Recently Cabinet cleared the food security bill to be introduced in parliament. It has evoked mixed reactions from economists, activists and politicians. After going through the main points and objectives of the bill, many questions have cropped up in my mind. It would be a sadist who does not agree to the principle of eradicating hunger and malnutrition from our 1.2 billion populous nation, where poverty figures vary by huge margins based on different reports of different committees. There can not be anything more egregious and shameful than the fact that we as a nation have not been able to provide for basic needs like food, nutrition, housing and healthcare to all of our people after 60 years of independence. In the present scenario India still has one of the highest infant mortality rate, undernourished and malnourished children and mothers. Children are dying of hunger and diseases that can easily be cured. Still more than 60% of child birth does not take place in hospitals. Problems are aplenty. Personally I have seen people in hunger. When I was small, I used to see emaciated farmers working in their field. With the back breaking labor they hope to grow some rice and wheat that will meet their needs for whole year. Unfortunately some year it would be flood and next year it would be drought. It is all so unpredictable without any irrigation facility or flood control projects. The tale of sorrow of poor farmers is indescribable. When the stomach is burning with hunger, when you have to think of next meal as you are eating one, think about the life they lead. They do not have any goal in their life except feeding the ever hungry stomach.
After 20 years of economic reforms we are aiming for 8-9% of GDP growth. We achieved the magic growth number for some years. We sold the lucrative India rising story to foreign investors. FDI poured in, industrialization was rapid, service sector boom was so much that it changed the structure of our economy. Primarily an agrarian economy was converted to service based economy. But all these came with a cost. The rising income disparity between upper and lower layer of society has become a crisis now. Higher purchasing power of some sections of society has added to the spiraling inflation. The middle class thrived and galloped in economic liberalization era, the poor, the tribal people who did not have skill set to take the opportunity crawled. Certainly something has gone wrong somewhere. I think we have digressed from our topic of food security. Let me get back to the core topic.
The food security bill has given rise to some pertinent questions. Experts are making this a debate of growth vs development or entitlement vs empowerment. Some people are saying it is not an either or situation. Let me outline views of the different side.
The food security bill is an ambitious, well-intended and laudable initiative. It aims to distribute subsidized food to needy households (determined by below poverty line census 2011). The entitlement of food will be a legal right for those section of society. Targeted public distribution system (TDPS) will be used to achieve the food security. TDPS divides the the households in three categories namely Priority, General and excluded. The priority category will get rice, wheat and coarse grains at Rs 3,2 and 1 respectively with 7 kg of grain per person per month. The general category will get 3 kg of grain per person per month at a price not exceeding half the minimum support price being paid to farmers. Excluded category are naturally excluded from the scheme. It seeks to cover 75% of rural population (with at least 46% belonging to priority households) and 50% of urban population (with at least 28% belonging to priority households). It also has provision to give maternity benefits of Rs 6000 to 2.25 crore pregnant and lactating women. It all boils down to providing highly subsidized grain to 67% of gigantic population of 1.2 billion which adds 900000 crore to the subsidy bill per year to the already burdened government. There is no doubting of the fact that food needs of the marginalized section should take first priority. But questions being asked is that is it the best approach? Socioeconomists like Amartya sen and Jean Derze argue entitlement gives the sense of empowerment. India is already procuring enough food grains to distribute to the poor. Various state govts are already running different schemes in which they provide grains via PDS at cheap rates. Last year the procurement was 55 million tonnes. And the procurement numbers are increasing year after year. Food grains are rotting in storage centers. The estimated figure for food grain needed for the first year of food security is 67 million tonnes which some experts say is easily achievable. This food security bill is step in right direction and will spur next generation of agri-reforms. We can not just harp on our GDP growth numbers . We need to see that the wealth is rightly redistributed among the underprivileged and not so well to do families. This will create a more equitable and inclusive society.
The contrarian point of views are many. Central govt already has high subsidy bills. It gives subsidy on LPG, Diesel, fertilizer. There is high expenditure on mega schemes like MNREGA (National Rural employment gurantee scheme). Can the govt afford another mega subsidy on food security? The state needs to reassess its financial strength. India already borrows too much to budget the expenditures. This years fiscal deficit target was 4.6%. It is already running under 5%. Inflation is high. Rupee is depreciating. Investor confidence is lowering. The industrial output numbers are shocking. If Europe crisis is not solved, it would haunt Indian economy more than the last US recession. It is all good to bash the corporate sector and malign high GDP numbers. Ultimately who will finance these subsidies? Is it sustainable? Another economic crisis is lurking on our door. We can not go back to a 1991 balance of payment problem now. The state needs to be prudent in its approach, reduce fiscal deficit, cut down subsidies provided to middle class, reduce the debt burden. Then we can aspire to be profligate in giving subsidies.Some economist stated that our interest payment in debts is ten times the health expenditure of the country. With such high expenditure it is near impossible to run these schemes. It will take us back to brink of disaster. Rather economists suggest that Govt needs to look at conditional cash transfer as an viable alternative. Govt should not muddle in food grain procurement to distribution in such a huge scheme. The Food corporation of India is monumentally inefficient. The logistics cost adds up to the cost of food grains by more than 50%. We should not embed rights after right where we can not deliver. Conclusion, it is a tough job.
