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Food Security Bill likely to hurt the poor more

posted Dec 20, 2011, 1:30 AM by Puneet Goyal
20 DEC, 2011, 04.48AM IST, ET BUREAU
The Food Security Bill cleared by the Cabinet is likely to hurt the poor more than it helps them. India already has 54.7 million tonnes of rice and wheat lying as stocks with the Centre and the states, 29.7 million tonnes of grain in excess of the buffer stocking norm.

Offtake of rice in the current fiscal year has been 74% of the allotment, and that of wheat, 64%. The residual will keep adding to the grain mountain with the government, which will rot, due to poor storage, be eaten by rats and be pilfered. By cornering huge volumes of grain, the government reduces the supply in the open market, putting upward pressure on prices.

By banning exports every now and then, it depresses prices. This irrationality is set to be replicated on a much bigger scale, if the proposed Food Security Bill becomes law. This is not to say that the goal of ensuring food security for the people is either unworthy or undoable. It is neither.

Rather, the government is going about it in the most inefficient, unintelligent fashion possible. The world demand for food is set to climb, thanks to steady growth in the poorer regions of the world and increasing diversion of corn to biofuel.

The right way to guarantee every Indian food security is to act to make India a major source of the additional food the world demands, to invest in agricultural growth: in harnessing water for scientific irrigation, in extension of know-how as well as in R&D, in rural roads that provide vital physical linkage to markets, in electronic spot exchanges, in scientific storage and efficient transport logistics, in developing as close a link as possible between the farmer and the first stage of food processing and in providing proper regulation of financial markets in agricultural commodities, futures, derivatives and insurance.

The employment guarantee scheme is a vital part of food security, as a self-selecting scheme of doles for the truly needy. Enhancing earning power through farm growth is the right strategy, supplemented with cash transfers to the poor. Instead of doing all this, if investible resources are diverted to gargantuan subsidy, the government would forgo a possible future of prosperity, to lay its hands on a populist present.