Govt can save over Rs 30K crore food subsidy with FCI rejig

By: | Published: January 23, 2015 6:20 AM

Government's food subsidy bill can come down by over Rs 30,000 crore...

Government’s food subsidy bill can come down by over Rs 30,000 crore a year by reducing coverage of beneficiaries to 40 per cent under the food law and outsourcing major work of FCI to states governments and private players, a high-level panel said today.

BJP MP Shanta Kumar, the head of eight-member panel that has submitted its suggestions on restructuring of FCI to Prime Minister Narendra Modi, termed the recommendations as “pro-farmer and “pro-poor” and said that their “implementation would have miraculous results”.

“The government can save by Rs 30,000-40,000 crore food subsidy a year,” he told reporters here.

“Despite FCI in operation for last 50 years, only six per cent of the nine crore farmers are getting the MSP and most poor people are not receiving subsidised grain under PDS due to 40-60 per cent leakages,” he said, adding the suggestions have made keeping these issues in mind.

Among the key recommendations, the panel has suggested direct cash transfer of Rs 3,000 per person a year as food subsidy and Rs 7,000 per hectare as farm input subsidy besides revisit of minimum support price (MSP) policy with more focus on pulses and oilseeds.

The key role of Food Corporation of India (FCI) is to buy foodgrains to ensure MSP to farmers, and distribute it to the poor under the public distribution system (PDS).

Kumar said that the panel has suggested “revisit” of the National Food Security Act — which the UPA government had rolled out in 2013 — as the coverage of beneficiaries is higher and not targeted well.

It has suggested lowering the coverage of beneficiaries under the food law to 40 per cent, from 67 per cent, to cover more BPL families and increase the quantity of foodgrains supply to 7 kg per person from the existing 5/kg.

The foodgrains to the poorest of the poor (Antoyodaya households) can be supplied at Rs 1-3 per kg for the time being but the pricing for priority households must be linked to 50 per cent of the MSP, the panel’s report said.

The panel said that the government should defer implementation of food law in states that have not done end-to end computerisation, have not put the list of beneficiaries online and have not set up vigilance committee to check pilferage from PDS.

Finance Minister Arun Jaitley had allocated Rs 1.15 lakh crore for food subsidy this year, of which Rs 92,000 crore is for FCI. The implementation of food law across the country is expected to increase the food bill to Rs 1.30 lakh crore.

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