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ThecostoffoodsecurityTheHindu

OPINIONCOLUMNSCHANDRASEKHAR

Published:January20,201310:27IST|Updated:January22,201310:41ISTJanuary20,2013

Thecostoffoodsecurity
C.P.Chandrasekhar

TheParliamentaryStandingCommitteeonFood,whichexaminedthedraftfoodsecuritybill,hasrecommendedonemoreversionintermsof
thecoverageandsupportthattheActshouldguarantee.Ithasreportedlyarguedformandatorycoverageof67percentofthepopulation
basedonmultiplecriteriathatwouldseparatethepopulationintogroupseitherincludedorexcluded.However,ithasscaleddownthe
monthlyentitlementofsubsidisedgraintoauniform5kgpermonthforeverypersoncoveredundertheact.Assumingfivepersonsper
householdthatamountstoanentitlementof25kgperhouseholdpermonth.Intheviewofthecommittee,identifiedbeneficiariesshouldbe
providedthestipulatedquantityatRs.3,2and1perkgrespectivelyforricewheatandmillets.
Thereisnounanimityhere.Onememberofthecommittee,T.N.Seema,submittedanoteofdissentobjectingto,amongother
recommendations,thereducedentitlementandthecaponcoverage.ThisisnotsurprisingsincetheLeftinandoutsideParliament,civil
societygroupsliketheRighttoFoodCampaignandmanyanalystsandacademicshavebeenarguingforuniversalcoverageonthegrounds
thattargetingwouldinmanywaysdefeatthepurposeofthebill.TherecommendationsoftheStandingCommitteenotonlyfallshortofthis
butputoutaschemewhichisoneamongthemanyinvolvinglessthanuniversalcoverage.
Thegovernmentsdraftbill,forexample,seekstocover63.5percentofthepopulation,consistingof75percentofthepopulationinrural
Indiaand60percentinurbanIndia.Theseproportionshavebeenbrokendownintopriorityandgeneralgroupswiththeformereligible
for7kgofsubsidizedgrainatthelowpricesmentionedabove,whereasthegeneralcategorywillbeeligiblefor3kgeachathalftheeconomic
costofgraindistributedthroughthepublicdistributionsystem.TheNationalAdvisoryCouncil(NAC),ontheotherhand,hadmadeacasefor
providingfoodgrainsusingtheRs.321pricingformulato75percentofthepopulation(90percentinruralareasand50percentinurban
areas)dividedintopriority(46%rural28%urban)andgeneral(39%rural12%urban)categories.Priorityhouseholdsweretobe
entitledto35kgofsubsidizedfoodgrainpermonthandgeneralhouseholdsto20kg,atapricenotexceeding50percentoftheminimum
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ThecostoffoodsecurityTheHindu

