MACRO ECONOMICSANDBUSINESS ENVIRONMNET

PROJECT REPORTON

FOOD SECURITY BILL

Submitted to Submitted byDr. Ritika Gugnani (GROUP 5) Khushboo vishnani Pavan kr. Gautam Kunal Madan Komal Bakshi Ravi Balyan Rohit Mohan

INDEXCONTENTSPAGE NO.

Food Security Introduction3.

Government Acts4

Evolution of Food security bill5

Scope of Bill6

Features of Bill7

Role of PDS8

Investments and Expenditure Required9-10

Challenges11-13

International Concerns13

Limitations14

Solutions14-15

Analysis and Findings16-17

Conclusion18

Bibliography19

FOOD SECURITYFood security is one of the most fundamental needs of security. Food security focuses on the availability of the food and its adequate use to access the nutritious & balanced diet.The other side of coin is food insecurity which is something broader in scope. Food insecurity includes hunger, malnutrition. Poverty and health are also inter-related with food security. People with poor health are not productive and unemployed people are not able to purchase food. Therefore food, poverty, health are tied with single thread and forms nexus of food-nutrition-livelihood.With the passage of time measuring food security is becoming quite challenging, because of continuous growth in population. A study shows that global population has doubled to 7.2 billion since 1950, but the number of hungry people are same, which means there is decline in percentage terms to a number of hunger people. At present 1/8 percentage of people are hungry as when compared to 1/3 in 1950. This is because latest updated technology being used in production, increase in foreign trade among countries.Our country calculates undernourishment on the basis of minimum daily intake of total calories by men, women, children. Majority of hungry people resides in labour intensive food production. They need additional calorie for proper growth and development therefore, continuous efforts are made by experts to calculate more reliable and effective data by exploring new information and latest technology. Country like India have majority population which resides in rural areas and they are peasants, poor class, or labour workforce. These people might not have food because of low productivity ,low income ,which restricts them from purchasing food, sometimes the food produced, harvested are spoiled by pest or by change in climate. Change in climate includes flood, draught rise in temperature. Climate change is worst in sub-saharan, Africa, South Asian countries and therefore there is insecurity of food. According to, world bank report there will be decrease of 15 to 18% in crop yield in coming years in these regions.WHO defines three crucial facets of Food Security :- Availability of food Access to food Consumption of food.Food availability is having availability of sufficient quantities of food on a consistent basis. Food access is having sufficient resources both economic and physical to obtain appropriate food for a nutritious diet. Food use is the appropriate use based on knowledge of basis nutrition & care as well as adequate water and sanitation. By, this we can say poverty ,poor health, hunger, are the result of low income ,poor productivity, climate change and therefore in order to overcome these challenges we need food security bill.

IMPORTANT GOVERNMENT ACTsNFSA(National Food Security Act) is fifth in a series of what might be said as a right-based approach. The Right to information act, has introduced transparency in governance. The Right to work through the rural employment guarantee law (MGNREGA), The forest rights Act giving tribals the right to forest produce, and The Right to education Act that has sharply increased student enrolment in schools are the other entitlements put in place by the government.

FOOD SECURITY BILL IN INDIAFood security has been entitled as right which widens its scope by becoming specific and far reaching. The moment access to grain becomes legally enforceable right and mere favour from state the game changes completely. It includes the level of administrative preparedness to meet the resulting PDS grain demand. It opens the gateway for NGO to identify any district or block where no PDS exists. They can file petitions in courts about people who are denied from their rights. The poor people are not having resources to claim what is rightfully resources due to them by taking their complaints against the local administration through the local administration through the grievances redressal mechanism. This is an area where responsible NGOs can step in and fight battles on behalf of the deprived people. OLIVER DE SCHUTTTER, United Nations Special Reporter on the Right to Food, said the food law had global significance : It is an important movement for the right to food in India. India is the most populated country of the world, containing 17.2% of world population. But according to the report of Global Hunger Index Indias condition is extremely pathetic. 25% (30 crore) people of India do not take complete meal two times. In this scenario food security is must in India

