Back-door entry of Food Security Bill
Just three weeks ahead of Parliament session, the UPA government surprised many by introducing the much hyped Food Security Bill through an Ordinance on July 5. The back door route was adopted because the government was unsure about its passing in the Parliament. Instead of taking such a decision in last four years the haste displayed at this moment left many questions unanswered—why the route of Ordinance was adopted when the Parliament is scheduled to meet on July 26; if the scheme was so much necessary why it was not brought in nine years; if the existed PDS system failed due to corruption, how can it benefit the people now; why the government which was ready to sacrifice itself over nuclear pact and FDI chose to bypass the Parliament on it; why the Congress evading from debate on this issue in Parliament, etc.? These questions are serious because most of them have been raised either by UPA partners or by the parties supporting it.
Though the government decision has been challenged in Supreme Court through a PIL, fact is that the Congress launched the scheme as a Brahmastra to win the coming general elections, which may be held any time. However, majority of the parties are principally with the scheme, the objections raised by them on certain provisions could have easily been settled through a debate in the Parliament. Why the Congress is evading from such a debate surprises all. It puts a big question mark over the ability of this government to implement the scheme effectively. This question becomes relevant because this government almost failed to implement other similar social security schemes like Mid Day Meal, MGNREGA, etc.
It is an irony that 67 per cent population of the country does not have sufficient food and lakhs of tonne foodgains rot in the godowns. Despite having the stock of over 50 lakh tonne goodgrains people are dying of hunger in the country. Even the Supreme Court reprimanded the government on this issue. But nothing concrete is done on this front so far. Till 2003, Brazil also faced the similar situation of hunger, but now it is hunger-free nation. If Brazil can do it why can’t we?
Calling it a game changer, the Congress hopes to change the outcome of the general elections through it. But the experts feel the scheme will have an enormous impact on the cereals market and the farm economy and presents significant operational challenges. It will also impact the government finances and widen the subsidy bill. The government claims the cost is budgeted at around Rs 124,000 crore a year, but some estimates say to implement the scheme in a sustainable and reliable manner can cost Rs 200,000 crore a year keeping in mind investment for stabilising production, creating infrastructure for storage and railways and upgrading public distribution system as well as an expected increase in the minimum support price.
The opposition parties are agitated over the manner in which the scheme has been implemented. Even the objections raised by Agriculture Minister Sharad Pawar were not taken seriously. In December last year, he not only questioned the feasibility of the project but also went on to say that the proposed Bill may adversely affect the farmers and consequently the food security of the country. West Bengal Chief Minister Mamata Bannerjee described it ‘impractical’ scheme. Some even termed it the step which would turn the “bread-givers (farmers) into beggars”. Tamil Nadu Chief Minister Jayalalithaa described it as ‘Food Insecurity Bill’ which Tamil Nadu did not require. Samajwadi Party chief Mulayam Singh Yadav accused the government of indulging in vote bank politics. The Left parties also slammed the Ordinance, while the BJP questioned the undue haste. Leader of Opposition in Lok Sabha Smt Sushma Swaraj termed the Ordinance as a deliberate attempt to denigrate the Parliament.
The experts feel that if the scheme is implemented as professed the real cost will be 3 per cent of the GDP or Rs 3,14,000 crore in a full fiscal year. Just in case the number doesn’t impress you, that’s more than the entire cost of all MGNREGA spends since 2005-06, the Rs 72,000 crore farm loan waiver, and many other government giveaways put together. The only conclusion one can draw is that the Bill is either a huge political hoax, or a gigantic fiddle with the budgetary arithmetic. Or both.
A prescription for disaster
The Food Security Ordinance may be a good election plank, but may not benefit many. In almost half the states, there are provisions for ensuring foodgrains to the poor at low prices. What would the Ordinance achieve? Precious little.
The ordinance reduces entitlements from 35 kg in rural and 20 kg a month in urban areas and is also silent on maternal and child care benefits that the original bill had talked about. It is an indirect admission of the government’s capabilities. It is indeed a dichotomy. While farm subsidies are being withdrawn, making agriculture unremunerative, the government is taking steps to increase subsidies on foodgrains. Who would benefit at the cost of the farmer? No, it is not the Food Corporation of India (FCI). It has been reducing procurement. Even this year it reduced it by 25 per cent. The private players, many large farms and MNCs in disguise, have entered the market. The government agencies, in short would not have stocks to cater to the needs.
The subsidies are estimated at Rs 1.25 lakh crore. It would be more as the transportation costs go on increasing. Turning nation into a massive ration shop and managing it is a formidable and unnecessary proposition. Why does the US not need this kind of a PDS? It does not because the country has evolved a system where food items, just not food grains, are available at affordable prices. Even modes of travel are not as expensive as it is in India, nor fuels are expensive and this is done through a chain of private business functionaries. The farm subsidies have played a significant role in keeping the food prices low in the US.
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 last over three years. The government has stacked excess rice and wheat. The FCI warehouses have been overflowing. As much grains rot every year as much it is procured. Since 2009, the government except expressing “helplessness” did not do anything. Are governments in this country so helpless? In 1963, when the Nehru government introduced PDS in a massive way in the wake of drought, it did not seek the shelter of a law for food security.
The Soviet Union collapsed because it could not ensure food supplies with mounting deficits. With high fiscal, current account and revenue deficits, it is a prescription for disaster. Or is it intended to be so? It is a “game changer” says minister Kapil Sibal. Since the government would not be having enough stocks to supply, the law (as it imposes a compulsion on the government) would be used to purchase foodgrains from private players and international dealers at inflated prices. This clarifies why FDI in retail has been opened up to 100 per cent. The bill would thus ensure a thriving foreign wholesale and retail sector. Its provisions are likely to open up legal route – compulsive purchases – for involved “players” – that is what happens in a “game” – to get rich quick. The UN ESCAP has recently said that food prices are increasing because of betting by large financial players.
This entire government has the least concern for the poor. The latest National Sample Survey (NSSO) survey 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? 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?