Food bill: Sonia says no to kicking off scheme without Act
A proposal to implement the food security system envisaged in the National Food Security Bill as a central government scheme, without waiting for the legislation to be passed, has been dropped following oppostion from the Congress president Sonia Gandhi. According to party sources, she preferred a rights-based approach to merely tinkering with the public distribution system as that would give too much leeway to the lower bureaucracy.
While the Congress remains firmly committed to taking up the Bill in the Winter Session of parliament, increasing doubts are being expressed over whether it is at all implementable. The recent tussle between the ministries of Food and Agriculture over the proposed minimum support price (MSP) for foodgrains is at the centre of the debate. An increase in MSP will drive up the food ministry's grain procurement costs and this will inflate the food subsidy bill.
The MSP for wheat has almost doubled since 2006-07 and this has tripled the food subsidy. The estimated cost of implementing the Food Bill is Rs 1,02,000 crore (with wheat at Rs 2 per kg and rice at Rs 3 per kg for 46 percent rural poor and 28 percent urban poor). But even a small increase in MSP will drive this figure up by a minimum of Rs 5,000 crore, according to food ministry estimates.
The commission for agricultural costs and prices (CACP) does not want to increase the MSP for wheat in the rabi season 2013-14. It may be recalled that MSP for wheat was hiked sharply last year after farmers threatened to go on a “crop holiday” and leave their fields fallow rather than plant wheat.
The ministry for agriculture has insisted there must be a 5 to 10 percent increase in the MSP for wheat as inputs costs, particularly fuel, have gone up in the last year. If the MSP is not increased, a “bonus” of Rs 130 per quintal should be given to farmers, it has said. But the Food ministry is not keen on either proposal, as it has to watch its own bottomline.
But it will also have to contend with the Punjab government, which wants an MSP of Rs 1,750 per quintal of wheat, on the grounds that the cost of fertilisers, seeds, fuel and labour have gone up sharply. Although urea prices have been hiked only marginally, those of other fertilizers have doubled or tripled. However, the central government has not overruled the CACP in recent years.
According to the FCI, the food subsidy in the current fiscal year has already crossed the budgetary allocation of Rs 61,978 crore. It has also outstripped last year's provisional figure of Rs 70,943 crore. So far, it stands at Rs 84,083 crore. Add to this arrears of the previous year and the food subsidy is already over Rs 1,00,000 crore – in just the first half of the year!
So if the National Food Security Bill is introduced, the lower issue price and the larger number of beneficiaries will definitely push this figure up. At the same time, the Samajwadi Party is insisting on universalisation of the Food Security Bill, which would make the food subsidy higher than the fuel subsidy.