Cutting food subsidy to cash transfer: Panel suggests steps to revamp FCI

The eight-member committee, was set up in August 2014 under the chairmanship of BJP MP Shanta Kumar, to recommend a complete overhaul of the way the mammoth organisation, FCI, functions.

hidden January 22, 2015 08:16:14 IST
Cutting food subsidy to cash transfer: Panel suggests steps to revamp FCI

New Delhi: After oil, a cut in food subsidy is on the anvil as a high-level panel today suggested giving cash to beneficiaries and shifting rice and wheat procurement to states that do not have provisions for administered purchase price.

Food Corporation of India (FCI), the Union government's nodal agency for procurement and distribution of foodgrains, should focus on eastern states, leaving bulk purchase to state agencies in Punjab, Haryana, Andhra Pradesh, Chhattisgarh, Madhya Pradesh and Odisha, the panel suggested in its report
submitted to Prime Minister Narendra Modi.

Also, it wants grain storage to be outsourced to private and government agencies like state-owned Central Warehousing Corporation (CWC) and state warehousing corporations.

The eight-member committee, was set up in August 2014 under the chairmanship of BJP MP Shanta Kumar, to recommend a complete overhaul of the way the mammoth organisation, FCI, functions.

Cutting food subsidy to cash transfer Panel suggests steps to revamp FCI

Reuters image

"The Prime Minister has asked the Department of Food and Public Distribution to expeditiously give its comments on the report so that it can be implemented in a time-bound manner," an official statement said.

Ashok Gulati, a member of this panel, made presentation on various recommendations. Food Minister Ram Vilas Paswan was present on the occasion.

According to highly-placed sources, the panel has suggested that "FCI should hand over procurement to six states like Punjab, Haryana, Andhra Pradesh, Chhattisgarh and Odisha for wheat and rice."

The committee recommended that FCI procurement should focus on eastern belt, where farmers do not get MSP. The Centre has also launched a scheme to achieve the second green revolution in the easter states, including Bihar, Jharkhand, West Bengal and Assam.

With states imposing higher mandi taxes on wheat and rice, the panel favoured uniform tax of minimum 3 per cent and maximum 4 per cent and the same to be included in the minimum support price (MSP). In Punjab, this tax rate now on wheat and rice is 14.5 per cent.

Finance Minister Arun Jaitely had allocated Rs 1.15 lakh crore for food subsidy this year, of which Rs 92,000 crore is for FCI. In petroleum subsidy, government has already started direct benefit transfer. Direct cash transfer is expected to plug leakage and reduce subsidy bill.

To strengthen distribution of foodgrains, the panel suggested "end-to-end computerisation" and setting up of a vigilance committee. At present, the leakage in PDS is estimated at 13.7 per cent.

The panel has recommended "giving cash transfer in 52 cities having 1 million or more population in two years" and also asked the government to give deficit states the option of either supplying grain or cash transfer.

For improvement in foodgrains storage, the panel has suggested outsourcing of stocking to Central Warehousing Corporation (CWC), State Warehousing Corporations (SWCs) and private organisations.

"FCI will manage but stocks would maintained by these organsiations," a source said, adding that the scaling up of warehousing receipts system has also been prescribed.

The panel called for encouraging private investment in logistics. "Set up silos in next two-three years, encourage bulk handling of foodgrains through grain trains."

The committee has finalised the report in five months. Initially, it was asked to submit the recommendation in three months, but it sought two-month extension.

Other members of the committee include FCI Chairman-cum-Managing Director C Viswanath and electronic and IT secretary Ram Sewak Sharma.

The chief secretaries of Punjab and Chhattisgarh, besides academicians G Raghuram and Gunmadi Nancharaiah from the Indian Institute of Management (IIM), Ahmedabad, and Hyderabad University, respectively, are also part of the committee.

PTI

Updated Date:

also read

Vaccinating teachers, students for board exams should've begun in January; offline exams risky now, says IWPA president
India

Vaccinating teachers, students for board exams should've begun in January; offline exams risky now, says IWPA president

Anubha Shrivastava Sahai, lawyer and president of the India Wide Parents Association, on the risks of holding board exams, and possible alternatives

China can launch cyber attacks, India addressing issue 'in serious way', says General Bipin Rawat
India

China can launch cyber attacks, India addressing issue 'in serious way', says General Bipin Rawat

The Chief of Defence Staff said that a "capability differential" has come between the two countries over the years and that China has a "lead" over India on technology

P Chidambaram says COVID-19 vaccination drive a crusade, not a festival, slams Centre's 'rhetoric and hyperbole'
India

P Chidambaram says COVID-19 vaccination drive a crusade, not a festival, slams Centre's 'rhetoric and hyperbole'

Taking to Twitter, the former Union finance minister urged the government to allow walk-in vaccination and asked them to get rid of the need for pre-registration for taking the vaccine in India