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The food security bill

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Zee News summarized the main news in this report:

UPA government’s ambitious programme and Congress president Sonia Gandhi’s pet project, the Food Security Bill was passed in the Lok Sabha on Monday. It seeks to provide cheap food grains to approximately 82 crore people in the country, ushering in the biggest programme in the world to fight hunger.

The passage of the bill will pave the way to give nation’s two-third population the right to 5 kg of food grain every month at highly subsidised rates of Rs 1-3 per kg.

The bill was adopted by the House through a voice vote after a combined discussion on the measure and a statutory resolution seeking to disapprove the ordinance promulgated on July 5.

Voting on over 300 amendments moved by the Opposition were taken up today in the lower House. The amendments moved by MPs Gurudas Das Gupta and Sampath were defeated on the floor of the House. Also, the amendments by moved by the leader of Opposition in the Lok Sabha, Sushma Swaraj were defeated. Meanwhile, the Samajwadi Party, who is giving outside support to the UPA, withdrew its amendments.

The bill now will be taken up in the Rajya Sabha. After the bill gets Rajya Sabha’s nod, India will join the select league of countries that guarantee majority of its population food grains. At Rs 1,30,000 crore government support, the food security programme will be the largest in the world. It would require 62 million tonnes of food grains.

There is a detailed discussion of the bill in Business Today:

The Bill aims to make the right to food a legal right. … It classifies the population into two categories of beneficiaries – general and priority – but is silent on how a priority household is identified. … Another contentious issue is that the Bill envisages a cost sharing between the Centre and the states where the states will bear the cost for nutritional support to pregnant women and lactating mothers, mid-day meals, anganwadi infrastructure, meals for children suffering from malnutrition, transport and delivery of food grains and creating and maintaining storage facilities. … If a state does not have the funds for implementation or the state assembly chooses not to allocate, it could seriously affect the working of the Bill.

TOI commented:

Hardly any bill has seen as many changes as the food security legislation, metamorphosing from a bare bones law delivering a minimum of wheat and rice to a mega-scheme incorporating a host of welfare programmes.

Soon after UPA-2 returned to power, the first draft of the proposed food security law envisaged 25 kg or rice or wheat to below poverty line beneficiaries and little else.

The [alternate version of the] law being pushed by National Advisory Council aimed at including various “at risk” sections such as destitutes or HIV affected persons and sought the inclusion of schemes run under the Integrated Child Development Services.

The pressure mounted by right to food activists then added to the government’s concerns as influential academics wrote in favour of universal or 100% food security coverage.

[The] PMO settled on a 67% coverage … but failed in its attempts to keep the quantum and rates flexible. Now any change in rates or quantity will need an amendment.

There is a political vision behind this bill, reports another article in TOI:

“The Food Security Bill is the fifth in a series of what might be called our ‘rights-based approach’,” [Sonia Gandhi] said, underlining RTI, rural job guarantee scheme, forest rights Act and right to education as its forerunners.

Unfortunately, there seem to be no means to implement this vision.

September 2, 2013

An article in FE questions common perception including my last sentence above:

In a recent article, Surjit Bhalla (“Manmonia’s FSB: 3% of GDP”, July 6, Financial Express—http://goo.gl/qoIbd3) has asserted that the Food Security Bill will cost 3% of GDP. This figure is almost three times the estimate offered by the government. Bhalla ends the article by throwing a challenge to prove him wrong. We believe Bhalla’s calculations have a serious error. Since he was explicit about his calculations, the errors are easily corrected. When we do that we find the estimate of costs increases by only 18% and not by 336%, as alleged by Bhalla for the part of the Bill he focuses on. This may be surprising at first glance but this is due to the fact that though the National Food Security Ordinance (NFSO) expands the coverage, it reduces the amount of grain per person for the below poverty line (BPL) population excepting the poorest of the poor.

The rest of the article is the calculation. Well worth reading. It makes me believe that the government’s figures are trustworthy. But not that it is affordable. That is attempted by an article in LiveMint which tries to bust what it says are five myths about the bill:

Third, it is claimed that the Food Security Bill would put a massive burden on an already overburdened exchequer as the government would have to procure additional food grain. Not only would they have to find more storage but also spend extra to procure the grain. Yes, it is fact that the procurement will have to be 62 million tonnes (mt) a year.

But guess what, the country procured 72 mt of foodgrain in 2012-13. And in case you wonder, in the previous year procurement was 63.38 mt, with the existing infrastructure at its disposal.

Fourth, leading on from the previous point, the additional procurement will drive up food inflation, even as fiscal overruns will create even more inflationary impetus. Bizarre as it turns economic logic on its head. At the moment one of the key reasons why food, especially cereal, inflation is up is because there is not enough supply in the market even while the food stocks—at 73.51 mt on 1 July—are mostly rotting. Now, if these stocks were instead offloaded through the public distribution system (PDS) at a subsidized price, what do you think will have happen to food inflation?

As the article says, the question is not about how much food is available, but what the government will have to pay for it. This money will have to be factored into the budget next year. Jean Dreze has a prediction in a letter to Tehelka:

The revised version of the food Bill is actually little more than a “Public Distribution System (PDS) Restructuring Bill”. The foodgrain requirements of the Bill are no more than existing allocations. Other entitlements (such as midday meals) do not go beyond the rights that people already have under Supreme Court orders, with the main exception of maternity entitlements.

Modest as it is, this PDS restructuring is very important. At the cost of a small increase in the food subsidy (due to lower issue prices), it can achieve a massive improvement in the effectiveness of the subsidy. Today, a large part of the food subsidy is wasted on the non-transparent and leaky APL (above poverty line) quota. Under the food security act, the APL quota will go, the PDS will have a broader base, and people will have clear entitlements — all likely to lead to a major improvement in the PDS. The effectiveness of this move towards a more inclusive PDS (especially if it is combined with other PDS reforms) is confirmed by the recent experiences of many states — Tamil Nadu, Chhattisgarh, Rajasthan, Odisha, Andhra Pradesh, Himachal Pradesh, among others.

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Written by Arhopala Bazaloides

August 27, 2013 at 4:42 am

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