Food Security Bill inadequate to tackle inflation, malnutrition

Sanjay Kaul, former joint secretary, Department of Food and Public Distribution, says that the much-awaited Bill has a number of lacunae, and will do little to mitigate the appalling levels of malnutrition and will not curb rising food prices

The much awaited Food Security Bill may not be adequate to cope with the issue of inflation and malnutrition, says an expert.

"The Food Security Bill, which the government says will be the answer to our problems, has serious problems," said Sanjay Kaul, MD and CEO of National Collateral Management Services (NCMS) and former joint secretary, Department of Food and Public Distribution. Speaking at a seminar hosted by the Observer Research Foundation on Wednesday, he said, "The Bill lays emphasis only on cereals, neglecting other food items and overlooking the issue of nutrition, which should be the end target."

The Food Security Bill, which the finance minister promised will be tabled this year, talks about increasing the subsidy on procurement of rice and wheat by the poor.

However, as Mr Kaul pointed out, it does not take into account vegetables, fruits, pulses and milk-which actually fuelled inflation last year.

"In rice and wheat prices, we have seen only 1% inflation. What we should really be bothered is about the other items; especially vegetables, fruits and pulses, where we see substantial scarcity," said Mr Kaul.

He pointed out that while India is fairly self sufficient in rice and wheat production (in fact, there is a surplus of 25 million tonnes (MT) currently, there is a shortage in supply of edible oils and pulses, which have shown no growth in the last five years.

India produces about 12MT of pulses, whereas the requirement in 2010 was 15MT, and will rise to 20MT in 2020. Since only a few countries actually produce pulses and fewer export, India will face a severe shortage. The demand for milk will also increase, from the present 106MT to 166MT.

Estimates by NCMS show that per capita consumption of cereals has actually gone down, whereas that of other food items has seen a rise. "The government has spotted this trend," said Mr Kaul. "Hence, provisions about new cold storages for vegetables and others have been outlined in the Budget. But given the state of public distribution and storage systems in the country, it is uncertain how effective we will be in decreasing wastage and leakage," he said.

Mr Kaul also spoke about the appalling levels of malnutrition prevailing in India. "(A total of) 45% of our children suffer from malnutrition, against 62% observed in 1975," he said. "It is a shameful figure, because we actually are worse than sub-Saharan nations. After 60 years of Independence, the figure should have gone down to 10%. In 40% (of) adults, we have seen a chronic energy deficiency. Food security should aim at eradicating malnutrition, but the Bill does not say anything about it," he said.

He said that the government is likely to talk about improving the PDS (public distribution system), but instead of only increasing subsidies, it is important to see that the rations reach the poor.

"It will be helpful if the government distributes coupons to the poor. Outsourcing the work to private enterprises must be considered, because (the) government machinery itself has failed to bring about any change," he said.

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Of late, I have noticed a marked animosity from self-styled independent financial advisors (IFAs) in response to my writings about them. Let me put the record straight. I am against anyone who calls...

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Remembering HT Parekh: The man who stood for fearless integrity

Yesterday, we touched upon one aspect of the life of HT Parekh, truly the architect of home finance in India. Today, on his birth centenary, we explore his fearless integrity and his role in ensuring how household savings of ordinary Indians could be gainfully employed in industrialisation, and how they could benefit from the gains of entrepreneurship

On 9th March, (Remembering HT Parekh: The man who brought home loans to India ), Moneylife had touched upon how HT Parekh (HTP) had proved that successful mortgage finance was possible in an unregulated industry.

Not many know that HTP established his reputation for fearless integrity (at a time when as an executive of nascent ICICI he had to look to the government for a myriad permissions and approvals) due to his testimony to the MC Chagla Commission of Inquiry on the LIC-Haridas Mundhra scam brought to light by Feroze Gandhi, son-in-law of the then prime minister. He said: "So far as the decision was taken primarily by New Delhi with a situation which Mundhra precipitated, the deal as such, had a certain validity, though it does not follow from this that the funds of LIC can be utilised freely without fuller consultation.

