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LATEST NEWS UPDATES | Reforming FCI or cutting back food security? -Nitin Sethi

Reforming FCI or cutting back food security? -Nitin Sethi

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published Published on Jan 30, 2015   modified Modified on Jan 30, 2015
-Business Standard

The Shanta Kumar Committee on restructuring FCI has suggested the reach of the National Food Security Act be curtailed to 40 per cent of the population

The National Democratic Alliance government set up the high-level Shanta Kumar Committee to restructure and reform the state-owned Food Corporation of India. Instead, the panel ended up providing a road map to restructure the entire farming and food security policy of the government. In doing so, the panel has re-ignited the debate that ran like a fire in a pine forest through the entire second tenure of the United Progressive Alliance government: should the National Food Security Act be as minimalistic as possible or should it be an expansive reform of the existing public distribution system?

The Shanta Kumar Committee has made many recommendations on changing what FCI does and how it does it. But it is the big-ticket recommendations on food security that stretch the terms of reference given to the panel to the limits. The panel suggests that in the medium term, the country should move towards cash transfers instead of distributing subsidised grain through FCI. This would also mean that the government's role of buying grain from the farmers at minimum support price will be substantially reduced.

In the short run, the panel has suggested that the National Food Security Act be curtailed. Instead of providing subsidised grain to at least 67 per cent of the population across the country, the law should provide 7 kg of grain per person (instead of 5 kg) at a much lower subsidy to a maximum of 40 per cent of the population. Instead of rice being sold at Rs 3 per kg and wheat at Rs 2 per kg, the committee has recommended that this price should be half of the minimum support price provided to farmers - that works out to a three-to-four time increase in the price of grain provided to the poor.

The panel headed by senior Bharatiya Janata Party leader Shanta Kumar has moved substantially away from the promises the party made in its 2014 election manifesto as well as its position on the floor of Parliament when the National Food Security Bill was debated. BJP said in its manifesto that " it has always held that 'universal food security' is integral to national security. BJP will take steps to ensure that the benefits of the scheme reach the common man and that the right to food does not remain an Act on paper or political rhetoric."

Several BJP Members of Parliament, including Finance Minister Arun Jaitley, had earlier berated the bill for spreading the social security net to fewer people than what was required. Some had even asked for universalisation of the scheme along the lines the Right to Food campaign (closely associated with some of the National Advisory Council members) had advocated.

Even Prime Minister Narendra Modi, then the BJP chief minister of Gujarat, had hit out at the National Food Security Act for being less beneficial than being marketed by the UPA government. Before the Bill was passed, he had said, "The method of selecting beneficiaries has been that you set the criteria, do a survey and then identify who the deserving families are for the scheme. Your food security Bill is such that you have already decided a cap on the number of the beneficiaries. And now you are forcing this cap on the states and telling them to find families who fit into this upper limit. This reverse sequence will never let this scheme become a success."

He was then referring to the UPA government's decision to provide subsidy under the National Food Security Act to 67 per cent of the population. The states were left to provide subsidy to any extra beneficiaries they chose to bring under the ambit of the Bill.

Taking a U-turn

The Shanta Kumar Committee has recommended just the reverse of what Modi as Gujarat chief minister had said. It too has advised an artificial cap imposed by the Centre and suggested the number of beneficiaries be restricted to below 40 per cent of the country's population.

In fact, the Right to Food campaign has claimed the panel's recommendations, if accepted, would lead to the NDA government imposing a de-facto poverty line of Rs 29.2 per day per person of expenditure in rural India to determine the limit on number of beneficiaries of the scheme, crimping the scope of the Food Security Act. In other words, their calculations based on the latest National Sample Survey data, suggest that any individual spending more than Rs 29.2 per day in rural India and Rs 46.75 per day in urban India would not be eligible for benefits under the Food Security Act.

Shanta Kumar has justified his change of stance, claiming BJP had just supported it because Parliamentary elections were around the corner. Media reports have quoted Kumar as saying, "When the Act came in Parliament, many thought 67 per cent coverage was quite high. But you know the political situation ahead of the elections. None of the political parties would have let the Act cover 67 per cent of population if the elections were not around that time...The opposition would have got a point against us. We knew our government was coming and we would correct it."

In effect, Shanta Kumar has suggested that BJP's postures and positions during elections are set to be different than its intent once it's in saddle at the Centre. But the Union government itself has not said so or made any comment on how it views the report. What it has done is delay the implementation of the food security law through questionable executive orders even as the Socio-Economic Caste Census runs behind schedule by several years now. The survey was to be the new basis for identifying the poor beneficiaries. Without it, the existing lists of beneficiaries dating back more than a decade remain the base on which the new beneficiaries are added.

The Right to Food campaign, the Left parties and the Congress see the Shanta Kumar report as a Trojan Horse set up to attack the food security law rather than bring about mere reforms in FCI. The imprint of economist Ashok Gulati, member on the Shanta Kumar panel, is hard to miss in the report. In the UPA regime as the head of the Commission for Agricultural Costs and Prices, which recommends the minimum support price for farmers, Gulati had expressed the same views through various official discussion papers. At that time, Gulati had fallen on the side of the divide that lost the battle as the Congress party went ahead with the National Food Security Act.

Whether Shanta Kumar's report and Gulati's vision find traction this time in the government will depend on how differently Modi acts as prime minister compared to the ideas he professed on food security as the chief minister of Gujarat.

Business Standard, 29 January, 2015, http://www.business-standard.com/article/economy-policy/reforming-fci-or-cutting-back-food-security-115012901297_1.html


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