Revising Food Security Act

GOVERNANCE/ ECONOMY

Topic:

• GS-2: Government policies and interventions for development in various sectors and issues arising out of their design and implementation 
• GS-3: Indian Economy and its challenges

Revising Food Security Act

Context: The NITI Aayog recently circulated a discussion paper on a proposed revision in the National Food Security Act (NFSA), 2013

What is NFSA?

• Right based framework: The NFSA provides a legal right to persons belonging to “eligible households” to receive foodgrains at subsidised price– rice at Rs 3/kg, wheat at Rs 2/kg and coarse grain at Rs 1/kg — under the Targeted Public Distribution System (TPDS). 
• Beneficiaries: Under sub-section (1) of Section 3 of the Act, the term “eligible households” comprises two categories — “priority households”, and families covered by the Antyodaya Anna Yojana (AAY). 
• Benefits: Priority households are entitled to receive 5 kg of foodgrains per person per month, whereas AAY households are entitled to 35 kg per month at the same prices.
• Coverage: The Act has prescribed the coverage under “eligible households” — 75% of the rural population and up to 50% of the urban population. On the basis of Census 2011 figures and the national rural and urban coverage ratios, 81.35 crore persons are covered under NFSA currently.
• The percentage coverage under the Targeted Public Distribution System in rural and urban areas for each State shall, subject to sub-section (2) of section 3, be determined by the Central Government.
• The total number of persons to be covered in such rural and urban areas of the State shall be calculated on the basis of the population estimates as per the census of which the relevant figures have been published.
• Demand from States: Thus, the number of NFSA beneficiaries was frozen in 2013. However, given the population increase since then, there have been demands from the states and union territories to update the list by ensuring an annual updating system under NFSA, 

Why has NITI Aayog proposed?

• Revision of Coverage Ratios: NITI Aayog has suggested that the national rural and urban coverage ratio be reduced from the existing 75-50 to 60-40. if this reduction happens, the number of beneficiaries under the NFSA will drop to 71.62 crore (on the basis of the projected population in 2020).
• Revision of CIP: Prices at which food is issued to beneficiaries are called central issue prices (CIPs). A revision of CIPs is one of the issues that have been discussed by NITI Aayog.

What is the implication of the revision for the Centre and the states?

• To make these changes in the law, the government will have to amend sub-section (2) of Section 3 of the NFSA. For this, it will require parliamentary approval
• Saving in Food Subsidy Bill: If the national coverage ratio is revised downward, the Centre can save up to Rs 47,229 crore (as estimated by the NITI Aayog paper). However, the move may be opposed by some of the states.
• Increased fiscal burden if not revised: On the other hand, if the rural-urban coverage ratio remains at 75-50, then the total number of people covered will increase from the existing 81.35 crore to 89.52 crore that will result in an additional subsidy requirement of Rs 14,800 crore

Conclusion

States need to deliberate the proposals made by NITI Aayog by keeping in mind the food security of people and its ability to withstand additional fiscal burden.

Connecting the dots:

• COVID and Food Security