Subsidizing food isn’t enough, surely?

It’s no surprise that headlines and groups around the world have alternately praised and derided the Indian Government’s recent introduction of the Food Security Bill. If passed by the upper house of Parliament, the bill would grant a legal right to food to 70% of India’s 1.2 billion population, offering cereals like rice and wheat at ₹2 or ₹3 per Kg. Moreover, there are provisions around offering free meals to pregnant and lactating women, maternity benefits, and free meals to children up to 14 years. An interesting rider even makes state governments liable to pay a food security allowance to their beneficiaries in the event food-grains aren’t available.

There are three rungs at which conversations around this bill have surfaced recently.

From the perspective of the ruling government, this bill aims to reduce and eventually stamp out the scourge of malnutrition in India, which today is supposedly worse than some sub-Saharan countries; the main opposition party however calls it an attempt to win votes for the general elections of 2014; and economists of various ilks question the sanity of such an endeavor, wondering if the country is stretching itself too thin trying to fund this effort.

Here are a few questions I’d ask before jumping to hyperbole.

Firstly, who is this program targeted at? What in your mind is the most realistic measure of determining the beneficiaries of such a program that does not rely on a formula that is created by a statistician in a governmental organization?

Secondly, malnutrition isn’t all about having no access to food at all. A large component of it is not having enough “higher calorie” foods in your diet — dairy, meat, fruit and vegetables. What does this bill do to solve that? What percentage of people face acute hunger and what percentage face calorific malnutrition?

Thirdly, Indian public distribution systems are notoriously leaky. What will this bill do to overhaul those? The Indian state of Chattisgarh has done well to address these issues, but why does this bill not mention how that model can be applicable across the country? What about overhauling the various issues that have been seen with the introduction of the Aadhar cards?

Fourthly, the question of being able to afford such a scheme is a minor one. The program costs about ₹1.44 trillion (~$22 billion) to implement. India’s GDP hovers around $1.8 trillion. The cost of this is barely 1.2% of total GDP — very comparable to India’s $23 billion in fuel subsidies. Moreover, the bill itself is doing little more than forging a banner under which schemes from previous governments as well as state government schemes are tied together. This means that states are already funding a significant chunk of the total money — the state needs to only fund the delta that this government has introduced.

Fifth — the introduction of this bill is not going to affect the short term rupee decline. Longer term, without the right fiscal policies, this may be an issue especially if the current account deficit remains as high as 6.7%, when it should be around 2.5%. But given this bill doesn’t tax the existing outflow of funds, short term repercussions seem ridiculous to debate about.Given the kind of things the new RBI governor, good looks aside, seems to be doing — it’s entirely conceivable that things will take a turn for the better.

Which brings me to my final point. The Indian media more so than ever has become absolutely sensationalistic — there are hardly any reports that seem well thought out and have the backing of solid facts. Most articles out there on the food security bill have either been instances of cuddling up to the ruling government, or to the main opposition party. While there are a few glimmers of journalistic integrity out there, these instances are so few as to be virtually ignorable — thus creating for the first time in modern post-independence Indian history a populace that is influenced by a fourth estate which is under the thumbs of a political and business elite.

And that does not bode well at all.

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