India Launches Right-to-Food Program Among Other Subsidies

July 9, 2013 Posted by India Briefing Reading Time: 3 minutes

Jul. 9 – Last week, the Indian government approved an ambitious 1.2 trillion rupee (US$22 billion) food security program to guarantee cheap food grains for nearly 800 million citizens.

The program, which is called the “Right-to-Food” program, will entitle nearly 70 percent of India’s 1.2 billion population to obtain five kilograms of wheat or rice each month at a discounted price of between two to three rupees (US$0.03-US$0.05) per kilogram (compared to 20 rupees per kilogram on the open market). The ordinance is expected to become law this week, but must be ratified during the next session of Parliament or within the next six months, or it will lapse automatically.

The program will cost an estimated 1.3 trillion rupees (US$23 billion).

Exact details of the ordinance have not been made public yet, but it is likely to follow the current pending government-supported Food Security Bill which is made up of the following four parts:

The expansion of food subsidies to 75 percent of the rural population;
The expansion of food subsidies to 50 percent of the urban population;
Guaranteed free lunches for poor children aged between 6 months and 14 years; and
A free meal and 6000 rupee (US$100) subsidy for pregnant women.

Jean Dreze, a development economist and honorary professor at the Delhi School of Economics, affirmed the benefit of the Food Security Bill.

“In terms of nutrition indicators, India is very far behind. The Food Security Bill is an opportunity to address these gaps,” he said.

India is currently home to a quarter of the world’s extreme poor despite the country’s economic gains in the past decade. A recent U.N. study noted that India is home to 61.7 million malnourished children, that 48 percent of all Indians under age 5 suffer from malnutrition and that a third of all women in the country are underweight.

This Right-to-Food program, while undoubtedly good in theory, is still an expensive scheme and may further weaken Asia’s third largest economy. India had already posted its lowest economic growth rates this past year in over a decade, and the rupee has also come under intense pressure as it fell to a record low against the U.S. dollar last month.

Nonetheless, India has strongly pushed forward with reforms and programs which seek to provide greater opportunities for its citizens. Last year, the Indian government enacted a 300 billion rupee (US$5.4 billion) policy to provide free medicine for its citizens. The plan will include up to half of India’s population within the next five years, with the free medication limited to the medicine listed on a government approved generic drug list.

The Indian government has also started directly transferring cash to its poorest citizens last January by way of the “Your Money, In Your Hands” project. The project will reportedly affect at least 720 million people – the world’s largest program of its kind.

The plan currently covers 18 states, but the whole country is expected to be involved in the scheme by this December. Through the plan, the government will transfer up to 40,000 rupees (US$720) on an annual basis to every household that is below the poverty level. Government welfare spending currently stands at about 4 trillion rupees ($71.9 billion) a year.

The Indian government currently spends about 2.16 percent of its GDP on subsidies, yet hopes to lower the rate to less than 1.75 percent by 2015.

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