Economy Aug 27, 2013
The Lok Sabha on Monday endorsed the Food Security Bill, which makes subsidised foodgrain a right for 67 per cent of the population, or 82 crore Indians.
The bill is expected to cost the government exchequer Rs 1.3 lakh crore ($22 billion) every year.
With this law being pegged as the Congress party's gamechanger for the 2014 Lok Sbaha elections, UPA chairperson Sonia Gandhi made a rare speech in Parliament, terming the Bill a historic step towards eradicating poverty. "The food bill is meant for the less fortunate sections of our society," she said.
Expectedly, the Opposition has criticised the bill as an attempt by the Congress to get mileage in the run-up to the 2014 polls.
"This bill is half baked, but we have still decided to support it," Leader of Opposition Sushma Swaraj said. Needless to say, the timing of the Bill's introduction in Parliament is such that almost all parties have found themselves compelled to endorse it.
In fact, even the proponents of the Bill have criticised the Congress party's haste in getting the bill cleared without completed the required groundwork.
"I am quite dismayed by this ordinance and also very concerned about the possible consequences of excessive haste. A sense of urgency is certainly required, but rushing the implementation of the bill for short-term electoral gain could be counter-productive, and even defeat the whole purpose of the bill," former National Advisory Council member Jean Dreze had told Mumbai Mirror in an interview.
Dreze had resigned from the council due to his differences with the Bill.
Here are a few facts about the Bill:
• The Bill was originally conceived by the National Advisory Council headed by Congress President Sonia Gandhi, who on 27 October, 2010, forwarded the basic framework of the proposed National Food Security Bill (NFSB) to Prime Minister Manmohan Singh. The Bill envisaged covering 75 per cent of the country's population, 90 per cent in rural areas and 50 per cent in urban areas.
• The prime minister set up an expert panel nder the chairmanship of C Rangarajan to study the NAC's proposal. The committee estimated that the total annual foodgrain requirement to roll out the NAC's recommendations covering 72 per cent of the population in the first phase and 75 per cent in the final phase was 68.76 million tonnes and 73.98 million tonnes, respectively.
• The panel brought down the coverage to 67 per cent of the population and suggested reforming the public distribution system.
• The government finally in July promulgated the National Food Security Ordinance, which has been made into a Bill now.
• The Bill seeks to offer rice at Rs 3 per kg, wheat at Rs 2 per kg and coarse cereals at Rs 1 per kg to the intended beneficiaries. Up to 75 per cent of the rural population and 50 per cent of the urban population will get 5 kg of foodgrain monthly. The poorest who fall under the Antyodaya Anna Yojana will continue with their present monthly entitlement of 35 kg of food grains.
• The Bill will entitle around 80 million of India's 1.2 billion population to subsidised foodgrain under the Targeted Public Distribution System.
• States are given the responsibility to decide on eligibility criteria based on socio-economic and caste census (SECC) data. However, the SECC survey is likely to take six more months.
• Pregnant women and lactating mothers would receive a maternity benefit of at least Rs 6,000 .
• Children aged six months to 14 years will get take-home rations or hot cooked food.
• The central government will also provide money to states and union territories if it runs low on grain as well as providing them with "assistance" towards the cost of intra-state transportation and handling of grains.
• In a bid to give women more authority in running their households, the oldest adult woman in each house would be considered the head of that household for the issuing of ration cards.
• At the coverage and entitlement now proposed, the total estimated annual foodgrains requirement is 612.3 lakh tons and the corresponding estimated food subsidy for implementation of NFSB, at 2013-14 costs, is about Rs 1,24,747 crore.
• There will be state and district level redressal mechanism with designated nodal officers. Redressal mechanism may also include call centers, helpline etc.
• The Bill provides for penalty to be imposed on public servants or authority, if found guilty of failing to comply with the relief recommended by the District Grievance Redressal Officer
Merits and demerits
• Crisil Research believes the proper implementation of the Bill "will lower spending on foodgrains by below poverty line households, and free up resources for spending on other goods and services, in particular health, education, and nutritious food."
• It sees the Bill enabling an additional savings of around Rs 4,400 this year for each BPL household that begins to purchase subsidised food. This savings equals around 8 per cent and 5 per cent of the annual expenditure of a rural and urban household, respectively.
• For rural households the savings amount exceeds their current annual medical and educational spends. Higher disposable income would also allow BPL households to spend more on protein-rich food, thereby improving their nutritional intake, Crisil said.
• However, the research house has said key to accruing all these benefits is the proper implementation. "While the benefits of the Bill could go well beyond just the provision of food, the success of the scheme and its welfare impact lies in identifying the poor and making sure that they are able to avail the food subsidy," it said.
• Many critics of the scheme converge on this point. They say beneficiaries do not stand to gain as about 40 percent of rice and wheat earmarked for the poor gets siphoned off due to corruption. An inefficient distribution channel also leads to waste.
• Implementing the bill in a fair, equitable and transparent manner is going to be a big challenge for the government.
• Many agriculture experts believe that Food Bill which proposes to provide grains to people at very cheap rates may discourage the agriculture production in the country. Hence it must make sure that farmers should not be burdened with the cost of subsidising the supply.
• Economists have raised concerns about the cost to the exchequer at a time when the government is struggling to bridge the fiscal and current account deficits. Fitch Ratings has said it was getting more challenging for India to meet its fiscal deficit target in the current fiscal year ending March 2014 with revenues slowing, Reuters reported today.
• Economists of the Government's Commission for Agricultural Costs and Prices (CACP), who define the roadmap of agricultural policies, have calculated "additional" subsidy burden of Rs 1.20 lakh crore per annum from the existing Rs 90,000 crore
• The Centre intends to delegate the task of construction of additional storage to the states, which may not be practically feasible given constrained centre-state relations among diverse political parties.
• The government does not even have enough storage capacity to store the amount of grain that it currently procures and will have to procure from the farmers in the years to come. So more grains could be dumped in the open and will rot as a result.
• Experts believe the rush to pass the bill implies the intent is nakedly political.
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