On July 4th 2013 the
Government of India has brought in a Food Security Bill via Ordinance route.
The FSB in its current form promises to provide food to nearly 70% of the
population at a whopping 90% subsidy. This may however have very serious impact
on the Indian economy in the longer run. Let’s have a look at the negatives of
the FSB.
1. The
FSB will provide Wheat at Rs. 3, Rice at Rs. 2 and Cereals at Rs. 1 per KG t o
almost 82 Crore populace; which will increase the burden on the exchequer by a
whopping Rs. 1.25 lakh crores. An economy which is growing at about 5% and with
the CAD touching almost 5% of GDP we can least afford to splurge money on such
scheme.
2. More
subsidy for FSB means less allocation for projects.
3. We
do not have sufficient infrastructure to implement the FSB and the investment
needed to implement it is yet to be calculated but a guesstimate suggests it
could be around 2 lakh crores.
4. In
case Monsoon fails we will need to import food grain which will be additional
burden on the exchequer.
5. Any
economy grows when the expense power of the people grows and expense power will
only rise if people have work to do. If sufficient amount of jobs are created
we do not need a FSB and the economy will also grow because people will have
money to spend.
6. The
Government says FSB will eradicate malnutrition. To end malnutrition you need
to provide nutritious food and the FSB provides only cereals as nutrition. How
FSB is going to end malnutrition then? Your guess is as good as mine.
7. FSB
also talks of providing at least Rs. 6000 for pregnant and lactating women.
Which will only encourage people have more children.
8. The
very low prices of the subsidized food will distort the market and farmers who
can’t sell to the government-assured program will lose out on the open market
because prices will be forced down.
9. The
food security law, which will be implemented with the help of an ordinance,
will also raise grain procurement by state agencies. While this may squeeze
private purchases, many traders said there were leakages already in the system,
which made sure that grain meant for welfare schemes found its way to the open
market. This was likely to increase, they said.
All in all my take on the FSB, it
is a bad idea which will ruin the work culture of this country and the
economy along with it. It will create a society dependent on government for
food rather than a work seeking professional society.
