To address the plight of tens of millions workers in the ‘informal’ sector viz. street vendors, craftsmen, construction workers, domestic help, agricultural laborers, self-employed etc affected by Covid – 19, on March 26, 2020, the finance minister, Nirmala Sitharaman announced a Rs 170,000 crore package under PM Gareeb Kalyan Scheme [PMGKS]. The most crucial component of this package is giving 5 kg of rice or wheat per person per month for ‘free’ to around 80 crore people through the public distribution system [PDS] plus one kg of preferred and region specific choice of pulse per household for 3 months. To understand the full implications of the relief which is estimated to cost the exchequer about Rs 50,000 crore, let us...
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Category: Procurement, handling & distribution
Economic Survey 2020: Fudging food and fertiliser subsidy
Far from subsidy allocations coming down, as the Economic Survey had recommended, there is significant increase not reflected in govt balance sheets Economic Survey 2020: The food subsidy figure mentioned in the budget are reimbursements to FCI, and other state agencies engaged in similar operations on behalf of the Union. —————————————————————————————————– Economic Survey 2020: In the 2020 Economic Survey, released on January 31, the chief economic advisor (CEA), K Subramanian had recommended some reduction in food subsidy by limiting the scheme’s coverage, and increasing the issue price of foodgrains. One was, therefore, looking forward to announcement of a major reform in this regard in the Union Budget for FY21 presented by finance minister Nirmala Sitharaman the following day. While the speech...
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Drastic cut in food subsidy – real or fudged
In the Economic Survey [2019-20] released on January 31, 2020, the chief economic advisor [CEA], K Subramanian had recommended some reduction in food subsidy by limiting coverage of the scheme as also by increasing issue price of foodgrains. In this backdrop, one was looking forward to announcement of a major reform in this important area in the Union Budget for 2020-21 to presented by the Finance Minister [FM], Nirmala Sitharaman on the following day. Even as the speech was devoid of any such announcement, however looking at the numbers, one comes across the revised estimate [RE] of food subsidy for 2019-20 at Rs 109,000 crore – a steep decline of 40% from the budget estimate [BE] of Rs 184,000 crore...
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Food subsidy – who are the beneficiaries
The Government is considering downward revision of ‘reserve price’ of rice from Rs 2,785 per quintal to Rs 2,250 per quintal for selling food under the Open Market Sale Scheme [OMSS] during the current financial year [FY] 2019-20. However, there is no plan for any revision in reserve price of wheat, and the current reserve price of wheat Rs 2,080 per quintal will continue to prevail throughout the remaining period of 2019-20. The scheme is run by the ministry of food civil supplies and consumer affairs to dispose off wheat and rice stored in buffer stock [also known as the ‘central pool’] kept by the Food Corporation of India [FCI] – the agency which is 100% owned by the Government...
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Reforming agri-markets – a hoax
An inter-ministerial panel for rural and agriculture sectors has identified trade barriers within the mandi system [mandi is state-run market yards known as agricultural produce marketing committees (APMCs)] that continue to hurt traders dealing in food commodities, which, in turn, affects farmers. The panel cites this as a major factor responsible for lower farm income. Arguing that farmers need freer access to markets for selling their produce , it has recommended removal of the inter-state mandi tax [levy collected from traders when agri-products are sold from one state to another] and replacing it by a single pan-India mandi tax. It has also mooted a pan-India licence valid across all mandis [a total of 585 in 16 states and two union territories]. The panel...
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How sugar turns bitter for the consumer…
The Cabinet Committee on Economic Affairs (CCEA) has approved a proposal of the food ministry for creation of four million tons of sugar buffer stock between August 1, 2019 and July 31, 2020. The government will spend Rs 1,674 crore towards the cost of carrying the stock. The amount will be directly credited into farmers’ accounts on behalf of sugar mills against their cane price dues. It has also decided to keep the Fair and Remunerative Price (FRP) of sugarcane unchanged at Rs 275 per quintal. FRP is the minimum price which mills have to pay farmers to buy sugarcane – the raw material for making sugar. The price is applicable to sugarcane purchases made during the sugar marketing year...
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A law on MSP – fiscally suicidal
On November 30, 2018, tens of thousands farmers – coming from all parts of the country – congregated on the national capital to register protest over their financial distress arising from un-remunerative price realization from sale of their output and ever increasing burden of indebtedness. Quite unlike protests in the past when their demands were restricted to specific areas such as timely payment of sugarcane arrears, reduction in power tariff, lowering GST etc, this time around, they have raised the pitch. They want a special session of the parliament to be convened to discuss their problems and pass two legislations [a private members’ bill has already been submitted to the chair]. These are: (i) a law to guarantee minimum support...
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Addressing farmers’ woes – middleman holds the key
In recent years, the Modi – government has increasingly faced the wrath of farmers all over the country with the last year alone having seen over half-a-dozen protests. On October 2, 2018, in a major show of strength, thousands of farmers from Uttar Pradesh [UP], Haryana, Punjab, Uttarakhand had congregated on Delhi border with close to dozen demands. These included:- Implementation of Dr MS Swaminathan headed Nation Commission on Farmers recommendations; Purchase of all of farmers produce at notified minimum support price [MSP]; Greater role to farmers producer organizations [FPOs] in food procurement; Waiver of all outstanding farmers loans; Payments of all outstanding arrears to sugarcane farmers; Enforcement of minimum wage for all farm workers; Giving pension to all farmers...
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Union’s fiscal budget held hostage by NFSA
Recently, Union Minister for Consumer Affairs, Food & Public Distribution, Ram Vilas Paswan informed that the Government will not affect any increase in issue prices for food-grains under the National Food Security Act [NFSA] till June, 2018. Under the Act, 5 kg of cereals per person per month is made available at heavily subsidized price of 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] or over 800 million persons. These prices shall be valid for a period of 3 years from the date of commencement of the Act and, thereafter, may be revised by the Central Government. The NFSA came into...
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Food – why consumers pay more but farmers get less?
In the just concluded Gujarat assembly elections, BJP got yet another chance to form the government for the sixth time in a row. But, unlike in the past, when it won by a comfortable margin, this time it barely scraped through getting 99 seats in the house strength of 182. A major reason was its dismal performance in rural areas. In particular, the farmers voted against the party expressing resentment over anti-farmer policies followed by the state government resulting in meager income even leading to suicide in some cases. A vivid manifestation of this is available from the Saurashtra-Kutch region where BJP got only 23 out of a total of 54 seats. The farmers suffered due to increase in cost...
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