Nemmadi cards turn out to be a ‘costly’ affair

A study by the Lokayukta into the Below Poverty Line (BPL) card distribution in Karnataka might expose both the Karnataka Government’s own blunders in administering the targeted Public Distribution System (PDS) and the systemic flaws plaguing it. On Monday, in the State Assembly, Chief Minister B.S. Yeddyurappa placed on record his support for the study.

The Karnataka Government, which had gone on a ration card-issuing spree before the Lok Sabha elections, is now complaining of excessive financial burden on the exchequer. With the Centre’s targeted PDS policy subsidising only a fraction of the total number of Below Poverty Line (BPL) cards identified by the State, the pre-election largesse is proving expensive.

What the Karnataka Government calls “burden” to the State exchequer stems from the fact that it pays four different rates to source foodgrains from the Central pool to provide rice at Rs. 3 a kg and wheat at Rs. 2 a kg, uniformly, to the existing 1.08 crore BPL card holders in the State. Of these, foodgrains supplied to 78 lakh people is subsidised at three different rates by the Centre. For the rest, the State gets no subsidy.

The Centre pays full subsidy for only 11.99 lakh Antyodaya card holders, who are the poorest section of society. The Centre’s subsidy decreases for the next slab of 20 lakh card holders under the BPL scheme. For the third section, which benefits 47 lakh card holders, the Centre’s subsidy is minimal. So, the State dips into its funds to keep the price uniform.

However, it is the fourth section of 28.9 lakh “nemmadi” card holders who prove the costliest for the State to subsidise, because the Centre gives zero subsidy to this category. These cards were issued by the State on the eve of the Lok Sabha elections from “nemmadi” centres. The Centre charges the State the highest rate — ironically termed “economy rate” — for foodgrains supplied to nemmadi card holders.

As a result, more than half of the Karnataka Government’s average monthly food subsidy bill of Rs. 130 crore is spent on providing foodgrains to nemmadi card holders. While the average cost a month for foodgrains supplied to 78 lakh card holders is Rs. 60 crore, the cost of supplying foodgrainsto 28.9 lakh nemmadi card holders is Rs. 70 crore.

Facing a financial crunch the State Government is now in the process of slashing “excess” cards in circulation. The issue is also politically sensitive because a withdrawal of cards will expose the ruling Bharatiya Janata Party to allegations that it used the levers of state power for political expediency.