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EVOLUTION OF FOOD SECURITY BILLPresident Mrs. Pratibha Patils declaration for the first time in parliament on June 4, 2009 that a national Food Security Act would be formulated, took more than four years to bring in ordinance. It was started through following process:-1) The Sonia Gandhi-led National Advisory Council in 2010, drafted the bill originally and proposed legal entitlement for 75% of Indias population.2) A panel led by C Rangarajan recommended lowering entitlements and reforming PDS.3) In September.2011, the food ministry circulated a draft report for public comments.4) In Dec.2011 , food security bill was first tabled in Parliament.5) In 2012, bill goes to the Standing Committee of Parliament. Jean Drezz and some economists push Plan-B, which removes distinction between priority groupsband non-poor. Standing Committee was suggested to provide 5kg per person a month.6) In Jan.2013, Standing Committee submits recommendations. Final version of bill incorporates Plan-B & Standing Committees recommendations.7) In May 2013, Bill was tabled in the Lok Sabh in Budget session but not taken up due to chaos in Parliament.8) In July 2013,Cabinet Committee on Economic Affairs passes ordinance on food security covering 67% of the population and enacted into law on August 2013.9) The National Food Security Act, 2013 was signed into law on September 12, 2013.

SCOPE OF FOOD SECURITY BILLAccording to Commission on Agricultural costs and Prices (CACP) bill is the biggest ever experiment in the world for distributing highly subsidized food by any government through a right based approach. The Act further says that functioning of the bill will be by PDS , to cover the two-third population i.e. about 820 million people. As per the Act Lok Sabha Standing Committee on Food estimated that total requirement of foodgrain in order to achieve the target will be approximately 61.55 million (metric) tonne in 2012-13. According to, CACAP total requirement of food in May 2013 on an average through PDS is calculated as 2.3 mt for wheat (27.6 metric tonne annually) and 2.8 metric tonne for rice (33.6 mt anually). CACP estimated rice and wheat required is about 61.2 million metric tonne. Standing Committee estimated value of additional food subsidies during 2012-13 works out to be Rs. 2409 crore, or about $446 million at the current exchange rate for a total expenditure of 1.22 trillion rupees. CACP reported current economic cost of FCI for acquiring, storing, distributing foodgrains is about 40% more than the procurement price. The expected expenditure of 1,20,000 crore for NFSB is merely a drop in an ocean. There is a requirement of additional expenditure for scaling of operations, enhancement of production, investments for storage, movements, processing and market infrastructure etc. For implementation of bill there is requirement of expenditure of about 1,25,000 to 1,50,000 crore. Minister of Consumer Affairs, Food and Public Distribution K.V. Thomas in an interview stated that it is not just the responsibility of Central government but State government is also equally responsible. India will be known in the world for eradication of hunger, malnutrition and poverty. Bill will focus on providing food security to 75% of rural population fulfilling nutritional needs of children, pregnant and lactating women. The government estimated cost on food security will come nearly 11.10% of total receipts. CACPs estimated cost of food security comes at 21.5% of total receipt. Economists Bhalls estimated cost of food security comes at around 28% of total receipt, once the cost of food security is calculated as percentage of total receipt of government from current financial year we can see how huge the cost of food security is actually.CACP warned that enactmented of bill will create severe imbalance in production of oilseeds and pulses and will create demand pressures which will inevitably spillover the market prices foodgrains. The higher food subsidy will raise fiscal deficit of government. The commission further said that bill would restrict private initiative in agriculture, reduce competition in market place due to government domination of grain market, shift money from investments in agricultures to subsidies and continue focus on cereals production when shifts in consumer demand patterns indicate a need to focus more on protein, fruits & vegetables.

FEATURES OF FOOD SECURITY BILL 75% of rural and 50% of the urban population are entitled for three years from enactment to 5kg foodgrains per month @ Rs.3, Rs.2 and Rs.1 per kg for rice , wheat & , coarse grains. States are responsible for determining the eligibility criteria. Pregnant women and lactating mothers are entitled for nutritious take home ration of calories and a maternity benefit of at least Rs. 6,000 for 6 months. Children 6 months to 14 years of age to receive free hot meals. The central government will provide funds to states in case of short supplies of foodgrains. The current allocation of foodgrains will be made by central government for atleast 6 months. The state government will provide a food security allowances to beneficiaries in case of non-supply of foodgrains through Public Distribution System. The eldest women in home, 18 years or above, will be the head for the issuance of ration card. There will be state and district redressal mechanisms and State Food Commissions will be formed for implementations and monitoring of the provisions of the Act. Three-tier independent grievance redressal system.

