India’s ‘Insecure’ Food Bill: Hurting the Poor

The Congress-party led Indian government is attempting to push a Food Security Bill through Parliament in a hurry. This bill may be politically beneficial for India’s ruling party, but will prove detrimental to the country’s poor. The ambitious Food Security Bill aims to supply subsidized food to India’s underprivileged population. It seeks to provide 7 kg of rice, wheat and grains per person to 2/3^rd of the country’s households at highly discounted prices. This bill has been hastily approved by the Cabinet and will be tabled in Parliament this week.

The urgency to pass this legislation is understandable from a political point of view, as it forms a key part of the Congress’s pro-poor platform. In light of the upcoming vital election in Uttar Pradesh (UP) and in the midst of increasing inflation, slowing economic growth and corruption scandals, the government must find a way to appease an increasingly dissatisfied public.

This effort to spread the benefits of economic development to the poor seems laudable at first glance.  However, this distribution of resources is exactly what the bill fails to provide for. While it legislates for specific amounts of food grains to be distributed to needy families, it lacks detail on how it plans to ensure this allocation.

India’s supply chains are famously afflicted by inadequate infrastructure and its distribution channels riddled with corruption. Food grains are produced in surplus in the country, but rot due to the lack of sufficient cold storage year after year. And yet, instead of dealing with this recurrent underlying problem, the bill seems to focus on the superficial aspects of food security.  Without paying attention to effective distribution, the bill will simply exacerbate the problem of food wastage while millions continue to starve.

Paradoxically, this bill which was designed to uplift the rural poor will hurt farmers by reducing the market prices of food crops by increasing the supply of subsidized grain. Thus, the bill may prove to be disadvantageous to the very population it was designed to benefit.  Additionally, as many have pointed out, the timing of the bill is economically inopportune (to put it mildly) in light of the country’s looming fiscal deficit and slowing economic growth.  The government has not as yet explained how it plans to finance this policy which is estimated to require 950 billion rupees per year.

Consequently, introducing this bill seems to be a baseless political move that provides little policy benefit. The country needs legislation that allows farmers to profit economically and grow autonomous, instead of forcing them to further depend further on the state. The government would do better to provide market incentives, not charitable hand-outs.

Despite these fundamental problems, it is likely that this legislation will pass through Parliament fairly smoothly. The bill is Congress Party President, Sonia Gandhi’s, pet project, and it is no secret that she pulls the strings of the government behind the scenes. As she is the head of the National Advisory Council (NAC) that has (conveniently) drafted the bill, it seems very unlikely that the plan will have trouble gaining approval. Furthermore, it would be political suicide for any political party to reject the bill when the mood in the country is already fragile; no policymaker will risk their seat by angering India’s poor further at this time.

The Congress party seems to have decided to stick to its guns firmly on this bill to prove it is still in control, after the Winter session of Parliament embarrassingly grinded to a stand-still this month after much uproar over a Foreign Direct Investment (FDI) retail bill that provided for foreign investment in the country’s supply chains and supermarkets. The FDI bill was ultimately shelved due to the strong opposition in Parliament, although ironically it had a much better chance at addressing the underlying problems the agricultural sector faces than the new bill.

It is highly unfortunate that the Congress party has chosen to stand firm on the wrong piece of legislation. Where’s the Indian government’s famous policy paralysis when you need it?