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Future insecurity

Chhattisgarh's food Bill has the same problems as the Centre's

Business Standard  |  New Delhi 

Even as the government prepares to try and pass a food security law in Parliament’s next session, it has been criticised from a fresh perspective — suggesting it may, after all, need another re-examination. A discussion paper put together by the Commission for Agricultural Costs and Prices (CACP) has debunked the draft Bill on several counts, some of which are well founded. Disputing its long-term feasibility, the CACP paper maintains that it would inflate food subsidies to an unsustainable level, hamper the functioning of the foodgrain markets and deal a formidable blow to Indian agriculture as a whole by skewing the cropping pattern.

In a related development, Chhattisgarh has come out with its own food security statute, which – notwithstanding its various flaws – has taken the concept of food security forward to incorporate nutritional security in it. For this, it stipulates supplying dals (gram and other pulses) at highly subsidised rates and iodised salt free of cost along with foodgrain. Notably, while the Centre is still struggling to clearly define poverty and priority category households, the Chhattisgarh law moots easily identifiable – and, importantly, verifiable – norms for the inclusion and exclusion of people in the food security network based on the socio-economic status and economic assets of household heads. However, securing and distributing foodgrain and other goods to nearly 90 per cent of the state’s population would be a mammoth task; paying would be even tougher. It will cost Rs 2,311 crore to begin with, and become more expensive with time.

The Centre’s food Bill may have similar problems. It will require government intervention at all levels of the food economy: production, procurement, storage, transportation and distribution, involving massive investment at each stage. The total subsidy burden, reckoned conservatively at Rs 1.2 lakh crore in the first year, could increase to Rs 1.5 lakh crore by the third year and swell further every year. That’s because the minimum support prices of rice and wheat will have to be stepped up annually to incentivise cereal production; the selling price of grains will have to be kept static at the level laid down in the legislation. Diversification of agriculture from cereals to high-value and protein foods driving food inflation will slow. Higher procurement, on the other hand – beyond one-third of the production or half of the marketed surplus that is already being cornered by the government – will further push private trade from the grain markets. To ward off some of these adverse outcomes, the CACP suggests conditional cash transfers – bounding the beneficiaries to conditions such as immunisation and sending their children to school, arranging for their acquiring skills and similar others – instead of delivering food in kind. Even that might not contain inflation or keep the overall food subsidy bill down, since the cash flow will have to be indexed with inflation. Still, it seems worth considering since it would, at least, avoid the problems resulting from the physical handling of foodgrain on such a massive scale and distributing them through the leaky and inefficient public distribution system.

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First Published: Wed, December 26 2012. 00:06 IST