Edible oil subsidy scheme may be reviewed for partial deregulation

For 2012-13, states have utilised only 2 lakh tonne as against 6.16 lakh tonnes procured for state allocation under PDS distribution

The ministry of food may start a review of the edible oil subsidy scheme under the public distribution system for a partial deregulation. As per the subsidy scheme, states are subsidised for distribution of edible oil at Rs 15 per kg under PDS. The scheme is to end in September 2013 .

Official sources say barring festival season and except few states like Tamil Nadu and Andhra Pradesh, this scheme is not being used by others. The uplift is even remarkable during election time.

There are other political compulsions as well. For instance, Kerala does not want to upset the price of coconut oil, widely used in the state. Similarly, West Bengal is not part of the scheme.

As against 6.16 lakh tonnes procured for state allocation under PDS distribution of edible oil under the subsidy scheme, only 2 lakh tonne have been used for the financial year 2012-13. There are very few takers of edible oil under this scheme and consequently, the rest of the amount will lapse and cannot be diverted to open market as it is meant for PDS, said sources.

Now the centre procures on behalf of the state and allots it to different states as and demand arises. The procurement is done through the state trading corporations. This process may be reviewed so that states themselves can decide and place orders with procurement agencies. Later the reimbursement and subsidy will be given on the basis of the bills generated rather procure edible oil on behalf of the states directly .

Sources said, last year as well, the scheme did not have many takers and the ministry had to start talks for the scheme’s wider acceptance, as edible oil prices were ruling high during the festive season. This review may downsize the subsidy bill for the centre towards edible oil distribution as there will not be any pro-rate allocation, said sources.

This scheme for distribution of subsidized imported edible oils through States/UTs with a central subsidy of Rs. 15/- per kg. has been implemented by the Government since 2008 for distribution through PDS. The operation of the scheme is being extended upto 30.09.2013..

In order to ensure supply of edible oil in the country, the government has banned export of edible oils (except coconut oil and forest based oil and edible oils in blended consumer packs up to 5 kg with a minimum export price of $1,500 per MT).

Besides, stock limits are being imposed from time to time to curb hoarding of such essential commodities like edible oil, pulses and edible oilseeds. Besides, a Centrally Sponsored Integrated Scheme on Oilseeds, Pulses, Oil Palm and Maize (ISOPOM) is being implemented in 14 major oilseeds growing states, 15 Maize growing States and 9 Oil Palm States.