlenecks which the government has to seriously look into before implementing such a massive scheme on a large scale. The promise of near universal coverage is nowhere in sight and the UPA’s seemingly fretful efforts to get the measure through do not appear to be convincing. The policy is noteworthy and the objectives of the bill is highly helpful to the Indian poor but before going ahead with the scheme its wise to clear the present problems, revise the bill to the needs of the poorest of the poor and plan to truly serve the people on the long run rather than sticking to short term political pay off. The country is waiting but for a most reliable FSB. However it is wise to go by the saying:

“Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a whole lifetime.”