The Food Security Ordinance, which was promulgated by
the president of India recently, got mixed reactions from the main
ruling party (the Congress), the main opposition party [the Bharatiya
Janata Party (BJP)] and industry bodies such as the Associated Chambers
of Commerce and Industry of India (Assocham), the Federation of Indian
Chambers of Commerce and Industry (FICCI) and the Confederation of
Indian Industry (CII).
Congress' view
The Congress termed the ordinance a historic initiative. Himachal Pradesh chief minister Virbhadra Singh lauded the United Progressive Alliance (UPA) for approving the food security ordinance, which, upon becoming an Act, would entitle 67 per cent of India's population to subsidised foodgrains under the targeted public distribution system (TDPS). He added that it was reflective of the government's commitment towards the welfare of the poor and the downtrodden.
The intended beneficiaries comprise about 75 per cent of the people living in the rural areas and about 50 per cent of the people living in the urban areas. Singh said, “The objective of providing food and nutritional security to India's masses is laudable, because that would ensure food for all.”
Contempt of Parliament
The Bharatiya Janata Party called the Food Security Ordinance a contempt of Parliament. Smriti Irani, a Member of Parliament representing the party, said, “The Congress went ahead and passed the Ordinance without discussing it with the opposition parties. Moreover, they also held a press conference to inform the media about their achievements even before the president promulgated the Food Security Ordinance. This is a political gimmick by the government ahead of election.”
Industryspeak
Assocham president Rajkumar N Dhoot said, “The government's ordinance, that will legally entitle the poor to highly-subsidised food, will also insulate a large number of people from inflation, and would ultimately help the country's rank go up in the human development index. The government must be complimented for taking a courageous decision, even though the decision would put a strain on the government's finances. However, with better implementation of the schemes, the pilferages can be avoided.”
“The poor people of the country are already suffering, because of the high food inflation, which on an average has stubbornly stuck to about 10 per cent. Unfortunately, the issue was sought to be addressed by the Reserve Bank of India (RBI) through tight money policy, which does not influence much the food inflation. The only answer to tackle the food supply and better nutrition for the people is through better supply. Moreover, there is no problem of foodgrains as the grain is rotting in the godowns,” he informed.
Reacting on the Food Security Ordinance, A Didar Singh, secretary general, FICCI, said, “After being deferred incessantly, the ordinance to implement the Food Security Bill comes at a time when we are trying hard to get back on the path of fiscal consolidation. While there is no denying the fact that right to food and attaining proper nutrition should be the basic provisions for every citizen of the country, the recent announcement seems a little premature, and the country is not yet fully prepared to roll out such a programme.”
He added, “The actual execution of the scheme would be marred by challenges, besides of course questioning the fiscal sustainability of the Bill. The Bill is expected to cost the exchequer about Rs 1,25,000 crore annually. The budgeted amount for the food subsidy this fiscal year is Rs 90,000 crore and an additional Rs 10,000 crore have been budgeted for the Bill this year. However, going ahead, the fiscal cost is expected to rise substantially.”
“One of the biggest issues that comes to fore is the access, and it is quite surprising that the government is willing to fall on the old public distribution system to allocate foodgrains under the Bill. The PDS has not been streamlined over the years and remains plagued with inefficiencies,” Singh said.
“In fact a survey conducted by the Comptroller and Auditor General (CAG) in 2007, on the effectiveness of the Centre's public distribution system revealed that 40 per cent of the beneficiaries were kept away from the scheme by denying them ration cards, and 99 per cent of those who availed the benefits reported they had not received foodgrains regularly,” he informed.
Singh explained, “As 75 per cent of the rural population would be eligible for foodgrains under the National Food Security Bill (NFSB), most farmers would conveniently sell all grains at the minimum selling price (MSP), which is most competitive, and again come to the government for their consumption. This might result in the government procurement increasing substantially and start of chain reaction, for instance, more procurement, more storage, more losses, etc., and lead to a situation where the government ends of buying all the food grains that are produced in the country.”
“It is important that we resolve the supply demand mismatch, and keeping in mind a long-term perspective, we should focus on improving agricultural production and productivity. Also, if the government is serious about implementing the scheme, then execution through direct cash transfers and food stamps for below poverty line (BPL) would certainly make more sense, as is being advocated by government itself,” he said.
Indrani Kar, deputy director general, CII, said, “The scheme will be targeted at the neediest populations and would be rolled out with maximum efficiency. Concerns are there since the delivery model of such an ambitious scheme is based on models like the PDS.”
“We are certain that in process of rolling out this very comprehensive scheme, the government would balance outgo on foodgrains with overall macroeconomic conditions, such as fiscal deficit and inflation. Under the present economic situation, the government can hardly afford to allow the fiscal deficit roadmap to be compromised in any way,” she said.
Kar added, “In addition, it is imperative to ensure that agricultural productivity is boosted in order to ensure adequate production of foodgrains. With extra disposable income in the hands of the poor, there would be a welcome shift in dietary preferance to high value items such as vegetables, fruit, dairy products and meat.”
