Thursday, March 3, 2011

Draft Food Security Bill almost ready


Differences between Rangarajan panel and ground realities to be sorted out

Sopan Correspondent / New Delhi

There is still hope for millions of people living below the poverty line in the country.

After reservations were expressed on the proposed Food Security Bill, the government has now said the draft Food Security Bill, which entitles nearly two-thirds of the population to subsidised foodgrains, was almost ready. The Bill will legally entitle up to 70 per cent of population to subsidised foodgrains as against the NAC's proposal to cover 75 per cent.

“We are going to introduce the Food Security Bill, almost 65-70 per cent of the population are going to get the benefit,” Food Minister K V Thomas said at the National Conference on “Policy for foodgrains storage, handling and transportation”.

The National Advisory Council (NAC), headed by Sonia Gandhi, had recommended to the government to grant legal entitlement of subsidised foodgrains to 75% of population covering both priority and general households.

But the Rangarajan Committee had raised concerns over foodgrain availability and suggested that it would be “feasible” to cover the “priority” households, and foodgrains could be given to “general” category based on the availability.

On difference of view expressed by the two prominent bodies on covering the number of beneficiaries under the law, Thomas said there was not much difference between the proposals suggested by the NAC and the Rangarajan Committee, except for above poverty line (APL) families.

He said the issue of APL will be addressed and the government will come to some kind of conclusion on this, adding that the matter will be discussed again with the Rangarajan Committee.

At present, the government provides 35 kg of food grains to 6.52 crore families below poverty line (BPL) through ration shops. Wheat is provided at Rs 4.15 per kg and rice at Rs 5.65 per kg.

Pointing out the urgency of strengthening storage capacity in the wake of higher requirement of foodgrains under the proposed food bill, the minister said “We need to improve our storage infrastructure through involvement of private sector.” As a result, the Food Ministry has proposed the Finance Ministry to consider providing fiscal and tax incentives and other facilities in the forthcoming budget to boost private investment in developing warehouse infrastructure.

Implementing NAC's proposal would required 60 million tonnes of foodgrains. At present, the government has foodgrains storage capacity of 50 million tonnes. Extra space to store about 15 million tonnes will be added in next 3-4 years.

An expert committee headed by C Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, last month said the provisions envisaged by the NAC for the Food Security Bill may be difficult to implement. It said the provisions have to be re-worked and fine-tuned due to non-availability of foodgrain, the potential distortion of open market food prices and the huge implications entailed by subsidy.

The committee said it will not be possible to implement NAC recommended food entitlements for either of the two phases and has pointed towards the ground economic, agricultural and storage facilities which are far from satisfactory.

The committee also warned against shortfall in procurement and said a larger procurement has danger of distorting the food prices in the open markets. It estimated the subsidy burden under the scheme to be Rs 92,060 crore in the final phase, against NAC projections of Rs 79,930 crore and said that the actual subsidy burden would be higher. The large food grain procurement would also require higher minimum support prices and imports, which would increase the fiscal burden.

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