The scheme mooted by the Delhi Government will only create more avenues for the middlemen to make money at the cost of the taxpayer Arvind Kejriwal, Chief Minister, National Capital Territory (NCT) of Delhi has justified his much-trumpeted scheme for door-step delivery of ration on the ground that this will help rein in what he describes as ‘ration mafia’ while ensuring that every grain of the subsidized food reaches the person (read: the poor) for whom it is intended. Who is this ‘ration mafia’? How does it plunder the subsidized food? Can the scheme prevent it? Under the National Food Security Act, 2013, the Union Government directs the Food Corporation of India and other state agencies to procure food from...
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Category: Revamped/targeted PDS
Food subsidy – fudging stops, what about reining in
In the Union Budget for 2021-22, the Finance Minister, Nirmala Sitharaman has given a pleasant surprise. This has to do with the Government’s decision to discontinue with the decades old practice of so-called “off-budget liabilities”. A technique used by successive regimes in the past, this is a fancy nomenclature to denote transfer of certain expenses incurred by the Union Government to the books of its agencies tasked with the implementation of its welfare schemes. This helps the former show lower expenses on its own books thereby helping it bring down fiscal deficit to the desired level. A typical case relates to the Food Corporation of India (FCI) through which it administers its mammoth program of delivering food subsidy. Under the...
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Legalizing MSP is anti-farmer
The anger of agitating farmers over the three farm bills enacted in September, 2020 refuses to subside. Despite a categorical assurance by the Prime Minister, Narendra Modi that the MSP (minimum support price) will continue and that the government was prepared to give this in writing, they are unfazed. Their leaders are insisting that all sales of agricultural produce including those outside APMC (Agricultural Produce Market Committee) mandis – now permitted under the Central law viz. Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 – should be made at MSP and that this must be provided for in the Act. At present, the Centre notifies MSP for 23 agri-items, however, this MSP has no legal sanction. The Food...
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Exclude the better-off
FOOD SUBSIDY The National Food Security Act (NFSA) enacted by the then UPA – government in 2013 guarantees availability of 5 kg of cereals per person per month at Rs 3 per kg rice, Rs 2 per kg wheat and Rs 1 per kg coarse cereals to 67% of India’s population (75% rural & 50% urban). The cost of making food available being substantially higher, this entails massive subsidy payment. Subsidy is financial supports given by government to enable a person buy a commodity which he cannot afford with his limited income. Prudence demands that this should be given for a temporary period to avoid perennial burden on the exchequer. This period should be used to enable him earn more...
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Food subsidy reform – unlikely in Modi’s term
The National Food Security Act (NFSA) enacted by the then UPA – government in 2013 guarantees availability of 5 kg of cereals per person per month at Rs 3 per kg rice, Rs 2 per kg wheat & Rs 1 per kg coarse cereals to 67% of India’s population (75% rural & 50% urban). This is an astounding admission that six-and-a-half decade after independence, nearly 800 million of country’s population are so poor that food has to be supplied at close to ‘zero’ price. Subsidy is financial supports given by government to enable a person buy a commodity or service which he cannot afford with his limited income. As a matter of prudent policy, this should be given for a...
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Dismantle TPDS, give cash to poor
For all those couched in socialistic mindset and obstinate about keeping complete control on food supply and distribution in pursuit of food security – regardless of all the negatives that go with it – need to take a look at a report of the Comptroller and Auditor General [CAG] on “Procurement and milling of paddy for Central pool” tabled in the Parliament on December 8, 2015. But, first a word on the trigger for audit by CAG is in order. A whistle-blower in Odisha had alleged that close to Rs 10,000 crores of black money was being generated every day as millers were hiding or under-reporting earnings from sale of paddy by-products. Reportedly, the Prime Minister’s Office [PMO] had forwarded...
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Direct income support – half-a-dozen speed breakers ahead
In January 2013 the then UPA – government had announced a nation-wide roll-out of direct benefit transfer [DBT] – an acronym for transfer of subsidy amount in to the bank account of the beneficiary. But, the mission remained on paper as even in LPG [liquefied petroleum gas] where it was launched on a limited scale June, 2013, the plan was abandoned in January, 2014. Modi – government resurrected DBT for LPG in November, 2014 in select districts and by January, 2015 embraced all 676 districts in India. Emboldened by its success [leakages have been completely eliminated and this alone would result in saving of over Rs 10,000 crores annually] is now planning big to cover all other subsidies viz., kerosene,...
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‘Unshackle’ food sector before cash transfer
Emboldened by the success of DBT (direct benefit transfer) in LPG, the government is keen to launch this in food and fertilizers. To begin with, it will launch a pilot scheme in Puducherry where 330,000 ration card holders could receive Rs 300-400 a month each in their bank account in lieu of their monthly quota of rice after the lists are validated and their bank accounts are seeded with Aadhaar. Beneficiaries will be free to spend the money on any thing, not necessarily grain. If, the pilot in Puducherry is successful, it will be rolled out in other Union Territories (UTs) When juxtaposed with Modi – government’s tall claim about implementing DBT [a committee under Mr Shanta Kumar – a...
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India’s food reforms – trapped in ‘twilight’ zone
Pressure is mounting on the government even from within to fix a much higher minimum support price (MSP) for paddy during July – June 2015-16 agriculture crop season than the amount recommended by the Commission on Agriculture Cost and Prices (CACP). The CACP had recommended a modest increase of 4% which translates to about Rs 50 per quintal over existing price of Rs 1360 per quintal for common variety of paddy. On the other hand, some sections within government are gunning for a hike of double this amount or Rs 100 per quintal. Meanwhile, farmers organizations e.g. Bharat Krishak Samaj (BKS) have resurrected demand for bonus over and above MSP that some states viz., Chattisgarh, Madhya Pradesh etc were giving...
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Volte-face on food reforms
On August 15, 2014 the prime minister had announced government’s intent to trifurcate Food Corporation of India (FCI) in to three entities each devoted to procurement, handling and distribution. Being a cosmetic exercise and far from making a dent on maladies afflicting the sector, the announcement failed to enthuse analysts. In a (pleasant) surprise turn of events, a committee constituted up under chairmanship of Mr Shanta Kumar – a senior leader of BJP and ex-minister in the NDA government under Vajpayee – has come up with recommendations which are out-of-the-box and hold a promise of bringing about a ‘paradigm shift’ in India’s food economy. It recommends:- (i) drastic curtailment in the role of the state/government in addressing food needs...
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