Posts Tagged ‘NCA’

FOOD SECURITY BILL, 2010……………. “Half baked, still cooking”

The Food Security Bill, proposed by National Advisory Council (NCA) is likely to be taken up during the month-long monsoon session of Parliament beginning on July 26, 2010. The 14- member NAC, headed by Congress chief Sonia Gandhi was constituted on 1st June and is expected to advise Indian government on various social programmes like food security guaranteeing cheap grains such as rice and wheat.

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On The Menu

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As a matter of fact, India suffered one of the worst droughts in 2009, resulting to low production of foodgrains. The burnt feeling of inflation is still being felt across India.

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India’s annual food inflation rose to 12.81% for the week ended July 3, 2010. The proposal aims to insulate the poor against surging inflation in the country where about 37% of the 1.2 billion population lives below the U.N. estimated poverty line.

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The Working Group on the proposed National Food Security Bill made a presentation. The NAC deliberated on the proposal of the Working Group and reached an initial agreement on the following:

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i. While time-bound universalisation of foodgrain entitlements across the country may be desirable, initial universalisation in one-fourth of the most disadvantaged districts or blocks in the first year is recommended, where every household is entitled to receive 35kgs per month of foodgrains at `3/kg.

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ii. In the remaining districts/blocks, coverage of universal PDS with differentiated entitlements (in terms of quantity and issue price), would progressively be expanded to all rural areas in the country over a reasonable period of time. There shall be a guarantee of 35 kgs of foodgrains per household at `3 a kg for all socially vulnerable groups including SC/STs, and 25 kgs for all others, at an appropriate price. There would also be a category that would be excluded based on transparent and verifiable criteria. Further details of this basic framework will be formulated by the NAC.

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iii. In urban areas, eligible households (identified by criteria developed by the Planning Commission based on the recommendations of the Hashim Committee), including slum-dwellers and the homeless, will be entitled to 35 kg per month at `3/kg.

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iv. Existing allocations for APL in the remaining districts/blocks should not be reduced.

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v. Comprehensive nutrition support schemes for infants, pre-school children, school children, welfare hostel students, adolescent girls, pregnant women, streetchildren, homeless, the aged and infirm, differently-abled, those living with leprosy, TB and HIV/AIDS etc., together with community kitchens and destitute feeding will be initiated throughout the entire country.

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The mainstay of the proposed Food Security Act is making available 25 kg of grains a month for `3/kg to the BPL (Below the Poverty Line) families across the country. The conservative estimates of the government are around 30 per cent of the population. More realistically, it is close to 75 to 80% people.

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Financial Implication India already provides cheap grains and pulses to nearly 180 million poor or low-income families through a public distribution system that will cost nearly $12 billion in the year to end-March 2011, accounting for about 1 percent of GDP and 5 percent of total government spending.

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Although there are no official estimates yet, the new scheme will definitely add to the subsidy burden. A Deutchse Bank report said the incremental cost could be about $1.27 billion, raising total food subsidy costs to around 1.1 percent of GDP in the current 2010/11 financial year and widening the fiscal deficit. The Centre spent `1,31,025 crore on food, fuel and fertiliser subsidies in FY10 and expects to bring down such payments to `1,16,224 crore in FY11 to cut fiscal deficit to 5.5% of GDP from 6.9% in the previous financial year.

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But Montek Singh Ahluwalia, the deputy chairman of India’s Planning Commission, has said the proposed food security bill will not lead to any breach of the 2010/11 fiscal deficit target.

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Tug-of-war

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The real challenge in implementing this scheme is an uncertain output from the country’s rain-dependent agricultural sector. Recently, govt. announce the fourth advance estimates, where the Agriculture Ministry has marginally revised downwards its estimates of the size of the 2009-10 wheat crop — from 80.98 MT to 80.71 MT (million tonnes).

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Accepting this proposal may divert the grains to the poor families’ kitchen instead of wasting tonnes of grains lying in the open space or near the railway tracks.

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