Explained | What is Karnataka vs. Centre row over free rice scheme?

Why did the FCI refuse to supply rice to Karnataka? What are the alternatives that the Karnataka government is exploring? How long will it take for the Congress government to implement the Anna Bhagya scheme?

June 29, 2023 12:22 pm | Updated 01:32 pm IST

A file photo of a person holding rice in their hands. The Anna Bhagya scheme aims to provide 10 kg of rice for each member of the BPL family and Antyodaya card holders. Image for representational purposes only.

A file photo of a person holding rice in their hands. The Anna Bhagya scheme aims to provide 10 kg of rice for each member of the BPL family and Antyodaya card holders. Image for representational purposes only. | Photo Credit: The Hindu photo library

The story so far: The Centre’s refusal to supply additional quantities of rice to Karnataka for the newly elected government’s flagship Anna Bhagya scheme has escalated into a political slugfest, with the Congress accusing the Narendra Modi-led government of “sabotaging” its programme to pursue “politics of hate.” In line with one of the five pre-poll guarantees of the Congress, the scheme seeks to provide 10kg of rice per person in families holding BPL and Antyodaya cards, beyond the 5 kg allocated by the Centre to the poorest of the poor under the National Food Security Act.

Chief Minister Siddaramaiah has claimed that the Centre “denied” rice to Karnataka despite having adequate stock “to create problem and scuttle the scheme.”

“They have adequate rice, which is lakhs of tonnes. They are giving it to private people, they are auctioning it, but they are not giving to the states,” the CM said.

The Karnataka government approached other States and national cooperative agencies for procurement of rice but without much success. Unable to procure enough food grain in the market at a reasonable cost in time for the launch date on July 1, the State government on Wednesday decided to temporarily give cash to beneficiaries in lieu of the promised five kg of free rice. Sources told The Hindu that cash transfer under the scheme is likely to continue for around three months before the supply to the PDS can begin. The cash transfer will also bring down the cost of Anna Bhagya implementation by an estimated 5% to 10%.

What is the Anna Bhagya scheme? 

Also Read | What the five Karnataka poll guarantees mean and who is eligible

The Congress secured a historic victory in the 2023 Assembly election in May on the back of a campaign centred around five big promises, one of which was the provision of free food grains for the poor. Under the Anna Bhagya scheme, the party promised to distribute 10kg of rice, free of cost, every month to each member of a family below the poverty line or a beneficiary of the Antyodaya Anna Yojana (AAY).

The “game-changer” scheme is one of Siddaramaiah’s pet initiatives, first unveiled in July 2013 when he became the CM to implement a revised food distribution system after the Central government implemented the National Food Security Act. The State government provided 30 kg of rice at Rs. 1/kg to nearly one crore families under the scheme. While single-member cardholders got 10kg per month, two-member families got 20kg, while those with three or more members were entitled to a maximum of 30 kg.

The scheme was revised in 2015 to remove the upper ceiling and provide 7kg of rice to every member of a BPL household for free. The fixed quantity was reduced to 5kg after the BJP took over following the collapse of the Congress-JDS coalition, alleging irregularities and leakages in the scheme.  

Ahead of the 2023 Karnataka Assembly election, Congress reiterated its commitment to revive the initiative and listed the programme as one of the five guarantees in its manifesto. Soon after taking over in May, CM Siddaramaiah announced that all five guarantees will be implemented. Amid pressure from the Opposition, the Cabinet finalised the roll-out plan at a later meeting in June. The scheme was scheduled for launch on July 1.

How much rice does Karnataka need?

Currently, BPL card holders are entitled to receive 5kg of rice from the Centre under the National Food Security Act. For the additional 5kg promised under the Anna Bhagya scheme, the Karnataka government requires a total of 4.45 lakh metric tonnes of rice for over 4.4 crore beneficiaries or 1.19 crore households across the State. While around half of the quantity will be provided to the State under the central scheme, an additional 2.28 lakh metric tonnes are required per month.

In this regard, Karnataka first reached out to the Food Corporation of India (FCI) earlier this month. In a tweet, the CM said the government wrote to the Deputy General Manager of FCI on June 9 regarding the State’s requirement of 2.28 lakh MT rice. Based on the request, the FCI in a letter on June 12 issued orders for the sale of rice under the Open Market Sale Scheme (Domestic) at a rate of Rs 3,400 per quintal. Under the scheme, the FCI sells stocks of wheat and rice at pre-determined rates in the open market to drive the supply of food grains and bring down open market prices. In January this year, the central government had introduced the OMSS policy, allowing States to buy rice and wheat from the FCI for their schemes without an e-auction. 

