Food Security Bill and its impact on F&B Franchising

The Food security Bill has invited discussions regarding its advantages and disadvantages during the past few months. The article analyses the impact of food security bill on franchising-food and beverage sector.

By Franchise India | March 12, 2012

Its relative advantages and disadvantages for the common masses has been the issue of concern for the parliament where the bill was placed before the Lok Sabha. The intent of National Food Security Bill is laudable, but as we start analyzing and interpreting its impact, the foundation is neither based on sound economics nor does it take into account hazards of implementation. According to the senior economists of India, they see food security bill’s implementation as a scary component


for Indian Economy. They say that it is a huge financial burden on the government at precisely the wrong time. The National Food Security Bill intends to provide subsidized food grains to 75per cent of the rural population and about half of urban households. But when it will come to its actual implementation, this would prove out to be a big challenge.

According to the India’s Agriculture Minister Sharad Pawar: “The country will have to take the responsibility of producing huge quantities of food grains.” For increasing the capacity of production of grains, banks will first need to liberally finance the farmers and other related associations.  If the demand for minimum food security will not be fulfilled by the domestic sources, imports would come into the scene. Herein, Multinational corporations all over the world will be thrilled to strategize by exploiting the urgency of Indian sovereign demand. This way India will then be an active consumption market for such basic necessities of food, thereby increasing the rate of food inflation.
According to the wall street journal, implementation of bill will cause food subsidies to balloon to an estimated 949.73 billion rupees (USD18.05 billion) in the first year of implementing the food security program, up from around 673 billion rupees now. The government will also need an investment of 1.1 trillion rupees to boost farm output over next few years, thereby increasing fiscal burden on government.
Further coming to analyzing the impact of food security bill on food and beverage sector in franchising, it would increase all aspects of cost. Due to the increase in the cost of purchase of raw materials of food grains; the cost of franchisee, royalty and profit sharing etc. would increase for sure. This is the resultant of upward pressure in prices for food and grains. In lieu of the off take of rice in the current fiscal year has been 74per cent of the allotment, and that of wheat, 64per cent. The residual will keep adding to the grain mountain with the government, which will rot, due to poor storage, be eaten by rats and be pilfered. By cornering huge volumes of grain, the government reduces the supply in the open market, putting upward pressure on prices.

Its relative advantages and disadvantages for the common masses has been the issue of concern for the parliament where the bill was placed before the Lok Sabha. The intent of National Food Security Bill is laudable, but as we start analyzing and interpreting its impact, the foundation is neither based on sound economics nor does it take into account hazards of implementation. According to the senior economists of India, they see food security bill’s implementation as a scary component for Indian Economy. They say that it is a huge financial burden on the government at precisely the wrong time. The National Food Security Bill intends to provide subsidized food grains to 75per cent of the rural population and about half of urban households. But when it will come to its actual implementation, this would prove out to be a big challenge.

According to the India’s Agriculture Minister Sharad Pawar: “The country will have to take the responsibility of producing huge quantities of food grains.” For increasing the capacity of production of grains, banks will first need to liberally finance the farmers and other related associations.  If the demand for minimum food security will not be fulfilled by the domestic sources, imports would come into the scene. Herein, Multinational corporations all over the world will be thrilled to strategize by exploiting the urgency of Indian sovereign demand. This way India will then be an active consumption market for such basic necessities of food, thereby increasing the rate of food inflation.

According to the wall street journal, implementation of bill will cause food subsidies to balloon to an estimated 949.73 billion rupees (USD18.05 billion) in the first year of implementing the food security program, up from around 673 billion rupees now. The government will also need an investment of 1.1 trillion rupees to boost farm output over next few years, thereby increasing fiscal burden on government.

Further coming to analyzing the impact of food security bill on food and beverage sector in franchising, it would increase all aspects of cost. Due to the increase in the cost of purchase of raw materials of food grains; the cost of franchisee, royalty and profit sharing etc. would increase for sure. This is the resultant of upward pressure in prices for food and grains. In lieu of the off take of rice in the current fiscal year has been 74per cent of the allotment, and that of wheat, 64per cent. The residual will keep adding to the grain mountain with the government, which will rot, due to poor storage, be eaten by rats and be pilfered. By cornering huge volumes of grain, the government reduces the supply in the open market, putting upward pressure on prices.

 

 

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