Antyodaya Anna yogana households are entitled to an additional 10kg of foodgrains per household. An additional allocation of foodgrains of 6.5 million tonnes for Other Welfare Schemes is also included in Act. This includes provision of an additional 5kg of grain per month to pregnant women and new mothers, and free mid-day meals in schools in age group of 2-16 years. The total foodgrains requirement is estimated as 61.2 million tonnes & this includes an additional 2.9 million tonnes to protect the allocation to states under Public Distribution System.According to Department of Food and Public Distribution following food security schemes are allocated to some statesSTATES THAT HAVE FOOD SECURITY SCHEMES

Andhra Pradesh35 kg rice at Rs.1 per kg

Chhattisgarh35 kg rice at Rs.2 per kg.

KeralaRice at Rs.2 per kg for BPL, universal PDS

Karnataka30 kg rice at Rs.1

Madhya Pradesh30 kg wheat at Rs.1

Odisha20 kg rice at Rs.1 a kg.

Tamil Nadu20 kg free rice a month

West BengalRice at Rs.2 per kg in selected area

ROLE OF PUBLIC DISTRIBUTION SYSTEM (PDS)National Food Security Act has put the Public Distribution System at the core of the national mission to feed the hungry. The value of PDS is demonstrated well in many states. Chhatisgarh, and Tamil Nadu being leading examples have improved the functioning of the PDS beyond all recognition. In Chhattisgarh the system has turned out to be very successful affair because of the importance and attention paid by state government to it. GPS trackers were installed in ration shop trucks to keep tabs on them and SMSs to individual ration shop consumers on the grain being dispatched with details of when it will arrive at shops, & so on. But functioning of PDS in many states are leaky. There are many adequacies of PDS they are:-1) Its uneven coverage in rural areas2) Its inability to serve the deserving person3) The huge leakages in form of diversion of subsidized grain to open market4) Utilization of highly subsidised cereals by above poverty line people by using fake identitiesThus PDS mechanism suffers from wastages, leakages, diversion, underutilisation, exclusion errors. Steps are required to make it corruption free, efficient and accountable through provision of better infrastructure, fixing accountability on key functionaries and introducing systematic reforms to ensure financial and institutional issues with regard to effective implementation of PDS.PDS can be revamped and redesigned by:-1) Opening new outlets with providing services in morning and evening hours so that people can fetched grains.2) Computerization of records3) Stringent enforcement and establishment of grievances redressal mechanism4) Decentralization procurement and distribution system5) Making availability of locally demanded foodgrains6) Inclusion of millets and other items under PDS7) Allowances in lieu of loss of wageA well-functioning PDS liberates people from constants fear that might be difficult to make ends meet if crops fails, or someone falls ill, or if there is no work.

INVESTMENTS AND EXPENDITURE REQUIRED FOR FOOD SECURITY BILLThe quantum of food subsidy in Indias GDP has been less than 1%, which clearly needs to be scaled up if food security has to be expanded further. This share was 0.8% in 2004-05, which declined marginally to 0.89% in 2009-10, and dropped to 0.74% in the current budget (2012-13 BE). Similarly, the share of food subsidy in the total budget has been flyng somewhere around 5% since 2004-05. The present provision of food subsidy in the union budgets is based on allocation of foodgrains to different sections of the population, i e, Antyodaya Anna Yojana (AAY), BPL and APL. CIP of per quintal of wheat for AAY, BPL and APL is Rs 200, Rs 415 and Rs 610, respectively. Similarly, CIP of per quintal of rice for AAY, BPL and APL is pegged at Rs 300, Rs 565 and Rs 830 (for Grade A), respectively. Further, the present provision of food subsidy has been made on the basis of the economic costs (EC) of per quintal of wheat and rice, i e, Rs 1,580.6 and Rs 2,068.9, respectively. To put in place the universal PDS for the provisioning of rice and/or wheat and millets, certain following assumptions are taken to arrive at an estimation of food subsidy in the union budgets.

Total number of households at present is 24 crore (approximate)

Provision of distribution of rice or wheat under PDS to all households at 35 kg per month per household; Provision of distribution of millets under PDS to all households at 5 kg per month per household economic cost of wheat and rice will not increase from their present levels of Rs 1,580.6and Rs 2,068.9 per quintal of wheat and rice, respectively; further we assume price of millets as Rs 1,500 per quintal; Distribution of rice and wheat is in the ratio of 2:1.Based on these above assumptions, the total amount of cereals needed for distribution through PDS would be around 115.2 million tonnes (i e, 67.2, 33.6 and 14.4 million tonnes, respectively for rice, wheat and millets), and the total amount of subsidy per annum would be Rs 1,85,418 crore (at current prices). The food subsidy bill stood at Rs 75,000 crore as per 2012-13 BE and thus an additional outlay of Rs 1,10,418 crore would be needed. The above estimate suggests that an additional amount of Rs 1,10,418 crore is required over of the above the existing food subsidy bill of the union government to universalise the distribution of rice, wheat and millets.

