The new UPA government’s flagship scheme for guaranteed food could be even more painful to pull off than the rural job scheme NREGA, requiring not just enough supply of grains and huge cash but also a switch to a whole new delivery system.
The Congress government plans to pass a National Food Security Act to give 25 kg of rice or wheat to about 260-million below-poverty-line people — or those that earn less than $1 a day — at just Rs 3 a kg.
With more than 200 million food-insecure people, India is home to the largest number of hungry people in the world and ranks 66th on a list of 88 countries, according to the International Food Policy Research Institute’s 2008 Hunger Index. So, implementing the scheme won’t be easy.
Finding the grain, finding the money amid slowdown and distributing it efficiently are the three biggest challenges, experts have identified.
Agriculture minister Sharad Pawar said: “Even one monsoon failure (means) there is problem. In such a situation, if we are going to take legal responsibility to supply a fixed quantity to a particular population at a fixed rate, it is not easy. But we have to accept the challenge.”
Cheaper food for all is likely to drive up consumption, so a higher productivity and sustained top-up of granaries are critical. The government is banking on mountains of grains it currently holds.
The Food Corporation of India, the biggest buyer of grain, bought a record 233-lakh tonnes of wheat and 291-lakh tonnes of rice till mid-May this year. “This wheat should suffice for two years,” said Alok Sinha, former MD of FCI.
For the money, the government could go for NREGA-like funding model, with the Centre and states contributing 75 and 25 per cent respectively. In any case, the scheme will cost about Rs 17,000 crore, part of which will be subsumed by the current food subsidy bill of Rs 42,489.72 crore, according to back-of-the-envelope calculations by HT.
Without higher taxes amid this downturn, the government may look to fund it through deficit spending and aided through its new disinvestment plan — selling 49 per cent stake in PSUs.
It could well mean borrowing from Peter to pay Pan, said DK Joshi, CRISIL’s principal economist.
The next big challenge would be to supply the food without being pilfered. This could require a massive overhauling of the country’s public distribution system.