The coverage of NFSA needs to be restricted to the bottom 20% and the issue prices for others could be linked to the procurement prices.
The ballooning food subsidy should be controlled with an increase in the ration prices of rice, wheat and coarse cereals from current Rs 1-3/kg as well as reducing the coverage from 67% of the population now, said chief economic advisor KV Subramanian. He has also suggested ‘active’ participation of private sector in foodgrains procurement to reduce storage, transport and handling costs, which together make up some 40% of the purchase price.
“While the interests of the vulnerable sections of the population need to be safeguarded, the economic rationale of increasing the central issue prices (CIPs) under the National Food Security Act (NFSA) also cannot be undermined. For sustainability of food security operations, the issue of burgeoning food subsidy bill needs to be addressed,” the survey said.
The coverage of NFSA needs to be restricted to the bottom 20% and the issue prices for others could be linked to the procurement prices. As an alternative to this suggestion, the Survey has also proposed to give income transfers to consumers through direct benefit transfers (DBT), followed globally.
The government has emerged as the single largest procurer and hoarder of foodgrains as it procures around 40-50% of the total markets surplus of rice and wheat. In some states like Punjab and Haryana, this share of purchase is as high as 80-90%.
The government’s food subsidy bill has increased from Rs 1,13,171 crore in 2014-15 to Rs 1,71127.5 crore in 2018-19 and the Food Corporation of India has been made to borrow from the NSSF to meet its expenses. The Centre’s dues to the FCI have now touched an all-time high of Rs 1.95-lakh-crore.
The Survey has termed the government as ‘monopsonist’ in the open-ended procurement operations undertaken for the NFSA commitments and suggested “if foodgrain markets are opened for active participation of private players with government as an equal player, competition would lead to more efficiency in the operations and development of adequate infrastructure in storage and warehousing.”
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