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Feeding the one billion

Critics say the Food Security Bill, introduced in Parliament this week, would further burden our public finances. But many others see it as hope for millions of food-insecure Indians. Zia Haq writes. Point-counterpoint: What the critics and advocates of the food security bill say | Did you know?

business Updated: Dec 25, 2011 02:00 IST
Zia Haq

Jean Drèze kind of knows both worlds. The Belgium-born development economist, influential in Indian policymaking, has gone to astonishing lengths to experience hunger.

Despite his economist father Jacques wanting him to join a wealthy family financial enterprise back home, Drèze not only continued teaching at Delhi University but also headed off to one of India’s poorest slums in Timarpur, not far from his classroom. The first thing he did was to find out what the poorest dweller ate, a diet he adopted as his own. Drèze lost several pounds as a result, but gained an insight into how 200 million Indians sleep and work on an empty stomach.

The proposed food security bill, which seeks to target hunger of the kind Drèze subjected himself to, was introduced in Parliament last Thursday. Private economists cringed. They say the bill will do all that a global slowdown so far couldn’t: break the back of an economy still up and running.

Yet, India’s poor performance on hunger is now settled. “It is almost a hidden national emergency,” says Drèze. In contrast to images of Sudan’s scrawny children with distended bellies, hunger in India remains largely invisible because it is driven not by near-death starvation but by sweeping malnourishment and calorie deficiency. Simply put, too little food lacking in essential nutrients has resulted in the world’s largest proportion of stunted children with poor brains. Worse, their poor health actually begins even before they are born: in the womb of their half-fed mothers.

Here are some internationally benchmarked findings. With more than 200 million food-insecure people, according to a 2008 FAO report, India is home to the world’s largest number of hungry people. The 2009 India State Hunger Index — brought out by the International Food Policy Research Institute, University of Riverside California and German foundation Welt Hunger Hilfe — found food-bowl Punjab ranking below Gabon, Honduras, and Vietnam. Also, no Indian state showed “low hunger” indices. Most states fall between “extremely alarming” and “serious” categories.

A 2010 Actionaid report warned that even in a fast-growing economy like India, nearly half the country’s children are malnourished, with one-fifth of the population going hungry.

India’s rates of child malnutrition are higher than most countries in Sub-Saharan Africa, according to the India State Hunger Index.

Who’ll foot the food bill?
The food bill promises cheap staples – mainly rice and wheat – to more than two-thirds of Indians. Apart from these core handouts, the bill also seeks to address nutritional concerns of those considered to driving India’s hunger fiasco: children and pregnant women.

India already runs a food subsidy programme of about Rs 67,000 crore through a large pilferage-prone public distribution system (PDS) of fair-priced shops. The new bill sharply widens handouts to cover 75% of rural and 50% of urban households, taking this figure up to R95,000 crore.

Since, the law takes a “life-cycle” approach, it will require an additional Rs 20,000 crore for meals to children, Rs 14,512 crore for lactating mothers and another Rs 6,000 crore for grains outside the PDS route, such as kitchens for elderly. For food relief during disasters, take another Rs 8,920 crore.

Expanding food handouts to nearly 800 million people at less than half the market price undoubtedly entails a risk of its own. In the midst of a clear slowdown — industrial output has shrunk by 5% — such spending is being compared to a moon-sized asteroid crashing down on the country’s public finances.

“If the government doesn’t come with ways to raise the funds, it will directly add to the fiscal deficit,” according to Dharmakirti Joshi, an economist at Crisil, the Indian arm of Standard & Poor’s. Since food production will have to match enhanced entitlements, the bill makes it mandatory for the government to pump up farm output by investing R1.10 lakh crore over the next five years.

The splurge is not one-off. By giving citizens a continual legal right to food, the government has tied itself in a perpetual financial knot. That, critics say, is the fatal flaw. It has already scared agriculture minister Sharad Pawar, who has publicly criticised the bill. Right now, the kind of money required simply isn’t there in the government’s vaults.

Small price to pay?
For Congress chief Sonia Gandhi, not having the food bill is not an option. In politics, she has displayed firm faith in socialist objectives, even as the government weighed the food bill several times over for financial implications before signing off on it.

“We must make it (the food law) work because it will protect a huge number of our people from hunger and malnutrition...We must take it to the people and make it a central part of our political campaign,” Gandhi was quoted by PTI as telling her partymen last Wednesday.

The food bill does come at a cost but there is nothing in it that “deserves the venom” being spewed on it, says economist Abhijit Sen of the Planning Commission.

The food bill doesn’t create any new subsidy segment but only expands on existing ones. “Anyone can sit down and find out that the cost for expanding the actual PDS allocation will not go up by Rs 8,000 crore. It is manageable,” Sen said.

The government already runs most of the nutritional schemes, such as those for children, mentioned in the bill. The bill essentially consolidates all ongoing meal-based welfare schemes strewn across ministries, whose total costs then appear colossal. Moreover, not all schemes apply at once but at specified dates as may be decided by the government, allowing time for arranging the funds.

“Even under the highly optimistic assumption that the Bill is passed…and comes into force around mid-2012, the additional subsidy in 2012-13 is likely to be well below that figure (Rs 27,000 crore). This is not only because of the time lag, but also because the Act is unlikely to come into force in the entire country in one go,” Drèze argues.

There would still be ways of meeting the costs. A likely food cess would instantly generate funds. Abolishing exemptions on customs duties for “diamond and gold” alone would generate nearly Rs 50,000 crore a year, according to the finance ministry’s “revenue foregone statement”. Indeed, there is considerable legroom to increase the country’s tax-GDP ratio.

Seen from the perspective of millions of stunted children and poorly fed women, the bill is hardly a big splurge. In fact, a small price to pay for ignoring a hidden emergency called hunger. Yet, as with all large subsidies, Drèze argues, the focus is more on costs than on how it can improve people’s lives.

Point-counterpoint: What the critics and advocates of the food security bill say | Did you know?