A food security ordinance that will stimulate food inflation is passing strange-Times of India
Jul 5, 2013, 12.00 AM IST The Parliament's monsoon session is only about a month away. That the Union cabinet has yet taken the ordinance route to implement the national food security Bill signals the scam-tainted UPA government's desperation to woo voters before the next general elections. But the hope that expanding what is already one of the world's largest food security programmes will boost political fortunes is hallucinatory. The exchequer is already burdened by a disturbingly jumbo deficit. Government is already the biggest buyer of cereals. Increased procurement could severely dent its finances and investors' confidence, reduce open market supply of grain, refuel food inflation and boomerang electorally.
Of course it is unconscionable that malnutrition continues to haunt a large section of India's population despite two decades of good economic growth. Unfortunately, the new Bill's solution is to expand existing systems of procurement and distribution, without fixing their glaring imperfections. The Food Corporation of India is monopolistic and distorts market-driven price discovery. The public distribution system is rife with corruption and leakages. One estimate is that less than a third of food subsidy reaches intended households and 71% of it is frittered away. While these wasteful institutions are being rewarded with an expansion plan, little attention will go to enhancing and reorienting agriculture investments to make them more sensitive to nutrition and productivity.
UPA is defending its decision by saying it had committed to bringing a food law in the Congress manifesto for 2009 elections. But that manifesto also declared that an immediate priority was to revive the economy. It also promised to maintain the path of high growth with fiscal prudence and low inflation! And what about all the build-up the UPA gave to the UID scheme? It was supposed to enable switchovers to cash transfers that would eliminate widespread abuse of public distribution of not only food, but also fuel, fertilisers, etc. Those goals are not reconcilable with the ordinance.