The government may shift to per capita allocation of foodgrains and raise the price of wheat and rice meant for the Above the Poverty Line (APL) population under the Public Distribution System (PDS) to meet the objectives of the proposed National Food Security Bill.
Raising the price of APL foodgrains is an “unavoidable adjustment,” the Planning Commission has said in a note it has prepared for the Sonia Gandhi-headed National Advisory Council (NAC) and circulated, among others, to the economic wing of the Prime Minister's Office.
“If APL grain prices are not raised, the supply would have to be limited, and this would defeat the objective of delivering food security for all,” the Planning Commission note says to buttress its case for bringing the APL grain prices on par with market rates.
The Empowered Group of Ministers (EGoM) on Food had asked the Commission to work out the poverty scenarios and the foodgrains requirement. The EGoM, which is meeting here on Friday, will take a view on the recommendations.
The Commission has suggested differential rates of foodgrains for the Below the Poverty Line (BPL) and the APL populations. The Antyodaya Anna Yojna beneficiaries would continue to get their quota of grains at Rs.2 per kg. It is assumed that the higher rates of APL grains would reduce the demand and the diversion of grains to the open market.
As against per household allocation, the Commission's suggestion is to shift to per capita (individual) allocation, estimated between six and seven kilos per month. This shift would equal an average household size of five members and give the government the flexibility to allocate less grains for a smaller household.
Smartcard system
As part of the reform of the PDS, the Centre may introduce a smartcard system that would be linked to the Unique Identification Cards which are expected to be in place by the end of the year. The option of giving cash payment to States or continuing with the present system of allocation of foodgrains to State governments for distribution through the PDS is also not closed.
The Tendulkar panel had suggested that the number of BPL households would be 7.4 crore based on the March 2005 population and 8.1 crore based on the March 2011 projections. The States have estimated the poor households at over 11 crore.
While the Centre is committed to an allocation of 25 kg per BPL household at Rs.3 per kg, the Planning Commission note suggests that the government should continue with the allocation of 35 kg per month per poor household, for which the foodgrains requirement would be 31.1 million tonnes with an estimated food subsidy of Rs.49,314 crore.
For the allocation to the 8.1 crore poor households, the grains requirement would be 33.9 million tonnes with an estimated subsidy of Rs.53,676 crore.
To meet the additional requirement of foodgrains, the Food Ministry would have build an average buffer stock of about 25 million tonnes as against 14.2 million tonnes at present. In years of shortages or drought, the requirements could be met through imports.
