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Economic Debate on Tele-Media: Commercial treatment of Food Security discussion

By: Amit Bhushan contact: amitbhushan@rediffmail.com` Date: 30 July 2013

The media is lately trying to attempt catch up with online genre by sponsoring debates on the Hot economic issues, which seem to be in season amongst host of other sundry issues in electorally poised India. While this is welcome, however the commercial nature of such discussions needs to be highlighted, so that at least the learned audience is aware of its pitfalls. On the face of it, the Television prime time journalists seem to be making enough effort by debating issues with not only with politicians of the ruling regime as well as principal opposition including those from sundry political outfits where required; but also includes some independent experts sprinkling doses criticism as well as some representatives of public voicing independent opinion. The format of such debate may seem an ideal platform but for the pitfall, that a congregation of dumb charades gloating over issues cannot help formulation of public opinion or take forward an already Red Hot discussion. While the independent economist and public are excited to show off their intellectual masturbation in public to ignore the lopsided silo-ed discussion is understood but even political opposition including the principal opposition party joining the chorus seems a bit nave unless the intention is to help improve the perception of the government. The discussion is pre-fabricated turf to push the government agenda for Food security reforms that would somehow solve the nutrition problem of the country seems too obvious conclusion which such television dramatist are trying to conclude. The real debate which includes the below categories is being ignored for giving a leg up for the lame duck government. To talk about the specifics on the Food Security bill; the points of discussion can be segregated under below heads: 1. Sanctity of numbers being presented: There are two fold aspects to this. First is the estimates of people who lack access to food and therefore in need for such security, there entry and exit criteria and governance of the same. The government seems totally confused about this in a bill being presented to make an implementable Law and its recent reports have added confusion as

it wasnt already enough. Second, the estimation on the resources required. The Government has budgeted 10K Crs. while estimating additional expense of 50k Crs (i.e. over an existing expense of 75K Crs.). It has not provided any estimates as a percentage of GDP that is likely to be committed as an expense for the goal which is so essential for a law which needs to be futuristic. The question exists on the veracity of the governments numbers i.e. the 125K Cr. being gloated by our respected economists. Indias GDP is estimated at USD 1.5 Trillion or 90 lac Crs. Approx. 14% of this GDP is derived from Agriculture or 12.6 lac Crs. It is safe to construe that cereals constitute half of this or 6.3 lacs Crs. Though considering that we do not grow our pulses or oilseeds enough, the proportion should be higher (other marginal crops like vegetables, fruits, spices combine cannot be over 23% of the GDP, leaving cotton, sugar, milk including pulses, oilseeds etc. constituting 4%). This cereals is barely enough to meet our needs. Considering that the government wants to sponsor almost 70% population with 5 kgs. Cereals or almost three & a half week ration so it can be assumed that this would require close to half of the cereals or 3 to 3-1/2 % of the GDP stating in GDP terms. Now considering that our budget currently is close to 12-14% of the GDP so the current regime seeks to tie close to 1/4th of the budgeted expenditure for the near future for the forthcoming government (of whichever party). The economists should begin sounding convincing to themselves about the justification for such a move in the first place. Another more supportive calculation can be 70% of the population is 70% of 112 Cr. i.e. 78.4Cr.If this population is to be offered 5kgs per month of cereals i.e. 60kg per annum at INR 25/- per kg (procurement, storage, movement & distribution), this would amount to 1.68 lac Cr. or roughly 1.8% of the GDP. There is surely scope to release current cereal subsidy and compare it with calculated incremental support. However this will need to be estimated in GDP terms and its proportion over the years will need to be estimated and their impact vetted. 2. Rationale of the argument being presented: The government cites support from some obscure nutritionists support for Cereals Distribution program with argument that if cereals are distributed cheaper, people will direct their savings to solve nutrition related health issues by themselves. Wish if something more sensible could have been said considering so many economists in the government. The rationale for Food/Cereals security is understandable delivery from such a law considering the fact that India has spent & continues to spend considerable resources in market development for cereals. This includes expenditure public and

private on production via fertilizer and irrigation & often subsidies, expenditure on storage including Food Corp and other public storages, expenditure on market such as APMC and private and public distribution through PDS. This has helped nation to be amongst leading producer of cereals and our per capita availability is enough to meet our requirements. However such market development activity for nutrition crops i.e. vegetable and fruits is absent or has barely started to develop and in rudimentary state presently (in spite of the expenditure done in past few years). In such case, is government argument is that the people would be able to solve all this by themselves although for cereals they have not been able to do so in past 40 years since such support programs were initiated. Or are they banking on imports being able to solve the problem and is ok about it. What happens to the domestic economy and why do we have only consumption drivers and no production drivers in agriculture??? Is current agriculture suffering from a demand problem or an affordability problem or a distribution problem. The law intends to attack only the affordability problem and brings in a system whereby state is to act as a large procurement and distribution specialist, a task in which it has failed miserably over the years. For some obscure reason, alternative mechanism of Direct subsidy transfer is being put in cold storage for now.

3. Situation context in which the law is being presented: The need for the Food Security law is felt at the fag end of the term for the present government when people have openly expressed displeasure with the policies & practices of the current dispensation. This only serves as an additional cause for skepticism. Those who want to read more about this, can go through the article attached.

Governance in India, a diminish ing marginal Utility or on Scribd or Management


Paradise.com for which the link is attached. http://www.managementparadise.com/article/4892/governance-in-india-a-diminishingmarginal-utility-or 4. Global context in which the law is being presented: The law is being presented in a phase of global gloom when no grand driver to move forward productivity & growth in economy is being seen. While most governments seem to be rethinking subsidies especially in Europe under the weight of IMF/European Bank, in India we seem comfortable piling on a Law for committed

government expenditure. The debate of global productivity technologies for the future is yet to be settled to identify new drivers (read the article below).

Envisioning Global Growth - Year 2013-14; which technology will lead for present
http://www.managementparadise.com/article/5000/envisioning-global-growth-year-2013-14which-technology-will-lead-for-present

The Law seems justified only if the intention of the present regime is to use Indian Laws, Finances & systems to make market for the Genetically modified cereals business in the country since the law would leave the future governments dependent on the seed companies to help Indian farmers produce enough food to meet the demands of people under the law in somewhat affordable manner, otherwise which imports will simply overwhelm the already susceptible Current Account Deficit & with it, the economy. However, the population must make its choices knowingly rather than under the weight of some law pushed under argument of some obscure nutritionist.