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LATEST NEWS UPDATES | India Can't Get the Food Right Wrong by Harsh Joshi

India Can't Get the Food Right Wrong by Harsh Joshi

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published Published on Mar 22, 2011   modified Modified on Mar 22, 2011
India's government has an ambitious plan for eradicating hunger in the country. Unfortunately, it may be going about it the wrong way.

The National Food Security Bill that New Delhi intends to implement this year will make food a legal right for every citizen, including the millions of poor and underprivileged.

No doubt the motive is right: India has one-fourth of the world's hungry poor, according to United Nations statistics. But merely declaring a legal right won't ensure that anything will change.

In fact, in the absence of other structural changes, the bill risks undermining New Delhi's fragile fiscal position.

For one, the government hasn't detailed how it plans to mend its porous food supply and distribution chains. The success of the food-security plan hinges on how efficiently the government can provide food to India's remote interiors and far-flung corners.

The current public distribution system is notoriously leaky, leading to massive pilferage. Studies have shown that nearly two-thirds of wheat meant for the poor is lost during distribution, and ends up mostly with hoarders.

Improving this is urgent, says Kaushik Basu, chief economic advisor to India's Ministry of Finance.

"To use such a leaky bucket to carry a subsidy would mean the fiscal burden would be huge," he says.

The second problem is ensuring there's ample food for everyone. For example, India falls short on the production of lentils, a key source of protein in the Indian diet. India produces ample amounts of crops such as wheat and rice, but lack of storage infrastructure means a lot of the grains end up rotting.

Fiscal implications aside, the government is counting on this program to win it crucial votes against the backdrop of scams that have eroded its credibility. A fumble here would only add to its struggle.

New Delhi has hinted at some small steps to improve the plan. It intends to transfer subsidies on kerosene directly to poor consumers rather than reimbursing oil companies that sold the fuel at a discount, and wants to emulate this model for food.

Still, Mr. Basu says the leakages in the food-distribution chain will take at least two years to mend, and even then only partially. For example, to make sure the food reaches the intended consumer, India also will need to step up efforts to provide all citizens with a unique identification number.

It's essential that the government focus on the right targets - or this bill could easily blow back on it.

The Wall Street Journal, 22 March, 2011, http://online.wsj.com/article/SB10001424052748704461304576216041457429666.html


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