If passed, the amended National Food Security Bill 2013 sent to Parliament will create a right to food for two-thirds of India’s people.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
GAIN Report Number: IN3037
Post: New Delhi
Indian Cabinet Approves National Food Security Bill 2013
Grain and Feed
Agriculture in the Economy
Agriculture in the News
Policy and Program Announcements
Climate Change/Global Warming/Food Security
If passed, the amended National Food Security Bill 2013 sent to Parliament will create a right to food
for two-thirds of India’s people. The estimated food grain requirement for this act is 61.23 million
metric tons at a cost of “about” INR 1.247 trillion ($23.1 billion), an increase of INR 238 billion ($4.4
billion) over current expenditures.
The Indian Cabinet approved amendments to the National Food Security Bill and passed it back to the
Parliament for consideration and passage. Major amendments in the revised bill includes –
simplification to a single category of beneficiaries constituting 75 percent of the rural population and 50
percent of the urban population, reduction of benefit from 7 to 5 kilograms of grain per capita,
delegation of the powers to identify, implement and address grievances to the state governments.
Another amendment establishes the subsidized prices for grains for only three years, after which prices
“will be linked suitably to the Minimum Support Price.”
Indian Cabinet Approves Revised National Food Security Bill; Sent to the Parliament
On March 19, 2013, the Indian Cabinet approved several amendments recommended by the
Parliamentary Committee on Food to the National Food Security Bill, pending in the Parliament since
2011. Subsequently, the revised draft National Food Security Bill 2013 was submitted to the Parliament
on March 22, and is likely to be discussed in the second phase (April 22-May 10, 2013) of the ongoing
budget session for approval.
Amendments Recommended by the Parliamentary Committee
The first draft of the National Food Security Bill 2011 submitted to the Parliament in December 2011
was referred to the Parliamentary Standing Committee on Food, Consumer Affairs and Public
Distribution for review. After over a year of deliberations and consultations with various stakeholders,
the committee submitted its report to the Parliament on January 17, 2013, which was subsequently
forwarded to the government. The government incorporated most of the proposed amendments of the
parliamentary committee, and the revised National Food Security Bill 2013 was approved by the Union
Cabinet Ministers. A copy of the revised National Food Security Bill 2013 available on a media
website reveals following amendments:
ξ A single category of eligible beneficiaries is established, accounting for 75 percent of the rural
population and 50 percent urban population. The original draft proposed two categories –
priority and general -- to be charged different prices for the subsidized food grains under the
ξ The monthly food grain entitlement to individual beneficiaries is reduced from 7 kg to 5 kg per
capita. However, “poorest of the poor” (Antyodaya Anna Yojana) households, of which there
are 23.4 million, will be guaranteed 35 kilograms of grain per household per month, and existing
higher allocations to certain states and union territories will be preserved.
ξ Uniform prices of INR 3, 2, and 1 per kilogram will be applied to rice, wheat, and coarse grains
(mainly millet), respectively, “for the first three years of implementation…and thereafter will be
linked suitably to the Minimum Support Price (MSP).”
ξ The central government will set the size of population to be covered in each state, while the state
governments will identify eligible households/people based on published census data. The state
governments will have flexibility in applying eligibility at the local levels according to need as
prosperity may vary in different cities, districts and villages. However, the total beneficiaries in
the state would meet the aggregate of 75 percent of rural and 50 percent of urban populations in
ξ Responsibility of implementation of the food security program will reside with the state
governments and every state will set up a grievance redressal system. The original proposal of
creating a new National Food Commission was dropped as the implementation of the program
will be by state governments.
ξ Due to the “concerns” of states and union territories “regarding additional financial burden,” the
central government will provide assistance to the state governments towards intra-state
transportation and handling of food grains, and margins to be paid to the Fair Price Shop dealers.
ξ Food entitlements for children and pregnant/lactating women continue in the revised bill,
although the original proposed maternity benefit of INR 1,000 per month for six months is
modified to a sum of INR 6,000 that can be paid out “in such installments, as may be prescribed
in the scheme to be formulated for the purpose”.
Foodgrain Commitment Raised Somewhat…
Government sources estimate the total food grains requirement under the revised bill at 61.23 million
metric tons compared to 56.3 million metric tons government foodgrains off take for Indian fiscal year
(IFY) 2011/12 (April/March), and significantly below the 76 million metric tons estimated requirement
of the original draft of the bill. Government sources report that the current government food stocks and
projected production will be sufficient to cover the foodgrains requirement through at least IFY
2014/15, but shortages may arise by the early 2020s unless domestic food grain production increases.
