ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

National Food Security Ordinance: Anything But Expensive

While critics have overblown the cost estimates of the National Food Security Ordinance, the ordinance itself is a missed opportunity. What is needed is a more comprehensive Act which incorporates measures such as procurement, storage and distribution through a decentralised, strengthened and universal public distribution system, among others and a strong grievance redressal and monitoring mechanism. 

With the promulgation of the National Food Security Ordinance (NFSO) last week, there have been many shrill voices warning the nation about the high costs of its provisions. The media, especially the TV news channels, have been continuously flashing figures on how expensive, and therefore harmful to the Indian economy the food bill will be. The most popular figures seem to be 3% of the GDP annually as estimated by the economist Surjit Bhalla (Indian Express, 6 July 2013) and Rs. 6 lakh crores over the next three years as estimated by Ashok Gulati, the Chairperson of the Commission of Agriculture Costs and Prices (CACP) (The Economic Times, 4 July 2013). It is necessary to understand how these figures have been arrived at, based on extremely dodgy assumptions. Further, there is a need to look beyond this superficial discussion and investigate how far this ordinance will go in addressing people’s hunger and malnutrition.

Surjit Bhalla uses an erroneous method to arrive at this estimate of Rs. 3 lakh crore per year. He assumes the actual consumption and outreach of PDS as reported by people in the NSS survey to be the current provision of the government and adjusts it to the proposed coverage and lower prices under the ordinance. So, he argues that according to National Sample Survey (NSS), 44% of the people get access to Public Distribution System (PDS) at an average of 2.1 kgs per head[1]. To expand this to 67% coverage and 5 kgs per head at lower issue prices as proposed by the ordinance, the food subsidy of 2011-12 (Rs. 72000 crores) has to be increased 4.3 times. The implicit assumption here is that the present level of leakages as reflected in the NSS will remain the same even after the ordinance is rolled out and further, that the government will allocate resources taking into account leakages. His calculations do not take into account the fact that the allocation of foodgrains under the Act will in fact go up only by 2 mn tonnes from 60 mn tonnes to 62 mn tonnes or that the current allocations are at three different issue prices for the Above the Poverty Line (APL), Below Poverty ine (BPL) and Antyodaya Anna Yojana(AAY) populations; or that currently the allocations are at the scale of 35kgs per household per month or even that the expenditure of many state governments on food subsidy will now go down as they will be getting grains cheaper from the central government. By using statistics to one’s own convenience without clearly mentioning the assumptions being made, such a method of estimating the food subsidy is only misleading.

Dear Reader,

To continue reading, become a subscriber.

Explore our attractive subscription offers.

Click here

Or

To gain instant access to this article (download).


Pay
INR 59

(Readers in India)


Pay
$ 6

(Readers outside India)

Support Us

Your Support will ensure EPW’s financial viability and sustainability.

The EPW produces independent and public-spirited scholarship and analyses of contemporary affairs every week. EPW is one of the few publications that keep alive the spirit of intellectual inquiry in the Indian media.

Often described as a publication with a “social conscience,” EPW has never shied away from taking strong editorial positions. Our publication is free from political pressure, or commercial interests. Our editorial independence is our pride.

We rely on your support to continue the endeavour of highlighting the challenges faced by the disadvantaged, writings from the margins, and scholarship on the most pertinent issues that concern contemporary Indian society.

Every contribution is valuable for our future.