Let states choose between cheaper grains and cash transfer, says panel

Last Updated: Wed, Jan 16, 2013 03:51 hrs

To bring about a synergy between the proposed direct transfer of food subsidies and the food security Bill, which will provide legal entitlement for cheap grain to a majority of India’s population, a Parliament standing committee has suggested states have the option of choosing between the two.

The suggestion has not been included as part of the report but is just mentioned in remarks. The committee, expected to give its final report to the Lok Sabha Speaker soon, has said it should be optional on states whether they want to go for distribution of cheap foodgrain under the food security scheme or distribute cash directly to beneficiaries.

However, a system of direct transfer of cash should be started by a state if it had an adequate banking network in place, the committee said. The original Bill had said the Centre would make arrangement for distribution of cash in lieu of grains only if there is a natural calamity or an unexpected shortage of foodgrain. “We have not compelled any state to opt for distribution of foodgrains under the Food Security Bill, but have made it optional. They can either distribute grains or cash in lieu of it,” Chairman of the Parliament Standing Committee on Food Vilas Muttemwar told Business Standard.

Muttemwar said the suggestion had been made because the government was expected to start pilot projects for distribution of direct cash subsidy through the public distribution system (PDS) in six Union territories from April 1. It is also planning to launch the ambitious food security scheme that will provide entitlement for cheap grain to over 64 per cent of India’s population from the next financial year.

Muttemwar said the standing committee had also accepted the food ministry’s proposal to expand coverage under the food security Bill from 64 per cent of the population to 67-68 per cent. The report will be give to the speaker with objections from political parties such as the Bharatiya Janata Party, Bahujan Samaj Party, All India Anna Dravida Munnetra Kazhagam and Shiv Sena. Eighteen of the 31 members of the committee have raised objections to the Bill.

According to the the food security Bill, tabled in Parliament and then referred to the committee, of the 64 per cent of the population to be covered, a maximum of 75 per cent could belong to the rural sector, while the threhold for urban households is 50 per cent.

Though the coverage is proposed to be widened, a new plan floated by the food ministry seeks to provide a uniform 25 kg of cheap grain (five kg a person per month) to all poor families irrespective of the below and above poverty line (BPL and APL) distinction.

In the original draft, the BPL families, which were classified as priority category households, were to get seven kg of foodgrains per month, while APL families, which were classified as general, were to get three-four kg of foodgrains.

At present, the targeted PDS provides subsidised grains to around 6.52 crore BPL and almost 11.05 crore APL families. Once the Bill is implemented, the country’s average annual procurement will have to rise to 60-65 million tonnes (mt) against the current 55-60 mt grains.

The new plan would, however, increase the food subsidy to around Rs 1.2 lakh crore, up from the current estimates of Rs 1.1 lakh crore annually.

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