The Gist of Kurukshetra: February 2014

The Gist of Kurukshetra: February 2014

SUPPLY-SIDE CHALLENGES OF THE NATIONAL FOOD SECURITY BILL

Removal of malnutrition and hunger from the country is not only socially desirable but also necessary for improving overall economic development, as healthy people contribute more to the economy with their relatively higher level of productivity and efficiency. Hunger andmalnutrition put enormous cost burden on the society. A World Bank Report states that malnutrition brings down three percent of country’s GDP annually. Various survey reports indicate that in spite of relatively higher GDP growth achieved during the neo-liberal policy regime, hunger and malnutrition among a majority of Indianpopulation still persists.National Family Health Survey (2005-06) reveals that the percentage of aneamic ever-married women in the age group 15-49 has increased from 53.9 in 1998- 99 to 58.2 in 2005-06 in rural areas and from 45.7 to 51.5 in urban area.

Similarly, percentage of aneamic children has also increased from 75.3 to 81.2 in rural areas and 70.8 to 72.7 in urban area between the same periods. The International Food Policy Research Institute (IFPRI) report on hunger ranks India at 67 out of 81 countries, slightly above Bangladesh and below all other South Asian countries. In Global Food Security Index, India ranks 66 out of 105 countries. It is inthis context that theNational Food Security Bill (NFSB) assumes significance as it gives legal right tosubsidised food grain to67% of India’s population (75% of rural and 50% of urban households) and alsomakes provision for nutritious meal to pregnant and lactating mothers and children. Assuming no leakages in the distribution system, we can argue that the demand-side constraints in the food accessibility of the intended beneficiaries would largely be removed after the execution of the NFSB. However, supply-side constraints may have serious implications for maintaining the food security.This paper, therefore, focuses onthe supply-side challenges of the NFSB.

An Overview of NFSB

In recent years, the Government of India has taken several initiatives towards ensuring rights and entitlements of citizens of the country. The

NFSB is one of them. Its objective is “to provide for food and nutritional security in human life cycle approach by ensuring access to adequate quantity of quality food at affordable prices to people to live a life with dignity”. It provides legal guarantee to 75%of rural and 50% of the urban population to get five kg food grains per month at Rs.3, Rs.2, Re1 per kg for rice, wheat and coarse grains, respectively. The poorest of the poor continue to be covered under Antyodaya Anna Yajana (AAY) and get 35 kgs food grains per month. It also makes provision for pregnant women and lactating mothers to get nutritious meals and maternity benefit of at least Rs.6000for sixmonths. As per theNSSOsurvey 2009-10,monthly per capita consumption of cerealswas about 11.35 kgs in rural and 9.37 kgs in urban areas. Thus, the NFSB meets approximately 50 percent of cereal requirement of eligible households. ‘

The bill also empowers women as it considers the eldest woman in the household (18 years or above) as the head of the household for the issue of the ration card. The state and district level redress mechanisms will also be put in place and provision of social audit and vigilance committees will be made to ensure accountability, transparency and quick redressal of grievances.The State FoodCommission will also be set up. The Bill also stresses on revitalizationof agriculture and food production and universal access to safe drinking water and sanitation.

The Planning Commission of India has estimated state-wise coverage of rural and urban households under the NFSB. The percentage of eligible households varies across states. For example, among the major states of India, the percentage of rural households to be covered under the Bill is highest in Jharkhand (86.48%), followed by Bihar (85.12%), Chhattisgarh (84.25%), Assam (84.17%) and Odisha (82.17). It is estimated to be lowest in Kerala (52.63%), followed by Haryana (54.61%), Punjab (54.79%), Himachal Pradesh (56.23%) and Tamil Nadu (62.55%). The percentage coverage of urban householdswill be highest in Bihar (74.53%), distantly followed by Uttar Pradesh (64.43%), Madhya Pradesh (62.61%), Assam (60.35%), Jharkhand (60.20%), andChhattisgarh (59.98%). It would be lowest in Himachal Pradesh (30.99%), followed by Tamil Nadu (37.79%),Kerala (39.50%), Haryana (41.05%) and Andhra Pradesh (41.14%). This clearly shows that relatively developed states would get less number of households covered under theNFSB.

Current PDS inmost of the states is not found working efficiently. Planning Commission estimated that about 45-55%of food grains under the PDS did not reach to the intended beneficiaries. This Bill is expected toseal leakages in the food delivery system through technological and administrative interventions, such as, use of ‘Aadhaar Card’ and setting up of new accountability, transparency and grievance redressal system. Moreover, since more than two-third of Indian population, including nonpoor, get legal right to have cheap food grains from the PDS, possibility of leakages and supply of poor quality of food grainsmay be minimized due to their collective power and action. However, major challenge in the execution of the Bill seems to be the identification of eligible house holds. Under theNFSB, responsibility of selection of beneficiaries is given to the state governmentswhich have to finalise the list of eligible households ineach village andtown.As has been happened inthe past, this time also, theremay be possibility of exclusion of eligible households or inclusion of non-eligible households. An Expert Group headed byN C Saxena estimated that 61% of the eligible population was excluded from the BPL list, while 25% of APL households were included in the list.

Approximately 62 million tonnes of cereals is required to implement the NFSB. In the current financial year (2013-14), under the TPDS (AAY+BPL+APL) the governmenthas allocated nearly 50 million tonnes (MT) of cereals (rice and wheat). Out of the total annual allocation, 10.22 MT was made under AAY and 17.46 MT under BPL. Thus, under the current arrangement, only 27.68 MT of cereals was distributed at themuch subsidized rates. In 20013-14, economic cost of rice and wheat is estimated to be Rs.2643.61 and Rs.2010.22 per quintal, respectively. Itmeans that thedirect cost of providing one kg of rice and wheat under the TPDS to the governmentwould be Rs.23.44 and Rs.18.10, respectively.

The additional procurement as a result of the NFSB will not only put enormous pressure on the existing infrastructure of the FCI but also constantly increase the financial burden on the government exchequer.

Even if the quantity of food remains the same each year, the amount of food subsidy will increase annually due to increase in the cost of food production, distribution and management. Economic cost of food grains can be reduced if the TPDS is decentralised and efficient, transparent and inclusive delivery systemis put in place. One of the reasons formonthlydistributionof cereals underPDS was that poorhouseholds did not have the sufficient purchasing power to buy cereals for the entire season. Therefore, under the current PDS, food grains are released and distributed under the PDS onmonthly basis. Since, under theNFSB, the eligible households would get rice/wheat/ coarse cereals at the rate of Rs.3/2/1, respectively, there would be no difficulty to them if they buy their allotted quota sixmonthly. For example, if an eligible (its sixmonth quota), only Rs. 300 will be paid. This amount can easily be earned through two days manualwork.Problemof storing ofhuge quantity of cereals by the Fel may be solved if food grains are distributed under the TPDS twice in a year at the time of Rabi and Kharif harvesting. One of the key issues is that this Bill does not have exit-clause.Only issue prices are supposed to be revised after three years. Our past experiences show that if someone is used to enjoy the benefits of any scheme, it is hard to withdraw it.

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