Economic Impact of India’s Food Security (611)

Economic Impact of India’s Food Security

         India HSBC Holdings global market director Hitendra Dave said, "the operation of the project cycle is very long, it may take months, maybe years to get the desired economic activity. The rupee has "beyond the real level”. Food safety law does not make the government beyond the fiscal deficit targets.”

         Next year is India's election year. In the election, the ruling Congress Party introduced a number of subsidies to the poor people, especially the new food security bill passed directly to each household food spending, subsidies to please the lower class voters. One of the program guaranteed 100 days of employment to a rural household at Rs. 100 (approximately US$2) a day. The Union cabinet states, “every person belonging to priority households… shall be entitled to receive 5 kilograms of food grains per person per month at subsidized prices.” According to the statement, food will be made available at between Rs. 1 (1.7 U.S. cents) to Rs. 3 (5 U.S. cents) a kilogram. This is the biggest program in the world and will cost the government about US$22 billion annually and cover 67% of the population. It forms a huge pressure on the economy.

        “The measure is credit negative for the Indian government (Baa3 stable) because it will raise government spending on food subsidies to about 1.2% of GDP (gross domestic product) per year from an estimated 0.8% currently, exacerbating the government’s weak finances,” the ratings agency said in a statement.

         The purpose of this plan is government wants to let people no longer in hunger. This bill is a right for food in India. It can also inspire many countries to do the same thing. However, food security and economic downturn are issues in a long run. This is the world’s biggest experiment of providing food grain to poor people. The government plans to double its food subsidies to 2 per cent of the GDP. The fiscal deficit, slow economic growth and not stable exchange rate are three big mountains current firmly on Indian people. The Indian economy is going through a slowdown now. In the recent years India’s GDP growth is from 8% to 9%. From 2011-2012 the growth rate is 6%. India’s GDP growth in 2012- 2013 is 5%, which is the lowest in a decade. This food security policy does not fit for India’s current economy. The new food security bill will take time to have an impact on the economy. The government also approved the food safety law, which may trigger worries. The Indian finance ministers announced so many measures. People have no choice. They are forced to obey the food security bill.

       If there are an additional 30 core people will get the cheaper food, the demand for other items of will rise significantly. It affects the economy in a negative way. Cheap food grains will lower the food bill of families and they would spend the extra money on other items. This will let the consumption of cheaper grains remain the same or even higher because people get rights to have food, rely on it and do not want to work hard.

         In conclusion, the Indian government takes effort to find a solution to solve hunger, the biggest issue happening in India. And it is a tough problem for the country. In a way people get adequate food to survive rather than lack of food. In the other way, the government subsiding the grain to help the food security, in the meantime, it costs a lot and it can’t promise the food security. Maybe having food is better than nothing, but it is a big challenge for India.

Work Cited

Annapurna, Singh. "Food Security Bill: Good politics to deliver bad economics." DECCAN HERALD n.d., n. pag. Print. <http://www.deccanherald.com/content/213752/food-security-bill-good-politics.html>.

Utpal, Bhaskar. "Food Bill will worsen economic  woes, says Moody’s." live mint& the world street journal. n. page. Print. <http://www.livemint.com/Politics/RZf5SB7rFzGalzcGo9YXSN/Moodys-says-Indias-food-security-Bill-credit-negative.html>.

Arun , Kumar. "Why food security bill makes economic sense." Hindustantimes 20 08 2013, n. pag. Print. <http://www.hindustantimes.com/comment/columnsothers/why-food-security-bill-makes-economic-sense/article1-1110529.asp&xgt;.

"India’s Food Security Ordinance May Spell Economic Disaster." Wharton University of Pennsylvania. N.p., 09 07 2013. Web. 11 Nov. 2013. <http://knowledge.wharton.upenn.edu/article/indias-food-security-ordinance-may-spell-economic-disaster/>.