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Analysts fret over India's 'game-changer' food plan

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(GlobalPost/GlobalPost)

India's ruling party said Thursday a vast new food scheme for the poor was a "game-changer" to fight endemic malnutrition, but analysts expressed concern about the programme's implementation and cost.

The cabinet issued an executive order late Wednesday introducing the National Food Security Bill, which is expected to be approved by the president later Thursday and enter into force well before elections next year.

The populist programme -- which the government says will add 230 billion rupees ($3.8 billion) per year to the country's existing 900-billion-rupee food subsidy bill -- offers subsidised grains to an estimated 810 million people.

It has been pushed strongly by the head of the ruling Congress party, Sonia Gandhi, who has insisted on honouring a 2009 election pledge despite concerns about the impact on government finances and food prices.

"It is going to be a game-changer in terms of poverty eradication," senior Congress leader Tom Vadukkan told AFP. "If basic needs like hunger are not met, you can't talk about (economic) development."

Despite two decades of strong economic growth, India still struggles to feed its population adequately, with a major survey last year showing that 42 percent of children under five were underweight.

The food measure, which will offer between three kilograms (seven pounds) and seven kilos of subsidised grain per person, is also considered key to the Congress-led coalition's fortunes in the national elections due in 2014.

"If it wins us votes, then that is an after-thought," Vadukkan, also a party spokesman, claimed. "Naturally anything good that you do gains you popularity."

India's opposition parties have rounded on the government for ramming through a controversial programme without a parliamentary debate, but the executive order is only temporary and must be converted into law.

It will be introduced in the next session of parliament, due to start later in July or August.

Critics of the food programme say that India can ill-afford such a costly subsidy at a time of slowing economic growth and when credit ratings agencies are eyeing the country's large deficit.

"India's current macroeconomic position does not provide the space to implement this policy," said Sonal Varma, economist with Nomura Securities, told AFP.

Indians classed as below the poverty line already receive subsidised kerosene, cooking gas, fertilisers or wheat through what is the world's biggest public distribution system.

About 360 million people currently receive subsidised grains, according to official data.

But the chaotic welfare programmes are notoriously inefficient and riddled with corruption.

A study by the national Planning Commission in 2005 showed that an estimated 58 percent of grains purchased by the government failed to meet their intended targets.

Siddhartha Sanyal, chief India economist with Barclays Capital, said that implementation would be a "huge logistical problem, with coordination required from all states".

Photographs of rotting food grains left out in the open due to a chronic shortage of storage facilities are an annual feature in newspapers during the monsoon season.

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http://www.globalpost.com/dispatch/news/afp/130704/analysts-fret-over-indias-game-changer-food-plan