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CCT vs. Food Bill – A debate

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CCT vs. Food Bill

It is expected that the National Food Security Bill (NFSB), introduced in the Lok Sabha will impact negatively in the functioning of the grain markets and would adversely impact/interfere in the functioning of these markets resulting in higher leakages. It is reported that the current leakages from the PDS or the Public Distribution System is to the tune of around 40% and the bill is expected to increase the same to a great extent.

The bill will result in efficiency losses and contradict the very policy of encouraging diversification in the farm sector – said Ashok Gulati, the Chairman of the Commission for Agricultural Costs and Price (CACP). CACP is a statutory body under the agriculture ministry which advises the government on price policy for major farm commodities.

There was a long debate between the policy of Food Bill and the Conditional Cash Transfer (CCT).  A further debate on long-term feasibility of the government’s big-ticket social welfare program happened with the introduction of the food security bill. It was said that CCT could have been a better option over the Food Security bill, as globally CCTs are seen having higher efficiency than physical supply of subsidized food.

Read about List of Top Food Processing Companies in India.

Issues of the Food Bill

It is estimated that the total cost to be incurred by the government for the food bill would be approximately around 1.2 Lakh Crore INR in the first year. The amount is expected to rise by 25% in the subsequent years, to reach a whooping 1.5 Lakh Crore INR by the end of the third year. The option for cash distribution under the bill in lieu of shortage of grain is an inefficient step. On the other hand, it was argued that due to non availability of proper infrastructure, distribution of hard cash would be a cumbersome task to comply. It is needless to say that distribution of cash requires a developed financial infrastructure, which is next to impossible under the current scenario. If we talk about the prospects raised in the food bill, we see that it aims to give legal right over subsidized food grains to 67% of the country’s population, but in its present form it throws up major operational and financial challenges. Also the implementation of the bill would enormous ramifications on the cereal economy/markets and, therefore, Indian agriculture as a whole.

Thus it is mandatory that before the implementation on any such subsidized bill for the food security, the government should study the long term feasibility and the impact of the bill in the overall system including the capital market, commodity market and of course the Indian economy growth as a whole. It is also important to study the effect of such bills in the value chain which includes the farm sector, agriculture sector, logistics and several other factors related to the distribution and food security.

Benefits of CCT

The feasibility of CCT on the other hand, can be well improved as it has “enough flexibility” to innovate using the globally acclaimed expertise of India in IT and Aadhaar to connect and pull those at the bottom of economic pyramid. Also it was suggested that under the CCT program, money which is to be directly provided to the poor families should be executed only after entering into a “social contract” with the beneficiaries.

The contract would highlight the basic amenities required which includes food, education and health. Also the payment of the cash to the female member of the family is one of the key points mentioned. In order to implement the CCT the individual states should be left to devise their own systems of provision of food security. Thus at last but not the least it could be very well said that there is a urgent need to check the food bill feasibility so as to implement CCT which will be beneficial for both the government, economy, and Individual thus making it a win-win-win situation.


Niraj Satnalika

Niraj is an MBA in International Business (Finance). Prior to this he completed B.Tech in Electronics and Instrumentation. He is currently working with Confederation of Indian Industry (CII), Kolkata in capacity of Consultant. Satnalika is actively involved with an NGO and works towards promoting education among the underprivileged.

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