Food Security Bill

Oct 20, 2013 3 Comments by

 

The Food Security Bill is a bill for consideration before the Government of India. The bill aims to provide subsidized food grain to around 67 percent of India’s 1.2 billion people. The bill is to provide for food and nutritional security in human life cycle approach, by ensuring access to adequate quantity and quality food at affordable prices to people to live a life with dignity.

The provisions of the bill are

  •  The Beneficiaries would get rice at  3/kg, wheat at  2/kg and coarse gains at  1 /kg. The government estimates it would need about 61 million tons of grains to provide the extra food this year. These rates would be valid for only 3 years.
  • Every pregnant woman and lactating mother would get free meal during pregnancy till six months after child birth. They will also get a maternity benefit of 6,000 in installments.
  • Children up to 14 years would get free meals. In case of non-supply of food grains, states will have to pay food security allowance to beneficiaries.
  • Under the program everyone who qualifies for the subsidy will be entitled to 5kg in total of rice, wheat, pearl millet and sorghum (a cereal).
  • According to the bill 67% of the population which includes 75% rural and 50% urban will get subsidized gains under the Targeted public distribution system.

The total amount of food security bill stands at for Rs.1.25 lakh Crore. According to the government it is estimated to have more than Rs 6 lakh crore for the time period of 3 years. As India is into a deficit position the main question arise is that “Whether This Bill Will Sink India’s Position or Not”.

One of the main opposition party BJP has stated that they don’t oppose the bill, but they oppose the way the bill is being used. The party states that they oppose on the distribution channel of the food to the poor people. The party states to implement the same policy or same method which they used in Chhattisgarh’s Public distribution system which worked out very well.

The beneficiaries to this scheme is not yet decided by the people as government couldn’t identify that how many poor people are there in the country. Thus Govt. has decided to provide a state wise report where all the states should provide a report of how many poor people are there in their state.

Impact on The economy

Two main impacts to the Indian economy would be

  •   There would be a huge amount of money spent on this scheme i.e. Rs 1.3 Lakh Crore which will add up to the fiscal deficit of the country
  • This scheme could push up world food prices in case of drought and under procurement

 

When the bill is compared to GDP it comes up around 1-3% of GDP. The Govt. of India have just estimated the cost of the Food Security Bill but they haven’t estimated the additional expenditure that is needed for the administrative setup, scaling up of operations, enhancement of production, investment for storage, movement, processing, market infrastructure etc. which will even add up to the value of the Bill.

Food security means higher expenditure to the Govt. A higher expenditure means higher Fiscal deficit. Thus in order to finance such a huge investment the Govt. has to finance it with more borrowing from the bond market. Thus higher borrowing leads to higher interest rates on those bonds hampering the economic growth of the country.

The Govt. should work on the measures to generate employment to ensure Food security. So, the people don’t think that “why should we work hard for others to get food at a low cost? Let’s also fall under below the lone and become eligible to get subsidized food”.

It is better to postpone the Food bill because as India’s Growth is taking a wrong turn where current account deficit of the country is widening and the value of the rupee is also decreasing. Thus economists state that India may come into the same position which it had in 1991.

The Govt. intends to supply food through Public Distribution System. But around 51% of the food delivered that way is lost due to leakages. Thus extending PDS might make another channel for leakages. The Govt. is also using direct cash transfers where in if Govt. is unable to make food available through PDS to the poor, then they will give cash payments which will go directly go into people’s bank accounts.

Challenges to be faced by Indian Government

©    Implementation

©    Better distribution Mechanism

©    More storage Mechanism

©    Modernization

©    Sustainable agriculture production

©    Investment in Agriculture

©    Bring in New technology

©    Storage capacities to be improved

©    More Cold Storage Facilities

As of now, the Food Security Bill looks a stunt by the UPA Govt. to woo the voters just before election. If it was such an important thing they should have implemented it way back, why just wait for the year before elections. All said and done many bills have been passed on paper but the implementation part is still not clear. Let’s see how the government goes about implementing this. Whether it would be a real help to the poor or just another Lakh crore scam?

Economy

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3 Responses to “Food Security Bill”

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