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Food Act subsidy burden can be shared by Centre and states: N C Saxena
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Monday, 30 May, 2011, 08 : 00 AM [IST]
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Irum Khan, Mumbai
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The cost for universalisation of the food security law, which is proposed by the National Advisory Council to cover around 85% of rural and 55% of urban population, can be shared by both, the Centre and the state governments.
That means, the Centre could subsidise foodgrains to around 32-35% of the poor and the rest of the population can be subsidised by the respective state governments. The strategy can be adopted for each state, thus making the subsidy burden lighter. The subsidy cost is bound to go up to around Rs 75,000 crore from the present Rs 63,000 crore once the Act is implemented.
This suggestion was made by N C Saxena, NAC member. According to him, a similar work plan could be adopted for all social security schemes like the PDS and health insurance.
“Like in Tamil Nadu, where the state bridges the gap by providing huge food subsidy, other states can do the same,” Saxena said.
With a number of unresolved aspects of the Food Act which are yet to be taken care of, Saxena said that the Act should take more than six months to come about or maybe a year or so.
On different committees giving different poverty estimates, (the Suresh Tendulkar Committee Report vouching for 37% people under poverty line, planning commission figure puts 27% and Saxena's own committee report betting on 50%), Saxena said, “ It is not relevant how to define the poverty line but what is important is to know who all need to be covered by the Act,”
According to him, the poverty level would differ for different states. For example, poverty estimates for states like Orissa and Bihar would be around 55%, for a place like Gorakhpur in UP they would be 58%.
Saxena particularly expressed his discontentment over certain aspects of the Tendulkar committee report, which is the official government report. He pointed out that the identification of poverty estimates in the report for the urban population at 25% is doubtful. The estimation is based on consumption but the need is to look at depreciation level. Like for Mumbai, which was estimated to have around 4% poor population, actually around 53% of the population lived in slums. Though not all slum-dwellers will be poor, at large, the city's poverty estimates should at least be at 10-12%.
Also, how relevant it is to define poverty with reference to Rs 30-35 earnings per day, is a concern too.
NAC has been vouching for the universalisation of the public distribution system plan, which has been subject to a number of debates and queries.
Like, will the country have sufficient foodgrain production to serve the NAC's universalisation plan? And will the plan sustain itself if there is not enough production?
It may be noted that during the last 10 years, food production has been stagnant at around 210-220 million tonnes with an exception of a record 233 million tonnes in 2009. At present India’s population is more than the combined population of Africa and South America. By 2020, the population will be equivalent to the combined population of Africa, North and South America. By 2025, India will overtake China, the most populous country in the world at present. How will the the country manage to provide food to this increasingly growing population?
To this, Saxena replied that the foodgrains production had crossed 233 million tonnes. He admitted that to provide 35 kg of foodgrains to the poor, the country would have to procure around 90 million tonnes of foodgrains. Currently, the procurement is around 60 million tonnes which can be stretched up to 65 million tonnes. Also, the general category could be provided foodgrains at Rs 20 per kg.
However, Saxena pointed out that the country was exporting 7-10 million tonnes of foodgrains. This could be utilised for domestic consumption.
Also, with the growing population, Saxena anticipates poverty level to decline. Hence the plan implementation should not be difficult even after considering impending challenges.
In addition, the strategy is to heavily subsidise those falling below the poverty mark. Those above the poverty line could have subsidised foodgrains at prices below the open market rate but higher than the prices set for the BPL category.
On resorting to cash transfer to subsidise the poor over the current PDS scheme, which has proved to be embarrassment for the country, Saxena said, cash transfer can be adopted on pilot basis. It will have to overcome challenges like banking infrastructure, good registration and encouraging widespread use of debit card. Also the UID (unique identification) system should be in place. Places like Delhi and Indore are using cash transfer methodology for different schemes, thus a pilot scheme will be a good idea.
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