Given the R2 lakh crore per annum that the Food Security Act (FSA) was projected to cost for the next three years, it was always unaffordable, and a bad idea given the 40-50% leakage levels in the current ration shop PDS system. And, if 66% of the population could afford a mobile phone, why did they need subsidised food? Other evidence corroborated this. At an all-India level, consumption on food, beverages and tobacco fell from 40% of household expenditure in FY05 to 30.5% in FY13; within this, that on food fell from 33.8% to 24.5% and that on cereals—this is what FSA promises—from 8.6% to 5.2%. Contrast this with the 6.5% spent on fruits and vegetables in FY13, 5.1% on milk and products, 4.7% on medical care and a similar fraction on telephones, and it was never clear why the FSA was required as consumers could benefit by using the money in other areas. Look at the data in a more granular manner using National Sample Survey (NSS) data, and you find that urban households spent more money on education than on cereals in FY12.
Each time such data was trotted out, however, the answer was the same: Indians are consuming less food because there is less to go around. In terms of calories, NSS data showed that, for rural India, average daily calorie intake fell from 2,153 kcal in FY94 to 2020 in FY10; for urban India, it fell from 2,071 to 1,946. Rural protein intake fell from 60.2 grams to 55 and that in urban areas from 57.2 to 53.5. Since this fall was accompanied by an increase in the intake of fat—from 31.4 grams to 38.3 in rural India and from 42 to 47.9 in urban India—it was always obvious this was a nutritional choice citizens were making. Data for the latest Nutritional Intake in India is out and, fortunately, that settles the debate since calorie consumption is up, as is that of proteins and fat—rural calorie intake is up from 2,020 kcal in FY10 to 2,099 in FY12, protein from 55 grams to 56.5 and fat from 38.3 grams to 41.6.
Two obvious conclusions follow. One, there is a need to recalibrate the poverty line since even rural calorie consumption is not the 2,400 level the poverty line estimates are based on. Two, given that households spend an equal amount, if not a lot more, on items other than cereals, why not give them cash transfers that allow them more flexibility in planning expenditure? Add to this the results of an ICRIER analysis that says FCI’s inefficient cereals procurement raises the price of free-market grain, and it is obvious cash transfers are a better alternative to the FSA. It is not clear why there is still any confusion in the mind of the government.