A bill-of-fare

The National Food Security Bill

The National Food Security Bill has been introduced in Parliament and is being examined by the Standing Committee.  There are several dimensions on which this Bill needs to be examined.  In an earlier note written before the Bill was introduced (see Pragati, January 2012), we had discussed some essential elements that any food security law would need to address.

Photo: Gates Foundation

The Bill categorises the population into three groups:  priority households, general households, and an implied group that is not entitled to any benefits. Priority households are entitled to receive seven kilograms of foodgrains per person per month, and general households are entitled to receive at least three kilograms of foodgrains per person per month.  Up to 75 percent of the rural population and 50 percent of the urban population will be categorised as priority or general households. Of these, at least 46 percent of the rural population and 28 percent of the urban population will be categorised as priority households. The priority population will have to pay Rs 3 per kilogram of rice, Rs 2 for wheat and Re 1 for coarse grains. The general population will pay half the minimum support price for these foodgrains.

This formulation does not address one major shortcoming of the current system. Creating separate categories with differential entitlements has led to errors in identifying the correct categories for households. Influential groups (who should be in the excluded category) have the incentive and ability to manipulate the system to get themselves included as beneficiaries.  As the total number of beneficiaries has been fixed, poorer households with less influence may be excluded. Indeed, the N C Saxena report (published in 2009) estimated that 61 percent of the eligible population is currently excluded from the BPL list, while 25 percent of non-poor households are included in the list.

The Bill also has a list of other entitlements. Pregnant women and lactating mothers will get meals through anganwadis and Rs 1,000 per month for six months. Children between the age of six months and six years will be entitled to an appropriate meal through the local Anganwadi, and those between the age of six years and fourteen years to one mid-day meal in all public and aided schools. It appears that some of these entitlements which are already available under other schemes (such as Integrated Child Development Services and Mid Day Meal Scheme) will be subsumed by this Bill. Also, destitute persons are entitled to one free meal, and those living in starvation to two free meals every day.

The state government is responsible for delivering these entitlements, and will pay a food security allowance in case of failure to supply the foodgrains or meals to the target population. The central government has the responsibility of supplying the required amount of foodgrains for all the above entitlements to the state government. In case of short supply, the central government shall provide funds to the state government to the extent of the shortfall.

The costs for other entitlements will be shared by the central and state governments.  The Financial Memorandum to the Bill estimates the cost of providing foodgrains at Rs 800 billion assuming that the foodgrain procurement price as well as the number of beneficiaries remains constant. It estimates Rs 20 billion for maintenance of buffer stocks, and Rs 135 billion for maternity benefits. The Bill does not estimate other costs, including those to be borne by state governments.  Some estimates indicate significantly higher costs. For example, Ashok Gulati and Jyoti Gujral have estimated the cost at Rs 2 trillion per year for the next three years. Food Minister KV Thomas has been quoted as stating that the total financial implication would be about Rs 3.5 trillion (including, among other costs, Rs 950 billion for food subsidy, Rs 350 billion for ICDS and Rs 1.1 trillion for raising agricultural production). The cost-sharing requirement also leads to another question.  Does this law require state legislatures to allocate the required resources?  If so, would that impinge on their legislative power to allocate resources according to their own priorities? On the other hand, what would happen to the legal entitlements in this Bill if state governments are unable or state legislatures are unwilling to provide the required funds?

The preferred mode of delivery of benefits is also not clear. Clause 3 of the Bill states that the foodgrain entitlements would be provided under the Targeted Public Distribution System (TPDS). Clause 18(1) of the Bill requires the central and state governments to progressively undertake certain reforms enumerated in Clause 18(2). These include, among others, two items that seem to be contradictory. Clause 18(2)(a) is a move towards “doorstep delivery of foodgrains to the TPDS outlets”. Clause 18(2)(h) states “introducing schemes, such as, cash transfer, food coupons, or other schemes, to the targeted beneficiaries in lieu of their foodgrain entitlements…”.  This leaves open the question of whether, over the next few years, entitlements would be provided as foodgrains or as cash transfers or as food coupons.

The Bill also includes certain objectives that are not directly related to access to food.  Clause 39 requires the central and state governments and local authorities to “strive to progressively realise the objectives specified in Schedule III”. The Schedule includes steps such as agrarian reforms, expansion of line capacity of railways, access to health care, education for adolescent girls, and pension for senior citizens. The question here is whether these objectives, which fall under the purview of several ministries and under other schemes and Acts (for instance, the Right to Education Act guarantees education to all children between the age of six and 14 years, and would include adolescent girls in that age group) should be a feature of a Bill on food security.

The National Food Security Bill is now being examined by the standing committee and will later be debated in Parliament. There are several aspects that need detailed deliberation in order to achieve the main objective of providing food to every person. These would include the issue of coverage (whether universal or targeted), the pros and cons of different delivery mechanisms, and the overall budgetary costs of the different approaches. There is also a need to look at the division of responsibilities between the centre, states and local authorities, as well as, coordination required between different line ministries to achieve the stated objectives.