Making food security work
For all the criticism aired against it, the National Food Security Bill (NFSB) strikes a reasonable balance between providing subsidised foodgrain entitlements for a large section of India's population that needs it and the feasibility of extending this right by law. From a grain availability standpoint, there is nothing insurmountable about meeting the goal set under the Bill, slated for tabling in the current session of Parliament. The NFSB proposes to cover 46 per cent of the country's rural and 28 per cent of the urban population — together about 49 crore people as per the 2011 Census — under the ‘priority' category. These households would be given a monthly grain quota of seven kg per person, translating into an aggregate annual requirement of roughly 42 million tonnes (mt). Supplying it should be no problem, as Government agencies have been procuring an average 53 mt of grain (31 mt rice and 22 mt wheat) in the last five years. Any fears of open market prices rising on account of ‘priority' household entitlements are, hence, misplaced. These apprehensions would stand further diminished, given the state of the public distribution system (PDS) in Uttar Pradesh or Bihar that house much of India's poor. Even if the Bill gets passed, it will take some time for these States to implement the scheme on the ground.
Besides ‘priority' households, the Bill also seeks to cover another 29 per cent of the rural and 22 per cent of the urban population under the ‘general' category. For these additional 33 crore people, the individual monthly grain entitlement is limited to 3 kg or 12 mt, taking the total grain requirement to 54 mt. This virtually corresponds to the existing levels of procurement, which may actually go up with the Government's plans to extend the Green Revolution to Eastern India.
The problem with the NFSB is not with supply as much as the unrealistically low rates – Rs 2-3/kg for ‘priority' households – at which grains are be priced. The implications here are not just fiscal; selling at these rates increases the possibility of leakages, while also disincentivising farmers from cultivation. A better idea would be to make available grain through PDS outlets at open market prices and separately issue food stamps or vouchers to the targeted population against the purchases they make. For this, it is not necessary for the PDS prices to dynamically match the market prices; even a reasonable alignment would eliminate the temptation for diversion. The stamps/vouchers, representing the difference between the open market price and the desired lower rate for the targeted quantity of grain, could be subsequently encashed through traditional banking channels. The Government's focus must primarily be to ensure that the PDS has enough quantity of grain to sell, which will happen if there are no leakages. Simultaneously, it should step up procurement by getting not only state agencies, but even private players to buy on its behalf at the official minimum support price. That would be a win-win for both farmers and food-insecure consumers.
The quantum of grain required for Right to Food is not the problem. The issue really is of making the PDS deliver....
-Umesh Shanmugam
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