The National Food Security law may see daylight in the winter session of Parliament. After much debate and persistent doubts, food security will move to a more concrete stage. It is important to take a look at how well-prepared (or underprepared) the country’s food management system is to deal with a much bigger mandate.
The prognosis is not good.
There are two choke-points in the current system: at the level of purchase from farmers and at the level of distribution by the Union government to the states. In both cases, it is the economics of managing food that creates problems.
When the food security law is made operational, 75% of rural and 50% of urban households will gain access to subsidized foodgrains. This will necessitate the Union government— through the Food Corporation of India (FCI) and agencies of state governments that act on its behalf—to lay its hands on a much larger amount of what farmers produce.
There are only two ways of doing this: pay farmers a higher minimum support price (MSP) or effectively shut private traders out from these markets, leaving the government as the sole buyer.
A Business Standard report on Wednesday showed how the Union ministries of finance and food and consumer affairs are disinclined to raise the MSP for wheat by 15% as recommended by the agriculture ministry. The latter, in turn, had based its proposal on the recommendation of the Commission for Agricultural Costs and Prices. The opposition from the two ministries was due to their fears that a higher MSP would stoke inflation in these commodities.
These fears are not unfounded: at the stage of distributing food stocks down to the states, higher MSPs translate into ever-rising subsidies or an increase in the prices at which food is finally sold to poor consumers, defeating the purpose of enhanced coverage.
There may not be much time for the Union government to sort out this issue. The food security law—if everything proceeds smoothly—will be rolled out sometime next year. At the moment, the government is comfortably placed on the supplies front, so much so that it allowed the export of foodgrains. Problems will, however, surface anywhere from 16-18 months after the initial roll-out when the programme is accelerated. It will be good if the Union government devotes some attention to these systemic problems before they become difficult to manage.
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