Group President, Group Managing Director & Editor In Chief: Dr.Shelly Ahmed

Wednesday, April 10, 2013

A Big Question To India 'How To Feed The Hungry?'

Consider the two best-known facts about India’s food economy. On the one hand, 42 percent of our little children are malnourished. On the other, our godowns are bursting with foodgrain. Can we join the dots by drawing a straight line from the warehouse to the homes of the hungry?

That’s only the most obvious of our food system’s glaring contradictions. subsidies on food and agriculture have shot up and bumper crops have been harvested, but instead of bringing down food prices, it seems to have had the opposite effect. Farmers are being paid more than double what they were 10 years ago for their foodgrain and retail prices of food have gone up — but they are still committing suicide.

We congratulate ourselves on record foodgrain exports at a time when per capita food availability at ho-me is declining — and we lose money on every tonne that we export. Exporters make profits, but the exchequer loses.

Into this crazy picture, the UPA government proposes to introduce the National Food security Bill. No one knows what impact it will have — economic, political, social — but it appears set to become law nonetheless. Will it fix the problem or cripple the economy?

The success of the MGNREGs, which was passed in the teeth of considerable opposition, is held up as an example of a positive social legislation that worked. so why should the Food security Bill not prove an even bigger game-changer?

It is not a perfect Bill and has been variously criticised for low food entitlements, inadequate attention to nutrition, too much discretion to state governments in identifying beneficiaries, a poor grievance redressal mechanism and providing scope for substituting the Public Distribution system (PDs) with cash transfers.

However, there’s no argument against a framework law on the right to food per se. When asked whether India could afford to have a statutory right to food, Food minister KV Thomas answered, “Can we afford not to?”

Agriculture minister Sharad Pawar voiced his doubts in the Union Cabinet. If a small farmer could get foodgrain for as little as Rs.1 per kg, as proposed in the Food Security Bill, why should he bother to grow his own? And what would happen in a bad crop year, or successive bad years?

Policymakers clearly have little idea how much implementing the Right to Food will cost. In the current year, Finance minister P Chidambaram has allocated only Rs 90,000 crore towards the food subsidy, of which Rs. 10,000 crore is the additional amount for implementing the Food security Bill. The food ministry estimates that the subsidy bill in the current year is likely to cross Rs 1.3 lakh crore.

And even this is inadequate, according to a paper by the Commission on Agricultural Costs and Prices, which puts the cost at Rs 2.41 lakh crore in the first year of implementation. Over three years, it says, the outlay will be Rs 6.82 lakh crore, including the Rs 1.1 lakh crore required for upscaling food production.

Whatever the figure, the fact is that every year, the minimum support price (MSP) will go up and impact the food subsidy bill. since 2003-04, MSPs of wheat and rice have more than doubled, from Rs 640 to Rs 1,350 per quintal in the case of wheat, and from Rs 550 to Rs 1,250 for paddy. But the food subsidy bill has gone up more three times in the same period, from Rs 25,181 crore to Rs 85,000 crore. This is because handling and storage costs have gone up as well.

small wonder that there is an annual tug of war between the ministries of food and agriculture. The former, as the purchaser, does not want the MSP increased. The latter, representing farmers, insists that it must be.

The MSP is a political and an economic necessity; it is especially relevant to farmers who have the means to produce surplus foodgrain for the market. Farmers have come to expect procurement at the time of harvest — this is because market prices are known to fall below the “minimum” prices set by the government during the harvest glut. According to Thomas, “We are bound to provide food and to procure… when the farmers who have grown the grain are waiting for you to procure, can you say no?”

Given annually escalating costs, will the Food security Bill cripple the economy? The head of a leading global commodities major observed, “You will run your ship into the ground. If you implement the Food security Bill today, India’s credit rating will fall by two points tomorrow.”

But economist Jean Drèze says the Bill makes sense, not merely on civilisational, but economic grounds.
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