Strident opposition by a few states on various facets of the National Food Security Act and the inability to identify beneficiaries under the Act in time seem to have dimmed the government's hopes of early adoption of the programme across the country. If the Union Budget presented in Parliament on Thursday is any indication, the Centre doesn't believe many states will enthusiastically adopt the programme soon, something the government might have realised during a day-long meeting with state ministers earlier this month.
With eight and a half months left this financial year, a significant rise in the allocation for the Act would have been under-utilised. It is expected when the Act is implemented across the country, the total subsidy on food will be about Rs 1,32,000 crore.
Finance Minister Arun Jaitley's maiden Budget has allocated Rs 59,000 crore for the implementation of the Act, against the Rs 88,500 crore allocated in interim Budget 2014-15 in February, about 33 per cent lower. The revised estimate for 2013-14 put the figure at Rs 12,000 crore.
At Rs 1,15,000 crore, overall food subsidy has been unchanged from the interim Budget, but there is higher allocation through general subsidy, compared to the Food Security Act. Some officials said lower allocation towards the Act could be because of the less-than-enthusiastic response of state governments. So far, only five states -Haryana, Rajasthan, Punjab, Chhattisgarh and Maharashtra - have fully implemented the Act, according to the Centre's assessment. Delhi, Himachal Pradesh, Karnataka, Chandigarh, Madhya Pradesh and Bihar have rolled out the Act partially. As such, the allocated sum of Rs 59,000 crore towards this may not be spent entirely; a portion of this might provide a lever to Jaitley to meet his target of retaining the Centre's fiscal deficit at 4.1 per cent of gross domestic product.
Officials said the actual amount of subsidy could be assessed later. They added the Centre's statement that it would alter some rules of the Act, in line with states' demands, could have led to lower allocation. At a meeting of state ministers and officials, convened by the Union food ministry earlier this month, the Centre had extended the deadline to states for identification of beneficiaries under the Act till October 2014.
"We do not want any confrontation between the Centre and states on the food security Act," Food Minister Ram Vilas Paswan had told states during his address at the meeting.
States such as West Bengal weren't satisfied with the extension and sought more time, which the Centre is now considering. "States were also demanding the Centre bear the entire expenditure of shifting foodgrain from central stocks to state warehouses, the margins paid to ration shop, estimated at about Rs 8,000 crore, and a decision on this is likely soon," said an official.
Though the United Progressive Alliance government had agreed to bear only half this expenditure, many state governments felt this was inadequate.
Also, there is a move to impress upon states to mandatorily include the poor, Scheduled Castes and Scheduled Tribes while identifying beneficiaries under the Act. The food security law provides legal entitlement to cheap grains to 67 per cent of the population. It guarantees five kg of rice, wheat or coarse cereals to each identified person every month, at a subsidised rate of Rs 3 a kg, Rs 2 a kg and Rs 1 a kg, respectively.