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Resource centre on India's rural distress
 
 

Not a grain of sense

-The Business Standard

 

The new Bill will set back the cause of food security - while wrecking central finances.

The Food Security Bill cleared by the Union Cabinet for introduction in Parliament seems irrational and impractical by parts. It seeks to provide a statutory right to highly-subsidised food for 75 per cent of the rural population, with 46 per cent in the “priority” category, or below the poverty line (BPL); and to 50 per cent of urban inhabitants, including 28 per cent in the priority category. The provisions of the Bill, notably the extent of population coverage, of course, do not conform wholly to the wishes of the National Advisory Council (NAC), headed by Congress President Sonia Gandhi. Had it so conformed, applying to even more people, it would have been harder to implement. Yet it does not fully address the Prime Minister’s Economic Advisory Council’s misgivings about its burdensome fiscal fallout, either. The foodgrain is required to be dispensed at Rs 3 a kg for rice, Rs 2 for wheat and Rs 1 for coarse cereals. It will be procured at a cost several times higher. The overall food subsidy bill will, thus, swell to unsustainable levels. While the food ministry’s seemingly conservative estimates project the likely central subsidy bill will grow to Rs 95,000 crore from Rs 60,000 crore or so, analysts predict it might cross Rs 1,00,000 crore. Once the cost of growing additional foodgrain, ever-rising procurement prices, state taxes, mandi charges and incremental inventory carrying and distribution costs are added, the actual subsidy bill might even soar to twice that.  State governments, meanwhile, have reservations over their share of the costs, as well as about implementation. Besides, many states are already providing foodgrain to some sections at Rs 2 or even Rs 1 per kg, prices lower than those envisaged by the Bill.

It may feel like UPA-II is trying to return to the 1970s, but even Indira Gandhi failed to nationalise the food trade (though she did try). Yet nationalisation is practically required by this rigidly written law, given how much foodgrain it expects the state to procure. Open-market prices will soar, with non-procured grain becoming scarce. How will the Bill ensure that no poor family finds itself dependent on expensive open-market grain? As several states point out, the delivery system – the public distribution system or PDS – is essentially broken. It operates, at best, at two-thirds efficiency. The Bill, in its current form, sets back efforts to reform it.

Writing a food security law that is so rigid amounts to killing the concept entirely, and expensively. If state governments, crucial to implementing the right to food, have alternative methods in mind, then they should be allowed to find their own way to food security. Nor should there be a price attached to grain by statute. It was at Rs 2 that N T Rama Rao promised grain to the Andhra Pradesh electorate in 1983. Why should it be written into central law in 2011? Well-drafted laws require wiggle room for effective implementation, or they will not serve their purpose. As the Bill works its way through committee and House debate, this principle must be kept in mind.