A case for food subsidies: An investment, not a waste

The writer whitethorn beryllium targeting nutrient subsidies for simplification either due to the fact that they vie straight with cultivation R&D oregon due to the fact that spending connected them has small oregon nary value. Both propositions tin beryllium contested.

It could beryllium argued that nutrient subsidies represent a large portion of subsidies to farmers successful the signifier of terms enactment on with input subsidies and overmuch of it is wasteful. Hence it is amended to redirect these subsidies to cultivation R&D. This would payment farmers and consumers and is simply a win-win for all. But tin we dainty nutrient subsidies similar different subsidies, specified arsenic fertiliser and electricity?

The country’s nutrient subsidy measure encompasses some user and husbandman subsidies owed to the engagement of the Food Corporation of India (FCI) successful subsidising some groups. However, these tin beryllium conceptually separated. Studies amusement that the constituent of subsidy to farmers successful the nutrient subsidy measure is overmuch little than the input subsidies (electricity, fertiliser). Therefore, it wouldn’t beryllium close to accidental that the nutrient subsidy straight competes with R&D oregon different cultivation expenditure by the government. In fact, Gulati besides points retired that nutrient subsidies “predominantly payment consumers alternatively than farmers”. Hence, it is incorrect to lump nutrient subsidies with the different subsidies received by producers. It would besides beryllium incorrect to inquire wherefore rice-producing farmers should get subsidised atom done PDS. Because present the atom shaper is successful effect getting income transportation arsenic a consumer.

Is it past the statement that the nutrient subsidy expenditure is wasteful? This strikes astatine the bosom of what we see valuable. In effect, the nutrient subsidy is simply a humble income transportation to the bottommost fractional of the population. A household of 4 that receives 20 kg of atom oregon wheat receives a monthly income of astir Rs. 700-Rs 800 depending connected the prices successful their locality. For mediocre households (with income little than Rs. 20,000), this is simply a precise invaluable transportation and sustains their nutrient information — not needfully successful enabling much atom depletion but successful releasing spending connected different indispensable foods (pulses, milk). This is besides an concern successful the wellness of susceptible populations. Its worthy was realised adjacent by critics during the Covid crisis.

Do truthful galore radical request nutrient subsidies? A decennary ago, the National Food Security Act’s (NFSA) enlargement of PDS sum addressed important exclusion errors successful the targeted PDS system. The NFSA’s supporters efficaciously argued that accurately identifying the mediocre is astir impossible, making wider sum indispensable to minimise exclusions. This motivation statement remains valid adjacent today.

Critics, including Gulati, person wrongly assumed the nutrient information measure post-NFSA would necessitate accrued atom procurement. This has led them to overestimations. The NFSA has accrued PDS sum ( from 44.5 per cent to 67 per cent). However, per-beneficiary atom proviso decreased (7.9 kg to 5 kg), negating the request for important other grain. Ultimately, the NFSA neither inflated the subsidy nor required accrued production.

It is well-known that cultivation R&D has a precocious complaint of return. This is adjacent much truthful erstwhile specified R&D targets pulses, milk, eggs, vegetables and fruits — foods indispensable to flooded nutritional gaps successful our population. The resulting gains accrue to all, producers and consumers. It is an concern successful the bottommost of the income pyramid. It efficaciously complements the payment measures towards them. The trade-offs successful expenditure request to beryllium made elsewhere.

The writer is an economist