The government is exploring the possibility of raising a fund up to Rs 3,220 crore required to implement the non-formal public distribution of foodgrain at the state level through a consortium of banks.
The scheme may prove handy in helping cushion the poor and economically weaker sections from high food prices, but is likely to put more strain on the central government’s finances.
The programme, which was earlier proposed to be a non-Plan scheme, will now be implemented as a Plan scheme during 2009-10. The scheme, which was cleared by the Committee of Secretaries last month, has been sent to the Planning Commission, which needs to approve it as a Plan scheme. The Cabinet will take a final decision.
The Department of Food and Public Distribution has proposed an allocation of Rs 3,220 crore under its annual plans for 2009-10. The money will enable state governments to intervene in the market by buying and distributing essential items to economically weaker families that are eligible for government assistance.
“The fund requirement has been worked out on the basis of the total number of families in these states. The actual assistance to be released would depend upon the proposals submitted by the states. Since certain states may not be ready to avail of this scheme, the actual requirement of funds may be lower,” said a government official.
The scheme, mooted by the Union food ministry, is being suggested at a time when the government is under pressure from the recent surge in the prices of essential commodities, which has pushed inflation to 12.4 per cent.
A scheme like this is expected to provide political benefits to the incumbent government at the Centre, which will face general elections by May 2009.
The money is to be used by states’ civil supply corporations and marketing federations as working capital for procurement, storage, transportation and retail marketing of essential commodities, other than the targeted public distribution system.
The money can also be used to upgrade infrastructure, but not to buy items like office vehicles or upgrade information technology.
