Just 15% more to get food security? Or are our sums wrong?

The claim by Consumer Affairs Minister KV Thomas, that the proposed Food Security Bill will cost Rs 95,000-1,00,000 crore in terms of food subsidies is interesting.

For two reasons. Either the estimate is a gross underestimate. Or the Food Security Bill is not about food security at all.

According to a Financial Express report, this is what the minister said: “Our food subsidy bill is around 830 billion rupees. It may go up to 950 billion to 1 trillion rupees or thereabouts (under the bill).”

If the subsidy is going to rise from Rs 83,000 crore (Rs 830 billion converted to crores) to just Rs 95,000 crore, it means for a meagre increase of just 15 percent of our normal food subsidy bill we are going to achieve food security.

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In short, we didn’t need a Food Security Bill at all since 15-20 percent increases in budgets are par for the course in any year.

If, however, the figures are wrong and misleading, then the government is clearly pushing forward an idea by claiming it costs so little. This will leave us with a large budgetary hole at a later stage, when everyone is committed to the Bill.

For a better perspective on this bill, it would be instructive to look at the numbers and calculations presented by the Prime Minister’s Economic Advisory Council (PMEAC) when the National Advisory Council (NAC) presented its original version of the Bill.

The PMEAC found the NAC’s calculations to be wide off the mark. Here are the figures as recomputed by it. For a less charitable interpretation of the Food Security Bill, read here.

The government has already approved an extra 15 million tonnes of additional storage capacity to be ready by 2012/13, Thomas said in the interview.

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India has agreed a draft of the National Food Security Act, which will supply grains to around 67.5 percent of its 1.2 billion population and will likely ease voter anger at inflation, but widen the country’s fiscal deficit.

An election promise by the ruling Congress party, the bill will likely be introduced in parliament later this year and be approved with little opposition.

(With Reuters reports)