The government estimates suggest that food security will cost Rs 1,24,723 crore per year. But that is just one estimate but, the cost at around $25 billion. Commission for Agricultural Costs and Prices(CACP) of the Ministry of Agriculture in a research paper puts the cost of the food security scheme over a three year period at Rs 6,82,163 crore. During the first year the cost to the government has been estimated at Rs 2,41,263 crore . Economist Surjit Bhalla put the cost of the bill at Rs 3,14,000 crore or around 3% of the gross domestic product (GDP). The trouble here is that by calculating the cost of food security in terms of percentage of GDP, we are unable to understand the seriousness of the situation that we are getting into. In order to properly understand the situation we need to express the cost of food security as a percentage of the total receipts(less borrowings) of the government.The receipts of the government for the year 2013-2014 are projected at Rs 11,22,799 crore. The government's estimated cost of food security comes at 11.10%(Rs 1,24,723 expressed as a % of Rs 11,22,799 crore) of the total receipts. The CACP's estimated cost of food security comes at 21.5%(Rs 2,41,623 crore expressed as a % of Rs 11,22,799 crore) of the total receipts. Bhalla's cost of food security comes at around 28% of the total receipts (Rs 3,14,000 crore expressed as a % of Rs 11,22,799 crore).Once we express the cost of food security as a percentage of the total estimated receipts of the government, during the current financial year, we see how huge the cost of food security really is. This is something that doesn't come out when the cost of food security is expressed as a percentage of GDP. In this case the estimated cost is in the range of 1-3% of GDP. But the government does not have the entire GDP to spend. It can only spend what it earns.The cost of food security is expressed as a percentage of total receipts of the government is likely to be even higher. This is primarily because the government's collection of taxes has been slower than expected this year.For the first three months of the financial year (i.e. the period between April 1, 2013 and June 30, 2013) only 11.1% of the total expected revenue receipts (the total tax and non tax revenue) for the year have been collected. When it comes to capital receipts(which does not include government borrowings) only 3.3% of the total expected amount for the year have been collected.What this means is that the government during the first three months of the financial year has not been able to collect as much money as it had expected to. This means that the cost of food security will form a higher proportion of the total government receipts than the numbers currently tell us. And that is just one problem.It is also worth remembering that the government estimate of the cost of food security at Rs 1,24,723 crore is very optimistic. The CACP points out that this estimate does not take into account "additional expenditure (that) is needed for the envisaged administrative set up, scaling up of operations, enhancement of production, investments for storage, movement, processing and market infrastructure etc.

CHALLENGES OF FOOD SECURITY BILL

1. INCREASING PRODUCTION AND NUTRITIONThe FAO estimates that crop production will need to increase by 70% by 2050. If this is to be achieved then coming 4 decade period will see more food production. The many groups of expert in the field of agriculture, trade and rural development support a model called sustainable development. This can be achieved in 3 ways, i.e. agro ecologically, genetically and socio-economically. Improving the diversity and nutritional value of food farmers grow their own subsistence is another way ensure adequate & stable nutrition. Biotechnology research is helping to breed crops to better withstand heat, draught and floods and have key micronutrients.

2. NEED FOR CHANGE IN CONSUMPTION PATTERNConsumption pattern plays a important role in food insecurity because of their influence on the types of foods which are produced and the resources required to grow them. For example 1kg of wheat requires 1,500 litre of water whereas same amount of beef requires ten times that amount. Similarly a third of wheat production goes to feed animals rather than humans.

3. WASTE AND POST-HARVEST LOSSESAround a third of all food produced ends up in waste. It occurs mostly when food crops spoil after harvested. Such post-harvest losses are caused by inadequate storage, transportation, or market access. Better understanding of storage systems and political commitment can help to address this issue. But, science & technology are also stepping in.4. GENDER GAPTechnology can make a difference but it is important to look at who is able to receive it. Rural women are the most important groups for addressing food insecurity and malnutrition, because these people are involved in food preparation at home. Individuals women farmers yield are lower than men on average of about 20 to 30%. This happens because of differences in their ability to access resources like high quality seeds & fertilizers. Reasons for this differences includes cultural norms, unequal land rights and womens domestic labour.

