The National Food Security Act and Impact on International Trade

Abstract

The National Food Security Act (NFSA) 2013, which was just passed by the Indian Parliament, intends to ensure food security in India, primarily through delivering subsidized grains to around two-thirds of families through the Targeted Public Distribution System (TPDS). The cost of such an ambitious rights-based strategy in the midst of slowing economic development and mounting fiscal deficits has been the most common complaint leveled at the NFSA. We believe that, while food subsidies have been increasing over the last few decades and will continue to rise as a result of this act, the incremental costs, at roughly 0.2 percent of GDP, are not as significant as indicated. Furthermore, recent evidence of increased TPDS use and lower corruption lends credence to the act's assumption that considerable revenue transfers to impoverished households can be made, enhancing food security and nutritional diversification. Several issues remain to be addressed in the act's design and execution, including its projected coverage, a cereal-centric strategy, beneficiary identification, and state flexibility. If these issues are successfully handled, the act might be a huge step forward in India's long-running fight against malnutrition and food insecurity. Finally, the NFSA presents a new chance to reform and improve the TPDS, which has long been an important part of India's national strategy to attain food security.