While upholding the concerns of the National Advisory Council (NAC) on providing food security for the poor, the Prime Minister’s Economic Advisory Council Chairman C Rangarajan has raised a host of issues, which will make the scheme hard to implement.
But some NAC members who did not want to be named said the council, led by Congress president Sonia Gandhi, would prevail on food security. The Congress party leads the United Progressive Alliance government at the Centre.
The full report of an experts’ committee headed by Rangarajan on food security — which was a critique of the NAC proposals — was released today.
The report says sharply focusing on and finetuning the Public Distribution System (PDS) continues to be an answer to food security. It implies making the changes envisaged by NAC involves a leap of faith and ability that India might not be ready for.
The report praises the Chhattisgarh government’s initiative in reforming PDS. Chhattisgarh is run by the Bharatiya Janata Party. The committee does not commend any Congress-ruled state for PDS reform, except Haryana (which is given credit for implementing smart cards for PDS beneficiaries) and Delhi. It also supported Tamil Nadu for experimenting with PDS management through a Global Positioning System (GPS), Gujarat for using bar-coded grain bags and Uttar Pradesh and Madhya Pradesh for introducing SMS alert systems. All these states are ruled by non-Congress governments.
The report says the total subsidy outgo is expected to be higher than the NAC projections on account of a number of factors. It says according to NAC projections, the total subsidy will work out to Rs 71,837 crore in the first phase (during which 72 per cent of the population will be targeted) and Rs 79,931 crore in the final phase (during which 75 per cent of the population will be targeted).
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But Rangarajan says this figure needs to be revised upwards if October 2011 and 2013 projections for the two phases are extrapolated and a 100 per cent offtake is assumed. He says subsidy then increases to Rs 85,584 crore and Rs 92,060 crore respectively.
Besides this, the current procurement and storage capacity of a little above 42.5 million tonnes, providing 68.76 million tonnes of foodgrain in the first phase and 73.98 million tonnes in the final phase, implies significant scaling up of the procurement, warehousing and supply chain operations. This involves large financial outgo which has not been quantified.
The report also points out that since the promised entitlements are legally enforceable, procurement will need to be scaled up by large increases in the minimum support price or imports. “Both options imply a large fiscal burden difficult to quantify,” the repeort says.
Admitting the NAC’s thinking is correct, Rangarajan says as the right to food security will become legally tenable, India must be aware of its effects.
| FOOD FOR THOUGHT (Broad suggestions) # Total foodgrain requirement for priority households, buffer stock and other welfare programmes are estimated to be 50.96 mt this year, while procurement is at 56.35 mt # The balance foodgrains of around 5 mt can be distributed to the non-entitled population (general households) at an issue price equal to minimum support price # The subsidy outgo for foodgrains for entitled households is estimated to be '83,000 crore, which includes the subsidy for welfare programmes and maintenance of buffer stock # More focus should be given on increasing foodgrain production, creating a stable procurement regime, computerisation of PDS and introduction of smart cards for beneficiaries |