Govt has no fiscal space for food bill in budget: FICCI

The National Advisory Council (NAC) chaired by Sonia Gandhi has been working on a New National Food Security Bill, a landmark proposal that aims to provide subsidised foodgrains to upto 75% of the country's population.

Prime Minister Manmohan Singh has said that the government is committed to tabling the National Food Security Bill in parliament soon. The Bill aims to provide the poor, legal guarantee of cheaper rice and wheat. Calculations done by the NAC indicate that about Rs 80,000 crore would be required in a financial year to implement the Bill. NC Saxena, Member of the NAC said that the government may provide some amount in the upcoming Union budget and at the supplementary stage modify or enhance it as per the requirement.

In an interview with CNBC-TV18, Director General of FICCI, Rajiv Kumar spoke about his expectations from the government on the implementation of the Bill.

Below is a verbatim transcript. Also watch the accompanying video.

Q: We are in the midst of a debate about the proposed National Food Security Bill, it could possibly become the right to food law very soon. Do you think this government has the capacity and the wherewithal to actually implement such a huge scheme?

A: Let me start by saying that food security should be a like birthright and should be the entitlement for every Indian especially 60 years after our independence. But it is not a matter of just passing a law. Food security has to be achieved by hardwork and by doing reforms and progress in agriculture because ultimately it is not a matter in my view of passing a law or of defining a subsidy.

Q: Or providing a budgetary allocation?

A: Or providing a budgetary allocation because it is a matter of having enough food available in the country either by growing it yourself or by imports so that the prices of the food remain such that it is accessible to the poorest of the poor.

Q: Do you think there is enough fiscal space and I am not talking about the political decision or the administrative capability, is there enough fiscal space for the finance minister to go ahead and announce this in the forthcoming budget?

A: In my honest opinion no. Because the food subsidy bill as it is at the moment has already become about 1.4% of GDP. You are looking at numbers and if you want to increase this further, and include all the provisions, there are various estimates. Some people say only Rs 17,000 crore is needed this year.

Some others would say Rs 40,000 crore and so on. We have to go beyond this to say that if you enshrine this into law then how will these numbers and how will this provisioning increase over the years? What will be the structural public expenditure requirement that you are introducing in the budget, which will make sure that this much of your expenditure now is salted for this thing.

So the fiscal space especially at this time given that you have got all the other requirements for your infrastructure for your education, for your health, you don