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Eatery taxes can fund the food security bill

india Updated: Nov 06, 2013 00:56 IST
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Food always becomes an important issue before each general election. This time around food has VVIP status, thanks to the passage of the food security bill (FSB). The additional burden on the government exchequer for funding the FSB has been estimated at Rs. 23,800 crore, and this has irked economists. Why should the ‘taxpayers’ money’ be spent on subsidies? As if the taxpayers’ money has never been put to worse use, but that is another story. For now, let us look at another of the country’s food facts.

The India Food Service Report-2013 of the National Restaurant Association of India predicts that the contribution of chain and licensed stand-alone eateries towards government coffers will be around Rs. 11,500-11,900 crore in the current year. By 2018, this is expected to more than double to Rs. 25,000 crore. Additionally, the government will get an opportunity to collect Rs. 17,000-26,000 crore via tax collection from the unorganised sector. One need not be an economist to see the comparable figures. The exponentially growing food industry of our country can easily fund the FSB independently.

Another ground for opposing the FSB is the potential imbalance it would create in the demand and supply of cereal and non-cereal crops. Since the Bill assures the availability of wheat, rice and coarse cereals at drastically subsidised rates to almost 75% of the rural population and 50% of the urban population, the demand for these crops is bound to rise rapidly.

This is likely to lead to a bias against protein and oilseed crops, which will eventually translate into inflation based on scarce supply. Interestingly, non-poor urban eating habits are beginning to show a trend away from ‘carbs’. The increasingly health and beauty conscious population is removing rice and wheat from their plates. In other words, whatever is being happily removed from the platter of the ‘haves’ is going to the mouths of the ‘have-nots.’

India is a land of contrasts. While our food industry is growing at 11%, we are unable to stop starvation deaths. Ironically, India is also guilty of gross food wastage amounting to Rs. 44, 000 crore due to the lack of storage facilities.

A recent article in the international press on the travails of small restaurants in Delhi shows that there is a lot in the industry that needs fixing. Although the process of issuing permits has become more streamlined, restaurateurs still have no single window to the government. A rapidly growing industry such as this deserves more attention. What better way to look at it than as a ‘fundraiser’ for the food security bill?

Nishtha Gautam is associate fellow, Observer Research Foundation

The views expressed by the author are personal