Towards Food Insecurity
The Monmohan Singh government is in a desperate mood to push through the National Food Security Bill (FSB) as quickly as possible. While the much-threatened ordinance route by bypassing the Parliament has not yet been carried out, there is hardly any doubt that it will be disapproved by the Parliament whenever its sessions are held. The issue here is not whether a special session of the Parliament is going to be held or the monsoon session of the Parliament, scheduled to be held in July, is advanced for passing the proposed legislation. Because, all told, the main opposition BJP is as concerned for populist contents in the Bill as the ruling Congress is, not to speak of the facts that its own governments in Chhattisgargh and Madhya Pradesh have already implemented similar provisions. In fact, these BJP-led governments provide food even cheaper than what the central government is proposing.
The bill ensures that “Priority households”, to be identified by the central and state governments, are entitled to 5 kg of food grains per person per month, and “Antyodaya” households to 35 kg per household per month. The combined coverage of Priority and Antyodaya households (called “eligible households”) shall extend “up to 75 per cent of the rural population and up to 50 per cent of the urban population”. The food grains are to be provided through the Public Distribution Systems (PDS) at Rs 3/2/1 for rice/wheat/millets (actually called “coarse grains” in the Bill) per kg. These may be revised after three years.
For children in the age group of six months to six years, the Bill guarantees an age-appropriate meal, free of charge, through the local anganwadi. For children aged 6-14 years, one free mid-day meal shall be provided every day (except on school holidays) in all schools run by local bodies, government and government-aided schools, up to Class VIII. For children below six months, “exclusive breastfeeding shall be promoted”. Children who suffer from malnutrition will be identified through the local anganwadi and meals will be provided to them free of charge “through the local anganwadi”. Similarly, every pregnant and lactating mother is entitled to a free meal at the local anganwadi (during pregnancy and six months after child birth) as well as maternity benefits of Rs 6,000 in instalments.
The FSB will cost the government about Rs. 1.25 lakh crore every year. Experts say that this is a serious increase in a situation where the government does not have enough resources as it is. But then the fact remains that India is already spending close to Rs 1.16 lakh crore on schemes that are listed as “entitlements” under, for instance, food subsidy (Rs 85,000 crore), mid-day meal (Rs 13,215 crore), Integrated Child Development Scheme (Rs 17,700 crore) and maternity entitlements (Rs 450 crore). If you add all these, the overall expenditure is around Rs 116,360 crore. In fact, then, the FSB will amount to an increase of only Rs 8,640 crore, an increase of 0.09 per cent of the GDP.
Obviously, this will amount to increasing budgetary deficits, but then the fact remains that we Indians are now more or less reconciled to this disease, which, in any case, is a global phenomenon in some form or the other. Of course, there is a catch here. Deficits are tolerable as long as the national economy grows at a healthy rate. For instance, when the UPA 1 regime introduced the Mahatma Gandhi National Rural Employment Guarantee Act (which provides 100 days of work to the poor at 100 rupees a day), the Indian economy was growing at an average of 9 per cent every year. But this year, the rate of growth has come down to 5 per cent, with no signs of easy recovery over the next two years. Where then will be money to absorb the growing subsidies? Worse, the credit rating agencies could downgrade the country’s investment climate to “junk” status. The “India growing” story will gradually turn into a mirage.
The bigger problems with the FSB are due to its unstated features. Its cost is much more than what is mentioned, if one goes by the report titled National Food Security Bill: Challenges and Options authored by Ashok Gulati, Jyoti Gujral and T Nandakumar (with Surbhi Jain, Sourabh Anand, Siddharth Rath, and Piyush Joshi) belonging to the Commission for Agricultural Costs and Prices (CACP), which is a part of the Ministry of Agriculture. This report was released in December 2012.
The stated expenditure at Rs 1,25,000 crore a year by the FSB , the CACP report feels, is just the tip of the iceberg. Because, this expenditure does not take into account “additional expenditure (that) is needed for the envisaged administrative set up, scaling up of operations, enhancement of production, investments for storage, movement, processing and market infrastructure etc”. The report estimates that “the total financial expenditure entailed will be around Rs 682,163 crore over a three-year period”. So the question is, where is this money going to come from, particularly when the government is already reeling under a very high fiscal deficit and is under pressure from international rating agencies to cut down on flab? A high fiscal deficit also means higher interest rates as the government will have to borrow more. It will also lead to higher inflation.
Secondly, at the proposed coverage of entitlement, total estimated annual food grains requirement is 61.23 million tonnes. But then, even if the quantity of food remains the same each year, the food subsidy bill will increase annually as despite the cost of food going up (because of wage increases and oil price rises), the government will continue to sell the subsidised food at the present price. In fact, the quantity of food grains that the government will procure in all probability will go up because of a rising population, and that will cost additional money.
Thirdly, and it is a big irony, while the FSB may eradicate hunger to a certain extent, it does not contribute necessarily to the health of the Indian people. Because health of an average Indian, as innumerable medical studies have revealed, is dependent on the quality of food that he or she consumes. The FSB overemphasies on the cereals like rice and wheat, whereas the overall health needs protein diets such as dairy, eggs and poultry, as well as fruit and vegetables. There is thus a need for a more nuanced food security strategy, but the FSB is obsessed with macro-level food-grain availability.
Fourthly, and this is another irony, the proposed FSB is also anti-farmer in the long run and thus is a step towards “food insecurity” of the country. Food experts say that Indians need at least 75 million tonnes of cereals every year for food security. That means that Indian farmers, 75 per cent of whom are small and marginal farmers, need to produce more food grains. But then, the cost of food production (labour, animals, energy, seeds and fertilizers etc.) is increasing every year. Here, the component of labour is particularly significant, because one of the adverse fallouts of the National Rural Employment Guarantee Act is that there is a huge shortage of labour in agricultural works, with the result that land remaining uncultivated is becoming a growing phenomenon. Now, if the 75 per cent of the rural population, which includes 90 per cent of the small and marginal farmers, is going to be provided subsidised food grains at less than 10 per cent of the cost (under the FSB) if they grow the food grain themselves, then why the hell will they cultivate?
And if they do not cultivate, where will the government procure grains from? It will be forced to buy them from abroad, further burning a hole in its pocket. Besides, Indian agriculture is still highly dependent on rainfall with 50 per cent of area under cultivation still at the mercy of good monsoons. Irrigation, wherever it is available, is also dependent on rainfall. So what happens in a situation of drought? If a drought situation crops up, will the government resort to imports? But then, as the CACP report says, import is not necessarily going to help, on the front of the rice at least. “Rice is a very thinly traded commodity, with only about 7 per cent of world production being traded and five countries cornering three-fourth of the rice exports. The thinness and concentration of world rice markets imply that changes in production or consumption in major rice-trading countries have an amplified effect on world prices.This is especially true in the case of rice, as global markets are much smaller. India’s entry into the international market as a large buyer could exert significant upward pressure on prices,” it says. Hence, any shortage of rice in India is going to hit world prices of rice through the roof.
It is not that the Manmohan Singh government is not aware of all these dangerous implications. But then it is helpless as the FSB is actually the baby of Sonia Gandhi-led National Advisory Council. As the Congress president, Sonia is more interested in getting votes for the ruling party. In 2008, the Mahatma Gandhi National Rural Employment Guarantee Act worked and ensured another term for the UPA. At least that is what she and her admirers think. Similarly, they think that the FSB, if implemented, will give the Congress another five years, even though it will lead the country to a situation of food insecurity.
By Prakash Nanda