The Indian National Food Security Act, 2013 (also Right to Food Act), was signed into law September 12, 2013 with retrospective effect from 5 July 2013. This law aims to provide subsidized food grains to approximately two thirds of India’s 1.2 billion people. Under the provisions of the bill, beneficiaries are to be able to purchase 5 kilograms per eligible person per month of cereals at the following prices:
rice at 3 (4.8¢ US) per kg
wheat at 2 (3.2¢ US) per kg
Coarse grains (millet) at 1 (1.6¢ US) per kg.
Pregnant women, lactating mothers, and certain categories of children are eligible for daily free meals. The bill has been highly controversial. It was introduced into India’s parliament in December 2012, promulgated as a presidential ordinance in July 2013, and enacted into law in August 2013.
75% of rural and 50% of the urban population are entitled for three years from enactment to five kg food grains per month at 3 (4.8¢ US), 2 (3.2¢ US), 1 (1.6¢ US) per kg for rice, wheat and coarse grains (millet), respectively.
The states are responsible for determining eligibility;
Pregnant women and lactating mothers are entitled to a nutritious “take home ration” of 600 Calories and a maternity benefit of at least Rs 6,000 for six months;
Children 6 months to 14 years of age are to receive free hot meals or “take home rations”;
The central government will provide funds to states in case of short supplies of food grains;
The current food grain allocation of the states will be protected by the central government for at least six months;
The state government will provide a food security allowance to the beneficiaries in case of non-supply of food grains;
The Public Distribution System is to be reformed;
The eldest woman in the household, 18 years or above, is the head of the household for the issuance of the ration card;
There will be state- and district-level redress mechanisms; and
State Food Commissions will be formed for implementation and monitoring of the provisions of the Act.
The intent of the National Food Security Bill is spelled out in the Lok Sabha committee report, The National Food Security Bill, 2011, Twenty Seventh Report, which states, “Food security means availability of sufficient food grains to meet the domestic demand as well as access, at the individual level, to adequate quantities of food at affordable prices.” The report adds, “The proposed legislation marks a paradigm shift in addressing the problem of food security – from the current welfare approach to a right based approach. About two thirds of the population will be entitled to receive subsidized food grains under Targeted Public Distribution System.”
The Indian Ministry of Agriculture’s Commission on Agricultural Costs and Prices (CACP) has referred to the Bill as the “biggest ever experiment in the world for distributing highly subsidized food by any government through a ‘rights based’ approach.” The Bill extends coverage of the Targeted Public Distribution System, India’s principal domestic food aid program, to two thirds of the population, or approximately 820 million people. Initially, the Lok Sabha Standing Committee on Food, Consumer Affairs and Public Distribution estimated a “total requirement of foodgrains, as per the Bill would be 61.55 million [metric] tons in 2012-13.” The CACP calculated in May 2013, “…the requirement for average monthly PDS offtake is calculated as 2.3 mt for wheat (27.6 mt annually) and 2.8 mt for rice (33.6 mt annually)…” When volumes needed for the Public Distribution System and “Other Welfare Schemes” were aggregated, the CACP estimated rice and wheat requirements to total an “annual requirement of 61.2” million metric tons. However, the final version of the Bill signed into law includes on page 18 an annex, “Schedule IV”, which estimates the total food grain allocation as 54.926 million metric tons.
The Standing Committee estimated that the value of additional food subsidies (i.e., on top of the existing Public Distribution System) “during 2012-13 works out to be…Rs.2409 crores,” that is, 24.09 billion rupees, or about $446 million at the then-current exchange rate, for a total expenditure of 1.122 trillion rupees (or between $20 and $21 billion). However, the Commission on Agricultural Costs and Prices (CACP) calculated, “Currently, the economic cost of FCI for acquiring, storing and distributing foodgrains is about 40 percent more than the procurement price.” The Commission added,
The stated expenditure of Rs 1,20,000 crore annually in NFSB is merely the tip of the iceberg. To support the system and the welfare schemes, additional expenditure is needed for the envisaged administrative set up, scaling up of operations, enhancement of production, investments for storage, movement, processing and market infrastructure etc. The existing Food Security Complex of Procurement, Stocking and Distribution- which NFSB perpetuates- would increase the operational expenditure of the Scheme given its creaking infrastructure, leakages & inefficient governance.
The Commission concluded that the total bill for implementation of the Bill “….may touch an expenditure of anywhere between Rs 125,000 to 150,000 crores,” i.e., 1.25 to 1.5 trillion rupees.
The government’s estimated cost of food security comes at 11.10%…of the total receipts. The CACP’s estimated cost of food security comes at 21.5%…of the total receipts. Bhalla’s cost of food security comes at around 28% of the total receipts…Once we express the cost of food security as a percentage of the total estimated receipts of the government, during the current financial year, we see how huge the cost of food security really is.
The Indian Ministry of Agriculture’s Commission on Agricultural Costs and Prices warned that enactment of the Bill could be expected to “induce severe imbalance in the production of oilseeds and pulses,” and “…will create demand pressures, which will inevitably spillover to market prices of food grains. Furthermore, the higher food subsidy burden on the budget will raise the fiscal deficit, exacerbating macro level inflationary pressures.” The Commission argued further that the Bill would restrict private initiative in agriculture, reduce competition in the marketplace due to government domination of the grain market, shift money from investments in agriculture to subsidies, and continue focus on cereals production when shifts in consumer demand patterns indicate a need to focus more on protein, fruits and vegetables.