The bill was truncated from the NAC version at the first stage when the government finalized it and then the parliamentary standing committee went along similar lines and recommended further paring down of the benefits. Sources said concerns were raised by the Congress leadership about reducing existing benefits under the Antodaya Anna Yojana to the 2. 5 crore poorest families as well as the recommendation of the standing committee to remove the Integrated Child Development Scheme (ICDS) from the mandate of the bill, which was advised by the women and child development ministry.
Sources said the party leadership was unhappy with the move to reduce existing entitlements under UPA’s flagship scheme instead of providing larger benefits. The government is likely to revise the bill keeping these views in mind and look at a much higher coverage in at least the 250 poorest districts of the country. The standing committee had recommended providing 5 kg of rations per person to 75% of rural population and 50% of urban India – a formula the government was happy with till the party leadership intervened.
The standing committee had recommended doing away with two categories of beneficiaries with differential benefits – a move the government had contemplated anyway after having sent the bill to Parliament. But curtailing the total number of beneficiaries and reducing the benefits to the poorest has not found acceptance with the party leadership, sources said. The government could now consider restoring the monthly allocation to the poorest back to 35 kg of rations per family.
Under an apex court order, the poorest and most disadvantaged are provided 35 kg rations at present. With the party keen to see the bill in Parliament during the budget session, a revised version could see the ICDS scheme coming back under the purview of the bill as a legally guaranteed right along with other food delivery mechanisms such as community kitchens. The UPA has already been caught on the back foot with opposition-ruled states providing cheaper rations to greater numbers under their own schemes following the lead of Chhattisgarh.
The delay in pushing the bill through, coupled with the constant and often publicly expressed differences between different arms of the government and the UPA on the shape of the legislation have taken the sheen off UPA-2’s big ticket scheme Food Security Bill is affordable The subsidies meant for the poor are always under attack, while the rest are able to retain their privileges. The additional allocation in grain and money terms will neither distort the grain market nor place a burden on the fisc.
Many recent commentators have portrayed the National Food Security Bill (NFSB) as an “unbearable burden” on the exchequer. The facts, however, do no substantiate the claim. The NFSB has been trashed from time to time in the English dailies. For instance, Business Line (March 21, 2013) published an article titled “Food Security Bill will torpedo Budget”. Another national daily claims that the Bill has a “fundamental flaw” that places “an unbearable burden” and “distorts agriculture” (Indian Express, March 19, 2013).
Quite often, the claims are partly due to a misconception that the government is making new financial and grain commitments under the NFSB. In fact, the NFSB does little more than turning into legal entitlements pre-existing food security schemes such as the Integrated Child Development Services (ICDS) Scheme, Mid-Day Meal (MDM) Scheme, Public Distribution System (PDS) and maternity entitlements. Some commentators have said that it is precisely the legal commitment that will lead to problems in the future — for example, the fear of the emergence of a government monopoly in the grain market.
This fear is not borne out by the facts. Under the PDS, ICDS and MDM, the government currently allocates about 58 million tonnes of grain. To meet this commitment, the government currently procures about 30 per cent of grain. The NFSB commits 62 million tonnes, i. e. , an additional 4 million tonnes. The Budget of 2013-14 allocates Rs. 31,000 crore for two children’s food schemes — school meals and the ICDS which reaches children under six. The Budget allocation for the food subsidy in 2013-14 is Rs 90,000 crore.
According to our estimates, the food subsidy will increase from Rs 80,000 crore (in 2012-13) to Rs 1,11,221 crore, under the NFSB. Thus, the NFSB implies an increase of just over Rs 30,000 crores in financial terms and 4 million tonnes in real (grain) terms. Can India afford this? Speaking at a panel discussion at IIT Delhi in February, Deputy Chairperson of the Planning Commission, Montek Singh Ahluwalia, said “it would be dishonest” to say that we cannot afford the Food Bill, and that the subsidies that we need to target are those enjoyed by the middle classes (e. g. , fuel).
Speaking at the same discussion, Amartya Sen made a pertinent point — that the reason why it is more difficult to reduce subsidies enjoyed by the middle classes (fuels such as LPG, petrol and diesel) is that the beneficiaries of those are more vocal than the rural poor or children under six who benefit from the food subsidies. This point is well illustrated by the events following last year’s Budget. The Budget 2012-13 announced a 1 per cent excise duty on unbranded jewellery and doubled custom duty on gold to 4 per cent. Gold is the country’s second biggest import, after crude oil.
