Bill on food security draws plan panel flak

Lavish subsidies will only distort economic growth

The Planning Commission has come down heavily on the government’s decision to introduce the Food Security Bill, saying such lavish subsidies in the name of inclusiveness will only distort economic growth and raise prices of food commodities in future.

“If we are going to have such large subsidies in the name of inclusion, we are going to see a very bad outcome. One such outcome is, India’s average economic growth will be much below its potential in the years ahead,” a senior Planning Commission official told Deccan Herald.

The commission has also drawn attention on how the suggestions given in the 12th Five-Year Plan for high and sustained economic growth have been ignored while taking the latest measure.

The 12th-Plan document clearly states that more investment in infrastructure, especially road connectivity, schools, health facilities, and availability of electricity should be an important component of any inclusive development strategy, rather than spending more on subsidies.

The official said that by attempting to introduce such a large subsidy programme the country will not only end up having an average of 4.8 per cent economic growth in the years ahead, but also will have to deal with rising prices of food commodities.

Experts have also criticised the Bill for the serious distortions it is expected to introduce in the cereal economy itself, with farmers producing something which perhaps the people are not looking for.

The cereal consumption is coming down on a per-capita basis, except probably for the bottom 5 per cent of the population. The recent National Sample Survey Organisation data shows it has stabilised, whereas the consumption of other things like vegetable, pulses, milk eggs have increased, and prices of these commodities are going to rise.

“The Bill is simply unsustainable, and its implementation will raise the government’s subsidy outgo to such an extent that it will affect the fiscal deficit and the already-burgeoning current account deficit, besides spiking inflation to a very high level,” said the official.

The government last week promulgated an ordinance on food security, making Right to Food a statutory right for two-thirds of India’s 121 crore people.