Economic Highlights

New Delhi, 24 May 2013

Food Security Bill

INSPECTOR RAJ ENSURED!

By Shivaji Sarkar

The New York Times headline screams: “Hunger in US at a 14-Year High.” President Obama states: “hunger rose significantly last year”.  However, researchers in a Department of Agriculture report are blunt and state that people are experiencing “food insecurity” or even “very low food security”.

In India, the Government states it will “eliminate” hunger “officially”, if the Food Security Bill is passed by Parliament. However, the new law may not ensure food security because the procedure to prove one’s eligibility is not easy in a quagmire of KYC – know your customer – queries. It is plaguing the LPG buyers, bank account holders and almost all supposed entitlements or commercial transactions like the railway ticket.

Would the law ensure food grain? Yes, says the Government. But it shall be only rice, wheat and millet, at Rs 3, 2 and 1 a kg to the extent of 35 kg in rural area and 20 kg in urban area. In effect it would be turning the entire nation into a massive ration shop and managing it is a formidable and unnecessary proposition.

Importantly, why does the US not need this kind of a public distribution system (PDS)? Simply because it has evolved a system wherein food items, not just food grains, are available at affordable prices. Neither the mode of travel is as expensive as in India, nor the fuel expensive. Plus, it is carried out through a chain of private business functionaries and that subsidies have played a significant role in keeping the food prices low. If despite that hunger is increasing there, though only in minor percentage terms, it shakes that nation.

India has done just the opposite. It has ensured that inflation remains at a high level. Food prices have increased by over 36 per cent in the past over three years. The Government has stacked excess rice and wheat. The Food Corporation (FCI) warehouses have been overflowing. As much grains rot every year as much procured.

Recall, the UPA Government was repeatedly asked by Supreme Court to release food grains to make these available to the poor to ensure that they did not remain hungry. It was also advised to release food grains in the market to keep the prices under check and utilize the FCI as a market interventionist agency. Sadly, the Government turned a deaf ear. It invites an intense probe.

Since 2009, the UPA Government except expressing “helplessness” has done precious little. Are governments in this country so helpless? In 1963, when the Nehru government introduced PDS on a massive scale in the wake of drought, it did not seek the shelter of a law for food security. In fact, even today the Government doesn’t need it.

Pandit Nehru realized it was a constitutional obligation to provide food to the people. Even if it is not mandated by any statute, it is the State’s responsibility. Recall, when Louis XVI failed to do so and Marie Antoinette called upon the Frenchmen to have cake instead of bread, the nation had a historic revolution—a culmination of bad governance and denial of food to its people.

In India, how would a law ensure food security? On the one hand, efforts are on to reduce subsidies particularly in agriculture, denying investment, making farming expensive, convoluting the food grain market—all resulting in stagnation of production level. On the other it is shedding crocodile tears.

The recent Economic and Social Conference for Asia and Pacific (ESCAP) report has come out with the worst indictment. It blames the Government and its agencies for allowing betting and “financialisation” in food items through the commodities futures market. It virtually opens up a Pandora’s Box as it unfolds the mystery of food inflation. The ESCAP analysis is based on data and facts provided by the Government, implying it is well aware of the “game” that is being played in the food market.

Is that the reason why Minister Kapil Sibal calls the food Bill as a “game changer”? It is certainly not changing the “game” for the poor and hungry people. Sibal or for that matter the entire Government has the least concern for the poor. The latest National Sample Survey (NSSO) records that now 73 per cent of the people, against 64 per cent in 2004-05, are not getting the minimum prescribed 2100 calories. Does it not mean that between 2004 and now more people have slipped to below poverty line?

Additionally, how would a Government that is plagued by corruption, fiscal and current account deficit ensure about Rs 1.5 lakh crore additional allocation for food? It would do so by levying additional taxes, like it did when it allocated Rs 40,000 crore for Mahatma Gandhi National Rural Employee Guarantee Act (MNREGA). It increased excise duties, introduced many cess, made service tax universal and also raised the rates. It has resulted in impoverishing the emerging middle class. Now they at best could be said to be at the edge of the poverty line, as the NSSO survey stresses.

Further, the food bill is too cumbersome. Apart from ensuring food grain it even has an agenda for maternal and child support, counseling for optimal infant/young child feeding, nutrition take-home for children under three (nobody knows how), cooked mid-day meal in Government and aided school, maternity entitlements of Rs 1,000 for six months for pregnant women, universal health care, revitalisation of agriculture and food production and much more.

Importantly, revitalisation of agriculture would cost Rs 1.1 trillion. From where would the Government shell out this amount? It also has provision for compensation of loss of entitlement and wonder whether it is really possible? In fact, much of it reads like an election manifesto. The aim appears obvious, but the road map unclear.

In 1960s, the youth spent almost seven years of their precious life queuing up at the ration shops and often returning without a morsel of grain. The reason being the black market in all food items thrived during those years. So did the desi unscrupulous traders and government inspectorate. Does this Government want a repeat?

With the Green revolution supplies were ensured as well as a thriving open market. Food prices dropped as Government investment in agriculture and subsidies went up. The UPA-II policies are cutting down farm investment, subsidies and making it difficult for farmers to meet the rising cost of inputs. During the past over 20 years, over 44 lakh hectare land has gone out of the farm sector to SEZ, industries and the real estate, with the latter acquiring over 16 lakh hectare alone.

This apart, the FCI is gradually reducing procurement, leaving it to the private sector. Clearly, the Government would not be able to ensure adequate food production or stocks. The new Bill would be used to purchase food grains from private players and international dealers at inflated prices. This explains why FDI in retail has been opened up to 100 per cent. In effect, the Bill would ensure a thriving foreign wholesale and retail sector and its provisions are likely to open up legal route for involved “players” in a “game” to get rich quick.

Indeed, it’s difficult to believe that the Bill would ensure food security. In all probability it won’t. Security can be ensured without the bill if food is made available at affordable prices, inflation is controlled and food production is increased by scrapping the Land Acquisition Bill and seeking larger public investment in the farm sector. Would somebody do that? ---INFA

(Copyright, India News and Feature Alliance)