India food subsidy

Let them eat rice: India passes food subsidy bill, but who really benefits?

With 800-million hungry mouths to feed, India’s government has to do something. Its answer to the country’s malnutrition problem is a mammoth food subsidy package that guarantees cheap food for the poor and a hefty bill for the exchequer. This won’t solve the problem, but, like the ANC with its social welfare carrots, it should keep the ruling party in power.

India’s government can afford to screw up even less than most. When President Zuma makes a bad decision, there are just 50-million or so of us South Africans that have to suffer the consequences. When Manmohan Singh gets it wrong, the futures of 1.24-billion people are at stake.

This is why India’s new Food Security Bill has attracted so much attention. It is an attempt to guarantee the right to food to one-sixth of the world’s population, a noble aim for sure. But, with parliamentary elections just around the corner, is that the bill’s real motivation? And are the sweeping subsidies it proposes the best way to tackle malnutrition?

On Monday, the bill received the seal of approval it needed from the Rajya Sabha, India’s upper house of parliament. Only the president’s signature awaits, and this is a formality.

For better or worse, the Food Security Bill will become the Food Security Law, with hundreds of millions largely impoverished Indians set to benefit from vastly discounted rice and grain courtesy of a massive subsidy program.

The numbers are truly astounding, as you would expect in a country of India’s size. Up to 800-million people, around two-thirds of the population, will be entitled to 5kg of food every month at a fraction of market value. Rice will go for three rupees (45 cents), wheat for two (30 cents) and millet for one (15 cents). The scheme will cost the government nearly $20-billion (R200-million) every year, and involve 61.2-million tonnes of food.

But cut through the numbers, and the hype, and actually not much has changed. India’s been providing food subsidies to its poorest citizens for years. This is merely an expansion (and a reform) of the existing legislation. Still, it’s a firm vote of confidence from India’s government that subsidies are the best tool to mitigate India’s malnutrition crisis.

The publicity the issue is generating is also a positive sign that the importance of food security is finally being recognised as a mainstream political issue.

In fact, some commentators wonder if it’s all a little too political. There is a general election in 2014, and there are few more emotive issues than hunger. The political party that can claim to have put the food on the table is surely onto a winning strategy. In this case, the party set to benefit is Sonia Ghandi’s Indian National Congress, the driving force in the ruling coalition.

This is certainly what the opposition thinks. “It is a half-hearted move by the government … Elections are around that is why they have brought this Bill at this time,” said Bharatiya Janata Party (BJP) leader Venkaiah Naidu.

Others question whether the same subsidies, which have failed to solve India’s food problems in the past, will suddenly be the solution to the problem.

“The bill fails to offer remedies for the root causes of malnutrition and equally important elements of food security, such as access to clean water, sanitation facilities, and public health education,” observes Highbrow magazine’s Annie Castellani.

“It also eviscerates a comprehensive definition of food security by limiting the potential scope of enforceable rights arising from the legislation. The poor infrastructure underlying India’s food delivery systems and damaging economic consequences of the legislation are also problematic. Such shortcomings underscore the need for the Indian government to revise the bill to address the core causes of malnutrition and invest in sustainable solutions, instead of placating the public by passing laws that are progressive in name only.”

Investors share this scepticism, with ratings firm Moody’s leading the criticism. “The measure is credit negative for the Indian government because it will raise government spending on food subsidies to about 1.2% of GDP per year from an estimated 0.8% currently, exacerbating the government’s weak finances,” it said in a statement.

The criticisms may be valid, but it’s also hard to see what the Indian government could realistically do differently. As evidenced by the widespread upheaval that sparked the Arab Spring, removing subsidies wholly, or even partially, can cause huge civic unrest…..

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