Food Act: Fresh Burden Of Rs 2,200 Crore Worries West Bengal

Even cereals are up at 14%, with the basic staple, rice, at 20%. Much of this is self-inflicted and controllable, provided we are ready to take some bold steps. While food inflation hovered below 4% during FY 2001 to FY 2008, it jumped to double digits during FY 2009 to FY 2013 and is continuing at that pace. One reason was the big fiscal stimulus of FY 2009, just before the last election, which doubled the fiscal deficit in a single year. In a country where an average household spends almost half of its expenditure on food, it was but natural that this increased spending will put pressure on food prices. The supply response in agriculture is positive and gave a high farm GDP growth in response to better price incentives, but not so high as to keep have to control food prices in the medium term, we must wind down the fiscal stimulus in a calibrated way. That’s where the dilemma between growth and food inflation appears. Though the fiscal stimulus helped raise overall growth, it also pumped up lot of expenditure through NREGA-type activities. These have led to an unprecedented increase in farm wages, which have been growing at almost 18% per annum for the last five years. This is causing cost push food inflation, partly also via MSPs responding to rising costs in farming. Unless labour and land productivity increases faster, this pressure on food inflation is going to stay. But policymakers can do a lot to bring food inflation from 18% to less than 7%, if not below 4%.

With the new financial burden in place, it is not possible for us to bear it further,” said a state finance department official. “The proposed bill will cripple finances and increase deficits for the cash-strapped state, already reeling under the financial crunch, said the official. Meanwhile, state’s food and supplies secretary Anil Verma will talk to the is likely to meet food secretaries of other states on Monday to set the agenda for the ministers’ conference. The states were given have been provided a year for the implementation of the act ensuring heavily-subsidized food grains for about 82 crore people in the country. Some states like Haryana, Himachal Pradesh , Rajasthan, Uttranchal, Mizoram and Delhi have already started implementing the act. The act will cover about 75% and 50% per cent of rural and urban population respectively under the targeted public distribution scheme as a single category, with uniform entitlement of 5 kg per person per month. They will get rice, wheat and coarse grains at the rates of Rs 3, 2 and1 per kg respectively. The Bengal government is already providing rice at Rs 2 per kg in the Maoist-affected Jangalmahal area. “Even if you take out Rs 500 crore, which we have to provide for the subsidized rice in Jangalmahal, it comes to around Rs 1,700 crore. Under the present financial condition, the state is not in a position to bear the burden,” said Jyotipriyo Mullick, food and supplies minister of the state. According to the proposal, while the Centre will bear 78% subsidy for implementing food security bill , state government will have to bear 22%. “We are not opposing food at a subsidized rate, but state finances are not in a position to bear the additional burden,” Mullick added. According to the Planning Commission data, West Bengal at present has 1.86 crore people living below poverty line, compared to The number of BPL population in the state has fallen improved from 2.08 crore in 2009.