Despite having a food security legislation, spending on food subsidy is low

Despite having a food security legislation, spending on food subsidy is low


Recent data from the National Family Health Survey-4 (NFHS-4) shows that about one-third of children in India is undernourished – 35.7 percent children below 5 years are underweight (too thin for age), 38.4 percent are stunted (too short for age) and 21.0 percent are wasted (too thin for height). It is also revealed that the level of anaemia among women and girls (aged 15-49 years) has stagnated marginally over the last decade from 55.3 percent in NFHS-3 to 53.0 percent in NFHS-4. Yet a country, which is ridden with such severe hunger and under-nutrition, spends less than 1 percent of its national income annually on food subsidy.

A recent analysis by the Inclusive Media for Change team shows that the actual expenditure by the Department of Food and Public Distribution (under the Ministry of Consumer Affairs, Food and Public Distribution) on food subsidy was less than 1 percent of Gross Domestic Product (GDP) during the last 7 years except in financial year 2015-16.

Calculations done by the Inclusive Media for Change team based on the data provided by Economic Survey 2017-18 (accessed from here) indicates that the share of expenditure on food subsidy by the Centre in the country's GDP reached close to 1 percent in 2015-16, after which it fell to 0.70 percent in 2016-17, but went up marginally to 0.81 percent in 2017-18. Please consult table-1.

The proportion of total expenditure by the Central government, which was spent on food subsidy, increased from 6.80 percent to 7.53 percent between 2014-15 and 2015-16, but dropped to 5.25 percent in 2016-17.

Table 1: Expenditure on Food Subsidy (in Rs. Crore)

Table 1 Expenditure on Food Subsidy
 
Source: Data on food subsidy in the yellow range has been sourced from Expenditure Budget, Volume-2 (of Budget Documents), from 2013-14 to 2017-18, www.indiabudget.gov.in

Data on food subsidy expenditure in the top row has been taken from the Table 8 in Chapter 7: Agriculture and Food Management, Economic Survey 2017-18, Volume-2, page no. 117, please click here to access

Data on total expenditure of the Central government has been taken from Budget at a Glance section of the Budget Documents since the year 2013-14, please click here, here, here, here and here to access

GDP data (new series, current prices) from 2011-12 to 2016-17 has been taken from the Press Note on Provisional Estimates of Annual National Income 2016-17 and Quarterly Estimates of Gross Domestic Product for the Fourth Quarter (Q4) of 2016-17, released on 31st May, 2017, Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation (MoSPI), please click here to access 

GDP data (new series, current prices) for 2017-18 has been taken from the Press Note on First Advance Estimates of National Income 2017-18, released on 5 January, 2018, CSO, MoSPI, please click here to access 

Note: The data on food subsidy expenditure pertaining to 2017-18 from the Economic Survey shows the figure as on 28 November, 2017

The data on food subsidy expenditure pertaining to 2016-17 and 2017-18 from the Budget Documents show the figures as per Revised Estimate (R.E.) and Budget Estimate (B.E.), respectively
 
The data on total expenditure of the Central government pertaining to financial years 2016-17 and 2017-18 from the 'Budget at a Glance' section of the Budget Documents show the figures as per R.E. and B.E., respectively
 
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The data on food subsidy expenditure, which is shown in the yellow shade of table-1, has been sourced from the Expenditure Budget, Volume-2 of the Budget Documents between 2013-14 and 2017-18. It can be observed from that table that there is a mismatch between the figures on food subsidy expenditure, which is provided by the Budget Documents in various years, and the ones, which is provided by the latest Economic Survey.  

Computations based on the data provided by Budget Documents (accessed from www.indiabudget.gov.in) reveal that the share of expenditure on food subsidy by the Centre in the country's GDP reached 1.02 percent in 2015-16, but fell gradually in the next two financial years. Please check table-1.

The proportion of total expenditure by the Central government, which was spent on food subsidy, increased from 7.07 percent to 7.79 percent between 2014-15 and 2015-16, but went down to reach 6.71 percent in 2016-17.

