Govt needs 62 MT foodgrains to meet NAC proposal on Food Law

The requirement of foodgrains is more than the 54 MT procured by the government last year, but is close to the record quantum of 59 MT purchased in the previous year. In a recent meeting, the NAC -- headed by UPA Chairperson Sonia Gandhi -- finalised its recommendations on the proposed Act and suggested extending a legal entitlement to subsidised foodgrains to two broad categories -- priority and general -- covering 90 per cent of the rural population and 50 per cent in urban areas.

According to sources, as per the NAC proposal, about 9.68 crore families would be covered under the priority category and 8.92 crore families under the general category, taking the total number of beneficiaries to 18.6 crore families.

At present, the government provides cheap foodgrains to 18.04 families, which includes 6.52 BPL families and 11.5 APL families, under the Public Distribution System (PDS). Offtake under the PDS in the last fiscal was 42.4 million tonnes.

The foodgrains requirement for the priority and general categories would be 40 million tonnes and 21 million tonnes per annum, respectively, sources added. The calculation is based on the NAC proposal for providing 35 kg of foodgrains a month to priority households at a subsidised rate of Rs 1 per kg for millets, Rs 2 for wheat and Rs 3 for rice.

For the general category, the NAC has suggested supplying 20 kg of foodgrains at a price not exceeding 50 per cent of the current support price, which comes to Rs 5.50 for wheat and Rs 7.70 per kg for rice.

The NAC has estimated that the government's food subsidy bill would go up by Rs 23,231 crore if the recommendations are implemented and enacted in the National Food Security Bill. At present, the government doles out food subsidies worth Rs 56,700 crore every year.

Experts are of the opinion that implementation of the NAC proposal is feasible, as the foodgrains requirement is close to the procurement level achieved during the last few years.

However, it would be difficult to implement the recommendations made for the general category, as it would involve another round of targetting beneficiaries, which may lead to the problem of inclusion and exclusion errors, they said.

Experts also pointed out that the price of foodgrains for the general category is lower than the existing rates -- Rs 6.10/kg for wheat and Rs 8.30/kg for rice -- for Above Poverty Line (APL) families. A higher gap between the market price and the proposed rates of foodgrains for the general category would give more scope for diversion, they added.

The UPA government had announced last year that it would bring in a legislation to provide 25 kg of wheat or rice every month to poor people at a price of Rs 3 per kg. It had set up an Empowered Group of Ministers to finalise a draft bill, which will be placed before the public for comments.