Based on a law passed in August, two-third of India’s population (or around 800 million people) will have a “right” to about 5 kilograms of cereals (mostly rice and wheat) per month at an extremely low price (around 4 cents/kg). To do this, the government will have to buy and distribute north of 60 million tons of grains annually. The obvious question is where all this supply would come from. And, would this destabilize Rupee by imposing an overwhelming fiscal burden on indian government?
How much extra production does India need to cover the increased demand? If what I learned from a quick survey of related debates in Indian media is correct, the answer is almost zero! Apparently, India is already producing more than this amount, but the existing distribution mechanisms do not allow access to food by poor people. Currently, a great fraction of the existing production ends up rotting since there is not sufficient demand at current prices.
If this analysis is true, this is yet another example of Amartya Sen’s argument that widespread hunger is not necessarily a result of low food production. He has shown, for example, at the time of the Bengal famine in 1943, there was sufficient food supply but at a staggering high prices. (The following wikipedia entry provides an informative summary of Sen’s arguments: http://en.wikipedia.org/wiki/Amartya_Sen#Research)
Still other concerns remain. Will Indian government be able to manage this gigantic program successfully? And, is food security the number one priority in India? Wouldn’t it make sense to scale back this program to release resources for health care, for example? Finally, since this program is likely (or alleged) to increase food price volatility on the world market, what would be its impact on poor people in other countries?