M A I N   N E W S

PM’s panel rejects NAC proposal
* Says no legal cover to 75 per cent population in the food security bill
* Assures delivery of wheat at Rs 2/kg and rice at Rs 3/kg to needy households
Vibha Sharma/TNS

New Delhi, January 13
The Prime Minister’s expert committee on the National Food Security Bill (NFSB) has rejected National Advisory Council’s (NAC) ambitious proposal of legally entitling 75 per cent of population to subsidised foodgrain. The panel said the suggestion given by Congress president Sonia Gandhi-headed NAC cannot be implemented in view of “current production and procurement trends of foodgrain” and “large subsidy implications”.

“Going by NAC proposal, the foodgrain requirement would be 74 million tonnes upon completion of final phase in 2014, while the total foodgrain availability with the government in 2011-12 and 2013-14 is likely to be 56.35 million tonnes and 57.61 million tonnes, respectively, based on the current production and procurement trends. It will not be possible to implement the NAC-recommended food entitlements for either of the phases,” the panel headed by PM’s Economic Advisory Council (PMEAC) chairman C Rangarajan said in the report made public today.

The panel recommended “assured delivery of foodgrains at Rs 2 per kg for wheat and Rs 3/kg for rice, to the really needy households and the coverage of the rest through an executive order, with a varying quantum depending on the availability of foodgrains.”

Sounding a cautionary note, the panel said the NFSB would confer an important legal right, which the government was duty-bound to fulfill and it was “...hence important to mandate enforceable entitlements keeping in mind the availability of grain.

The panel also said increasing the current procurement level had “the danger of distorting the food prices in the open market”. While any hike in support price to boost procurement would raise the “fiscal burden”, imports were an “undependable” and “high cost option” to meet the foodgrain requirement under the proposed food law.

The NAC recommended legal entitlement to subsidised foodgrains to “priority” and “general” households, covering at least 72 per cent population in phase-I starting 2011-12 and 75 per cent in the Phase-II in 2013-14.

Another point raised by the panel has been the huge subsidy implications. “Against NAC projections of Rs 71,837 crore in phase 1 and Rs 79.931 crore in final phase, the expert committee’s figures after adjusting for population and offtake are Rs 85,584 crore (phase 1) and Rs 92,060 crore (final phase). The total subsidy outgo is likely to be higher on account of scaling up of procurement and warehousing, MSP/imports and cost of carrying buffer,” it said.

The committee suggested that legal entitlement may be defined as the percentage of population below official poverty line plus 10 per cent of the BPL population. “ie 46 per cent of rural and 28 per cent of urban population as of now”, which “are the same as NAC recommended ‘priority’ households. This captures not only the poor but also some at the margin”

If panel recommendations are followed, the grain requirement will be nearly 52 MT in 2014 and the subsidy will be Rs 68,539 crore and if outgo on other welfare schemes and maintenance of buffer stocks included, the total subsidy would be Rs 83,000 crore.

The committee recommended that more focus should be given on increasing foodgrain production, create a stable procurement regime, comprehensive computerisation of public distribution system and introduction of smart cards for the beneficiaries. It also said that state governments be entrusted with responsibility of identifying beneficiaries.

The proposed bill was part of the Congress manifesto for the Lok Sabha elections in 2009, promising 25 kg of rice or wheat per month at Rs 3 per kg for every poor family with legal sanction. An empowered group of ministries (EGOM) had then cleared the draft bill in March on the same line as had been proposed in the Congress manifesto but the NAC wanted its scope to expand.

The government at present provides 35 kg of food grains to 6.52 crore BPL families through ration shops. Wheat is provided at Rs 4.15 per kg and rice at Rs 5.65 per kg. The NAC meeting is scheduled on January 21, when it may come out with an official response to the latest development.