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05 July 2013
www.ramakrishnavadlamudi.blogspot.com
As the clich goes, India is a kaleidoscope of contrasts. On the one hand youve plenty of food grains rotting in government warehouses and on the other millions of hungry and malnourished mouths have been craving for two square meals a day. Amidst such chaos, the Union Cabinet on 3 July 2013 approved an ordinance on the National Food Security Bill (NFSB) and the President has since given his assent for the ordinance. This bill will have to be ratified by the Parliament. This write-up aims to analyze the issues concerning the NFSB and its consequences.
There is no doubt that unless the PDS is overhauled completely, all the loopholes are plugged and it is made more effective, providing food security to the millions of population will remain a miragedespite the stated intentions of the government. However, some states seems to be more effective in providing food security through the PDSnotable examples being Chhatisgarh, Kerala and Tamil Nadu.
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The amount of Rs 2,00,000 crore includes not only the cost of food grains, but also the cost of storage and transportation. Excess buffer stocks should be stored to take care of NFSBthis leads to inefficient allocation of governments scarce resources. As of now, an amount of Rs 80,000 crore (as per CACP) is locked up in excess stocks without serving any worthwhile purpose. This excess money is injected into the system leading to rising rice and wheat prices, while food grains are allowed to rot in warehouses. Out of the expected subsidy cost of Rs 1,25,000 crore for the current financial year, the central government had already budgeted for Rs 90,000 crore for food subsidy in 201314. So, the government needs to provide an extra Rs 35,000 crore this year. More bureaucrats will be provided employment for implementing and monitoring the PDS for ensuring food security.
On Balance
There is an urgent need to ensure that adequate food is made available to the hungry mouths. Renowned and Nobel-Prize winning economist, Amartya Sen, has expressed his views in favour of providing legal entitlement to the malnourished and underprivileged classes of India, though he has pointed out certain flaws in the NFSB. Its unfortunate that the NFSB had to be promulgated by the President rather than passed through the Parliament. The central government seems to be having its own reasons for rushing the NFSB through the ordinance route rather than through the Parliament. In the backdrop of the utterly-failed PDS, insufficient storage capacity, severe transport problems, no noticeable gains in agricultural productivity due to lack of farm investment, huge subsidy burden and inefficient allocation of resources; it is difficult to say whether the food security bill will be able to achieve its desired objective of providing legal entitlement of minimum food grains to the underprivileged. One saving grace is that we have plenty of stocks at present to take care of food security. Let us hope that monsoon will continue be favorable and farm output will be stable in the coming years. --Abbreviations: FCI mt NFSB : Food Corporation of India : million tonnes : National Food Security Bill
Reference: Commission for Agricultural Costs and Prices (CACP) Disclaimer: The author is an investment analyst and freelance writer. His articles on financial markets and Indian economy can be reached at:
http://ramakrishnavadlamudi.blogspot.in/
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