Recent discussion paper Nithi Aayog It suggested reducing beneficiary coverage under the National Food Security Act (NFSA) from 75% to 60% in rural areas and from 50% to 40% in urban areas. Rationalism: It reduces food subsidies in India ₹47,229 crores. This is not the only proposal to reform the NFSA. Earlier this year, the Economic Survey suggested raising the issue price of food grains from the current level ₹3 per kg of rice, ₹2 per kg for wheat and ₹Coarse cereals through Public Distribution System (PDS) at Rs. 1 per kg.
NFSA was approved in 2013 and fully implemented in 2015. Although its reform is welcomed after six years of implementation, such a process should be based on an independent evaluation of its performance in the light of the stated objectives of the law. Unfortunately, there is no such evaluation. Consumption cost surveys used to estimate PDS were also last available for 2011-12 only. A survey was conducted in 2017-18, but it was junk by the government. However, small surveys by private researchers and organizations have highlighted the NFSA’s access and potential in improving nutrition and ensuring food security for the most vulnerable in India.
However, the current debate on reform is not based on any objective evaluation of its performance and effectiveness, but on the need to reduce our food subsidy. That’s also misleading. Food discount for this year, at ₹4.22 trillion, somewhat explained by past arrears paid to the Food Corporation of India (FCI). The same is true of next year’s food subsidy budget ₹2.4 trillion. But this government has introduced a method of using off-budget measures such as extended loans to the FCI through the National Small Savings Fund. Excluding debt repayments for the coming year, the food subsidy bill stands at 1% of GDP, which remains the same as before the implementation of the NFSA, and the law significantly expands the number of beneficiaries. But it is not only off-budget accounting practices that obscure the actual level of food-subsidy, but also the method of accumulating too much and accumulating excess stock. As of March 1, FCI contained 80.5 million tons of rice and wheat, almost four times the buffer requirement.
Being a drain on the NFSA’s public coffers could not be borne by boogie facts. The high food subsidy was actually caused by the mismanagement of food procurement and storage by the government. Today’s reform proposals are a setback because they rejected the goal of expanding coverage under the NFSA by partially universalizing it. Reducing the number of PDS beneficiaries would be a throwback to an age of distribution, which is inefficient and not prone to leakage, in fact excluding even the high percentage of the poor who need government support. Also, there is definitely no mechanism or device to reduce the number of beneficiaries. The socio-economic caste survey is almost a decade old and there is no way to identify the required beneficiaries. But such a step at this stage is also detrimental to the intended purpose of the NFSA, which is to provide nutritional security. The latest data from the National Family Health Survey (NFHS-5) has clearly shown stagnation and in many cases reversed gains in the nutrition sector. As the Kovid pandemic exacerbates food security and livelihoods, attempts to dilute NFSA in the name of reform will further weaken food and nutrition security. In fact, looking at growing stocks of food grain with FCI, it is important to expand the NFSA and universalize it, at least until stocks run out or our economic situation returns to normal.
Any short-sighted attempt to dilute the NFSA will not only reverse the gains made over nutrition and food security over the past two decades, but also contribute to inefficiency. The siege with our food subsidy means that the NFSA has not found any recipients of the significant reforms it needs. Including essential nutrients such as legumes and edible oils is a good way to make NFSA more relevant. Since India is a net importer of both, bringing them under the NFSA will increase productivity through better incentives and help ensure nutrient security. Reforms should focus on strengthening its ties with the NFSA and the agricultural sector, and not on diluting the hard-won right to food in the country.
Himanshu is an Associate Professor at Jawaharlal Nehru University and a Visiting Fellow at the Center for Science Humans in New Delhi.