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Let them eat rice: India passes food subsidy bill, but who really benefits?

By Simon Allison 4 September 2013

With 800-million hungry mouths to feed, India’s government has to do something. Its answer to the country’s malnutrition problem is a mammoth food subsidy package that guarantees cheap food for the poor and a hefty bill for the exchequer. This won’t solve the problem, but, like the ANC with its social welfare carrots, it should keep the ruling party in power. By SIMON ALLISON.

India’s government can afford to screw up even less than most. When President Zuma makes a bad decision, there are just 50-million or so of us South Africans that have to suffer the consequences. When Manmohan Singh gets it wrong, the futures of 1.24-billion people are at stake.

This is why India’s new Food Security Bill has attracted so much attention. It is an attempt to guarantee the right to food to one-sixth of the world’s population, a noble aim for sure. But, with parliamentary elections just around the corner, is that the bill’s real motivation? And are the sweeping subsidies it proposes the best way to tackle malnutrition?

On Monday, the bill received the seal of approval it needed from the Rajya Sabha, India’s upper house of parliament. Only the president’s signature awaits, and this is a formality. For better or worse, the Food Security Bill will become the Food Security Law, with hundreds of millions largely impoverished Indians set to benefit from vastly discounted rice and grain courtesy of a massive subsidy program.

The numbers are truly astounding, as you would expect in a country of India’s size. Up to 800-million people, around two-thirds of the population, will be entitled to 5kg of food every month at a fraction of market value. Rice will go for three rupees (45 cents), wheat for two (30 cents) and millet for one (15 cents). The scheme will cost the government nearly $20-billion (R200-million) every year, and involve 61.2-million tonnes of food.

But cut through the numbers, and the hype, and actually not much has changed. India’s been providing food subsidies to its poorest citizens for years. This is merely an expansion (and a reform) of the existing legislation. Still, it’s a firm vote of confidence from India’s government that subsidies are the best tool to mitigate India’s malnutrition crisis. The publicity the issue is generating is also a positive sign that the importance of food security is finally being recognised as a mainstream political issue.

In fact, some commentators wonder if it’s all a little too political. There is a general election in 2014, and there are few more emotive issues than hunger. The political party that can claim to have put the food on the table is surely onto a winning strategy. In this case, the party set to benefit is Sonia Ghandi’s Indian National Congress, the driving force in the ruling coalition.

This is certainly what the opposition thinks. “It is a half-hearted move by the government … Elections are around that is why they have brought this Bill at this time,” said Bharatiya Janata Party (BJP) leader Venkaiah Naidu.

Others question whether the same subsidies, which have failed to solve India’s food problems in the past, will suddenly be the solution to the problem. “The bill fails to offer remedies for the root causes of malnutrition and equally important elements of food security, such as access to clean water, sanitation facilities, and public health education,” observes Highbrow magazine’s Annie Castellani. “It also eviscerates a comprehensive definition of food security by limiting the potential scope of enforceable rights arising from the legislation. The poor infrastructure underlying India’s food delivery systems and damaging economic consequences of the legislation are also problematic. Such shortcomings underscore the need for the Indian government to revise the bill to address the core causes of malnutrition and invest in sustainable solutions, instead of placating the public by passing laws that are progressive in name only.”

Investors share this scepticism, with ratings firm Moody’s leading the criticism. “The measure is credit negative for the Indian government because it will raise government spending on food subsidies to about 1.2% of GDP per year from an estimated 0.8% currently, exacerbating the government’s weak finances,” it said in a statement.

The criticisms may be valid, but it’s also hard to see what the Indian government could realistically do differently. As evidenced by the widespread upheaval that sparked the Arab Spring, removing subsidies wholly, or even partially, can cause huge civic unrest. The new law at least is an attempt to rationalise the already-existing subsidy program, and it takes a stab at reforming the horrendously wasteful distribution network on which it relies (some media reports suggest that nearly half of the food ear-marked for the subsidy program is lost through “leakage”, i.e. waste or corruption).

Ultimately, though, it’s unlikely to fix the problem. “The food security bill is a fraction of what is required to tackle India’s enormous nutrition problems,” concluded Jean Drèze, an economist who works with Amartya Sen. “The battle for the right to food is far from over.”

Subsidies, in other words, are not the answer, even if they are the best a struggling Indian government can do, given their history of offering cheap food. South Africa, and particularly the ANC, should take note. As Daily Maverick’s Ranjeni Munusamy noted in an article earlier this month, there are strong similarities in the way India’s ruling party and the ANC use welfare to guarantee political support:

“In the absence of being able to create gainful employment, [India’s Food Security Bill] is being seen as a shrewd move to keep the poor pacified. South Africa’s social grant system is used in a similar way to prop up the poor due to massive unemployment and poverty levels in South Africa. With around 16-million people in the country dependent on state funding for survival, the ruling party is able to contain discontent and rebellion. It also means that the ANC has a massive constituency of people grateful to it for support.

“The dependence on the grant system is not likely to disappear unless there is a massive turnaround in South Africa’s economic performance and the economy starts producing jobs on a large scale. Therefore any party taking on the ANC at the polls will need to reassure welfare recipients that it will not pull the plug on their grants if they take power.”

A similar logic applies to India and the ruling Indian National Congress. Don’t expect them to lose the next elections, but don’t expect India’s malnutrition stats to radically improve either. DM

Read more:

  • India’s upper house approves Singh’s food subsidy bill, on Businessweek

Photo: School children eat their free mid-day meal, distributed by a government-run primary school, at Brahimpur village in Chapra district of the eastern Indian state of Bihar July 19, 2013. REUTERS/Adnan Abidi

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