…But Subsidy Will Soar
With the expanded single category of beneficiaries provided “highly” subsidized food grains, the
subsidy burden under the proposed bill is likely to jump to INR 1.247 trillion ($23.1 billion) compared
to the estimated food subsidy of INR 850 billion (15.7 billion) for IFY 2012/13. If the National Food
Security Bill is passed during the current budget session of Parliament, food subsidy costs could
increase beyond this year’s budgeted amount of INR 900 billion (about $16.6 billion). Requirements for
assistance to states for meeting the expenditure on transportation, handling and “Fair Price Shop”
dealers’ margin, etc., would be additional.
Government to Push for Early Parliamentary Approval
The revised National Food Security Bill 2013 is likely to be submitted to Parliament in the second half
of the budget session, which will start on April 22, 2013. The United Progressive Alliance (UPA)
government would like to push for the early approval of the bill to showcase the benefits of the program
to voters before they go to the polls in the upcoming 2014 elections. While any major political party is
unlikely to oppose the “politically sensitive” issue of providing food to the population, some ruling
regional parties may push for expanding the population coverage and express concerns about the cost-
sharing arrangements under the program.
Media Present Diverse Views on the Revised Bill
Indian mass media have covered the National Food Security Bill 2013 extensively, including Minister
of Food K.V. Thomas’ statements in support of the bill,
This is no mean task, a task being accomplished in the second most populated country in the world. All
the while, it has been a satisfying journey. The responsibility is not just of the Central Government but
equally of the States/UTs. I am sure together we can fulfill this dream. The day is not far off, when India
will be known the world over for this important step towards eradication of hunger, malnutrition and
resultant poverty... By providing food security to 75 percent of the rural and 50 percent of the urban
population with focus on nutritional needs of children, pregnant and lactating women, the National Food
Security Bill will revolutionize food distribution system.
Tehelka carried comments in addition to a summary analysis by Professor Jean Dreze, one of the bill’s
architects, downplaying concerns about the cost of the bill:
...financial analysts are raising predictable concerns about its affordability. These concerns, however,
are misplaced. The revised version of the food Bill is actually little more than a “Public Distribution
System (PDS) Restructuring Bill”. The foodgrain requirements of the Bill are no more than existing
allocations. Other entitlements (such as midday meals) do not go beyond the rights that people already
have under Supreme Court orders, with the main exception of maternity entitlements...the Bill is a form
of investment in human capital. It will bring some security in people’s lives and make it easier for them
to meet their basic needs, protect their health, educate their children, and take risks. In short, the food
Bill is sound economics.
The Indian media have given voice to the bill’s critics, as well. Tehelka, which scooped other media as
the first to post the amended text of the bill, noted,
It is not a perfect Bill and has been variously criticized for low food entitlements, inadequate attention
to nutrition, too much discretion to state governments in identifying beneficiaries, a poor grievance
redressal mechanism and providing scope for substituting the Public Distribution system (PDs) with
cash transfers...Policymakers clearly have little idea how much implementing the Right to Food will
cost...Compounding these problems is the leakage from the PDs, variously estimated by researchers at
40 to 55 percent.
Business Standard’s Sanjeeb Mukherjee was equally direct:
Managing such a complex scheme will be a big headache for the government. For one, NFSB says that
the eligibility for getting benefits under the scheme will be determined by the state governments and
will, therefore, vary from state to state...Leakages in the PDS have definitely decreased over the years,
of course, and officials claim pilferage is now down to 15-20 per cent. But this is still a matter of
concern when put in the context of the government's annual spend of Rs 80,000-90,000 crore [INR 800
to 900 billion] on procurement, storage and distribution of cheap grain.
Blogger R. Jagannathan, editor-in chief of Network18 Group and for years a rather acerbic commentator
in the Indian business press, wrote in Money Control,
The Right to Food will ruin the market for grain and distort food economics as it involves buying grain
at Rs 12-15 a kg and selling it at Rs 1-3 a kg. The bulk of the subsidies will go to keep rice, wheat and
coarse grains farmers in business when demand is moving away to proteins milk, vegetables, fruits,
eggs, etc. Supplies of protein foods, the main drivers of food inflation in the recent past, are not rising
commensurately. The right to food will thus be addressing a hunger problem that is either not there or
may exist only in pockets of India. If acute hunger is reducing, why have a national food security law?
Some media reported objections from the Right to Food Campaign that “the food entitlement would be
woefully short of government’s own norm for nutritional requirement of a person” and that provision of
“only 5 kg of cereals to a person in a month not only makes a mockery of the intent of the bill but also
goes against the Supreme Court order which had made 35 kilograms of food grains per household an