NAC proposes subsidised food for 75 percent Indians - Atasi Das

The much hyped NAC recommendations made at the sixth National Advisory Council (NAC) meeting held on 23 October 2010 involves the issue of ‘legal entitlement to subsidised food’; the food security net has been designed to exclude the top 15 per cent of the economically well-off rural population and 60 per cent of the urban elite. The NAC recommendations will come under the scrutiny of the Union Government before being incorporated as part of the Food Security Bill. The bill will be implemented in a phased manner after its enactment.

About NAC
The National Advisory Council (NAC) is an advisory think-tank comprising renowned scientists, economists, academic administrators, social activists, politicians and retired bureaucrats and is currently chaired by the Congress President Sonia Gandhi. It primarily provides policy inputs on social sector planning to the Union Government.

Major NAC recommendations on the Food Security Bill
Atleast 75 per cent of the Indian population should have legal entitlement to subsidised foodgrains; 90 per cent of the rural population and 50 per cent of the urban population ought to have access to subsidised food security. Families classified as ‘Priority households’ (46 percent in rural and 28 percent in urban India) should be entitled to a monthly allotment of 35 kg of foodgrains at a subsidised price: “Re 1 per kg for millets, Rs 2 for wheat, Rs 3 for rice”. The monthly quota translates to 7 kg of subsidised foodgrains per person.

Households falling under the ‘general’ category (44 percent in rural and 22 percent in urban India) will possess a monthly entitlement to 20 kg of food grains at a subsidised rate: prices should not exceed 50 percent of the current government set “Minimum Support Price” for millets, wheat and rice. This translates to an allotment of 4 kg of subsidised foodgrains per person.

Prices, minimum coverage (of the scheme) and foodgrain entitlement shall stay unchanged atleast till the end of the twelfth five-year plan (2012-17). Rural coverage of the scheme will be adjusted for different states as per the 2004-05 poverty estimates of the Planning Commission.

NAC envisages the food security law to come into force from the next financial year and expects it to be implemented countrywide by 2014.

A revamped Pubic Distribution System (PDS) by the next financial year (2011-12) for effective channelisation of the subsidised foodgrains. Proposed PDS reforms include steps like decentralised procurement and storage of foodgrains, transparency of records, revised PDS commissions and a wider PDS commodity basket. NAC has recommended that in the first round the subsidised food entitlements be extended to 85 percent of the rural population and 40 percent of the urban population. The criteria for categorisation of the beneficiaries into ‘priority’ and ‘general’ households lie with the Government of India.

Legal entitlements towards child and maternal nutrition, community kitchens, feeding programmes for destitute and vulnerable groups, universal access to proper sanitation facilities, safe water and primary healthcare and measures for revitalising the agricultural sector are also amongst the NAC recommendations. Other programmes receiving NAC recommendation include nutrition and health support programmes for adolescent girls, school health programmes and a nationwide programme for creches.

The ground reality
India, Asia’s third biggest economy with a billion-plus population already provides subsidised foodgrains (including pulses) to around 180 million low income households through the public distribution system; around 40 percent of India’s population fall under the U.N. estimated poverty line (at $1.25 per day). Narendra Jadhav, NAC member has observed that the initial phase of the proposed food security scheme will cost the government exchequer an extra Rs15,137 crore, which will subsequently rise to Rs23,231 crore after the final round of implementation. This may derail the government’s efforts at reining in its ballooning fiscal deficit at 5.5 percent of GDP in the 2010-11 financial Year (from 6.9 percent the last financial).

The idea behind the proposed Act is to shield the economically marginalised population from the singes of the sustained inflationary pressures in India, particularly food inflation. The Centre’s food subsidy bill for 2009-10 reportedly stood at around Rs 55,600 crore. Headline inflation was 8.6 per cent in August 2010 and food inflation stood at 13.75 per cent in the week ended 16 October 2010. Another supply side problem for foodgrain availability is that, India’s agriculture is still very much dependent on the monsoon and in recent years India has suffered a decline in the volume of its agricultural produce.

Jean Dreaze, NAC member and right-to-food security activist has expressed his disappointment at the rollout of a ‘minimalist’ draft in place of the universal PDS, ostensibly due to government budgetary considerations and inadequate supply of foodgrains (particularly that of wheat and rice). The political opposition has rued that the government had overlooked its budgetary constraints while doling out tax concessions to the well-to-do-off sections of the society.

Conclusion
Developed countries like the USA have a robust institutionalised social security framework, which is made good in mixed economies like India through the planning mechanism. India’s high growth trajectory has failed to promote inclusive growth and social security measures like food entitlement are targeted at protecting the economic interests of the poorer sections of the society, who are the most hard-pressed in the era of market force dynamics. Nearly 800 million people are set to benefit from the proposed Food Security Act in India; but critiques say that this populist move will help in to garner political support for the ruling party ahead of the October state elections. The government move at shielding the poorer section of the society from the effects of inflation apparently runs counter to its decision to lift fuel subsidy earlier this year; it remains to be seen as to how the government manages this magnanimous social sector spending without much fiscal imprudence.