National Food Security Bill

by Deepthi Sai

The Food Security Bill was passed in the Lok Sabha on 26 August. United Progressive Alliance (UPA) chairperson, Sonia Gandhi, called the bill “a historic step towards eradicating poverty” since it is targeted toward helping the less fortunate sections of our society. However, renowned economists believe that the Congress’ haste in getting the bill cleared when it is half baked only makes it evident that it is nothing more than a political gimmick to gather votes in the upcoming general elections. Given the timing of the introduction of the bill, almost all political parties are found compelled to endorse it.

The Food Security Bill essentially aims at providing grains at highly subsidised rates. Here is a brief overview of the bill:

• The bill covers 67.5 percent of India’s population, which stands at 1.2 billion. Currently, the food subsidy scheme called Targeted Public Distribution System (TPDS) covers 180 million of those at the bottom rung of the economic ladder. Under the TPDS, these individuals receive subsidised grain through ‘fair-price shops.’ The Food Security Bill increases the coverage of the TPDS.
• Those who are entitled to benefit from this bill have been divided into ‘general’ and ‘priority’ however, the qualification for this division has not yet been decided. As per the bill, 46 percent of rural beneficiaries and 28 percent of urban beneficiaries are considered ‘priority’ households. Priority group will get rice at 3 rupees per kg, wheat at 2 rupees per kg and coarse grain at 1 rupee per kg.
• The bill favors women by giving pregnant women a maternity benefit of at least Rs. 6000. The oldest female in the house is given the authority of issuing a ration card. Children below 14 years of age will get take-home rations or hot, cooked food.
• The state government is allowed to decide the eligibility criteria for allocation of grain and the central government will provide the state funds if it runs low on grain and also take up transportation costs.
• The estimated annual expenditure of the bill stands at 1.3 lakh crore rupees ($22 billion) with an annual requirement of 612 lakh tons of foodgrains.

The bill is proposed to decrease expenditure of poor households on food to free up resources to be spent on other services such as healthcare and education. Nutritional intake is expected to increase. However, problems regarding proper targeting of poor households still prevail. Earlier food subsidy schemes such as the TPDS and PDS suffered from poor targeting, improper implementation and widespread corruption by officials in charge. If this trend continues, the Food Security Bill will also not be as effective as the Congress claims. Circulation of cheap grains can disincentivise agricultural production in the country, which also must be taken care of by the government. Additionally, the government currently does not have adequate storage facilities, which could result in large-scale wastage.

The most important consideration while passing this bill will be the damage to the treasury. Expenditures on this account burns a huge hole through the governments pockets. At a time when the economy seems to be in the doldrums, incurring such a cost puts the government far from achieving its fiscal goals. Fitch Ratings has said it is getting more challenging for India to meet its fiscal deficit target in the current fiscal year, ending March 2014, with revenues slowing.

At such a time, one must seriously ask if such a bill is necessary. What is the point of providing cheap grains to the poor if they will have to battle higher inflation, lower growth and unemployment due to that? With the general elections approaching, the Food Security Bill seems to be nothing more than a political breather for a government struggling with corruption scandals and policy paralysis.

References

"All You Need to Know about National Food Security Bill." Firstpost. N.p., 27 Aug. 2013. Web. 30 Aug. 2013. <http://www.firstpost.com/economy/all-you-need-to-know-about-national-food-security-bill-1063107.html>.

"Facts about Food Security Bill." DNA India. Reuters, 16 Sept. 2011. Web. 30 Aug. 2013. <http://www.dnaindia.com/india/1587925/report-explained-facts-about-food-security-bill>.

The National Food Security Bill (2013). Print.