Food Security Bill: What it is?

India’s Food Security Program was first debated in 2009 and has bounced in and out of Parliament for the last two years. It has been finally passed in the Lower House of the Parliament or Lok Sabha on August 26, 2013. The bill is aimed to provide subsidized food grain to around 67% of India’s 1.2 billion people. The bill seeks to empower women. The eldest woman (must be above 18 years of age) in a family will be considered as the head of the household for issue of ration cards. In the absence of such eligible female member in the family, eldest male member will be considered. Pregnant women and lactating mothers, in addition to recommended nutritious meals, will receive maternity benefit of Rs6000, minimum. Children with age between 6 months and 14 years will be entitled for home rations or hot food as per prescribed nutritional norms.

The Detail of the Food Security Bill (Who will be Benefited & How):

It is believed by many researchers that this bill will reduce the spending on food grains by BPL households and they will now have some disposable income to attain other necessary expenses. They can generate savings around Rs. 4,400 or 5% to 8% of their household expenses per annum. They can spend more on protein rich and nutritional foods.

The main objectives of this bill are:

  • It 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% of the population living in the rural area and 50% living in the urban area will receive 5 Kg of food grain in every month. The poorest under the category of ‘Antyodaya Anna Yojana’ will continue to receive their monthly quota of 35 kg food grains.
  • 80 million of India’s 1.2 billion populations will come under the benefit of ‘Food Security Plan’ through the Targeted Public Distribution System.
  • Each States is empowered to decide upon own eligible criteria based on SECC or Socio-Economic and Caste Census data. However, the survey of SECC will require around six months more to complete.
  • Pregnant women will receive a minimum maternity benefit of Rs. 6,000.
  • Children with the age between 6 months and 14 years will receive home rations and cooked hot food.
  • The central government will provide necessary financial and other assistance to the states and union territories if it runs short on grains including the cost of intra-state transportation and handling of grains.
  • The eldest woman in a household exceeding 18 years of age will be considered as the head of the family for the purpose of issuing of ration cards. In the absence of such woman, the eldest male member will be so considered.
  • The annual requirement of food grains under the program is estimated to be 612.3 lakh tons and corresponding estimated food subsidy for implementation of National Food Security Bill or NFSB, at 2013-14 costs, is about Rs 1,24,747 crores.
  • Any aggrieved citizen may complain through state and district level ‘Redressal Mechanism’ to designated nodal officers, it may also include services of call centers.
  • If any office bearer or authority if found guilty, will be subject to prosecution and penalty.

 Food Security Bill in the Current Situation

Many economists consider the recent ‘Food Security Bill’ as a classic example of ‘irresponsible populism’ because the bill is expected to cost the government exchequer $22 billion or Rs 1.3 lakh crores every year. The government estimates cost around Rs. 124,723 crores per year, however, it is a mere estimate. The commission for Agricultural Costs and Prices (CACP) under the Ministry of Agriculture has put the cost of the scheme over a three year period at Rs 682,163 crores. An economist, Surjit Bhalla, in The Indian Express, has put the cost at Rs, 314,000 crores per year or 3% of GDP. Although some other economists challenged his view but they could not lower the figure to any percent below 1.35% of the GDP. But, the facts remains that the government does not have the entire GDP to spend. It can only spend what it earns.

So in order to understand the impact of Food security Bill in the government exchequer, it should be expressed as a percentage of total receipts of the government. The projected receipt of the government for the year 2013-14 is at Rs. 1122,799 crores. The government estimated cost at Rs. 124,723 for the Food security Bill works out to be 11% of the total receipts or Rs. 1122,799 crores—which is much higher than the percentage of GDP at around 1.2% that is repeatedly gets publicized by the central government. This basis of collection on receipt is more important because the government’s collection of taxes had been slower than expected every year. In respect of capital receipts (excludes government borrowing) only 3.3% of the total expected amount for the year has been collected.

The economists are confused how Mr. Chidambaram reconfirmed that he will maintain the fiscal deficit at 4.8 % of the GDP as projected earlier.

Some of the arguments raised against the ‘food security bill’ are mentioned below:

  • The state agencies will squeeze out small traders from the market and will dominate the market. There may be many leakages and malpractices.
  • Small farmers who grow for own consumption may shift to other profitable corps and buy subsidized food. This can imbalance the food grains output calculations.
  • The real benefits of Food Supply Bill depend in the proper implementation. Otherwise most of the goods earmarked for the poor will be siphoned off due to corruption, or through inefficient channel of distribution goes to waste.
  • Implementing the bill in an equitable, fair and transparent way is a real challenge for the government.
  • The government does not even have enough storage capacity for their current procurement. This must have to be expanded many more times with more improved facilities.
  • The minimum requirement of an adult is 450 gm of cereals per day, for people who do heavy work need 600 grams per day. This implies an individual needs an average of 13.5 Kg of wheat/ rice per month. The bill promises to deliver only 5 kg per month. Similarly if we calculate pulse requirement at 50 gm per day, the country’s annual requirement figure at 18.45 million tones will exceed country’s total pulse production by 16%.