Food ordinance gives a push to cheap rice scheme

State set to save subsidy of Rs 2.66 to Rs 5.3 per kg

Whether or not the national food security ordinance proves to be a game-changer for the Congress-led UPA government in the coming Lok Sabha polls is a big question. But it has certainly come as a boon to the party’s government in Karnataka.

The ordinance, which envisages providing five kg grain per person per month, is likely to bring huge relief to the Siddaramaiah government in implementing its flagship Re 1 per kg rice scheme. The State's food subsidy is estimated to come down substantially – from an estimated Rs 4,800 crore per year to about Rs 2,000 crore – once the ordinance is implemented, according to official sources.

As per the estimate by the State Food and Civil Supplies department, the Centre will provide food grains to about 93 lakh Below Poverty Line (BPL) families in the State as per the 2011 census data under the ordinance, against the current 31.29 lakh BPL families as per the 2001 census figures.

More importantly, rice will be provided at Rs 3 per kg to the State, instead of the existing price of Rs 5.65 per kg (BPL category) and Rs 8.30 per kg (Above Poverty Line -APL category). The State government, as a result, will be saving from Rs 2.66 to Rs 5.30 on every kg of rice under the ordinance. The ordinance has, however, done away with the APL category.

Currently, the Food Corporation of India (FCI) is providing 1.44 lakh metric tonnes (MT) of rice to the State for 32 lakh BPL families (57,616 MT) and 34 lakh APL families (86,495 MT) per month. Altogether, including for the Antodaya Anna Yojane (AYY) for the poorest of the poor, the State gets 1.77 lakh MT of food grains per month.

The State, actually, has 1.33 crore ration card holders (86.89 lakh BPL, 35.26 lakh APL and 11.16 AYY). As the food grain currently being provided by the Centre is much less compared to the number of BPL card holders, the State government has been forced to buy costly rice from the open market and other sources to implement its Re 1 per kg rice scheme which is set for a July 10 launch.

The government is currently buying rice from the Chhattisgarh government at Rs 27 per kg. It has also decided to participate in the online trading of National Commodities and Derivatives Exchange Limited to buy the costly rice. The scheme requires 2.84 lakh MT per month, while the current availability from the Centre's quota is 1.77 MT.

Though the ordinance says that five kg of food grain will be provided per person and maximum of 25 kg per family, it is not still clear as to exactly how much quantity of rice the State will get every month. For, BPL families are classified into different categories depending on the number of members in a family.

However, it is estimated that the State will altogether get more than two lakh MT of food grain per month for about 73 per cent of the total population, excluding AYY category.

State eagerly waiting

The State government is eagerly waiting for the Centre's official communication on implementing the ordinance.

“We have estimated that about 93 lakh BPL families will be covered under the ordinance and it will bring down the State's food subsidy. But we have not received the official communication from the Centre. Once we get it, we will know the exact numbers,” Secretary to Food and Civil Supplies department Ashwathnarayana Gowda said.

There is a catch

The State will be in for trouble if there is shortage of food grains in the country under public distribution system. The ordinance says food grains will be provided depending on the availability. If food grains are not available in adequate quantity, it plans to reimburse the cost (the economy cost) to the beneficiary through direct benefit transfer system. The State should be ready to face such a scenario and buy rice from the market, sources said.