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Resource centre on India's rural distress
 
 

Food Security Bill implementation will boost savings in BPL households

-The Economic Times


Successful implementation of the Food Security Bill will leave more savings in the hands of rural and urban below poverty line (BPL) households, enabling them to spend on health, education and nutritious food, a study said on Monday.

The implementation of the Food Security Bill could also generate additional savings of around Rs 4,400 this year for every beneficiary household in some states, the report said.

The savings would arise because BPL households that currently purchase foodgrains at the higher market price will have access to subsidized rice and wheat after implementation of the Food Security Bill. Less than 44% of BPL households had access to subsidized rice, and only 33% bought subsidized wheat in 2009-10 .

"The additional savings of rural BPL households will be almost twice of what they spend on health and education annually now. Properly implemented , the food bill will not only guarantee food security for them, it will also improve their overall quality of life by enabling them to spend more on health, education, proteinrich food and household consumables ," Dharmakirti Joshi, chief economist at ratings agency Crisil, said.

Rural BPL households currently spend around Rs 2,400 on health and education annually . This is nearly half the amount which they will additionally save with the successful implementation of the food bill. The savings of Rs 4,400 will equal around 8% and 5% of the total annual expenditure of rural and urban BPL.

Having more disposable income would encourage BPL households to increase their discretionary spending. Therefore, the benefits of the bill could go well beyond just food, the report said.

However, for this is to become a reality, the government must focus on identifying BPL households correctly during the exercise of income status classification, it said. Once those BPL households, which currently do not have access to subsidized food, receive an appropriate identity proof, they would be able to avail food subsidy, amounting to the difference between the market prices and the subsidized prices.

"The Food Security Bill's success should be measured by the proportion of eligible households that actually benefit from the bill, especially in states with alarge BPL population. The government can leverage the Aadhar platform, and link their Unique Identification Number to income status, once the deserving beneficiaries are identified ," Vidya Mahambare, principal economist at Crisil, said.