A day later, on June 13, the Union Ministry of Consumer Affairs, Food and Public Distribution discontinued the sale of rice and wheat from the central pool under the OMSS to other States, except those in the northeast. At the time, the central pool had a rice stock of 262.23 lakh metric tonnes, according to data available on the FCI website.

Why did the FCI rescind its offer?

The Ministry said the decision was taken to stabilise rising prices. “To ensure that the inflationary trends are kept under control while ensuring adequate stock levels in the central pool, it has been decided to exclude State governments’ scheme from the ambit of OMSS (D), this time… The quantities have been reduced to accommodate more small and marginal buyers and to ensure a wider reach of the scheme,” it said in a statement. 

The FCI added that the scheme caters to the same set of beneficiaries covered under the Prime Minister’s Garib Kalyan Ann Yojana. “The Government of India is already providing food grains for 80 crore people. Additionally, 60 crore consumers need to be taken care of. OMSS operations would be carried out in the interest of those 60 crore people so that inflation remains under control for the rest of the country,” said Ashok K.K. Meena., Chairman and Managing Director of the FCI.

What other sources did Karnataka consider?

Last week, Mr. Siddaramaiah called on Union Home Minister Amit Shah in New Delhi to discuss issues related to the supply of rice. The meeting ended with Mr. Shah promising to take up the matter with Union Food and Consumer Affairs Minister Piyush Goyal, which revived hopes of timely implementation.

Karnataka Chief Minister Siddaramaiah meet Union Home Minister Amit Shah in New Delhi on June 21, 2023. Photo: Special Arrangement

Karnataka Chief Minister Siddaramaiah meet Union Home Minister Amit Shah in New Delhi on June 21, 2023. Photo: Special Arrangement

However, Mr. Goyal declined Karnataka’s demand at a later meeting with the State Food and Civil Supplies Minister K.H. Muniyappa. “The Centre requires 135 lakh metric tonnes for the national supply, whereas they have a stock of 262 lakh metric tonnes. We pointed out that they can supply us rice since they had enough, but they were not relenting,” Mr. Muniyappa said.

This pushed the State government to look out for other sources to procure the rice at a competitive cost before the launch date.

Alternate sources may have provenexpensive for the State which has estimated the annual cost of implementing the scheme at about Rs 10,000 crore. Mr. Siddaramaiah reached out to his counterparts in Andhra Pradesh, Telangana and Chhattisgarh. Central agencies National Consumers’ Cooperative Federation (NCCF), Kendriya Bhandar and National Agriculture Cooperative Marketing Federation (NAFED) too submitted their quotations to the State government. “NCCF, NAFED, Kendriya Bhandara, these three organisations have increased the price prescribed for the supply of rice. NCCF suggested Rs 32.94, while we asked for Rs 32.24. Now tenders are being called transparently to buy rice in the open market,” the CM said on Wednesday.

The FCI supplies rice at Rs 36.60 per kg, including a transportation cost of Rs 2.60. 

Politics over rice

With the launch not going as per plan, the Congress-led government in Karnataka has dubbed the Narendra Modi-led government “anti-poor” and accused it of indulging in “dirty politics” to derail welfare programmes of non-BJP governments.

Mr. Muniyappa said that while the Union government was denying States the chance to participate in FCI’s open market sale, it opened its own tender to sell 15 lakh metric tonnes of rice at Rs 31 per kg. “We were ready to pay ₹34 per kg,” he said.

His party colleague Jairam Ramesh earlier highlighted in a press conference that the previous BJP-led government in the State alone lifted more than 95% of the rice procured by all State governments under the OMSS at a rate of ₹3,400 per quintal from January 1, 2023 till May 24, 2023. Alleging that the Centre’s decision to discontinue the OMSS for States was targeted at sabotaging the Anna Bhagya scheme, Mr. Ramesh said, “It is nothing but Karnataka’s durbhagya that PM Modi is punishing the poor of the State for voting to secure their future. But the Congress government in Karnataka will do everything possible to ensure the rights of the people of Karnataka are protected, and the Guarantee of Anna Bhagya 2.0 with 10 kg free rice is implemented at the earliest, come what may.”

The BJP, meanwhile, refuted the charges and asked Congress to purchase the required rice from the open market. “Congress can purchase more rice from the open market to fulfil its poll promise of 10 kg rice. There are no restrictions. The party should stop lying and blaming the Union Government for its failure in fulfilling its own promise,” said Pralhad Joshi, Union Minister and senior BJP leader from Karnataka.

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