Cost estimates differ on proposed food security law

The cost of the proposed Food Security Act, meant to entitle every poor family each month with 25 kg of food grains at Rs 3, is engaging many quarters in the government and outside, with differing calculations on the cost and the number of beneficiaries.

Government sources say the food subsidy bill will rise, but by only about Rs 3,000 crore. Some others argue it would actually cut the food subsidy bill. Others note all this will be unclear till the scheme details are made known.

The Ministry of Food and Public Distribution, which is working on a draft food Bill which is supposed to entitle below poverty line (BPL) families with 25 kg of food grains at Rs 3, has worked out cost estimates which it did not share.

The ministry, according to sources, is worried whether the food security criterion would increase the number of BPL families and hence increase the subsidy bill. It is struggling with questions as to whether the Bill is meant to provide food entitlements to BPL or for a separate category of beneficiaries who are suffering from food insecurity. It has also raised questions as to whether the new BPL census due this year would increase the numbers.

According to sources in the Planning Commission, there could be differing cut-offs for different schemes. The basis for this cut-off and the resultant ranking of BPL beneficiaries would be clear in a few weeks when the Tendulkar committee report is released.

N C Saxena, chairman of the committee, said it was up to the government to decide if there should be different criteria to identify those who are food insecure and deserve food at Rs 3 a kg.

According to Biraj Patnaik, advisor in the Supreme Court Commissioner's office on Right to Food, it is premature to talk about costs, as nothing is clear, starting from the proposed price of rice and wheat, the number of beneficiaries, and so on. So, it is like talking in the air.

One estimate shows the modified targeted public distribution programme for BPL families would cost the government only an additional Rs 3,800 crore.

At present, 35 kg of food grains are given to BPL card-holders at a price of Rs 4.5 (in the case of wheat). In addition, food grains are provided at a price of Rs 3 only to a limited number of people under the Antyodaya scheme.

Economist and activist Reetika Khera said if the market price is above Rs 8.5 a kg, then the new measure implies reduction in subsidy.

The current price of wheat is Rs 12.5 and the current subsidy is Rs 4.5. Though the price in the instance of wheat has been brought down to Rs 3, the quantity has been reduced by 10 kg.

According to Khera, this would give a cheaper subsidy figure.

However, she added that the subsidy size would also depend on the number of beneficiaries.

According to the Arjun Sengupta committee, the BPL number should be 70 per cent of the population and in that case, the amount would certainly be more than the present figure.

But if the beneficiaries are only the current 33 per cent of the population, then the bill of about Rs 35,000 crore is all set to reduce, she said.