Food grains for food security
There was a good deal of hesitation on the part of government to introduce the Food Security Bill even after it was recommended by the NAC. The bill, which is now before the parliament, would be adopted with every political party wanting to earn some leverage at the polls at the cost of the exchequer.
The initial hesitation was precisely because the cost of food security is too high. The provision for food subsidy in the last budget was Rs. 606 billion, about 11 percent of the total tax revenue of the centre. With food security, that is bound to double making it impossible for the government to conform to the self-imposed discipline of the FRBM Act.
Apart from the financial burden of food security it is also necessary to consider whether there will be enough grain to feed the public distribution system (PDF) and, even if there is, whether it will be delivered to the identified beneficiaries. On both counts there are serious doubts.
The total production of cereals (rice + wheat) was 181 mt (million tonnes) in 2010-11 and, with good monsoons, is expected to cross 243 mt in the current year. Of this, about 36 mt will be retained by farmers for seeds and self-consumption. Government procured nearly 36 mt for PDS, leaving 109 mt for the open market.
The food security bill requires that 63 percent of the population will be supplied with grain at subsidised prices. That is possible only if the government procures an additional 35 mt. This diversion of grain to PDS will reduce the supply to the open market by more than one third.
Surely, the number of consumers who used to buy from the market will also be reduced because a part of them will be eligible beneficiaries under food security. Even so, the fact that grain will be available to them at reduced prices would mean that consumption will increase and the market supply will fall significantly short of demand and generate inflation.
It is not easy to produce more to make up that shortfall. Since 2000-01, food grains production has been increasing at only 2 percent per year because the Green Revolution which had made a dramatic change to food production reached a plateau.
Even if the grain is available, will the PDS deliver it to 160 million families? The present system has too many loopholes. A study made by the Planning Commission brought out that only 43 percent of the PDS grain reaches the intended beneficiaries. The rest leaks out of the system mainly to the open market. The temptation to divert will only be intensified after food security is implemented because the price differential between the PDS and the open market will be too high.
What is critical for food security is food production for which there are serious limitations. The per capita cultivable land is shrinking rapidly and unless new technologies, like biotechnology, are immediately introduced the country will face food shortage.