The Food Security Bill is on its way. It is making its headway through an ordinance instead of a rigorous debate in the houses of the parliament. The president has conceded his signature. And AICC has started claiming that such a beneficial bill for the poor has not been introduced in India ever before. And the oppositions, as usual, are presenting it as a political stratagem. According to the data released by the central government, the implementation of the bill requires an additional expenditure of 50 thousands to 1 lakh crores of rupees. The flickering economy of the nation will have to bear that burden. The million dollar question, in this context, is whether the poor common man will gain something out of it.
The bill is categorizing Indians into three broad groups. At first, there is the poorest of poor section which is conceded maximum advantages. A person belonging to this category will be able to consume a maximum quantity of 7 kg of rice for Rs. 3 per kg or wheat for Rs. 2 per Kg or Joar-Bajra for Re. 1 per kg in a month. A family of this economic category will be permitted to consume a maximum quantity of 35 kg of the abovementioned food grains at the same rates. Following this is another category, membership to which enables a person to consume a maximum quantity of 3 kg food grains. They will consume these food grains by paying a half of the price that the government will be paying to the producers. Following this group is the group of ‘well-off’ Indians who, the government thinks, can take care of itself.
The Food security bill claims to cover 75% of the rural population and 50% of the urban population in India. Among them, 46% of the rural population and 28% of the urban population belong to the first category that is profiting most of the advantages. Apart from this, the bill sanctions special provisions for the pregnant and breast-feeding mothers, children, homeless and poorest of poor.
This seems to be a pretty fine arrangement on the surface level. But there are some points raised by economists and activist groups which merit a serious attention.
Is India capable of producing such a huge quantity of food grains? And what will a poor family do with the excess money it will get by consuming subsidized food?
In a survey recently conducted by NSSO, the surveyors divided the urban and rural consumers into ten broader groups. The lowest income group was marked with number 1 and the highest income group with number 10. Nearly 10% of Indian population is included in a single group. The upward you go from 1 to 10, per capita consumption gradually increases. For example, per capita food consumption in rural areas among the lowest group is in about ten and half kg; for the highest income group, it is slightly above 12 kg. For the lowest income group in the urban areas, per capita food consumption increases with a hike in income but one cannot formulate such an equation for the higher income groups. The most important data released by this survey is the significantly decreasing amount of food consumption with increasing amount of income in case of over 60% of overall population. Fast moving consumer goods like soaps, combs or cellular phones are in higher demand than food grains in comparatively well-off households in the rural areas. And well-off families in the urban areas are consuming costlier protein intakes and vegetables instead of elementary food grains.
One thing is certainly clear. Excess money gives way to better food consumption in the rural regions. So with the excess money a rural family gets hold of by consuming subsidized food grains, it will consume more food grains from the open market. So the proper implementation of the Food Security Bill will ensure a hike in the demand for food grains in the rural markets. The problem lies in the fact that production cannot be increased overnight to satisfy that demand. At present, forex reserve of Indian economy is not sufficient enough to balance this inequality of supply and demand. So inflation becomes the only available tool to manage the situation.
This price-rise will affect the poorest families in worst possible ways. After the full implementation of the Food Security Bill, the lowest income groups in rural areas will consume a share of their consumption from the open market. The NSSO survey reveals that per capita food consumption among the lowest income group is around 11 kg and the provisions in the Food Security bill concede only 7 kg of this. So both the income groups outside the purview of subsidy and the lower income groups within it will have to consume overpriced food grains from the open market. In addition to that, the lower income groups will consume extra food grains with the excess money in hand. And the higher income groups outside the purview of subsidy, with sufficient income capabilities, will not lower their demand for food grains. In the midst of it, prices of necessary food grains will get skyrocketed.
So the question is ‘who is going to get benefitted from the huge amount of subsidy provided in the Food Security Bill?’ A certain portion will surely flow into the sectors other than agriculture but the lion’s share will be deposited in the hands of a few big businessmen and stockers in the agricultural sector.
Everybody with a minimum knowledge about Indian public distribution system is aware that it needs radical reforms. The Food Security bill pledges to bring a sea-change in PDS’s workings but no one knows how long it will take. So implementing the bill before PDS reforms paves the way for corruption and futility. A large number of poor people in India don’t hold a ration card owing to the lack of proper PDS infrastructure. If inflation hits the open market, they will be affected most.
Summarily, there are two points to make. First, subsidizing food grains without a massive increase in production is not a solution. Second, without introducing radical reforms in public distribution system, food security cannot be provided for such a large number of people.
I hope that our policy-makers will give some thought to it.