Finally the Congress Party took to the ordinance route to introduce the Food Security Bill. We cannot blame the Congress Party for this. They tried to introduce the bill in the previous session of Parliament but was prevented from doing so. There is again no guarantee that the next parliament session will not again be a wash-out as the previous two sessions. Thus there was no surety that the BJP would allow introduction of the Food Security bill in the coming Parliament session and permit discussion on the bill to take place. Under these circumstances there is no justification to blame the ruling party for opting for the ordinance route.
What however needs to be debated is whether the bill that has been introduced is in the interest of the nation. True, food grains will become available to about two third of the country’s population at highly subsidized rates. This will lead to an increase in the subsidy bill. But this increase in the subsidy bill can be borne by the nation if it leads to food security for the people as the supporters of the bill claim it will do. But is the bill actually going to bring about food security. Here we are of the opinion that the bill will lead to more food insecurity than security.
The bill seeks to distribute 5 kgs of food grain per month to the target population at about one eighth of the actual cost of doing so. Under these circumstances small farmers who produce grain primarily for self consumption will find it beneficial to buy food grains from the PDS at a small fraction of their cost of production rather than produce the grain themselves. These small farmers will therefore stop producing food grains altogether and would prefer to use their small land holdings for some other purpose. The result will be a reduction in food grain production in the country.
The requirement of food grains for the PDS will go up substantially during the new regime. Larger procurement and distribution by the government will make private trade in food grains unviable to a large section of the food grain traders. Many such traders will go out of business and the impact on private trade in food grains will be devastating. What will get dismantled will not come back easily if there occurs a need for it later on.
During years of lower production government will have to take resort to large scale import of food grains. Such imports are going to be on unfavorable terms to our country because the size of such imports are going to be huge and the suppliers from abroad will jack up prices substantially making use of the opportunity to go for a kill. During such years the government is likely to encounter severe fiscal and balance of payment problems. If the economic situation is already severe even before the imports take place there is the possibility of economic crisis like situations developing.
The food security bill provides for only distribution of food grains. Today the food consumption basket of the Indian population has become largely diversified. People have started consuming large quantity of fruits, vegetables, milk, fish, and other animal products. Today, in India if people are encountering a deficit in their food consumption it is not in the matter of food grains but in the matter of superior food items mentioned above. When people face problem of inadequate purchasing power they will not be sacrificing their quota of food grains which they will anyway purchase as an unavoidable necessity. Their sacrifice will be in the matter of purchase of superior items of food for which the food security bill makes no provision. So the ordinance that has been introduced doesn’t take care of the needs of the modern Indian society which has more or less emerged above the subsistence level.
The bill that has been introduced takes care only of the caloric requirement of the Indian population. It fails to address the needs of protein and other nutrients of the population. Thus the bill is aimed at meeting basis food security not the larger goal of nutrition security which is the real need of a modern and emerging India as against the needs of India of a bygone era.
We are at a stage of development where the possibility of cash transfers and the like have emerged which could be a substitute to distributing subsidized food grains. But once this new model is introduced it will be impossible to experiment with any other model as the scheme being of a highly populist nature no government will have the courage to withdraw any of the privileges under it.
One of the drawbacks of the scheme is that it requires the huge machinery of the FCI and the programs of procurement and food distribution to back it. The problem with this setup is that it is inefficient, loaded with corrupt practices, and subject to various malpractices. One way of minimizing these drawbacks is to replace actual distribution of food grains under the scheme by a system of distributing food coupons that could be used by the people to purchase subsidized food grains. If food coupons can be introduced the size of the food storage and distribution network can be kept in check with the integration of private trade in food grains with the entire exercise. Such a model will be more cost effective and subject to fewer malpractices.
Under a system of food coupons consumers will be distributed food coupons, which they can use to buy food grains at subsidized, rated from the market. The traders who sell subsidized food could accumulate the food coupons collected from the consumers and submit them to the treasury to be compensated for the subsidy they provided.
P V Rajeev , former Economic Adviser of Government of India and worked as an Economist in Government of India for more than three decades. ...
