National Food Security Act a landmark legislation, says IMF

The International Monetary Fund today described India's National Food Security Act as a landmark legislation which is an important effort to ensure that a majority of the population has access to adequate quantities of food at affordable prices.
"The legislation is a landmark, representing the largest food security programme in the world, involving the distribution of subsidised grain to two-thirds of India's population of 1.2 billion," the IMF said in reports issued after its annual consultations with India.
The Food Security Act (FSA), passed by Parliament last year, proposes to cover up to 75 per cent of the rural population and up to 50 per cent of the urban population.

They will be entitled to five kgs of food grains per person per month at highly subsidised rates of Rs 2 and 3 per kg for wheat and rice, respectively.
"Nonetheless, the Act has been introduced at a time when international experience indicates that conditional cash transfers, rather than physical distribution of subsidised food, have been found to be a more efficient means of achieving food and nutritional security," the IMF noted in a special mention of the food security law.
Finance Minister P Chidambaram, in his Interim Budget presented on January 17, said Rs 1,15,000 crore has been allocated for food subsidy keeping in mind the government's commitment to implement the FSA throughout the country.

The IMF said the Act needs to be evaluated to take into account not only the food subsidy, but three additional cost dimensions, which may magnify the FSA's fiscal implications.
"First, if implementation of the FSA includes 'grandfathering' of existing beneficiaries, even when their income levels may imply that they no longer qualify for the FSA program, then the estimated fiscal cost could be higher," IMF said.
Second, if the FSA requires merging the current classification under the Targeted Public Distribution System with new and more careful identification schemes, then there may be misclassification which could raise costs.