supportprice(MSP).
Finally,theExpertCommitteesetupbythePrimeMinisterandchairedbyC.Rangarajan,whichtookonthetaskofpruningtheNACs
recommendations,electedforasubstantialreductioninthepopulationthatistobeguaranteedaccess.Itfavouredaschemethatwould
restricttheassureddeliveryoffoodgrainsatRs2perkgforwheatandRs3perkgforrice,tothereallyneedyhouseholdsandcovertherest
throughanexecutiveorderwithavaryingquantumdependingontheavailabilityoffoodgrains.Thiswouldineffectgivethegovernmentthe
optionofdroppingthosenotreallyneedyfromthescheme.Thereallyneedyhouseholdsweredefinedasthesetofthosefallinginincome
termsbelowtherevisedofficialTendulkarpovertylineplusanadditional10percentabovethatline.Thiswasaclumsyconcessiontokeeping
coverageequaltoatleasttheprioritysectionidentifiedbytheNAC.
Giventhispotpourriintermsofschemesdefinedbycoverage,quantumofaccessandprice,thedebateisbeingshiftedfromonebetween
thosedemandinguniversalcoverageandthosewantingtorestricttherighttofoodtothesocalledneedy,tooneabouthowmuchofIndias
currentpopulationshouldbeseenasneedy.However,therecanbenoagreementonwhatbeingneedymeans,asthescornwidelypoured
onthegovernmentsearlierpovertylinemadeclear.Andhavingamultidimensionalperspectiveondeprivation,whileappropriate,creates
significantdifficultiesinidentifyingbeneficiariesleadingtoerrorsofexclusion.
Therealreasonwhysuchtargetingisstillfavouredbysectionsingovernmentisthattheyseeitasawayofreducingthecostofthe
programme.Thisefforttoreducecosthasbeenbackedbyargumentstosuggestthatafoodsecurityprogrammewithuniversaloreven
extensivecoveragewouldeitherbeinfeasiblebecauseofinadequatefoodsuppliesorwouldbeimpossibletosustainbecauseoftheburdenit
wouldplaceonthegovernmentsbudget.
Intheelaborationofthefirstoftheseargumentstheemphasisisontheinadequacyofthedomesticallyavailablesurplusoffoodgrainsand
thefactthatifIndiaplacesasignificantdemandinglobalmarketstosupportitsfoodsecurityprogrammeitwouldresultinaspikeinprices
thatwouldbedamagingforall.Thatsucharguments,advancedbyboththeRangarajanCommitteeandtheParliamentaryStanding
Committee,couldevenbemadeisshocking.ItamountstostatingthatproductioninIndiaisnotincurrentcircumstancesandcanneverbe
adequatetosupportanefforttoensureminimumaccesstofoodataffordablepricesforthatsegmentofthepopulationthatwouldchooseto
availofgrainssuppliedthroughthePDS.Besidesthefactthatthisjudgementisbasedonquestionableassumptionsonavailabilityand
offtake,italsoignoresthefactthatIndiascurrentplightistheresultoflongyearsofneglectofagricultureandfoodgrainproduction(refer
WagesofNeglect)thathasresultedinalongtermdeclineinthepercapitaavailabilityoffoodgraininthecountry.Thisneglectisnow
beingmadethereasontoprunethefoodsecurityprogrammebyagovernmentthatcelebratesthehighgrowthratesofrecentyearsand
makestallclaimsaboutIndiascurrentpositionintheglobalorder.
Theotherargument,whichhasbeenthefocusofthecaseagainstanextensiveoruniversalfoodsecurityprogramme,isthatthecostinvolved
istoohighforagovernmentalreadyburdenedbyahighfiscaldeficit.Itmaybeusefultoreiterateoncemorethatafiscaldeficitcanalsobe
prunedbymobilisingmoreresourcesthroughincreasedtaxation,reducedtaxconcessionsandbetterimplementation.Thecontroversy
surroundingthecapitalgainsdemandmadeonVodafonemakesclearthatthisgovernmentiscommittedmoretoincentivisinginvestors,
includingforeigninvestors,thantomobilisingresourcestofinancecrucialexpenditures.
Toconcealthefailuretomobiliserequiredresourcesofficialdiscussionsonthefoodsecurityprogrammequoteabsolutenumbersofthe
subsidiesentailedineventhecurrentprogrammeandthewaytheyhaverisenovertimeinnominalorcurrentpriceterms.This,tostartwith,
exaggeratestherealincreaseinfoodprovided.ThuswhilethecentralfoodsubsidybillroseinnominaltermsfromRs.23,280croretoRs.
60,573crorebetween200405and201112,thefigurein201112afteradjustingforinflationinthewholesalepricesoffoodarticlesbetween
thosedateswasRs.30,239crore.OnereasonwhyfoodpricesriseistheadjustmentthatthegovernmenthastomaketotheMinimum
SupportPriceforfoodgrainstocompensateforcostofproductionincrease.Tousethattodeclarefoodsubsidyastheburdenisclearly
disingenuous.
Butwithoutmakingthisclearnominalfiguresarequotedandtakenasbeingirrefutablyindicativeofhowburdensomeitis.TheRangarajan
CommitteeestimatedthatthesubsidyrequiredtosupporttheNACsschemecouldgouptoRs.92,000croreandtheParliamentaryStanding
CommitteeestimatesthesubsidyrequiredtosupportitsrecommendationsatRs.1.12crore.Thesefiguresarecontroversialandinvolve
strongassumptions.
Further,besidestheinflationfactor,thereisanotherreasonwhyabsolutefiguresconveylittle.Takeforexamplethenumbersreportedin
Chart1givingtheratioofactualfoodsubsidiesoverthelastdecaderelativetoGDP.Inmostyearssubsidieshaveamountedtobetween0.6
and0.8percentofGDP,andtouched1percentinonlyasingleyear.Raisingthisfiguretomorethanonepercentisareasonabledemand
giventhefactthattheWorldFoodProgrammeestimatesthat,despitehighgrowthovertwodecadesandmore,aquarteroftheworlds
hungrypopulationresidesinIndiaandaround43percentofchildrenundertheageoffiveyearsaremalnourished.
Moreover,Chart2showsthatduringthe2000s,whencorporateprofitsweresoaring,taxconcessionsindifferentformsprovidedtothe
corporatesectoramountedtowellaboveonepercentofGDP.ThusthesumestimatedbytheParliamentaryStandingCommitteeasneeded
tosupportitsrecommendationwasat1.35percentofGDPin201112,lessthanthe1.36percentofGDPtransferredtothecorporatesector
throughtheseconcessionsin200708.Andcorporatetaxrebatesareonlyoneforminwhichthecorporatesectorisfavoured,asthe
controversiesoverspectrumsale,coalblocksandevengaspricingsuggest.Anyonewithasenseofsocialprioritiesshould,inthe
circumstances,recognisethattheargumentthatthemoneyisnotavailableiswithoutmuchbasis.Whatislackingisthewilltomobilisethe
surplusandallocateittowhereitisneededmost.

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