An illusion of food security

Sidharth Birla

The much-publicised Food Security Bill has done rounds of Parliament, and the Ordinance passed recently does reinforce that this is a serious political agenda. While the need for proper nutrition for our citizens is not in question, this security measure is premature. The country is not adequately prepared to faithfully roll it out.

Putting aside for a moment the wide-ranging fiscal implications of the Bill, which are clearly negative, it needs to be evaluated under many non-financial criteria. There is a clear distinction between having needs and being needy. It is nobody’s case that the needy should not be protected. But is it fair to artificially pander to well above the majority of the population?

SUBSIDY TARGETING

A fundamental issue is whether the Bill can achieve the stated purpose of food security. We believe true food security can come about only through a combination of various factors, the first of which is much higher agricultural productivity and production. The next is a population which has sufficient jobs and earnings to pay (whether directly or through government revenues) a fair remunerative price to the farmer. The final link is an efficient storage and distribution mechanism which minimises losses and leakages. If these issues are not scientifically addressed, the food security would amount to an unaffordable dole.

Nonetheless, as a true reflection of its spirit, the Bill should aim at providing food security to the poorest of the poor; really speaking, this means people below the poverty line. However, as conceived, it covers 75 per cent of the rural population and 50 per cent of the urban population.

Short of saying that this is the proportion of our country which is poor, one is hard-pressed to rationally justify this coverage. There is an obvious contradiction between providing fresh subsidies at a time when as a well-articulated policy subsidies are sought to be directed to the truly needy.

The government is simultaneously anxious to implement the Food Security Bill as well as direct cash transfers towards subsidies -- is this not a serious flaw? Can the purpose of the Bill not be met by direct transfer of cash or food stamps to those below the poverty line?

The Planning Commission estimates indicate that population below poverty line is 27.5 per cent. Further, even if one considers the Tendulkar Committee estimates on poverty, the population benefiting from the FSB should not exceed 37.2 per cent (to be precise, 41.8 per cent in rural areas and 25.7 per cent in urban areas).

Enormous savings in subsidies by restricting coverage to the BPL population can and perhaps should be directed to providing infrastructure and social benefits such as food warehouses, higher education and health benefits.

The Bill also falls back on the Public Distribution System, which has not been streamlined over years and is plagued with inefficiencies. It appears from surveys that about 40 per cent of beneficiaries denied ration cards and 99 per cent of those who availed the benefits reported they had not received supplies regularly.

RIGHTS WITHOUT OBLIGATIONS

Another pertinent question that comes to fore, and more so from past experience, is whether we are entering an era of granting “rights” without the need to foster a culture of matching “obligations”? The assurance of Rights alone cannot ensure delivery of any objective.

An obvious case in point is a review of the progress after making the Right to Education as a fundamental right. Due to the huge amount of population covered by the Bill, we could see the disappearance of a free market for grains as the Government will become the largest acquirer.

The unintended victim in this plot could ultimately be the farmer, who would either continue to suffer with un-remunerative prices for food grains, or would shift to production of other items.

Leakages from distribution channels will create a grey market and end up recycled as freshly produced grains in the MSP purchase counters of FCI the next year. Last but not the least, generating jobs remains one of biggest challenges being faced by the country. The NREGA has been a flagship programme with the aim of enhancing livelihood security in rural areas. What are the implications of the co-existence of NREGA and FSB? Will not the overlapping segments of population abuse benefits from two programmes?

We have not touched upon possible discriminatory and consequent legal aspects of granting such fundamental rights, nor have we considered the implications of a natural event such as a weak monsoon, or a global event that affects food production.

In such case, India may distort prices of the entire global food supply chain? How could we fund such level of imports if the need arises? After all, the Bill will create an enforceable right on all successive governments.

In summary, the premise of food security could be illusory. The intent for the care of the poorest is laudable. But one cannot guess what the moral hazards of pandering to needs, compared to caring for the needy, may be.

A nation on dole cannot be a productive one. Real food security can accrue only from a combination of improved food production and productivity, and creation of a much larger number of jobs.

(The author is Chairman of Xpro India and Digjam Ltd, and Senior Vice-President, FICCI.)