It can be confirmed from table-1 that the size of the Centre’s budget vis-à-vis India’s GDP has shrunk over the years from 14.93 percent to 12.91 percent between 2011-12 and 2017-18.  
 
About Food Subsidy and NFSA

It can be inferred from the Notes on Demands for Grants 2017-2018 by the Department of Food and Public Distribution (please click here to access) that expenditure on food subsidy has three main components:

* Food Subsidy to Food Corporation of India (FCI) under National Food Security Act (NFSA): This provision is towards subsidy to FCI on food grains transaction for reimbursement of (i) the difference between the economic cost [viz. Minimum Support Price (MSP) plus procurement incidentals plus distribution costs] of food grains and their issue price for meeting the requirements under NFSA as well as other welfare schemes of Government of India and (ii) carrying cost of buffer stocks/ strategic reserve. According to Sharma and Alagh (2013), economic cost has two main elements: (a) cost of procurement, and (b) cost of FCI operations involving handling, storage and transportation.

* Food Subsidy for Decentralized Procurement of Food grains under NFSA: This provision is towards food subsidy to state governments, which are procuring food grains for Central Pool under Decentralized Procurement of Food grains Scheme.

* Sugar Subsidy payable under the Public Distribution System (PDS).

Clearly, a low level of food subsidy vis-à-vis the GDP or total expenditure of the Centre indicates not only lower level of commitment of the government towards the implementation of NFSA, it also shows that the government is less inclined to purchase food grains from farmers at MSP rates.

It may be noted that a public interest litigation (PIL) was filed by the organisation Swaraj Abhiyan in December, 2015 [Writ Petition (Civil) No. 857/2015] in order to seek judicial intervention for implementation of existing programmes/ schemes by the Centre and states in drought affected and rainfall deficit areas. In its various orders related to that PIL, the Supreme Court bench comprising judges Madan B Lokur and NV Ramana had noted that the mechanism for enforcing several provisions of the NFSA were not established or constituted by various state governments despite the fact that the legislation came into effect from 5 July, 2013. Please check the links below.

With the rise in frequency of extreme weather events since early 1970s, as has been mentioned in Chapter 6: Climate, Climate Change, and Agriculture of Economic Survey 2016-17, ensuring food security of the people living in areas affected by such events should be given more priority by the concerned governments.  

References

Chapter 6: Climate, Climate Change, and Agriculture, Economic Survey 2016-17, Volume-1, please click here to access
 
Supreme Court judgement on the writ petition (C) No. 857 of 2015, 21 July, 2017, please click here to access
 
Supreme Court judgement on the writ petition (C) No. 857 of 2015 Part-II, 13 May, 2016, please click here to access  
 
Supreme Court judgement on the writ petition (C) No. 857 of 2015 Part-I, 11 May, 2016, please click here to access
  
India's hunger ranking affected by wasting among children, depicts new report, News alert by Inclusive Media for Change, 13 October, 2017, please click here to access 
 
SC bench observes apathy for legal provisions under NFSA by state govts., News alert by Inclusive Media for Change dated 9 August, 2017, please click here to access
 
Prevalence of wasting among children is rising, shows NFHS-4 data, News alert from Inclusive Media for Change dated 17 May 2017, please click here to access  
 
Supreme Court asks for constituting State Food Commission to implement NFSA, News alert by Inclusive Media for Change dated 13 December, 2016, please click here to access
 
One-third Of West Bengal Kids Stunted & Underweight, Says NFHS-4, News alert from Inclusive Media for Change, 21 January, 2016, please click here to access  
 
Food Subsidy in India: Its Components, Trends, Causes and Reforms for Public Policy -Vijay Paul Sharma and Munish Alagh, Indian Journal of Agricultural Economics, Vol.68, No.2, April-June 2013, please click here to access

Image Courtesy: Inclusive Media for Change/ Shambhu Ghatak



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