To shield millions of poor against devastation caused by Covid – 19, on March 26, 2020, the finance minister, Nirmala Sitharaman had announced that the government would give 5 kg of rice or wheat per person per month for ‘free’ to around 80 crore people through the public distribution system (PDS) for 3 months; it would also give for ‘free’ one kg of preferred and region specific choice of pulse per household for 3 months. This was in addition to 5 kg of cereals per person per month, 80 crore persons are already getting at a heavily subsidized price of Rs 3 per kg rice, Rs 2 per kg wheat & Rs 1 per kg under the National Food Security...
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Category: Public distribution system (PDS)
Serve up a fresh NFSA
The 80 crore people the Govt currently targets for giving subsidised foodgrain under the Food Security Act includes millions of higher-income beneficiaries who don’t deserve it The Finance Minister, Ms Nirmala Sitharaman, announced a Rs 1,70,000 crore package under the PM-Gareeb Kalyan Scheme (PMGKS) to address the plight of tens of millions of workers in the “informal” sector affected by CoviD-19, on March 26. The most crucial component of this package was giving five kg of rice/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 three months. To understand the full implications of the relief — estimated to cost...
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Can Corona – crisis spur food reforms
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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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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Ballooning food subsidy, looming debt trap
Even as the union finance minister, Arun Jaitely exudes confidence that the government will be able to stick to the fiscal deficit target for the current year, it is battling the consequences of ballooning food subsidy. In particular, it is making all possible efforts to shield the former from the negative effects of the latter. The food subsidy arises because of the overarching commitment of the government under the National Food Security Act [NFSA] to provide food to over 2/3rd of the population at heavily subsidized price of Rs 1/2/3 per kg for coarse cereals, wheat and rice. The cost of procurement, storage and distribution being much higher, the differential amount represents the subsidy. The Food Corporation of India [FCI]...
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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 subsidy – reining in bogus claims alone is not reform
According to the medium-term expenditure framework [MTEF] statement recently released by the finance ministry, the food subsidy bill of the union government is projected to increase from Rs 145,000 crore during the current year to Rs 175,000 crores during 2018-19 and further to Rs 200,000 crores during 2019-20. This comes as a big disappointment to all those who have been anxiously looking forward to Modi – government deliver on its reforms agenda especially in regard to food subsidy which is a big resource guzzler – next only to interest payments and pension. Considering that such an assessment [steep increase] is being made less than two years before its term comes to an end implies that no reform is in the...
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Yogi – Modi onslaught on poverty
The just concluded assembly elections in Uttar Pradesh [UP] were fought in the backdrop of deteriorating law and order situation, hostile environment for investment, crumbling infrastructure [sans a few pockets in urban areas], widespread farmers distress, their high level of indebtedness and acute shortage of bare necessities viz. home, food, education, health, water and electricity. The poor investment climate and pathetic law and order discouraged industrialists and businessmen from setting up factories/shops even as existing establishments were facing closure. Together with farming being un-remunerative/losing proposition, this made a deadly cocktail leading to large-scale loss of jobs and in turn, migration of youth en mass to other states such as Maharashtra and Gujarat. Promises galore BJP led by Modi promised liberation...
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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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