This burden on the current account deficit was an important reason for doubling the customs duty. Following this, the All India Gems and Jewellery Trade Federation and others initiated a strike which went on for 21 days. They argued that the industry, including the “large” number of people it employs, and buyers of gold, would suffer. A massive media campaign was launched, following which the Finance Minister withdrew the excise duty. According to the revenue foregone statement presented along with the Budget 2013-14, the revenue foregone from the gold and diamond industry for the previous financial year was Rs. 5,000 crore. Such tax breaks are often justified on the grounds of the employment potential of the gems and jewellery industry.
According to Invest India, a website of the Ministry of Commerce and Industry, “The sector provides employment to around 1. 8 million people. In the next five years, the sector is expected to create additional employment for around 1. 1 million people. ” According to the National Sample Survey Organisation, 2009-10, the size of the Indian workforce is between 430-471 million persons. If the gems and jewellery industry employs 3 million people as per the Ministry’s target, this would be 0. per cent of the workforce. An industry that employs less than one per cent of the Indian workforce is currently enjoying tax benefits amounting to Rs 65,000 crore (nearly 20 per cent of all revenue foregone).
The Food Bill will benefit 67 per cent of the population at an additional cost of Rs 30,000 crore, yet it is said that it will “torpedo” the Budget. If anything, the NFSB does not go far enough. The NFSB tabled in Parliament in December 2011 included special provisions for the destitute and other vulnerable groups (e. g. , community kitchens and social security pensions).
These have been discarded in the version cleared by Cabinet on March 19, 2013. In many rural areas, the Block is already too far to go to complain, yet for violations of rights under the NFSB, grievance redressal only begins at the District level. Viewed in this comparative perspective (for example, it is approximately 1 per cent of the GDP), few can question the affordability or desirability of the NFSB. In absolute terms it is not a small amount. One might argue whether such expenditure is worth it, given the “fact” that the programmes in its ambit, for example, the PDS, are “dysfunctional” (Indian Express, March 19, 2013).
However, recent data from the National Sample Survey of 2004-05 and 2009-10 suggest that while the functioning of the PDS is far from perfect, we do need to update our “facts”. In joint research with Jean Dreze, we show that the implicit subsidy from the PDS eliminates 18 per cent (14 per cent) of the “poverty gap” — or the difference between the poverty line level of income and the median income (or monthly per capita consumption expenditure) of poor households — among poor rural (urban) households.
Again, there are marked inter-State contrasts — in Tamil Nadu the corresponding figure is 60 per cent and in Chhattisgarh and Andhra Pradesh it is nearly 40 per cent. The real question then is not whether India can afford to have a right to food but as the Food Minister said in a recent interview, “Can we afford not to? ” Food as a right In its latest form, the National Food Security Bill, 2013 promises to address the extreme irony of an ambitious nation holding mountains of food in storage, while masses of its people are undernourished or even starving. The right to food is finally on the threshold of being legislated.
Every step taken to widen the coverage of food security schemes is an advance. Yet, the empirical truth is that incremental measures at targeting the needy are a poor substitute for a cohesive, rights-based universal system of food entitlements. There are, no doubt, many positives to the new legislation, such as coverage of up to 75 per cent of eligible priority households in rural areas, the importance given to women as the head of the household for issue of ration cards, inclusion of pregnant and lactating women for free meals (some in government wanted to take away this entitlement from women ho bear more than two children but the idea was sensibly dropped), and setting up of State Food Commissions to investigate violations of entitlements.
Under the proposed law, it will be up to the States to frame criteria and choose the priority households for food entitlements, an exercise that will inevitably be accompanied by the well-documented troubles associated with targeting any welfare scheme. Exclusion of any deserving household is unfair and divisive.
It poses a challenge to States that wish to provide universal access, an issue that is bound to be felt acutely in urban areas attracting tens of thousands of migrant labourers. The Centre is unwilling to countenance a Universal Public Distribution System on the ground that too much money is involved. Even under the latest Bill, it is argued, the exchequer would have to bear a heavy expenditure of Rs. 1. 24 lakh crore. Yet, the government has not hesitated to build up expensive food stocks over the years, some of which is left to rot, mainly to pay the high support prices demanded by influential sections of the farm lobby.
Moreover, the policy orientation is disproportionately favourable towards some sectors such as infrastructure, compared to food and health care. Evidently, the Food Bill can and should do a lot more, to become near-universal and win over sceptics such as Tamil Nadu, which has opposed it on the ground that it is inferior to the universal PDS in the State. Also noteworthy is the fact that the Chhattisgarh Food Security Act has done better than the Centre’s proposed law in some respects — by supplying subsidised pulses and covering 90 per cent of households, for example.