My View -
I am a socialist capitalist. We need food security. I am not for making it a legal right. Let us implement this in a time bound manner and study the results. We need to go down the path of growth. Governance reforms are a dire necessity now. That alone will fix the broken link. Decentralization of power, more local management bodies, building cold storage chains, investing in infrastructures will take the country forward. We can not have a socialist scheme of things where govt pays everything. People need to be empowered by right education, right skills and by building human capacities. This has to be aided by promoting entrepreneurship, environmentally sustainable industrialization. If govt feeds poor farmers eternally, who will produce grains? Where is the incentive to produce? We need another green revolution for our long term growth. Food security is very noble initiative, but I do not believe in its long term impact. And for god sake abolish middle class subsidies. Who buys a car can definitely pay for petrol price. Otherwise go ride a bicycle or use public transportation.
Till now I am an optimist who believes in India rising story. Any country that transitions from a developing to developed nation, goes through lot of turmoil. It will be alright :)
After 20 years of economic reforms we are aiming for 8-9% of GDP growth. We achieved the magic growth number for some years. We sold the lucrative India rising story to foreign investors. FDI poured in, industrialization was rapid, service sector boom was so much that it changed the structure of our economy. Primarily an agrarian economy was converted to service based economy. But all these came with a cost. The rising income disparity between upper and lower layer of society has become a crisis now. Higher purchasing power of some sections of society has added to the spiraling inflation. The middle class thrived and galloped in economic liberalization era, the poor, the tribal people who did not have skill set to take the opportunity crawled. Certainly something has gone wrong somewhere. I think we have digressed from our topic of food security. Let me get back to the core topic.
The food security bill has given rise to some pertinent questions. Experts are making this a debate of growth vs development or entitlement vs empowerment. Some people are saying it is not an either or situation. Let me outline views of the different side.
The food security bill is an ambitious, well-intended and laudable initiative. It aims to distribute subsidized food to needy households (determined by below poverty line census 2011). The entitlement of food will be a legal right for those section of society. Targeted public distribution system (TDPS) will be used to achieve the food security. TDPS divides the the households in three categories namely Priority, General and excluded. The priority category will get rice, wheat and coarse grains at Rs 3,2 and 1 respectively with 7 kg of grain per person per month. The general category will get 3 kg of grain per person per month at a price not exceeding half the minimum support price being paid to farmers. Excluded category are naturally excluded from the scheme. It seeks to cover 75% of rural population (with at least 46% belonging to priority households) and 50% of urban population (with at least 28% belonging to priority households). It also has provision to give maternity benefits of Rs 6000 to 2.25 crore pregnant and lactating women. It all boils down to providing highly subsidized grain to 67% of gigantic population of 1.2 billion which adds 900000 crore to the subsidy bill per year to the already burdened government. There is no doubting of the fact that food needs of the marginalized section should take first priority. But questions being asked is that is it the best approach? Socioeconomists like Amartya sen and Jean Derze argue entitlement gives the sense of empowerment. India is already procuring enough food grains to distribute to the poor. Various state govts are already running different schemes in which they provide grains via PDS at cheap rates. Last year the procurement was 55 million tonnes. And the procurement numbers are increasing year after year. Food grains are rotting in storage centers. The estimated figure for food grain needed for the first year of food security is 67 million tonnes which some experts say is easily achievable. This food security bill is step in right direction and will spur next generation of agri-reforms. We can not just harp on our GDP growth numbers . We need to see that the wealth is rightly redistributed among the underprivileged and not so well to do families. This will create a more equitable and inclusive society.
The contrarian point of views are many. Central govt already has high subsidy bills. It gives subsidy on LPG, Diesel, fertilizer. There is high expenditure on mega schemes like MNREGA (National Rural employment gurantee scheme). Can the govt afford another mega subsidy on food security? The state needs to reassess its financial strength. India already borrows too much to budget the expenditures. This years fiscal deficit target was 4.6%. It is already running under 5%. Inflation is high. Rupee is depreciating. Investor confidence is lowering. The industrial output numbers are shocking. If Europe crisis is not solved, it would haunt Indian economy more than the last US recession. It is all good to bash the corporate sector and malign high GDP numbers. Ultimately who will finance these subsidies? Is it sustainable? Another economic crisis is lurking on our door. We can not go back to a 1991 balance of payment problem now. The state needs to be prudent in its approach, reduce fiscal deficit, cut down subsidies provided to middle class, reduce the debt burden. Then we can aspire to be profligate in giving subsidies.Some economist stated that our interest payment in debts is ten times the health expenditure of the country. With such high expenditure it is near impossible to run these schemes. It will take us back to brink of disaster. Rather economists suggest that Govt needs to look at conditional cash transfer as an viable alternative. Govt should not muddle in food grain procurement to distribution in such a huge scheme. The Food corporation of India is monumentally inefficient. The logistics cost adds up to the cost of food grains by more than 50%. We should not embed rights after right where we can not deliver. Conclusion, it is a tough job.
My View -
I am a socialist capitalist. We need food security. I am not for making it a legal right. Let us implement this in a time bound manner and study the results. We need to go down the path of growth. Governance reforms are a dire necessity now. That alone will fix the broken link. Decentralization of power, more local management bodies, building cold storage chains, investing in infrastructures will take the country forward. We can not have a socialist scheme of things where govt pays everything. People need to be empowered by right education, right skills and by building human capacities. This has to be aided by promoting entrepreneurship, environmentally sustainable industrialization. If govt feeds poor farmers eternally, who will produce grains? Where is the incentive to produce? We need another green revolution for our long term growth. Food security is very noble initiative, but I do not believe in its long term impact. And for god sake abolish middle class subsidies. Who buys a car can definitely pay for petrol price. Otherwise go ride a bicycle or use public transportation.
Till now I am an optimist who believes in India rising story. Any country that transitions from a developing to developed nation, goes through lot of turmoil. It will be alright :)
No comments:
Post a Comment