Forbes India 15th Anniversary Special

The Good and Bad of the Food Security Bill

The Cabinet recently passed the food security bill. But does it only make politically correct noises?

Published: Apr 27, 2013 06:28:23 AM IST
Updated: Apr 26, 2013 05:07:31 PM IST
The Good and Bad of the Food Security Bill
Image: Jayanta Dey / Reuters
The prolonged battle for the right to food had forced the Supreme Court to ensure universalisation of welfare schemes like mid-day meals for schoolkids

The Food Security Bill (FSB), which had been in the works since UPA took office for the second time in 2009, finally received the nod from the cabinet in March. But, contrary to expectations, it was panned by many sections of the press. An editorial in The Indian Express implied that the bill had a fundamental flaw, while the one in Mint explained why it will not work. The bill received adverse reactions from the aam admi too, as was evident by the comments readers of the Financial Press left on the website.

But the FSB is not an idea that the government came up with overnight. It’s been debated over several years and across several platforms. Then why is India’s biggest social welfare policy measure facing such flak?  

The right to food campaign started when the Rajasthan unit of the People’s Union for Civil Liberties filed a writ petition in the Supreme Court in April 2001 demanding that the country’s food stocks be used to alleviate hunger and malnutrition. The prolonged battle between the PUCL and the Union of India led to many “interventions”, like instituting food commissioners, to ensure universalisation of welfare schemes like mid-day meals for schoolchildren.

The Good and Bad of the Food Security Bill
Meanwhile, the UPA’s first stint had achieved two very important results that propelled the right to food campaigners to push forward their agenda: The government had passed the National Rural Employment Guarantee Act (now the MGNREGA) and ensured that India grew at over 9 percent for successive years. With the country riding at such a high, the activists had asked the UPA a simple question when it took over the second time in 2009: How can India be among the world’s fastest growing economies and yet have hunger and malnutrition levels worse than that of Sub-Saharan Africa?

It turned out to be a potent argument and, despite much dilly-dallying, the UPA approved the bill in March.

But by now, the argument had lost its edge primarily due to the sharp deceleration in India’s growth rate. From growing at an average of 9 percent between FY06 and FY11, India is huffing and puffing to even touch the 5 percent mark now. Slower growth has meant a steep fall in tax revenues.

The fiscal deficit is also a major concern and if India further slips on its promised 5.2 percent growth rate in FY14, the credit rating agencies could downgrade the country’s investment climate to “junk” status. If that happens, corporate India would find it harder, and costlier, to raise loans for investment.

“The government has passed it [the FSB] with great reluctance and obviously corporate India is not very happy,” says Biraj Patnaik, a senior campaigner for the right to food. Reason: The bill is likely to cost the government Rs 1.25 lakh crore each year. 

But this entire amount is not new expenditure for the government. India is already spending close to Rs 1.16 lakh crore on schemes that are listed as “entitlements” under the FSB. For instance, food subsidy (Rs 85,000 crore), mid-day meal (Rs 13,215 crore), Integrated Child Development Scheme (Rs 17,700 crore) and maternity entitlements (Rs 450 crore).

So, the additional expenditure is around Rs 8,635 crore, an increase of 0.09 percent of the GDP. But its impact on fiscal deficit is an old issue that had largely been overcome when the growth was good. Opposition against the FSB now came from different quarters.

Hunger vs Malnutrition
The new reason for disapproval stems from the different ways in which hunger and malnutrition are defined. Naysayers argue that eradication of malnutrition requires more than just removal of hunger. Simply providing for the basic minimum food is unlikely to do enough to improve India’s ignominious malnutrition levels. Food security is necessary but not sufficient for nutrition security.

“For nutrition, you need to focus on children and women. The FSB does take a step ahead in that direction, though it could have done more on those fronts,” says Reetika Khera, professor at IIT-Delhi.

The other area of concern is increased government involvement when it comes to procuring grains from the market. The fear is that the FSB will significantly raise the amount of foodgrain procured from the market and distort agriculture prices in the process. “The government procures just under one-third of the total production. The bulk of foodgrain trade is in the private sector and it will remain there. This is because the current allocation for the food schemes covered by the bill is about 56 MT [million tonne] of grain; this will increase to approximately 62 MT—an increase of just four MT,” says Khera.

Food Over Facts
Montek Singh Ahluwalia, deputy chairman of the Planning Commission, and considered as one of those unhappy with the entitlement mode adopted by the UPA, settled the debate while addressing students at IIT-Delhi recently. “This is no longer about facts. This is about a moral recognition that something is wrong. There is now a broad consensus (among policymakers) and that is new.”

[The FSB comes up for debate when the Budget session of the Parliament is re-convened on April 22.]

(This story appears in the 03 May, 2013 issue of Forbes India. To visit our Archives, click here.)