5. SUSTAIN AVAILABILITY OF FOODGRAINSSustained availability of food grains with public authorities in wake of the legal right guaranteed to entitled beneficiaries is the major challenge. Self sufficiency has been achieved in food grain production at 257 million tonnes despite the growing pressure on land and water as a result of climate change. There is overexploitation of ground water resources in the states like Madhya Pradesh, Bihar , Uttar Pradesh, Orissa, West Bengal. 6. EFFICIENCY OF THE FOOD GRAIN PROCUREMENT, TRANSPORTATION AND DISTRIBUTION CHAINFCI is applicable in entire country but it works in few surplus states such as Punjab, Haryana, Western UP and Andhra Pradesh. CACP says that it would be cheaper to procure food grains from states such as Madhya Pradesh, Bihar, Gujarat, etc. and deliver to neighbouring deficit/remote states in Central, Eastern and Western India. This could also possibly reduce the wastage of food grains. Additional procurement, storage and distribution by the FCI under NFSA would require rail head connections for all FCI storage points and increase in bulk wagon availability with Indian Railways. One key aspect that needs immediate attention is reform of the FCI apparatus with allowance for public private partnerships in physical movement and storage of grains.

7. ELIMINATE LEAKAGE AND CORRUPTION Another challenge is to eliminate leakage and corruption and ensure stringent monitoring under NFSA at the last mile distribution points in states. States such as Tamil Naidu and Kerala by computerization of databases and using hologram. The states like Madhya Pradesh has taken a significant step and used the private sector to computerize the PDS and register beneficiaries with the biometric Aadhaar numbers as well as provide food coupons, led technologies.

8. QUALITATIVE IMPROVEMENT IN FOOD ABSORPTIONLong term challenge is of qualitative improvement in food absorption, especially for women and children, by creating synergies between public health, sanitation, education and agricultural interventions. Creation of quality rural and urban infrastructure through community participation, by converged programs, like Mid Day Meal , National Rural Health Mission, Total Sanitation Campaign , Integrated Child Development Program has to be achieved through effective public private partnerships in states. NGOs such as Akshaya Patra that delivers freshly cooked, nutritious daily meals to 1.3 million children in government schools through twenty locations across nine states in India need to be encouraged, scaled and institutionalized.9. DISPARITIES IN THE DISTRIBUTION OF PDS BENEFITSOfftake per BPL cardholder is high in WB, Kerala, Himachal Pradesh, and Tamil Nadu as compared to that in Bihar, Madhya Pradesh, Uttar Pradesh and Rajasthan which account for largest amount of poverty in India.10. FINANCIAL BURDENThe immense financial burden of the NFSA will translate to mean rising food subsidy. From Rs 17,494 crores in 2001-02 the food subsidy has shot up to Rs 72,823 crores in 2011-12.Theprojected subsidy bill of Rs1,25,000 crores may be underestimated as it fails to account for the large procurement, storage and distribution costs, rising minimum support price which State has to offer to farmers as an incentive to increase production and to cover rising cost.

11. FORCE GOVERNMENT TO IMPORT

A poor harvest may force Government to import. When India enters the world market with such huge demand the world prices will rise. This would increase our import bill and Minimum Support Price will have to be increased to compensate for rising world prices.This will lead to raise in the ballooning subsidy bill and inflation pressures.

INTERNATIONAL CONCERNS ABOUT FOOD SECURITY BILL

After the implementation of Housing and Food Security Act in 2013 the birth anniversary of late Rajeev Gandhi in Delhi, Haryana, & Uttarakhand some leading food producing member countries of the world like US, Canada, Pakistan raised the issue of subsidy because it was increasing the threshold limit. India was asked to explain the effect the legislation will have on global stocks and commodity prices. As, Agreement on Agriculture allows market distorting subsidies only upto a limit of 10% of total production. Concerns about was raised in WTO meeting at Indonesia in Bali, where several agricultural producing-exporting countries talked about stockholding of food by countries such as India & Thailand depressing global prices and affecting their export.The issue of NFS Act, 2012 was on prime agenda of WTOs Bali ministerial conference in December 2013. But, India did not succumbed by the pressure of developed countries.India argued providing Food Security was the Sovereign Right of the country and it can not be comprised. India was supported by the G-33 countries including China. As a result a consensus emerged on this issue in the form of Peace Clause was signed which means no dispute can be raised or complaint can be filled before WTO for four years against any countries for adopting trade distorting measures on account of food security of WTO limits of 10%.

