The Telegraph
Wednesday , July 17 , 2013
CIMA Gallary


- The food security bill has sound economic backing

This version of the United Progressive Alliance team has earned itself the label of “masters of non-governance”, largely because of its inability to steer major pieces of legislation through Parliament. A case in point has been the food security bill. The bill, one of the Congress’s main election promises in 2009, guarantees cheap foodgrains to three-fourths of the rural and half the urban population as a legal right. Unfortunately, the Congress could not muster enough support among its coalition partners; perhaps there were rumblings of disquiet even amongst its own ranks. Finally, as its life comes to an end, it has been able to muster some kind of consensus to pass an ordinance to implement the bill. Of course, the bill still has to be approved in Parliament. It is unlikely that there will be enough explicit opposition in the Lok Sabha since parties who vote against it will be labelled anti-poor.

The food security bill has generated almost as much heat as the Right to Employment Act, one of the highlights of UPA-I, and for very much the same reasons. Economists, who would much rather leave everything to the market, feel that any kind of government intervention in favour of specific groups is unnecessary at best and plain wrong at worst. They would prefer the government to take steps to remove any possible road blocks in the growth process, and let growth take care of the rest.

The more vociferous critics argue that the bill will cause the level of food subsidy to reach stratospheric levels. This will increase the already high fiscal deficit, and make the public fiscal management completely unmanageable. However, this argument ignores the fact that the additional expenditure that will be incurred on the food security bill is relatively small compared to India’s GDP.

Many critics argue, not without some justification, that the main delivery system envisaged in the food security bill is the public distribution system, and that the PDS is quite unequal to the task of delivering any increased volume of food to the poor. They highlight the many inadequacies of the PDS — its uneven coverage particularly in rural areas, its inability to target the deserving, and the huge leakages in the form of diversion of subsidized grain to the open market. Any increase in social welfare resulting from the operation of the PDS, they claim, is obtained at an exorbitant cost because of the leakages, not just because of the diversion of subsidized food to the open market but also because many BPL cardholders who get food at highly subsidized prices have incomes significantly above the threshold level.

It would be foolish to deny that the PDS is grossly inefficient and that many people have made their fortunes milking the system. But, as all readers of newspapers know, many armaments deals are also plagued by kickbacks and bribes paid by foreign suppliers, who then recover these costs by inflating the prices at which weapons are sold to the Indian government. However, this form of corruption, which has pretty much the same effect on the Indian exchequer, has not resulted in any clamour to stop defence purchases. This is presumably because modern armaments for our defence forces are deemed to be absolutely essential.

So, the proper question is about the importance of legislation guaranteeing minimum quantities of food for the poor. Or, can we trust an accelerated rate of growth to ensure that the poor do not go hungry to bed? Some pieces of data provide an adequate answer. The International Food Policy Research Institute prepares a global hunger index — India ranks 65 out of 79 countries for which data are available. Moreover, even the government has been forced to admit that nearly half the children under five are chronically malnourished.

There is no doubt that in spite of almost two decades of reasonably fast growth, vast numbers of Indians lead lives that are well below any notion of an acceptable standard of living. This is a compelling rationale for legislation such as the food security bill. Of course, the actual contents of the ordinance still deserve close attention.

In the debate preceding the formulation of the bill, an overwhelming majority supported universal coverage even if that came with a lower quota. Universal coverage would have ensured that the state governments would not have to screen out those who are not entitled to subsidized food, almost entirely because almost all state governments have proved to be notoriously bad at this task. Also, a large segment of the top income bracket would probably have opted out of the scheme anyway because of the poor quality of grains typically available in the ration shops. Unfortunately, the Central government has dug in its heels and refused to go in for universal coverage — although they have reduced the quota recommended by the National Advisory Council.

The use of the PDS as the main delivery mechanism is also open to question. Some states, Chattisgarh being a leading example, have improved the functioning of the PDS beyond all recognition. But, in most states, the PDS is a leaky sieve. And here alternative arrangements need to be made. A refreshing change in attitudes is that the ordinance does not rule out the use of cash transfers in regions where food cannot be delivered physically. It hopes that the increasing use of the Aadhar card, which will link a designated bank account to each card, will enable the cash to be directly transferred to the bank accounts of the beneficiaries.

The estimated quantity of foodgrain that will be required to support the food security bill is actually not significantly higher than the amount disbursed through the PDS today. The major change from the existing system is that the target group can now claim their quota as a legal entitlement. The local ration-shop owner can no longer fob them off by saying that stocks have not arrived. Of course, the poor typically will not have the resources to claim what is rightfully due to them by taking their complaints against the local administration through the grievance redressal mechanism. This is an area where responsible NGOs can step in and fight legal battles on behalf of the deprived.

Many of the Opposition parties have claimed that the timing of the ordinance makes it clear that the bill is politically motivated — the Congress has issued the ordinance at this point of time because the elections are just round the corner. But, of course, it is the Bharatiya Janata Party that is to blame for this — the party’s agitation has disrupted the functioning of Parliament for a record number of days. Moreover, even if politics has played an important role in the formulation and timing of the ordinance, the important fact is that it has sound economic backing.