Amidst efforts by the Union Government to enact the Food Security Bill as early as possible, senior BJP leader and former Finance and External Affairs Minister Yashwant Sinha has termed the Bill a “complete disaster”.
This statement has come at a time when Sinha’s party has indicated that it will not oppose the Bill. Sinha, who is also the Chairman of the Standing Committee on Finance, also said that the reports on Constitution Amendment Bill for Goods and Services Tax and on Chit fund issues will be presented during the monsoon session of Parliament. Excerpts from an interview:
On Food Security Bill
It will be a complete disaster. Let me quote you some figures from the Standing Committee’s report on Food Security Bill. The Bill proposes providing 7 kg of foodgrains per person per month at subsidised rates. Once implemented, this will require a total procurement of 76.3 million tonnes of foodgrains every year. You should not forget that the average annual procurement of wheat and rice during 2000-01 to 2010-11 has been 45.05 million tonnes, with the highest procurement of 73 million tonnes in 2011-12.
So, the requirement is much more than our best procurement. This is when agriculture production is rising year after year. This clearly indicates India will become a perennial food importer. Now if you exhaust the entire 85 million tonnes of stored foodgrains, then we will need to acquire from the open market. This will fuel inflation.
There will be a financial burden as States will have to provide storage and door delivery. States are going to oppose it. This will also create open-ended liability. In fact, this mechanism is a direct assault on the federal system. You should not forget that many States are already providing foodgrains at subsidised rates.
You are walking into darkness, not knowing where it will end.
On using food security as election plank
In 2009, riding on the Indo-US civil nuclear agreement, this Government promised electricity to every home. They went overboard on this. This has remained a promise. In a way, this is nothing but fooling the people. This time, they will promise food security. This is the situation in a Government, whose Prime Minister Manmohan Singh, said in 1991 as Finance Minister that the days of free lunches were over!
On Goods and Services Tax
The Standing Committee on Finance has completed deliberations on the Constitutional Amendment Bill for introduction of Goods and Service Tax. We are expected to present the report during the Monsoon Session.
On Ponzi schemes
The Standing Committee has deliberated upon this issue. I feel that, on the one hand, there is a regulatory gap and on the other hand, there is regulatory overlap. Remember, scamsters are always one step ahead of the regulators. They design their financial product in such a manner that it does not fall under any regulator. We feel that this regulatory gap needs to be filled. As an immediate measure, there should be a Finance Ministry-headed inter-body mechanism which will have various regulators such as RBI and SEBI as members. The Committee has completed its deliberations and is targeting the Monsoon session to submit its report.
On Fiscal Deficit target
The fiscal deficit target has been set at 4.8 per cent. Since this is an election year, expenditure can not be compressed. There will be more populist schemes this year. So, the option is to raise revenue. But my question is, when the economy is doing badly, how can tax revenues grow over 19 per cent during the current year?
The Government has also drawn up a road map to achieve three per cent fiscal deficit by 2016-17. I feel that the whole thing will have to be reconsidered. Remember, you can’t fix the target for the next Government.