A paperback analysis of NAC’s Food Security proposal – part 2

In the previous post in this series, we saw that NAC food security proposals seem to be a veil covering the lies of UPA. This post is a continuation of the series.

Heres a quick summary of the previous post in this series:

NAC proposals say that priority households should get rice, millets and wheat Rs. 3, Rs. 1 and Rs. 2 per Kg, while general households should get all the three at 50 percent of MSP (Minimum Support Price). Going by 2006 numbers, both priority households and general households pay Rs. 3 per rice. The price for wheat and millets does not provide any advantage to the priority households.

A paperback analysis of NAC proposals reveal that NAC proposals are going to be a huge burden on the tax payer who comes from one of the 25 percent general households. This attitude of the government to cut the feeding hand is atrocious insult to the tax payer’s intelligence. The analysis continues.

Food Security Bill - breaking the back of Indian Tax Payer

What has the GoI been doing so far?

Currently under PDS, a card holder gets 35 kg rice at Rs 4.15 per month. There are various schemes which give an entitlement of varying quantity. By World Bank estimates, 40 percent of Indian population is BPL. By extension 40 percent of Indian households are BPL. According to 2001 census, we have a total of 19,19,63,935 households – 13,82,71,559 rural and 5,36,92,376 urban households. The NAC proposals take Tendulkar Committee report as yardstick. It puts BPL population in India at 41.8 percent. So, we will stick to 40 percent poor in this analysis. Lets round off number of households to 20 crore households in total – 14 crore rural and 6 crore urban. We will do this analysis for rice and extend the same for wheat and millets. Current market price at nearest Reliance store for Sona Mosuri rice is Rs 28. Lets take Rs.25 for our simple analysis.

Out of 14 crore rural households, 46 percent will be treated as priority households. This puts the total number of rural households covered under priority household category at 6.44 crores. Assuming every household takes its share of 35 kg rice, wheat and millets every month, the total annual cost to be borne by government for supporting one household is 35 * 12 * (25-3) = Rs. 9240. For 6.44 crore households, the total cost to be borne by the government is Rs. 59,505.6 crores ~ Rs. 60,000 Crores. This is amount for rice alone. One Kg wheat stands today at Rs. 35 from the best brand in the market. Imagine the cost borne by the government! Millets have traditionally been a low cost alternative. Government may not bear much there. However, the total cost borne by the government is actually bringing in an extraordinary loss. The Prime Minister’s Economic Advisory Council puts the amount at Rs 80,000 crores, which according to this paperback analysis is way too low. Also, once you bring in correction based on inflation within and outside India for whatever reason, the number may take a range whose upper extreme could even touch Rs 1 Lakh Crore – comparable to estimated loss due to 2G scam.

Who bears this loss?

The loss is borne of course by the 25 percent general households, who toil day in day out to earn. NAC proposes that those who work hard for their monthly salary should pay for feeding rest of the people in the country – a proper socialist construct. As if giving a concession, NAC says that these 25 percent households would be entitled to 20 kg rice at half the MSP. PMEAC’s Rangarajan panel raises objection to this. Even SC is not behind. Following is an excerpt from The Hindu’s report:

Earlier, Justice Bhandari told the AG that the Centre should not provide subsidised PDS foodgrains to the APL. “We had requested you not to give subsidised food to APL families who can afford. What is the justification to give subsidy to people who earn more? Why should a person with very high income get subsidised food?” [emphasis added]

This coming from SC is actually disappointing. The statement shows how deeply embedded the concepts of socialism are in our thought processes. Justice Bhandari could sound right when he asks

“why a person with high income should get subsidy”

The counter question then is

“why should the tax payer pay for feeding some one else who is unrelated to him?”.

Unfortunately, SC does not ask this question. Indian consumer already pays heavy income tax. On the top of it, there are indirect taxes like sales tax, value added tax etc. One would not expect the government or NAC to ask this question. But this coming from the honorable Supreme Court is alarming. We have to come out of these socialist thought processes to bring our country out of poverty.

Atrocious new plans being hatched

Jean Dreze, a belgian national is a member of the NAC. He is a professor at University of Allahabad. He wrote an op-ed in The Hindu claiming that NAC food security proposals is being used as political tool by the UPA and thus proposals may not get implemented. He was critical of Rangarajan Panel’s objections. NAC met the next day. In that meet they proposed a redress scheme. Here is a report from The Hindu:

On Monday, the NAC discussed the proposed redress mechanism, not just for the Food Security Bill but also for all existing rights-based schemes such as those relating to education, health and employment as well. What is being proposed is an authority at the district and block levels, which can be approached by anyone. The authority would be independent of the District Collector, NAC sources told The Hindu.

This proposal is very dangerous. In any country where majority of population understand the administrative mechanism people would have cried foul questioning the real intention behind such a proposal. In India, this would pass off as just another re-org. The problem here lies in term “authority independent of the District Collector”. Also, NAC says they would like to see the authority as a single point contact for grievances related to health, education, employment etc. Does this mean District Collector is redundant? If such an authority is placed as a parallel rung to the District Collector, who does that authority report to? PM? PMO? Governor? President? Just who? This question needs a clear answer. The blogger also wrote to The Hindu on the same point.

What we need?

We need NAC’s analysis documented. We need those documents to be placed in public domain so that people can pour over them and understand the reasoning behind the proposals. Such independent analyses would not only allow for better systems than PDS to be suggested, but would also allow for public scrutiny. After all, a general household bread-winner should know why he/she has to pay for the consumption of some other family.



One comment

  1. […] Hindu, complaining about the lack of co-operation from the government (more on this issue here, and here). And then if you think the suggestion ends here – you are mistaken. Look at this report. NAC […]

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