Food security law may create financial crisis: Raman Singh

Published: 09th September 2013 01:59 PM  |   Last Updated: 09th September 2013 07:45 PM   |  A+A-


The recently passed food security legislation "could create a financial crisis for India", said Chhattisgarh Chief Minister Raman Singh who stressed that his state is now looking at better health, gainful employment, a risk- and debt-free secure future.

Raman Singh wrote in the Economic Times Monday that the state has "outgrown the adage of roti, kapda aur makaan (food, clothing and shelter)".

"That bridge has been crossed. We are looking at better health, gainful employment, a risk- and debt-free secure future. And at remaining fiscally responsive," he wrote.

He says he has "learnt the lesson that a state needs to be fiscally robust to run welfare schemes".

"The central Food Security Act of 2013 could create a financial crisis for India.

"But Chhattisgarh has implemented the Act at a cost of 1.4 percent of the gross state domestic product (GSDP) and has managed to contain its fiscal deficit within the fiscally prudent ceiling of 3 percent of GSDP."

The Chhattisgarh chief minister, who is heading the BJP government in the mineral-rich state since December 2003, wrote that successive Reserve Bank of India studies of state finances have ranked Chhattisgarh among the top-three best-performing states in critical fiscal parameters and management.

"During the last decade, it has maintained fiscal discipline, including sustainable debt management. The economic and fiscal indicators of Chhattisgarh have consistently been better than most other states. The annual growth rate during the 11th Plan has been 8.4 percent compared to the 7.9 percent average for all states.

"On the fiscal side, the ratio of revenue receipts, state's own tax revenue, debt, interest payment as well as fiscal deficit to GSDP has been significantly better than the national average. In fact, Chhattisgarh has the lowest debt-GSDP ratio among the states."

Raman Sing wrote that Chhattisgarh's "overall fiscal management has also been far more prudent and efficient if you compare it with the Centre, for example".

"While the debt stock to GDP ratio of the Centre has ballooned to 40 percent, Chhattisgarh's outstanding liability is pegged at 17 percent. Similarly, the ratio of revenue receipts to GDP of the Centre, at 9 percent, is less than half that of Chhattisgarh."

He went on to write that in the economic sector, there has been substantial investment in agriculture and allied activities.

"In spite of the economic slowdown, industrial growth rate has far exceeded the national average. This would have been better but for the policy paralysis of the Centre, particularly in the core sector.

"Food and nutrition security, health and skill development have remained the centrepiece of our efforts. We are the first and only state to have Food and Nutrition Security Act, Right to Skill Development Act and a Universal Health Insurance Scheme.

"In many ways, the Chhattisgarh Right to Food and Nutrition Act is far more progressive and inclusive compared to the central Act."

Raman Singh noted that it guarantees nutrition security, "whereas the central Act is limited to food grain".

"The state Act covers nearly 90 percent of households compared to 67.1 percent under the central Act. Similarly, the state Act provides for 35 kg of food grain per household whereas under the central Act, the entitlement is 5 kg per person. Considering the national average of five persons per household, the average works out to only 25 kg per household."

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