New Delhi: The United Progressive Alliance’s (UPA’s) proposal to draft and implement an ambitious legislation to provide low-cost food to the poor faces daunting challenges, say people working on the law, and its implementation could cause the government’s food subsidy bill to increase by 65% to Rs70,000 crore.
The contours of the food security law were laid out by President Pratibha Patil in her speech to members of both Houses last week. She said the legislation would “provide a statutory basis for a framework, which assures food security for all. Every family below the poverty line in rural as well as urban areas will be entitled, by law, to 25kg of rice or wheat per month at Rs3 per kg. This legislation will also be used to bring about broader systemic reform in the public distribution system (PDS)”.
Apart from the increase in the subsidy bill, the implementation of the law could cause the government to go against some Supreme Court orders. And before the scheme is implemented, the Centre and state governments need to figure out exactly how many poor people there are in India —a statistic that varies widely across estimates by various departments.
Senior government officials working on a draft of the law have been asked to make sure it is ready to be passed within 100 days of the UPA’s return to power. The government, say analysts, sees this as the equivalent of the employment guarantee Bill it passed in its first stint in power. The National Rural Employment Guarantee Scheme, they add, is one of the factors that worked in favour of the UPA and helped it return to power last month.
The officials say they have conveyed their apprehensions to Union agriculture minister Sharad Pawar and his junior minister K.V. Thomas in meetings convened to discuss the Bill. “It is going to be a huge financial liability on the government,” said one of the officials who, like the others, didn’t want to be identified given the sensitivity of the subject.
There is also some confusion over the number of poor in the country.
While a Planning Commission estimate puts the number of below poverty line families at 62.5 million, state governments estimate that this number is closer to 107 million. Given that the government pays Rs8.50 to buy a kilogram of rice and Rs10.80 for a kilogram of wheat, “the cost to provide 25kg rice and wheat at Rs3 per kg will come around to Rs70,000 crore a year”, added the same official.
That number is disputed by an eminent food economist.
“The additional cost (of the law) is Rs5,000-7,000 crore,” said Ashok Gulati, director of International Food Policy Research Institute. If Gulati’s estimate is accurate, the food security law will not push the food subsidy bill beyond Rs50,000 crore. The interim budget estimate of the food subsidy bill in 2009-10 was Rs42,490 crore. Food subsidy is the largest explicit subsidy in the government’s budget.
Another problem government officials foresee is availability of foodgrain.
“Providing foodgrain to the poor when there is a surplus should not be an issue. But any crisis in the foodgrain production will derail the scheme. Importing foodgrain is not going to be a feasible alternative as foodgrain deficiency (when it happens) is a global phenomenon these days,” said the government official quoted in the first instance.
That is a real concern, said S. Raghuraman, head of trade research at Agriwatch, a Delhi- based research firm. He said 2009 was a “record year” in terms of the amount of grain the government has been able to buy.
This would make it easy to implement the food security law this year, he added.
India’s foodgarin stock in 2007 could rise to the highest level since 2002 in the past 19 years, Citigroup Research’s India Macro Report released on 8 June said.
“But what happens in years of shortage?” asked Raghuraman. “Since it is an election promise, the government will (still) go ahead with it without working out its long-term implications.”
Gulati, however, said the existing buffer stock of foodgrain is adequate to cushion fluctuations in output.
The proposed law will come on top of existing schemes that aim to provide the poor with subsidized foodgrain through the PDS. One such scheme is the Antyodaya Anna Yojana (AAY), under which around 25 million socially backward families get 35kg of rice or wheat at Rs3 and Rs2 a kilogram, respectively.
Recent developments around AAY are another challenge the government has to deal with as it tries to make the food security law a reality. In 2001, activist group People’s Union for Civil Liberties filed a public interest litigation in the Supreme Court seeking legal enforcement of the right to food. The Supreme Court has not given its final verdict on the subject, but it has issued some interim orders and appointed two commissioners to monitor the implementation of its interim orders.
The interim orders have converted the benefits of AAY and other schemes into legal entitlements. For instance, if an AAY cardholder does not get the full quota of foodgrain at the designated price, he or she can approach the court. AAY actually offers a better deal than what is currently proposed under the new law.
If AAY is bundled into the new law under the entitlements announced by Patil last week to Parliament, it would lead to a problem, said one of the commissioners appointed by the Supreme Court.
“If it (Patil’s announcement on entitlements) is true, it will lead to a contradiction,” said Harsh Mander, a special commissioner appointed by the Supreme Court.
Sangeeta Singh contributed to this story.