Hidden costs

Much of the debate on the National Food Security Bill, which has now become a law through an ordinance approved by the President, has focused on its fiscal implications. This issue — the additional cost to the exchequer from implementing the new law and whether it is affordable in the long run — is certainly important. Indeed, the official calculations are overly optimistic. Not every ration card under the existing public distribution system (PDS) services the food needs of one or more real persons. That said, there are other issues of practical import as well, arising from the legal guarantee to the eligible public, a specific quantity of foodgrains as an entitlement. Till now, the Government made grain available through the PDS, largely in the manner of rendering a service. A few States did a great job of it, while most were indifferent at best. Either way, there was no obligation to deliver, which the retail network exploited to create a large black market in food grain.

A legal entitlement, however, leaves States with no choice but to deliver to the public, what is demanded of it. The implications of this are huge. Since the PDS today is non-existent in many districts of the country, an NGO can easily go to one of these areas and demand that people there be given ration. As awareness about the ‘right’ to 5 kg of rice or wheat per month at Rs 2-3/kg for two-thirds of Indians spreads — a matter of time, courtesy the activities of voluntary social organisations and the mass media — it will unleash a latent demand for PDS grain from section of the public that has been left out either partially or in full. Even farmers, who previously retained a significant portion of the grain they produced for captive consumption, will now choose to sell this entire quantity and meet their family requirement solely from the PDS. When PDS wheat costs just Rs 2/kg, as against its minimum support price of Rs 13.5, isn’t this inevitable? It, then, creates a unique situation where the country’s entire grain output potentially becomes marketable surplus!

All this raises fundamental questions. If access to food becomes a legally enforceable right and not a mere favour from the state, what is the level of administrative preparedness to meet the resulting PDS grain demand that would definitely exceed current official projections, for the reasons cited earlier? How are district collectors going to deal with petitions NGOs will file in courts for alleged no-delivery of a right enshrined in law? Similarly, is the Government going to procure the entire extra grain that farmers will now offload in the market, only to sell it back to them at the lower PDS rates? What will this do to the ‘market’ itself? Aren’t there better ways to protect the interests of poor consumers and farmers, including direct cash transfers? These are matters that the Government should allow Parliament to seriously debate, rather than simply enacting a law through ordinance.

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