"LIC as a public undertaking with funds available for investment can, no doubt, play an important part but this should be consistent with the primary aim of safeguarding policy-holders' interests." Further "The propriety of the purchases depends on the view that might be taken on the situation then prevailing. It could have been on grounds of public purpose, viz., to avert a financial crisis. LIC, as such, could not invest on those grounds. That would be the field of government policy. In that event the decision would be that of the government. This would also involve consideration of how far the government should regard it as proper that the funds of LIC are utilized for such a purpose."

"As the largest investor and as a nationalized undertaking, the investing public, particularly the small investor, would expect LIC to be a watchdog of the investor class as such. LIC must be ready and willing to assume this special responsibility which it can do in close consultation with the government, when so required. (Emphasis added; pages 556, 558, 565; Volume 2 of India in Transition through the Eyes of a Visionary: 1940s to 1990sWritings of HT Parekh, copy available for reference at the Moneylife Knowledge Centre).

That was in 1957when Jawaharlal Nehru was the prime minister and TT Krishnamachari the finance minister (FM). HM Patel was the finance secretary. TTK resigned and HM Patel was transferred. Years later, HM Patel became the FM during the Janata government and came to inaugurate HDFC on Dassera day, October 22, 1977.
Championing the Cause of Small Investors

The health of the capital market was a subject uppermost on his mind. He wrote and spoke about itfrom the beginning of his professional life in India after he returned from the London School of Economics in 1936 to work briefly as secretary of the Bombay Shareholders' Association, at Harkissondas Lakhimdass, at ICICI and even at HDFC. He constantly advised captains of Indian industry not to treat the market as a source of cheap funds. He viewed it more as a way of economic democracy-so that the ordinary Indians' savings could be gainfully employed in industrialisation and they could benefit from the gains of entrepreneurship.

It was his constant lobbying for the investment vehicle of mutual funds that led to the setting up of Unit Trust of India in 1964 by TTK who was the FM once again. In a note that he wrote to the government in August 1960 proposing that a mutual fund be set up, he said: "Another source of support to the investment market comes from investment trusts but this agency has not yet made good progress in India. In advanced countries, in recent years, unit trusts or mutual funds, as they are called in the USA, have been highly developed. It is to be hoped that the government will give suitable encouragement for the growth of this agency in order that it can play an effective role in the strengthening of the capital market in the country." (p260, Volume 1).

He was too modest and self-effacing a person to believe that his life's work would be of any value to present and future generations. Yet, with constant entreaties of friends, and to overcome his loneliness after his wife Hira passed away in November 1970, he penned his memoirs in Gujarati in the form of letters to her Hira ne Patro and a sequel Hira ne Vadhu Patro (Letters to Hira and More Letters to Hira). These books along with many of his speeches and articles provide a veritable goldmine for those interested in the economic history of India.
While compiling and editing some 300 pieces of HTP's writings in English, spread over more than 50 years, I learnt as much about the man as I had while working with him. His writings bear witness to the remarkable range of his intellectual and practical interestscapital market, credit policy, gold policy, development banking, economic and industrial policy, rural development, social infrastructure, planning and regional cooperation. At the core of it all was his concept of developmentshaped in no small measure by the Fabian socialism of the London School of Economics of the early 1930s and by a host of his contemporaries and his peer group in the world of economics and finance.

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Ravi Shyam

8 years ago

An excellent and timely reminder of then and now as in wealth creators v/s sub-prime crisis.
They may be but a few. They live and leave this world a better place for all of us.
May God Bless him.

nagesh kini

8 years ago

Thank you Nita for encapsulating HTP in so many words and more particularly for bringing to the notice of the present generations HTP's thoughts, the Mundra scandal, TTK, Firoze Gandhi, Chagla commission, Desai. I must read the book at the Knowledge Centre.India did produce such dedicated veterans but who will remember them ? Thanks to Nita for refreshing our memories.

Pradeep Wagh

8 years ago

Truly HTP was a visionary who brought common man on a respectable platform of living by helping him with a shelter that he could afford with the help of HDFC.
HDFC ranks as a revolutionary concept of Housing Finance of the last century in India.
May HTP continue to inspire such many more great innovative ideas for India;s development of common folks.

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