With Elections in Mind Congress Passes Ordinance on Food Security Bill


Congress passed an Ordinance on Food Security Bill which guarantees food at nominal rates (5 kg of foodgrains each month at Rs. 1-3 per kg) for 67% of the population. This was done in utter haste when Parliament is expected to convene in another 2-3 weeks. Another populist measure by the Congress Govt. keeping the elections in mind. The same was promised to be passed within 100 days of UPA coming to power in 2004 elections. Der aaye durust aaye!

In spirit, the law is a good as it provides food security to citizens. However, there are implementation issues as we don’t have enough storage capacity. If only 25-30% population is below poverty line what is the need to include 67% at a cost of Rs. 1.25 trillion, risk of increasing fiscal deficit from targeted 4.8% to 5.1% (Crisil) which could threaten our investment grade rating.

The bill has left BJP and other opposition parties in a quandary as it will be difficult for them to reject this bill in Parliament. Congress feels this will act as “sanjivani buti” and divert attention from scams, inflation etc. and help it to garner votes. Policies of Congress like NREGA, Direct cash transfer of subsidy, Food Security Bill have all been framed to garner votes. Congress govt. should aim at creating conducive environment for industry and creating jobs (automatically people would not need NREGA, subsidies and Food security); instead of wasting tax payers money on schemes where there is a lot of leakage and resources do not reach the targeted population.

Is it a populist scheme keeping in mind elections? In a country as big as India can this be implemented successfully? Your thoughts please….

5 comments

  1. MNREGA and FSB are not just populist but disastrous schemes. The impact of nrega on labor force started taking effect within a year. With this security the labor availability per we dropped significantly and artificially increased labor costs thus impacting productivity by creating labor supply side bottlenecks. Also along with the drop in unskilled labor, the transition from unskilled labor to vocation trained labors reduced as there no incentive to join any vocational labor force. All this in the guise of employment generation which is to dig a pit and refill it. FSB has a much higher potential to be a disaster. If the farmer gets grains at Rs 1 a kg why would he even cultivate food grains anymore, about 60% of which he currently consumes. FSB will result in huge migrations from grain production to cash crops for the farmers as they are not incentivized to produce grains. This will have in our food grain self sufficiency itself within 3-5 yrs. This in addition to other procurement, operational, leakage and corruption concerns.

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  2. Thanks Aravind. These schemes are just money laundering techniques. Govt is working for development or wants to push back India.

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  3. yes…I feel it is more for political gains as opposed to “food security” considering many states such as chattisgarh, mp have already provided such schemes….dosent make sense that in one end the FM is saying that we will curtail the fiscal deficit and then you do this!

    I expect quite a few leakages to happen(stories of “rotted food grains” from fci godowns finding their way to africa still abound) , indirect taxes to increase on the general public/ certain subsidies to decrease/ more stake sale in PSUs and other regressive tactics to fund this big elephant….certainly not required considering the existing infrastructure is there and can be spruced up to partially serve this purpose….

    even nrega led to a wage price inflation and gave rise to disguised unemployment

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    1. Thanks AK. Leakages will go into the coffer of the loyal party workers / members and circle back to Congress party as donations.

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