Indian Parliament Approves Food Subsidy Scheme

12 September 2013

India is set to roll out an ambitious US$19.5 billion food subsidy scheme that will provide 67 percent of its citizens the legal right to cheap grain, following the approval last week of a new Food Security Bill in the upper house of the Indian parliament.

The bill, which has been under debate in the country's parliament, cabinet, and food ministry for two years now, will entitle poor citizens to five kilograms of subsidised grain from state-run "fair price shops" - part of a nationwide public distribution system aimed at tackling widespread food insecurity and malnutrition.

The scheme now awaits final approval from the country's president, Pranab Mukherjee, before it can become law. Mukherjee passed an earlier version of the bill as an "ordinance" in July of this year. (See Bridges Weekly, 11 July 2013)

The bill has sparked widespread debate and controversy, both within India and overseas. While economists such as Nobel laureate Amartya Sen have welcomed the new legislation, other experts have warned that inefficiencies and leakage in the existing distribution scheme could mean that as much as 40 percent of subsidised food may not reach intended beneficiaries.

The bid to expand food subsidies across the population has also helped prompt calls for greater flexibility in WTO rules on domestic food aid and public food stockpiling programmes in developing countries.

India, along with other developing countries in the G-33 coalition, has argued that food bought at administered prices under these schemes from resource-poor, low-income farmers should not have to count towards limits on trade-distorting subsidies at the global trade body. (See Bridges Weekly, 14 November 2012)

However, developed countries and some developing countries have cautioned against changing rules in ways that could allow countries to provided unlimited amounts of support to farmers in a manner that could harm producers elsewhere, potentially also undermining food security in other parts of the world.

The question has taken on added urgency as countries seek to negotiate a successful outcome for the WTO's upcoming ninth ministerial conference, due to be held in Bali, Indonesia in three months' time.

ICTSD reporting; "Rajya Sabha passes food security Bill," REUTERS, 3 September 2013; "Food Ministers to discuss Bill on October 3," THE HINDU, 9 September 2013. "Two-day meeting of state food ministers in national capital on October 3-4," TIMES OF INDIA, 8 September 2013.

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