Why the Food Security Bill has serious implications on our economy.

The recently passed food security bill in Loksabha is been termed as a game changer for UPA in 2014 general elections. The bill aims to provide food grains to eligible households at subsidized prices and it will cater to the 75% of the rural population and 50% of the population residing in the cities. Once implemented, it will cover two thirds of the population.

The bill requires 75 million tonnes of rice and wheat. Our current production stands at 67 million tonnes so a further 8 million tonnes need to be procured to foot the two thirds of the population as envisaged earlier. This presents an interesting picture because for the last 2-3 years the rain gods have been very kind to us and so a figure of 67 million tonnes of rice and wheat was achieved. What if there is a poor monsoon? From where we will get those additional 8 million tonnes? The most shocking aspect of the bill is that it will obtain the supplies from small and marginal farmers and most of the beneficiaries are again those farmers so the government will give those farmers rice and grains at subsidized prices. This is crazy.

Another reservation which I have about this is that it takes back in time because after 1991 reforms this measure is more of a socialist one. The concept of socialism is a flawed one and in these times of slow growth, widening fiscal deficit, free fall of our currency our economy is going to suffer because of this. The bill looks flawed especially looking at its logistical provisions and it was obvious from the fact that 300 amendments were suggested by different parties.  

And the bill will cost our country a whopping Rs 1.23 lakh crore at a time when our economy is in crisis. This populist scheme will add to the fiscal problems which we’ve been facing for the last few years. There would be more administrative problems and the corruption which goes hand in hand with any scheme of this Government. The food subsidies will rise once again and that would pose problems to the economic scene. Sonia Gandhi said during Loksabha that we have to get this done irrespective of whether we can do it or not. This shows only one thing; vote bank politics and the timing of the bill is a testimony to it. The present government is in serious danger of losing the elections and at this moment a scheme of such scale is bound to get messed up, paving the way for leakages and corruption. Such is wrong timing of the bill that our PM has no right to call himself an economist. He remains a rubber stamp of National Advisory Council’s chairperson.

In 2009, the UPA waived 60,000 crore loans from farmers and that compounded our problems and now this food security bill is again a tool to just fool the farmers and the rural people to gain political edge. The much touted MNREGA scheme for the rural youth has been a failure and it costs our country a bomb. The present government has a history of targeting rural population and manipulating them with their unsubstantiated claims but this time the food security bill would also be used to hide their failures.