“By ensuring implementation of the Model APMC Act at the state level, encouraging contract farming, and setting up missions for agri technology, sustainability and irrigation, yields can be boosted to global benchmarks,” he added.
Congress' view
The Congress termed the ordinance a historic initiative. Himachal Pradesh chief minister Virbhadra Singh lauded the United Progressive Alliance (UPA) for approving the food security ordinance, which, upon becoming an Act, would entitle 67 per cent of India's population to subsidised foodgrains under the targeted public distribution system (TDPS). He added that it was reflective of the government's commitment towards the welfare of the poor and the downtrodden.
The intended beneficiaries comprise about 75 per cent of the people living in the rural areas and about 50 per cent of the people living in the urban areas. Singh said, “The objective of providing food and nutritional security to India's masses is laudable, because that would ensure food for all.”
Contempt of Parliament
The Bharatiya Janata Party called the Food Security Ordinance a contempt of Parliament. Smriti Irani, a Member of Parliament representing the party, said, “The Congress went ahead and passed the Ordinance without discussing it with the opposition parties. Moreover, they also held a press conference to inform the media about their achievements even before the president promulgated the Food Security Ordinance. This is a political gimmick by the government ahead of election.”
Industryspeak
Assocham president Rajkumar N Dhoot said, “The government's ordinance, that will legally entitle the poor to highly-subsidised food, will also insulate a large number of people from inflation, and would ultimately help the country's rank go up in the human development index. The government must be complimented for taking a courageous decision, even though the decision would put a strain on the government's finances. However, with better implementation of the schemes, the pilferages can be avoided.”
“The poor people of the country are already suffering, because of the high food inflation, which on an average has stubbornly stuck to about 10 per cent. Unfortunately, the issue was sought to be addressed by the Reserve Bank of India (RBI) through tight money policy, which does not influence much the food inflation. The only answer to tackle the food supply and better nutrition for the people is through better supply. Moreover, there is no problem of foodgrains as the grain is rotting in the godowns,” he informed.
Reacting on the Food Security Ordinance, A Didar Singh, secretary general, FICCI, said, “After being deferred incessantly, the ordinance to implement the Food Security Bill comes at a time when we are trying hard to get back on the path of fiscal consolidation. While there is no denying the fact that right to food and attaining proper nutrition should be the basic provisions for every citizen of the country, the recent announcement seems a little premature, and the country is not yet fully prepared to roll out such a programme.”
He added, “The actual execution of the scheme would be marred by challenges, besides of course questioning the fiscal sustainability of the Bill. The Bill is expected to cost the exchequer about Rs 1,25,000 crore annually. The budgeted amount for the food subsidy this fiscal year is Rs 90,000 crore and an additional Rs 10,000 crore have been budgeted for the Bill this year. However, going ahead, the fiscal cost is expected to rise substantially.”
“One of the biggest issues that comes to fore is the access, and it is quite surprising that the government is willing to fall on the old public distribution system to allocate foodgrains under the Bill. The PDS has not been streamlined over the years and remains plagued with inefficiencies,” Singh said.
“In fact a survey conducted by the Comptroller and Auditor General (CAG) in 2007, on the effectiveness of the Centre's public distribution system revealed that 40 per cent of the beneficiaries were kept away from the scheme by denying them ration cards, and 99 per cent of those who availed the benefits reported they had not received foodgrains regularly,” he informed.
Singh explained, “As 75 per cent of the rural population would be eligible for foodgrains under the National Food Security Bill (NFSB), most farmers would conveniently sell all grains at the minimum selling price (MSP), which is most competitive, and again come to the government for their consumption. This might result in the government procurement increasing substantially and start of chain reaction, for instance, more procurement, more storage, more losses, etc., and lead to a situation where the government ends of buying all the food grains that are produced in the country.”
“It is important that we resolve the supply demand mismatch, and keeping in mind a long-term perspective, we should focus on improving agricultural production and productivity. Also, if the government is serious about implementing the scheme, then execution through direct cash transfers and food stamps for below poverty line (BPL) would certainly make more sense, as is being advocated by government itself,” he said.
Indrani Kar, deputy director general, CII, said, “The scheme will be targeted at the neediest populations and would be rolled out with maximum efficiency. Concerns are there since the delivery model of such an ambitious scheme is based on models like the PDS.”
“We are certain that in process of rolling out this very comprehensive scheme, the government would balance outgo on foodgrains with overall macroeconomic conditions, such as fiscal deficit and inflation. Under the present economic situation, the government can hardly afford to allow the fiscal deficit roadmap to be compromised in any way,” she said.
Kar added, “In addition, it is imperative to ensure that agricultural productivity is boosted in order to ensure adequate production of foodgrains. With extra disposable income in the hands of the poor, there would be a welcome shift in dietary preferance to high value items such as vegetables, fruit, dairy products and meat.”
“By ensuring implementation of the Model APMC Act at the state level, encouraging contract farming, and setting up missions for agri technology, sustainability and irrigation, yields can be boosted to global benchmarks,” he added.
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