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The National Food Security Act, an election promise of the party, could easevoter anger at near-10% inflation in June

The Government has agreed a draft law that will expand supply of cheaper

grains to its poor, a plan if ratified by parliament could widen the fiscal deficit

but secure voter support for the ruling Congress party and its allies.

The National Food Security Act, an election promise of the party, could ease

voter anger at near-10% inflation and give the government a political breather at

a time when it is struggling with corruption scandals and policy paralysis.

The draft bill is also expected to give the government a better idea on how much

grain India will have left over for exports after maintaining comfortable buffer

stocks in a rural economy heavily dependent on the annual monsoon rains.

On the flip side, the bill will weigh on efforts to meet a fiscal deficit target of

4.6% in 2011-12 by nearly doubling India's annual food subsidies to about $23

billion or 2% of GDP.

It could also perpetually lock the government into costly subsidies to ensure

steady supplies of rice, wheat and coarse grain from domestic production or

imports.

Here are a few key facts about the bill which is likely to be introduced in

parliament later this year and approved without much opposition:

It seeks to cover about 67.5% of India's 1.2 billion people, expanding anexisting food subsidy scheme that covers about 180 million of India's poorest

people who receive about 4 million tonnes of grain every month through

licensed "fair price shops". It is not clear if the proposed law will subsume the

existing quota to avoid overlap.

About 70% of Indians live in rural areas, forming the core voter base of politicalparties. Nearly 75% of the rural population, or 630 million people, and 50% of

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urban people, or 180 million people, will be eligible to receive grains at cheaper

rates.

The beneficiaries are divided into "general" and "priority" households with thelatter recognised as the more vulnerable group but yardsticks for this have not

been decided yet. The bill identifies 46% of the rural beneficiaries and 28% of

urban beneficiaries as "priority" households. About 40% of India's population

live below $1.25 a day.

The "priority" group will get rice at a fixed 3 rupees a kg, wheat at 2 rupees a kgand coarse grain at 1 rupee a kg. The general category, both in rural and urban

areas, will get grains at half of the price the government sets for payment to

farmers.

The annual requirment for rice and wheat under the proposed act will be at least45.6 million tonnes, calculated on a monthly outlay of 3.8 million tonnes.

India's rice and wheat inventories at government warehouses on September 1

stood at 56.3 million tonnes, more than double a target of 26.9 million tonnes.

Inflation has stayed stubbornly high over the past year despite overflowing

granaries, showing that Indian staples such as rice and wheat are not to blame

for high food prices.

Negatives:

First, it cuts down on the number of eligible households Second, the Bill ignores the State government estimations of BPL

families. As opposed to 6.52 crore families recognised by the Central

government as being poor, State governments, based on their own

estimation, have extended BPL coverage to 11.03 crore households,

Third, it cuts down on allocations. The Bill shifts from the present quotaof 35 kg per family to an individual-based system fixed at a monthly

quota of 7 kg per person for a BPL family.

For APL sections it is even worse, with just a 3-kg quota per individual The fourth issue is that of prices. Around 10 State governments have

established a system where BPL families get rice at Rs. 2 a kg. The Bill

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ignores these existing price benefits. In the Bill, the price of rice for BPL

families is Rs. 3, not Rs. 2 a kg. However, the price of wheat has been

kept at Rs. 2 a kg and that of millets at Rs. 1 a kg

It also links the right to food with the questionable Aadhar, or unique

identification system based on biometric information. he main problem of

corruption in the PDS is not impersonation which is what the UID

seeks to address but diversion and leakages to private traders

POSITIVE FEATURES

There are some positive features in the Bill including the inclusion of the

mid-day meal scheme in its ambit. There are good provisions for

nutritional guarantees in the form of a cooked meal for pregnant and

lactating women, including for mothers for six months after childbirth.

These are universal free-of-cost benefits. There are other schemes

proposed for community kitchens for destitute persons, for migrant

workers and special provisions for groups or communities identified as

victims of starvation. However, disabled persons are once again left out

But where will the funds come from? According to the Bill, the entire

payment for all these free schemes proposed by the Central government

will have to be made by the State government. Since the largest number

of poor people reside in precisely those States where there are very

limited resources, expecting the State governments to bear the huge

expenditures is unjust and unfair.

The Food Bill will become a victim of the same lack of resources

syndrome if the present framework for expenses is not drastically

changed