Congress passed an Ordinance on Food Security Bill which guarantees food at nominal rates (5 kg of foodgrains each month at Rs. 1-3 per kg) for 67% of the population. This was done in utter haste when Parliament is expected to convene in another 2-3 weeks. Another populist measure by the Congress Govt. keeping the elections in mind. The same was promised to be passed within 100 days of UPA coming to power in 2004 elections. Der aaye durust aaye!

In spirit, the law is a good as it provides food security to citizens. However, there are implementation issues as we don’t have enough storage capacity. If only 25-30% population is below poverty line what is the need to include 67% at a cost of Rs. 1.25 trillion, risk of increasing fiscal deficit from targeted 4.8% to 5.1% (Crisil) which could threaten our investment grade rating.

The bill has left…

View original post 132 more words