January 13, 2014

India's government is guaranteeing 800 million people about 5 kilograms of subsidized food per month for each person

India passed the National Food Security Act (NFSA), guaranteeing access to subsidized food to nearly 70% of the 1.2 billion population. In an unprecedented experiment, the central government is now legally bound to provide each of over 800 million people — just shy of the combined populations of the U.S. and the European Union — 5 kg of subsidized food grains every month. (The poorest receive more, and states also run their own food-subsidy programs.)

The program, if successful, could give a major boost to the ruling Congress Party ahead of national elections this spring. The problem, critics say, is that the landmark legislation relies on an unwieldy network of farmers, buyers, storage facilities and sellers to provide some 60 million tons of subsidized grains each year.

According to a recent study, in fiscal 2011–12, over 500 million Indians received 51.3 million tons of subsidized food, or more than 10 times the amount of direct food aid delivered by the World Food Programme in 2011. But in 2005 the government estimated that nearly 60% of its grain did not reach beneficiaries because of theft, corruption and difficulties identifying the needy. More recent studies show that has improved somewhat, but over 17% of Indians are still undernourished, according to the 2013 Global Hunger Index.

The law is expected to cost the government about $20 billion in fiscal 2013–14 as it rolls out across India. That’s a moderate increase over what the government has already been spending on food programs.

Critics do not think India should be doing this with a weak currency and large fiscal deficit.

Many East Asian nations [China] dramatically reduced poverty not through government handouts but by liberating the private sector and creating jobs.






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