LIMITATIONS OF THE ACTCorporate lawyer have listed over crucial shortcomings of the Act which requires careful handlings. Corporate governance Restrictions on lawyers of subsidiaries A sea change in auditing profession : appointment of auditors including mandatory firm rotation. Eligibility , qualification and disqualification of auditors, limits on the number of audits. Clauses on independent directors and the manner of their selection Power to comprise or make arrangements with creditors and members Merger and amalgamation of companies Valuation of register valuers

SOLUTIONS ROR SUCCESSFUL IMPLEMENTATIONS OF NFSA The government has to create robust process and provide specific guidelines for identification of priority families. Biometric based Aadhaar will provide the benefit of de-duplication and ghost card identification as well as that of enabling ration cards to their rightful owners. Since the entitlements under the Act are dependent on the numbers of members in each family, a responsive for updating family members details like death , birth, marriage, divorce and resulting changes in foodgrain entitlements will ve required. A mechanism to eliminate Fair Price Shop is required to prevent large-scale diversion of foodgrain from TPDS. This is essential not only to establish that each beneficiary is being provided the right to food. States will need to establish highly detailed set of directives to the district and block level authorities responsible for on-the-ground implementation. These directives must provide a pragmatic set of procedures, target timelines and milestones. Continuous monitoring and evaluation of process and outcomes will be required to ensure that the provisions of the envisaged system are not diluted during implementations. Government will need to invest sufficient resources and build adequate organisational capacity at the centre and at state level to successfully execute this mammoth program within a reasonable time and cost. The focus would shift from yield per hectare to per litre of water. With 45 % of cultivable land under irrigation relies heavily on monsoon for agricultural output. It is therefore necessary that the country invest heavily on creating requisite infrastructure and government should take measures for to prevent misuse of water. Imbalanced application of nutrients & excessive mining of micronutrients, leads to deficiency of macro and micronutrients in the soil. The research &development challenge would be to stop further degradation and go in for rehabilitation of degraded lands and water resources in cost effective manner. A balance between higher production of food grain and change in consumption pattern is to be made. Effort should be made by government to ensure that farmers uses resources judiciously and invests in land & right crops. Nearly 80% of agricultural investments comes from private sector and mostly from small farmers. Issues such as exports controls, levies & restriction on stock holdings & inter-related movements of food would come into focus. The research should focus on to evolve technologies and management options to suit the needs of smallholders agriculture and involve them in agriculture supply chain through institutional innovations. The consumption basket of an average Indian has been diversifying away from cereals and moving towards more vitamins ,and protein foods. All these foods are bought fro open market. If cereal inflation in market is hovering at 18%, vegetables prices soaring at 46% and protein goods at 11% in July 2013 over last July 2012 then right to poor will be in trouble. Therefore priority should be to bring down food inflation from current level of 12% to less than 4%.

ANALYSIS

Poverty Ratio and Poverty Line

The root cause for providing food subsidy through NFSA is poverty prevailing in country. In order to identify the poor class living in the society, poverty line is the benchmark. According to the report of Tendulkar committee the national poverty line for rural areas for the year 2011-12 is estimated to be Rs.816 per capita per month and Rs.1,000/- per capita per month in urban areas. Therfore, for a family of five, all India Poverty Line in terms of consumption expenditure would amount to about Rs.4,080/- per month in rural areas and Rs.5,000/- per month in urban areas.Per Capita Poverty Line (Rs)Per Capita Poverty Line Per Month

Per Capita Poverty Line Per Day

RuralUrban RuralUrban

Individual8161,00027.2033.33

Family of 5 person40805,000136166.67

Based on the poverty line, Government of India declares the poverty ratio.Poverty Ratio & Number of People Year Poverty Ratio % No. of poor (million)

RuralUrbanTotalRuralUrbanTotal

1993-9450.1031.8045.30328.6074.50403.70

2004-0541.8025.7037.20326.3080.80407.10

2011-1225.7013.7021.90216.5052.80269.30

Poverty ratio in the year 2011-12 was 21.9 percentages and number of poor according to this ratio comes to 269.3 million. Here, we can see that the numbers of poor in the year 1993-94 were 403.70 million which were reduced to 269.30 million by the year 2011-12, & this the reduction of more than 33%. And as a result the poverty ratio was also reduced by more than 50% during 1993-94 to 2011-12. Poverty and Ration CardAs per the latest available data of Ration cards, 45.89% who are either poor or poorest of poor and 54.11% are from Above Poverty Line category.

