The food security bill which was passed yesterday in the Lok Sabha has been criticized by the opposition because the government is trying to regain lost sympathy prior to elections. In the process they have ignored what should be the most important criticism for the Bill. The government aims cover 70% of India through this Bill. Considering the current cost of essential food grains, the approximate subsidy the government is providing per person is Rs 20 per kg of food grain. Limiting the amount of food grain consumption per person to 5 kg/month, the cost of the subsidy per person is Rs 100 per month. Therefore, the cost of this scheme per year for the government is approximately 840 Billion rupees (100 Rs per person per month for 12 months and 700 million people).
As a percentage of the total GDP, this spending amounts to 2% of our GDP. Compare this to our spending on education, which is a measly 3%.
Fine. This is a lot of money. But it is feeding our poor, so what is the problem ?
Yet another instance of corruption masquerading in the form of a Bill
With so much money left in the hands of people on the ground, there is bound to be pilferage of grain, higher than ordained price of grain charged and bad quality of grain given to people, resulting in the generation of vast amounts of black money which would ultimately wet the beaks of the very politicians who passed the bill. The difference in the price promised by the government and the market price is astounding, and considering the execution of various government schemes, this bill promises to go along the same path.
A further trigger for food inflation
With the government needing to procure grains for this scheme, the amount of grain available in the fair market is bound to go down. With a lesser amount of food grain available for the general consumption, an artificial increase in the price in the market is possible, due to the creation of an apparent scarcity of grain by middle men. Increase in food prices in the market would strain the government expenditure further, and be a cause for further worry.
Case of hiding the problem rather than solving it
The real problems in the country arise due to low wages paid to the poor due to the abundance of people without literacy and education, and lack skilled knowledge. Further, people with industrial skills like carpentry, plumbing, etc are also highly undervalued. Thus, a vast inequality gap exists in our country, and the government must spend on developing the required infrastructure to reduce this gap. Further, they should work on policies which would increase the minimum wage paid to people, ensuring compulsory filing of income statements to reduce draining of public funds and strategies which involve lesser government monitoring of private enterprises. By merely giving grains, you are feeding a man a fish and thereby disincentivising him from learning to fish.
Yet another quick fix solution which is bound to go wrong
On multiple levels this bill seems like a quick fix solution to a problem. The problems which prevent growth and foreign investment in our country still exist because of our archaic bureaucracy, which wants to and is made to control everything in our country. The value of the Indian rupee falls as we speak because in crude terms, the money we earn does not really have any value. Inflation levels are sky high. Amidst this chaos, we bring in the food security bill which undermines any kind of effort put in by anyone in the system. It undermines the farmer who grows the grain and the services rendered by individuals which gives them their earnings. The only way the government can pay for this solution is by undermining the value of the rupee. And once this happens, there are no prizes for guessing the direction in which the country would be heading.