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False fears about food security

-Live Mint

The National Food Security Bill (NFSB) has finally been cleared by the cabinet. While this should have been seen as an important step forward towards the objective of food security for all, the Bill has come under severe criticism for being too ambitious and disastrous for the economy. While some of these fictitious numbers are expected from the media, concerns have also been raised by senior government functionaries, notably those from the Union ministry of agriculture. The figure most quoted is by the chairperson of the Commission for Agricultural Costs and Prices (CACP). He has argued the NFSB will cost an additional Rs.6 trillion in the next three years. He has not given figures for expenditures after three years. He need not: presumably, the economy would have collapsed by then anyway.

This bizarre figure could have been dismissed had it not come from a senior functionary who is not only a significant stakeholder in the NFSB proposal but is also aware of the factual situation. Clearly, the figures reported are not typographical errors or errors of judgement but have been issued deliberately to mislead the country.

By the government’s admission, the NFSB is going to cost an additional Rs.20,000-25,000 crore. In fact, even this figure is an overstatement: The NFSB assumes 100% offtake of foodgrains and entitlement of “general” households conditional on improvement in administration of the public distribution system (PDS). Neither is the assumption of 100% offtake empirically and otherwise true nor can the PDS be “reformed” overnight.

But what does the NFSB propose that will lead to an increase in expenditure by Rs.6 trillion? The NFSB proposes coverage of 75% rural population and 50% urban population. It has not increased coverage but has, in fact, decreased it by including a category of excluded households whereas none exists at present. Even otherwise, most state governments provide a large amount of foodgrains, at cheaper prices and to a larger number of households than the NFSB.

How much grain will be required? The government claims that with 100% offtake it will require 61.7 million tonnes (mt). The procurement this year has been 62 mt, more than what is required. Incidentally, this is not only true for this year, but has been for the last four years where average procurement has been close to 60 mt. What happens if there is a drought? Well, the worst drought in 2009 witnessed the government procure 58 mt. But above all, the government has more grains than what it can distribute and this has been the case for the last three years.

While this may suggest that the situation may not be worrisome in the next two-three years, the government may have to invest in augmenting food production for future needs. This is where the bulk of the fanciful numbers put out by the CACP chairman kick in. First, the numbers are imaginary given the track record of the government. But even if the government decides to invest, what’s wrong with that? Shouldn’t the agriculture ministry invest in augmenting food production given that per capita food availability has been declining since the early 1990s and nutritional standards have not shown any improvement even with high economic growth? Does it mean that if not for the NFSB, the government will not invest in agriculture? If the only reason why the government will invest in agriculture is the NFSB, then all the more reason that there be an NFSB.

Further, it has been argued that minimum support prices (MSP) may have to be raised to procure so much grain. Given the past record, there is no additional foodgrain requirement over and above the average procurement in the last four years. The fact is also that MSP has been rising even without the NFSB. MSP for rice and wheat has increased by more than 70% in the last five years. How is the NFSB responsible for this? Secondly, the CACP chairman is fully aware of how MSP is determined in this country (he heads the institution that recommends MSP) and by his own admission the current MSP is far below what the farmers should get as the right price. Does he mean that if not for the NFSB, MSP would not have increased? Does he mean that MSP is determined by the demand for procurement and not on the cost of cultivation data from the agency that he heads?

Fortunately, such voices are in a minority. But there is a larger question that begs for an answer. And that is: can we expect this set of officials to ensure an increase in agricultural production, provide assured and remunerative prices to our farmers and ensure food security for all? But more importantly, the question is not whether we can afford an additional subsidy of $5 billion for the NFSB but whether we can afford to have 500 million malnourished Indians.

Unfortunately, in the cacophony of the debate on the cost of the NFSB, the real question on what it will deliver and in what ways has not received as much media attention that such legislation deserves. I hope to come back to those issues in my next column.