NEW DELHI – Frustrated by delays in Parliament, and eager to gain favor with rural voters ahead of national elections, India’s cabinet has approved a sweeping executive order that establishes a legal right to food and will create what is likely to be the world’s largest food subsidy system for the poor.
The issue of food security has been a source of controversy during the government’s second term. Sonia Gandhi, president of the Indian National Congress Party, has promoted the plan as a necessity to widen the safety net for India’s hundreds of millions of rural poor. But critics have complained about the high costs and have warned that the program will broaden a subsidy system that is already inefficient and corrupt.
For the governing Congress Party, the new ordinance fulfills a campaign pledge made by Mrs. Gandhi and provides her party with something tangible to offer voters as the country prepares for national elections next year. The coalition government has been battered by corruption scandals and a sinking economy. With polls suggesting a loss of public support for the Congress Party, the food ordinance is good politics, some analysts say, if uncertain economics.
“It is very consistent with the overall thrust of the government to become the welfare party of India,” said Ashutosh Varshney, an India specialist at Brown University. “How to finance welfare is a tricky question. But the welfare party of India can still garner a lot of votes because so much of India is still below the poverty line.”
The ordinance, issued on Wednesday, still requires further approval. It must be signed by President Pranab Mukherjee, considered a formality, and then approved by a majority in both houses of Parliament in the coming “monsoon” session. Initially, the Congress Party had intended to pass a bill in Parliament, but the effort met with numerous delays and political fights, some within the Congress Party, until the government instead opted for the cabinet ordinance.
“Why didn’t the government bring the food bill in Parliament and discuss it?” asked Rajnath Singh, president of the Bharatiya Janata Party, the main opposition party. “Why such hurry?”
The debate over food security has also featured a clash of ideas about how a country like India, with 1.2 billion people and sharp extremes of wealth and poverty, can most effectively provide food to the poor, and provide them with the tools to lift themselves into better lives. India once had a state-planned, socialist economy, but now it has something of a hybrid, with powerful interest groups wedded to maintaining entrenched fuel and food subsidy programs, even as many business leaders push for more market-based solutions.
India’s economy, once roaring above 9 percent annual growth, has now cooled appreciably, and many critics have cautioned that the food security program could be a huge burden as the government tries to address a stubborn budget deficit. Currently, the government allots about $15 billion to food subsidies, a figure that also includes payments to farmers. Under the new broader plan, that figure would rise to nearly $21 billion.
The exact details of the ordinance passed by the cabinet have not yet been made public, but presumably it closely follows the government-supported Food Security Bill, which had been pending in Parliament. That bill has several components: an expansion of food subsidies to 75 percent of the rural population and 50 percent of the urban population; guaranteed free lunches for poor children ages 6 months to 14; and a free meal and $100 subsidy for pregnant women.
Jean Dreze, an economist and a leader of the food security campaign, said that the program had been scaled down from earlier proposals and that the extra costs were somewhat misleading, since new expenditures to the central government would be somewhat offset by reduced burdens on state governments. He said the law would streamline existing eligibility categories and make permanent some already existing programs for poor women and children.
“I think it is less ambitious than many people believe,” Mr. Dreze said.
But many economists warn that India cannot afford to expand subsidies at a time when economic growth is slowing and the government is struggling to contain its deficit. Surjit S. Bhalla, an economist, predicted that the program would exacerbate fiscal problems and could also create disincentives for farmers that could lower food production in India.
“I do not know of a more bizarre scheme in the world,” said Mr. Bhalla, chairman of Oxus Investments, an economic research and advisory firm.
Currently, the government’s Public Distribution System, or P.D.S., distributes subsidized grain and kerosene through Fair Price Shops across India. Eligibility categories are used to determine how much a person can receive, and the program distributes monthly bags of wheat or rice, along with cooking fuel, to millions of people.
But the system has been mired in corruption. Many eligible recipients either never receive their benefits, or do not receive their allotted amount. Academic studies have found that 70 percent of the budget is wasted, stolen or used for bureaucratic and transportation costs. Many critics have called for gradually dismantling the P.D.S. network and instead instituting a program that transfers cash directly to recipients.
Mr. Dreze said the current proposal had included different programs for using cash transfers but that, over all, the system was not prepared yet for such a significant change. He said the new plan should eliminate some of the existing corruption.
“Why not act on what you have?” he said of the existing distribution network. “Cash transfers will take a lot of time to put in place.”
Hari Kumar contributed to this report.