National Food Security Bill

National Food Security Bill _1Although you are going to study management, MBA institutes expect that you know whats happening in the Lok Sabha and the Rajya Sabha, as anything that the government does, any new bill that the parliament passes affects the corporate world and can rock the stock exchange upside down.

You are expected to know the major new bills passed and one of the major ones this year was the “National Food Security Bill”.

 BACKGROUND:

For this topic, it’s very important you know what the Bill is all about. Here is a run through of the Bill. Know these and you know the Bill. You know the bill and you can make your own points.

The Indian National Food Security Act, 2013 (also Right to Food Act), was signed into law September 12, 2013. Main points are :

  • 75% of rural and 50% of the urban population are entitled for three years from enactment to five kg food grains per month at Rs.3 (4.6¢ US), Rs.2 (3.1¢ US), Rs.1 (1.5¢ US) per kg for rice, wheat and coarse grains (millet), respectively.
  • The states are responsible for determining eligibility.
  • Pregnant women and lactating mothers are entitled to a nutritious “take home ration” of 600 Calories and a maternity benefit of at least Rs 6,000 for six months.
  • Children 6 months to 14 years of age are to receive free hot meals or “take home rations”.
  • The central government will provide funds to states in case of short supplies of food grains.
  • The current food grain allocation of the states will be protected by the central government for at least six months.
  • The state government will provide a food security allowance to the beneficiaries in case of non-supply of food grains.
  • The Public Distribution System is to be reformed.
  • The eldest woman in the household, 18 years or above, is the head of the household for the issuance of the ration card.
  • There will be state- and district-level redress mechanisms, and
  • State Food Commissions will be formed for implementation and monitoring of the provisions of the Act.

POINTS IN FAVOUR:

  • More power to BPL families : A CRISIL Report published on April 29 2013 believes the proper implementation of the Bill “will lower spending on foodgrains by below poverty line households, and free up resources for spending on other goods and services, in particular health, education, and nutritious food.

National Food Security Bill _2

  • Better Nutrition Intake : The Bill enables an additional savings of around Rs 4,400 this year for each BPL household that begins to purchase subsidized food. This savings equals around 8 per cent and 5 per cent of the annual expenditure of a rural and urban household, respectively. For rural households the savings amount exceeds their current annual medical and educational spends. Higher disposable income would also allow BPL households to spend more on protein-rich food, thereby improving their nutritional intake.
  • Better Redressal Mechanism : The Bill states that there will be state and district level redressal mechanism with designated nodal officers. Redressal mechanism may also include call centers, helpline etc. The Bill provides for penalty to be imposed on public servants or authority, if found guilty of failing to comply with the relief recommended by the District Grievance Redressal Officer. This Bill is great opportunity to reform the PDS loopholes in India.
  • Women and Children Considered : It’s a giant leap ahead in empowering the weaker sections of the society. According to the Bill, the eldest woman in the household, 18 years or above, is the head of the household for the issuance of the ration card. Pregnant women and lactating mothers are entitled to a nutritious “take home ration” of 600 Calories and a maternity benefit of at least Rs 6,000 for six months. Moreover, Children 6 months to 14 years of age are to receive free hot meals or “take home rations”.

POINTS AGAINST:

  • Inefficient Distribution Channels : The beneficiaries do not stand to gain as about 40 percent of rice and wheat earmarked for the poor gets siphoned off due to corruption. An inefficient distribution channel also leads to waste.

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  • Discourage Agriculture : Many agriculture experts believe that Food Bill which proposes to provide grains to people at very cheap rates may discourage the agriculture production in the country. Hence it must make sure that farmers should not be burdened at all with the cost of subsidizing the supply. Even a little burden can cause a large number of farmer suicides. Also, Small farmers may shift to other crops, as they will get the subsidized food grains. This will reduce the production of food grains.
  • Meet fiscal deficit target : Economists have raised concerns about the cost to the exchequer at a time when the government is struggling to bridge the fiscal and current account deficits. Fitch Ratings has said it was getting more challenging for India to meet its fiscal deficit target in the current fiscal year ending March 2014 with revenues slowing. Economists of the Government’s Commission for Agricultural Costs and Prices (CACP), who define the roadmap of agricultural policies, have calculated “additional” subsidy burden of Rs 1.20 lakh crore per annum from the existing Rs 90,000 crore.
  • Storage Issues : The Centre intends to delegate the task of construction of additional storage to the states, which may not be practically feasible given constrained centre-state relations among diverse political parties. The government does not even have enough storage capacity to store the amount of grain that it currently procures and will have to procure from the farmers in the years to come. So more grains could be dumped in the open and will rot as a result.
  • Political Reason: It won’t be totally unfair to say that the rush to pass the bill implies the intent is nakedly political, with the nearing elections and a motive to preserve the vote bank.

POSSIBLE CONCLUSION:

The Food Security Bill has great measures to tackle the issue of malnutrition and hunger in India. But the key to accruing all these benefits is the proper implementation. “While the benefits of the Bill could go well beyond just the provision of food, the success of the scheme and its welfare impact lies in identifying the poor and making sure that they are able to avail the food subsidy

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11 thoughts on “National Food Security Bill

  1. Are there any measures regarding storage facilities in the bill? Addressing storage issues too is imperative.Are there any measures like PPP or FDI in infrastructure development for supply operations.It would be good if you can throw light on those issues and make it a comprehensive one

    1. I absolutely agree. The implementation of FSB demands a supportive infrastructure, without which this bill, like the PDS becomes ineffective and open to corruption. As far as investments are concerned, it would make sense for the government to float some debt schemes to address this dire need; for example AAA rated infra bonds backed by government credibility. Additionally, such a large issue would also do wonders for India's growing fixed income market.

  2. That is a very valid point. As far as i know, the National Food Security Bill does nothing substantial to address the issues with Storage Facilities by terming it as the duty of the States. What you mentioned could very well add to my point that the bill is futile without efficient implementation and infrastructure. Thanks a lot 🙂

  3. Including food stamps, organized procedure to identify people below BPL, standards for quality of food grains, and addressing storage issues need to be included in the bill itself. Otherwise, the loopholes in PDS will continue to exist in National Food Security bill.

    1. Rahul. There is a 3 year time frame to the bill after which we expect there to be a revision of the bill based on its success/failure. Let's hope all this are taken care of in the revision. Until then.. I agree.. These loopholes raise a very big question on the efficiency of the bill, making it look like a political requirement rather than a social one.

  4. Does the three-year time frame imply there will be a withdrawal of the food security act thereafter or there will be a revision?You could also elaborate on the need to generate employment opportunities rather than expanding the subsidy blanket fu0rther.It only weakens the country as the apparent improvement in the lives of the poor are merely cosmetic and the subsidy politics is untenable in the long run. Very good article nonetheless. 🙂

    1. Most of the bills come with a time frame and the reports thereafter is used to trash it or revise it. In this case we all expect a revision in order to GED rid of the loopholes. The subsidy blanket you talked about is a very sensitive topic just like reservation. Some say the reasons are political while some say its a way of life to a country where poverty is still an issue, inspire of economic growth. Nice opinions.

  5. Could you present an article on the India-China-America dynamics? Encompassing the political dimension as well as the economics one. I assume it will be a hot topic this season amidst the exciting times in the International arena.

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