Centre confident of food Bill success despite Budget jolt

Written by Sandip Das | Himani Kaushik | New Delhi | Updated: Mar 5 2013, 06:31am hrs
Despite a token additional allocation of R10,000 crore for the implementation of the National Food Security Bill made by finance minister P Chidambaram for the next fiscal, the Centre is confident of meeting financial requirements for the scheme in case the proposed law is ready for implementation in the next few months.

Official sources told FE that the Bill is expected to be passed by the monsoon session of Parliament after which the states would be given time to comply with the central law.

At present the food ministry, in consultation with the law ministry, is preparing a note for the cabinet before the Bill is introduced in Parliament.

Chidambaram has budgeted R90,000 crore as food subsidy for 2013-14, which includes R10,000 crore given for incremental cost in case of implementation of food security legislation.

With a carryover subsidy burden of R32,000 crore from previous years, the government's actual food subsidy bill next fiscal is likely to be in excess of R1,20,000 crore. Of course, the option of deferring a portion of it is very much there.

A senior government official, requesting anonymity, said, the funds allocated in the Budget are adequate for the proposed Bill as it is likely to be cleared only in the monsoon session.

Implementation of the food Bill is linked to computerisation of the database of all the beneficiaries through which we plan to have better targeting of families that would also lead to reduction in pilferage, the official said.

According to the finance ministrys calculation, the government is budgeting an additional allocation of R23,000 crore only for the full fiscal, over and above the food subsidy once the proposed Bill is rolled out.

He said the food subsidy Bill in a year, once the legal entitlement is introduced, would be R1,20,000 crore and this could be even higher in case of lower domestic production.

When we enter the world market for imports of grains, the prices inevitably flare up. India's demand for imports in a scarcity-year would be big enough to influence the global prices decisively.

Besides, the government is also aiming at reducing storage cost of foodgrains once the Bill is implemented as large chunk of grain would be distributed to targeted families.

At present, the government has grain stocks in excess of 66.1 million against buffer stocks and strategic reserve norms on only 25 million tonne.

Even in case of procurement of grains for the proposed

legislation, the food ministry is anticipating a nominal increase in procurement of around five million tonne annually from the current level of 55 million tonne.

Meanwhile, the food ministry has revised the food Bill and now proposes to give legal right to over 5 kg of foodgrains at R1-3 a kg per month to about 70% of the population as suggested by a parliamentary panel.

The panel had also recommended coverage of 75% of rural and 50% of urban population with uniform entitlement.

The government provides the subsidy to meet the difference between the cost of purchase of grains (minimum support price and other administrative costs) and prices at which the grains are allocated to states for distribution under the Targeted Public Distribution System (TPDS).

At present, the government supplies 35 kg rice and wheat each every month at subsidised rates to 6.52 crore BPL families under TPDS.

Besides, another 8 crore families under APL category get subsidised grains.