A paperback analysis of NAC’s Food Security proposal – part 1

NAC – National Advisory Council – is a super body like a super band in rock music band systems. They are an unsaid power above the Government of India. Given the democratic system in India and the kind of constitution and almost 94 amendments that have happened so far, any one can have power above the Government of India in general and Prime Minister in particular. So what is National Advisory council supposed to do? Their vision statement says –

The National Advisory Council (NAC) has been set up as an interface with Civil society. The NAC would provide policy and legislative inputs to Government with special focus on social policy and the rights of the disadvantaged groups. The NAC would also give attention to the priorities stated in the address of the President of India to Parliament on 4 June, 2009. In addition, the NAC would review the flagship programmes of the Government and suggest measures to address any constraints in their implementation and delivery.

The NAC comprises distinguished professionals drawn from diverse fields of development activity who serve in their individual capacities. Through the NAC, the Government has access not only to their expertise and experience but also to a larger network of Research Organizations, NGOs and Social Action and Advocacy Groups.

What is NAC Proposal on Food Security?

The concept of Food Security has been mooted by the “intellectual class” in UPA camp to ensure food for India’s population. Just what is food security? One would ask. Food Security proposal (as they call it), which is actually going to be implemented verbatim by UPA, is

Entitlement of 75 percent of the population with 35 kg of rice, wheat and millets per month and 25 percent of the population with 20 Kg of rice, wheat and millets per month.

Lot of people were flummoxed by such blatant insult to intellect of average Indian. How is such a division and entitlement even justified, they asked. But then, this turned out to be a highly misunderstood summary. To add to our confusions, The Hindu on 25 Oct corrected this point of view

This 75 per cent of the population is, in turn, divided into “priority households” — who should have a monthly entitlement of 35 kg at a subsidised price of Re. 1 a kg for millets, Rs. 2 a kg for wheat and Rs. 3 a kg for rice — and “general households” who should have a monthly entitlement of 20 kg “at a price not exceeding 50 per cent of the current Minimum Support Price” for the three grains.

The question that needs to be asked is “Is NAC a policy and legislation input device or is it just another entitlement politics tool, which the Indian National Congress has mastered over the last 60 years of independent India?” We digress. This post is a simple paper back analysis of NAC proposal.

It is a simple mathematics problem. Its all just numbers, no wonder NAC members are mostly PhDs in economics and policy studies.

According to 2001 census India’s population is 1.2 bn people divided 70-30 among rural-urban regions. Lets round off to 700 mil rural and 300 mil urban population.

According to NAC, 46 percent of 700 mil i.e., 322 mil and 28 percent of 300 mil i.e., 84 mil would be called Priority Households.

Similarly, 44 percent of 700 mil i.e., 308 mil and 22 percent of 300 mil i.e., 66 mil would be called General Households.

Thus a total of 322+84+308+66 = 780 mil will be covered in NAC subsidy proposals i.e., 78 percent of total population.

But wait, this actually means only 40 percent (=406 mil) are entitled to Rs 1 for Kg Millets, Rs 2 per Kg Wheat and Rs 3 per Kg Rice. Also, please note that there is no talk of 25 percent population. General Households section i.e., 374 mil, on the other hand, will get “at least 20 Kg of these items at a price not exceeding 50 percent of current Minimum Support Price”.

Is that all? No definitely not. This cover is extend-able beyond 75 percent poorest of the poor. So, NAC wants to reserve the rights to extend the coverage if need be.

The question is “out of 700 mil rural population, who should be part of the key 322 mil?” and “out of 300 mil urban population, who should be part of the key 84 mil?”. Details are awaited.

What is Minimum Support Price?

Continuing with our simple math problem, let us try to see what NAC advise means in terms of monetary pressure on Government of India. The obvious questions would be

1. What does one mean by Minimum Support Price?
2. What is the current minimum supported price of Rice, for example.

According to 2006 budget, Rs 600 is MSP for 1 Quintal Paddy, which means MSP for 1 Kg Rice was Rs 6. Let us use the same figure in this paperback calculation.

Priority Households i.e., 322 + 84 mil will pay Rs 3 per Kg. Note that they would be actually paying 50 percent of MSP, which would in turn means that only quantity of entitlement may be different. But of course, lets give it to UPA here. MSP may change.

Similarly, general households i.e., 306 + 66 mil will pay “50 percent of MSP” which is again Rs 3. So basically, they did not change anything in the current PDS scheme.

It seems NAC is trying to pull a veil on our eyes. Are they really trying to bring as many people as possible under Food Security?

In the next post, we will see how Food Security might be a burden on Tax Payer.

To be Continued

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