Ration cards and fair price shop Ration Cards in Lacks as on (31-12-2013)

No. of fair price shopBPLAAYAPLTotal

515108870.85247.6331318.782437.26

BPL = Below Poverty Line AAY = Antyodaya Anna Yojana (Poorest of the poor) APL = Above Poverty Line

The current population of India as on 21st February 2014 is 124.90 Crore. As per the poverty estimates of 2011-12 the average household size of 5 (rounded off) was considered while calculating poverty line. Now as per the above table total numbers of ration cards issued by the year 2013 were 2437.26 Lacks. So, if number of ration cards are multiplied with average household size of 5, then the number of people benefited from the government welfare schemes through ration cards will be 121.86 Crore . This shows that still total number of people who are not having the ration cards are around 3 Crore. As per planning commission 22% Indian population is poor, whereas ration card data states that there are almost 46% who are coming either in BPL category or in AAY category. This clearly indicates that either the poverty line is not properly defined or the ration card holders are taking undue advantage of the scheme. This clearly reveals that around 24% (46%-22%) of the beneficiaries are doubtful. This shows that amount of food subsidy is going in wrong pockets which is the result of corruption or leakage in the public distribution system. Public Distribution System and LeakageThe Government is going to implement this act through existing Public Distribution System. The above analysis is based on the ration card data of December 2013 and poverty line clearly reveals that, there is a leakage of 24% in the PDS while as per Gulati A. et. al. (2012) there is a leakage of 40.4% in the PDS. Subsidies (crore)2012-13Budget 13-14Revised figure of food subsidy with NFSA

Fertilisers65974.1

65971.5

65971.5

Food85000

90000

124747

Petroleum96879.87

65000

65000

Interest7415.88

8061.34

8061.34

Others2384.58

2050.68

2050.68

Total Subsidies257654.43

231083.52

265830.52

Findings Government will cover 67% of population under this act but the poverty ratio in India is 26% as per international poverty line and 22% as per national poverty line, therefore unnecessary coverage of 41% of the population will increase the cost of subsidy. . The State Government will prepare guidelines and identify priority households. This means that the Central Government does not have any exact data of actual beneficiaries of NFSA, yet it claims to cover two third of the population.

Government has proposed to implement this act through PDS. As per the finding there are 3crore people who do not have ration cards but Government has not mentioned any clear guidelines for including these people under NFSA

If the government would have resolved the issue of leakage in PDS, then Rs. 30000 crore could have been saved .

One of the reforms suggested by government for improving PDS is to leverage Aadhar cards for unique identification, but this step is not going to be helpful as the Supreme Court of India has made Aadhar non-mandatory for getting any social benefit.

The government has proposed to implement cash transfer facility in case of non-supply of food grains but only 10% of the poor avail banking facility in India. Providing banking facility to 90% of the poor is a big challenge for the government.

Computerization of fair price shops and door step delivery are also among the proposed reforms by government. But looking to the current scenario it seems a challenging task.

CONCLUSION

The success of Act depends on efficient grievance redressal, tackling corruption and stakeholders active involvement. Subsidised food will reduce the food spending of the poor and place some surplus money in their hands. This surplus money which would then be spent in India will stimulate domestic consumer demand. Unless the Act is effectively implemented, hunger and poverty will continue to affect our country.The Act has potential to bring rich dividends especially in rural areas as it will increase their productivity, labour efficiency, reduced expenditure on health and reduced migration to cities. India with population of more than 1.2 billion if wants to become a global super power then she has to eliminate hunger and malnutrition which is affecting more than one third of the population. An African quote is apt to mention in this context. Anybodys Hunger is Everybodys Shame.

BIBLIOGRAPHYBooks1. Introduction to Economics S.K. Aggarwal2. Indian Economy- Singh

Websites1. www.wikipedia.com/foodsecurity 2. www.thehindu.com 3. www.forbes.com/indias-food-security-bill 4. indiacode.nic.in