Also Read: Cabinet clears Ordinance to implement Food Security Bill
"Now since the ordinance has been passed the issue is how you are going to implement it? If the intended beneficiaries don't get the benefit of the bill, which are below poverty line (BPL) households, then the purpose of the bill gets defeated," DK Joshi, Chief Economist, Crisil said.
While the Food Bill is ready to be implemented the government still has not been able to prepare a list of beneficiaries. States given the responsibility to decide on the eligibility criteria based on socio-economic and caste census (SECC) data. However SECC survey is likely to take six more months. While mere passing of ordinance will bring some political advantages for the UPA government, it will also raise lot of hope and expectation among common man, noted NC Saxena, Member, NAC.
"If the list is not well prepared; because I am not very happy with the SECC methodology that they have followed, it could lead to lot of dissatisfaction and anger amongst the people," Saxena added.
The controversial Food Security Bill is also expected to increase government's fiscal burden. The bill, which provides two-third population the right to 5 kgs of foodgrain every month at highly subsidised rates of Rs 1-3 per kg will cost government around Rs 1.25 lakh crore for FY14. Following this new legislature existing food subsidy is expected to rise by Rs 23,800 crore
Government however has been preparing itself in advance to face this additional burden by reducing subsidies for other sectors. "They have reduced the petroleum subsidy, so there is going to be some cushion available from that. Unfortunately, rupee has depreciated, so it going to cut into that saving that government would have got out of petroleum subsidy. Yes, it is definitely going to be additional burden, but I think government did began to create space by market linking some of the fuels and I think if you look at the electricity prices they are also being raised. I think so there has been movement from moving the subsidy from petroleum towards food items," Joshi explained.
How the bill will affect agriculture sector?
Many agriculture experts believe that Food Bill which proposes to provide grains to people at very cheap rates may discourage the agriculture production in the country.
"When N T Rama Rao was the Chief Minister he started Rs 2 rice program and it did tremendous damage to agriculture in Andhra Pradesh. With Rs 1-3 that various states have got what will be the impact on agriculture?," Devinder Sharma, Agriculture Expert said raising a fundamental question.
He further added that there is a need for a bigger discussion, bigger debate before counting benefits of the food security program. What is more worrying is that no one has yet tried to underline the linkage of agriculture and food security program.
Sharma further pointed that government is now also planning to cap agriculture procurement and use Food Corporation of India (FCI) for future trading. Food Ministry has already asked the National Commodity & Derivatives Exchange Limited (NCDEX) to clear this proposal of allowing FCI to undertake future trading. "Which means the government actually is withdrawing from its overall role of distributing food. So, from 2014 you will see this program turning into cash for vote program," Sharma said.
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