Food Security Bill could spark grain crisis: Gulati

Written by Sandip Das | New Delhi | Updated: Mar 21 2013, 08:33am hrs
With the revised National Food Security Bill set to be introduced in Parliament, the Commission for Agricultural Costs and Prices (CACP) has warned the government's move to distribute highly subsidised foodgrains to two-thirds of the population as a legal entitlement that would create a serious crisis of food managementin the country.

CACP chairman Ashok Gulati told FE that in the absence of huge investments in irrigation, foodgrain storage facilities and improvement in rail infrastructure for transportation of grains, the implementation of the proposed food security legislation would not be sustainable in the long run.

The Union Cabinet on Tuesday gave its nod to the revised Food Security Bill, which guarantees providing 5 kg foodgrain per month at a subsidised rate to 67% of the country's population. Under the proposed food law, goodgrains would be provided to around 82 crore people in both urban and rural areas. Foodgrains would include rice, wheat and millet at R3, R2 and R1 a kg, respectively.

The annual foodgrain requirement for implementing the National Food Security Bill is estimated at 61 million tonne. With the government forced to buy a large chunk of foodgrains produced in the country for implementing the Bills requirement, it would drive out private players from the market, Gulati noted. In case of a decline in foodgrain output due to drought, as was the case in 2002 and 2009, the government would be forced to buy foodgrain from the global market, which would not be feasible in the long run, he said. Volatility in food systems due to exogenous shocks from weather-related events, or instability in international markets, compromises national food security. While India has achieved much in augmenting foodgrain production, especially that of rice and wheat, curbing volatility in year-to-year production remains a critical challenge, a research paper recently co-authored by Gulati had stated.

For sustaining production of foodgrains in excess of 250 million tonne every year, we need to improve our irrigation, storage and transportation systems, Gulati.

Even a dearth of enough railway wagons for transportation of foodgrains would create a hurdle in the distribution, he pointed out. At present, under the Targeted Public Distribution System (TPDS), about 30-35 million tonne of foodgrains are transported to various states using rail and road networks.

The food subsidy in coming years will balloon due to the lower central issue price of grain, a significant rise in the number of entitled beneficiaries and the need to keep raising the minimum support price (MSP) to cover the rising costs of production and to incentivise farmers to increase production, the research paper had said.

The food subsidy bill for the government is likely to rise to R1.2 lakh crore annually from the current level of R85,000 crore.