Government subsidies in India with focus on food subsidy in view of the national food security bill

Abstract

The National Food Security Act, 2013 aims to provide food security to about 67% of the population. It aims to bring within its coverage 75% of the rural population and 50% of the urban population. The Act proposes to make food security a legal right of every citizen rather than a welfare goal of the government. With over 40% of India’s children being malnourished, there is a need for support mechanism to sustain them. The implementation is also likely to bring in a better Public Distribution System which will have a wider reach and at the same time be more effective. The Act also tries to empower women and look after their needs during maternity and lactation. While all of the above benefits are compelling, it is also important to understand the operational challenges in implementing a scheme of such a large scale. Other countries such as Brazil have tried to achieve food security through subsidy schemes such as Conditional Cash Transfer. In India itself, there has been a move towards Direct Cash Transfer. Hence the viability of partially or fully introducing such money transfer provisions to meet the objective of food security should also be looked at. The task of attaining food security in the country is the job of Food corporation of India (FCI) through the Public Distribution System (PDS). Hence it is a natural starting point for any study on Food Security in the country. After describing the current institutional setup, we describe the various short comings in the system. This is followed by an analysis of the National Food Security Act, 2013. We describe its various benefits and the estimated costs. The report then analyses methods of improving the current PDS system to achieve greater efficiency. We also describe various better alternatives to the PDS system. This is followed by an analysis of the deeper question of what is the real problem being faced by the country - is it hunger or malnutrition? Finally, we conclude the report with a case study on Brazil which was able to bring about significant changes through its focussed food and nutrition security programs.