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National Advisory Council to prevail on food security law by Prabha Jagannathan
The government is likely to accept most of the recommendations of Sonia Gandhi-led National Advisory Council (NAC) on the proposed food security law despite warnings that the suggestions would add to subsidy burden, increase dependence on imports and distort the country's food economy.

The food ministry has set out plans that are in line with the NAC's proposal to widen the scope of the legislation, which seeks to provide legal guarantee of subsidised grains to the poor.

"The ministry is trying to procure up to 80 million tonnes (mt) of grains to provide for both general and priority households at subsidised rates as suggested by the NAC," a senior food ministry official told ET on condition of anonymity.

The move followed a meeting last week between Gandhi and Minister of State for Consumer Affairs , Food and Public Distribution, KV Thomas.

Several experts have warned that the NAC recommendations would force the government to substantially raise its grain procurement, which in turn would lead to a larger subsidy burden on its already stretched finances. The council had proposed legal subsidised food entitlements for at least 72% of the country's population in Phase-I by 2011-12.

The NAC had also proposed legal subsidised food entitlements for 75% of the country's population, covering the 'priority' (below the poverty line) and 'general' (above the poverty line) households, in Phase-II by 2013-14.

"It will not be possible to implement the NAC recommended food entitlements for either of the phases," an expert panel headed by the Prime Minister's Economic Advisory Council chairman C Rangarajan had said.

The panel had instead suggested covering just 46% of the rural and 28% of the urban population, broadly coinciding with the poverty estimates.

Currently, the government provides 35 kg of grains a month to each of the 65.2 million families living below the poverty line through the public distribution system. The government charges only Rs 4.15 a kg for wheat and Rs 5.65 a kg for rice from these families.

But the Rangarajan panel's views were strongly criticized by the NAC, which released a part of the draft Food Security Act for public debate a week after the panel submitted its report. "The NAC is opposed to leaving out APL (above poverty line) beneficiaries from the ambit of the food law," NAC member N C Saxena said.

The prime minister constituted an empowered group of ministers to reconcile varying views of the two on the proposed legislation and even enlisted the Planning Commission's support.

Officials say the government may offer a compromise by implementing largely the NAC suggested law, but peg the food prices higher to lighten its subsidy burden. The NAC has proposed wheat at Rs 2 a kg and rice at Rs 3 a kg in food law.

"The government may not fix the grain prices in the food law," the official said. "It may just say 'price as decided by the government'." "We have no problems if the issue price for grain is raised gradually, but sound legal backing is imperative," another NAC member told ET.

According to the food ministry's estimate, the food subsidy bill would rise from the current Rs 60,000 crore to Rs 72,000-75,000 crore once the proposed law is enacted. Experts are also wary of the logistical challenges in implementing the law.

"Implementing the food law efficiently will be the biggest challenge for the government, especially since several countries have chosen the cash transfer/food coupon route over the physical handling of grain," Commission for Agricultural Costs and Prices chairman Ashok Gulati said.

The NAC had estimated its proposal would require 55.59 mt of grain by the final phase in 2014. But the Rangarajan panel said the NAC has understated the grain requirement and pegged it at 58.76 mt, rising to 63.98 mt eventually.

The panel also said the government would be able to procure only 56.35 mt of grain in 2011-12 and 57.61 mt in 2013-14 at the current level of production and procurement. But the NAC has rejected the argument that its suggestions are not feasible. "If a mammoth rights-based legislation on work such as the MGNREGA and the right to education can take off so can the food law," NAC member N C Saxena said.