For all the talk of the United Progressive Alliance government about the seminal step the proposed National Food Security Bill will be in eradicating hunger and malnutrition, Finance Minister P Chidambaram‘s budgetary allocation for it is paltry. In his Budget speech , the Finance Minister said he was setting aside an extra Rs 10,000 crore, apart from the usual provision for food subsidy, toward the “incremental cost” likely once the legislation is passed.
How much has Chidambaram provided? Part two of the Expenditure Budget documents shows it is Rs 90,000 crore. The document clarifies: “The provision of Rs 90,000 core for food subsidy also includes a provision of Rs 10,000 crore for implementing the National Food Security Act.”
How much was the food subsidy envisioned in the last Budget (2012/13) for the current financial year? It was Rs 75,000 crore, and the revised estimate was above Rs 85,000. But this estimate – as the government itself has said – was based on population numbers of year 2000. Had this figure been updated to the 2011 census, the food subsidy would have been above Rs 1,10,000 crore (as per Food Ministry’s estimates).
And, if the 2011 census figures are used to estimate the food subsidy bill for 2013/14, it rises, by the food ministry’s own calculations, to Rs 124,000 crore – even without the Food Security Bill becoming law. If it is passed the subsidy will be even higher. Of course, all these estimates are based on the Bill introduced in the Lok Sabha in December 2011.
So how does Chidambaram’s allocation of Rs 90,000 crore amount to an additional outlay? “I don’t know the Bill yet,” said Chidambaram at his press conference after the Budget announcement. “There is no Food Security Bill at the moment. We only have the Standing Committee’s report on an earlier version of the Bill. It is only when the (revised) Bill is presented to the Cabinet, that we can do an assessment of its cost. I cannot put a number today. However, in anticipation that a Bill will carry an incremental cost, I have provided Rs 10,000 crore.”
But he should have had an idea. The estimates of the food ministry, based on the original provisions of the Bill, are public knowledge. The original bill intended to include up to three-fourths of the rural population and half the urban population as beneficiaries, with 46 per cent of the former and 28 per cent of the latter being ‘priority households’, which would be entitled to seven kilos of foodgrain per person per month, at prices of one rupee per kg for coarse grain, two rupees for wheat and three rupees for rice. (Distinct from them would be the ‘general households’, which would get three kilos or less at half the price the government paid farmers to procure the grain.) The ministry estimated the subsidy at Rs 1,26,000 crore a year.
How can Rs 90,000 crore then be called an enhanced allocation? “This is a big letdown,” said N.C. Saxena, member of the Sonia Gandhi headed National Advisory Council (NAC). “The meagre Rs. 10,000 crore set aside for the implementation of the Food Security bill not only implies the lack of urgency on the government’s part to enact it but also the gross underestimation of the additional resources required,” says Subrat Das, Executive Director, Centre for Budget and Governance Accountability.
Examining the original Bill,the Standing Committee on Food, Consumer Affairs and Public Distribution has recommended removing the distinction between priority and general households, among other things. But no final decision has been taken. Whatever is decided, however, even if the final cost is less than Rs 126,000 crore, it certainly will be much more than what the finance minister has provided for. He certainly will have to loosen his wallet or the outcome could well be a diluted Bill, hardly serving the noble intent.