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LATEST NEWS UPDATES | India should lead reforms with Food Bill by Prabha Jagannathan

India should lead reforms with Food Bill by Prabha Jagannathan

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published Published on May 28, 2011   modified Modified on May 28, 2011
Good politics and good economics can make compatible bedfellows, if the timing is right. Food, its producers and consumers, are now the Centre's most potent political and economic battleground. Politically speaking, this could be the best time for the UPA to reclaim its dog-eared pro-people credentials through the Bill. The Right to Food Bill has triggered many apprehensions, including fears of a higher subsidy burden, an adverse impact on private sector participation in the foodgrain sector, leading to higher open market prices for wheat and rice, and so on.

The UPA has taken a rights-based approach on work and education before this. But effective implementation of the food law will be the most challenging act for the UPA government , more so because several countries have taken the cash transfer option and moved away from physical handling of grain. Like the landmark employment-guarantee legislation NREGA - among the biggest and most challenging in the world - there are bound to be glitches in implementation that can be ironed out gradually. Despite its shortcomings the NREGA has undoubtedly been good for the economy and Congress' politics.

Higher food subsidy spend for right to food should not be a major economic problem, in any case, it was long expected. Critics differ over whether physical handling of foodgrain or cash transfers and food coupons are a better option. The food ministry does not expect 100% offtake and has projected additional spends of around. Rs 15,000 crore over the. Rs60,000 crore subsidy bill. The extra subsidy has to be viewed both against the food and fuel price trajectories of 2020, and increasing population pressure. Land under crops and productivity are stagnant.

The lack of a legislation-backed approach to food would be glaring in a country which indulges in public chest-thumping over its position as an emerging economic power. Economists such as Jayati Ghosh have criticised the cash transfer option arguing that in the overall strategy of development and poverty reduction, cash transfers cannot, and should not, replace the public provision of essential goods and services, but rather supplement them.

Food economists such as CACP chief Ashok Gulati and others have cautioned against the adverse impact the government's physical buys of close to 60% of the marketable surplus of grain from the market could have on open market prices and the participation of the private sector. That is a valid fear and the Centre is appearing to take cognizance of this by planning pilot cash transfer projects in select districts by early next year, specially since maximum buys of 80 m tonnes of grain needs sustained production highs.

However, the cash transfer is likely to be effective only after Adhaar comes into being countrywide. But the compelling political reasons for pushing the Bill through now outweigh other issues for the present. On its second anniversary, the UPA faces the stinging charge of betraying the aam aadmi with unprecedented food and fuel price hikes. Forced to move its high profile food minister and ally NCP chief to mollify the public over persistently high food prices, both PM and FM have had to jettison the shockingly nonchalant "we're not astrologers" attitude on soaring price of essentials.

Worse, dogged by both, they've had to peg down earlier growth projections. Meanwhile, by announcing free rice distribution for the poor of Tamil Nadu, AIADMK president J Jayalalithaa has threatened to puncture the food plank and trigger off competitive welfare games among the Congress' regional rivals. The ruling party has to wrest back the initiative soon. To shore up its political dividends in key foodgrain producers Punjab and UP, the Congress has to put the food law in place now, with several months still left to go for key state elections.

UP, centre of Rahul Gandhi's farmer agenda, is the country's biggest wheat producer and the second largest rice producer. UP has a key role in the Centre's grain procurement for welfare programmes. Yet its farmers are stuck with lower than MSP prices every year. In Punjab, from where the Centre procures the most for PDS currently, the SAD has already become the produce price for paddy farmers.

Deteriorating soil health, depleting water tables and adequate compensation to shift farmers from foodgrain have become key poll issues. What has made the food law most politically imperative now, though, could be charges against PM Manmohan Singh and the UPA of drift on economic reforms, poor governance and fostering corruption in high places. The ruling Congress now badly needs to resolve the aam aadmi's trust deficit.

A wimpish and hesitant food guarantee programme based on executive order and meant only for BPL consumers as suggested by the Rangarajan committee cannot achieve those desired goals. For six months in the run up to the recent polls , the government put all economic reforms on hold, including exports of sugar, rice and wheat, freeing urea prices and bringing in FDI into multi brand retail.

After elections, pressure is mounting on the government to carry forward that reform agenda, conditionally or not. The Food Bill could be the conducive people-friendly measure to lead the the new reforms drive. That would still leave scope for the UPA to indulge in any necessary "course correction" in the last year and half of its regime, a move initiated by ex-PM and reforms initiator P V Narasimha Rao.

The Economic Times, 28 May, 2011, http://economictimes.indiatimes.com/news/economy/agriculture/lead-reforms-with-food-bill/articleshow/8614016.cms


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