ISSUE OF FOOD INFLATION IN INDIA AND THE EFFECT OF FOOD SECURITY BILL ON IT : AN ANALYSIS

BY DWAIPAYAN GUPTA H11075

WHY NEED FOOD SECURITY?

Source: SCN 2004, 5th Report on World Nutrition Situation

MALNUTRITION

Source: SCN 2004, 5th Report on World Nutrition Situation

SUPPLY OF FOOD

FOOD INFLATION

FUEL PRICE HIKE

GOVT. MEASURES

WHAT IS FOOD SECURITY BILL?

The draft Food Security Bill would provide 25 kg of wheat/ rice to BPL households at Rs. 3/- per kg. IT would rely on existing infrastructure and logistical support of the public distribution system (PDS). Would cover about 68% of population.

CHALLENGES
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.

Uncertain output from the country's rain-dependent agricultural sector.

The government's BPL list is perceived to be heavily infiltrated by undeserving people.

If the Bill is about ensuring food security, how can it leave those who may not fall below the poverty line but are already exposed to food insecurity?

POSSIBLE COURSES OF ACTION

1. Support needs to focus particularly on enabling poor rural producers those least able to respond to changing market signals to expand their production and seize the opportunity offered by higher commodity prices. 2. 3. Choosing a hierarchical manner of implementing food subsidy starting from the poorest. 4. 5. Determine the most effective means of enabling the private sector to participate more fully in agricultural development and in particular

POSSIBLE COURSES OF ACTION (Contd..)

4. The right time to implement the bill should be after improvement of the inflation rate (below a certain permissible level).

5. PDS and BPL list to be overhauled. UID can be linked with these to have a better monitoring.

6. Assess the impact of giving support by relaxing taxes on food commodities and suppliers/distributors.

THANK YOU