India implements expansive food subsidy plan

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India implements expansive food subsidy plan

India's government cabinet passed an executive order Wednesday to establish an estimated US$22 billion food security scheme that could become the world's largest subsidized food program for the poor.Assorted_grains

The move sidesteps debate in the nation's parliament, which has been reviewing the bill since December 2011.

Once signed by the president and approved by both houses of parliament, the plan will provide legal entitlement of subsidized wheat and rice to 67% of India's 1.2 billion people.

The program is expected to require about 61 million tons (MT) of grain, or an additional 3 million MT a year, Reuters reported. It seeks to provide 5 kilograms of food grains a month per person.

As national elections approach next year, the rush to pass the bill has been tauted as politically strategic and critics have questioned its feasability.

The program will broaden an already existing subsidy system that provides cheap food to 218 million people, Reuters reported.  Expansion of the food safety net has been a key initiative pushed by Sonia Gandhi, president of the Indian National Congress Party.

Leading up to Wednesday's decision, doubt circulated about whether the nation's infrastructure could meet storage needs and keep up with grain production.

A recent national auditor report found a 40% shortage in storage space for food grains, Inter Press Service (IPS) wrote.

"India did not have space to store 33 million tonnes of foodgrain worth 12 billion dollars, which it had bought from farmers for various government food security schemes," the news agency reported.

Dinesh Rai of the Warehousing Development and Regulatory Authority told IPS that 13% of gross domestic product is lost every year due to wastage of food grains along the supply chain.

In addition to grains, the United Nations Environment Programme estimates that India also loses 12 million tons (MT) of fruit and 21 million tons of vegetables a year from lack of cold storage.

Corruption also been a key point of contention in the food program. Subsidized food is sold by the government through "fair price" shops, where grains meant for the poor might be sold at higher prices on the open market, Reuters explained. An estimated 40% of such food is "siphoned off."

Photo: Fir0002 via Wikimedia Commons

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