Topic :Shanta Kumar Committee Report: Analysis
Topic in Syllabus: General Studies Paper 3 :IndianEconomy
A High-Level Committee (HLC) was appointed and chaired by former food minister Shanta Kumar, on restructuring of the FCI in August 2014. The HLC, in its report submitted its recommendations in January 2015.
On re-structuring of FCI:
- The FCI hand over all procurement operations of wheat, paddy and rice to states (Andhra Pradesh, Chhattisgarh, Haryana, Madhya Pradesh, Odisha and Punjab) that have gained sufficient experience in this regard and have created reasonable infrastructure for procurement.
- The FCI should accept only the surplus grain (after deducting the needs of the states under the National Food Security Act—NFSA) from these state governments (not millers) to be moved to deficit states.
- The corporation FCI should move on to help those states where farmers suffer from distress sales at prices much below Minimum Support Price (MSP), and which are dominated by small holdings, like eastern Uttar Pradesh, Bihar, West Bengal, Assam, etc.
- After more than four years, restructuring of the FCI remains a dream, and the corporation continues to depend on the same set of states for procurement of grains and procurement operations have not been revamped in eastern states.
On PDS reform:
- The government should relook at the coverage (67% of the population) under the NFSA as it’s on the ‘higher’ side.
- Computerisation of the PDS process for checking the pilferage of PDS grains.
- Gradual introduction of cash transfers in the PDS, starting with large cities with more than 1 million population; extending it to grain-surplus states, and then giving an option to deficit states to opt for cash or physical grain distribution.
- According to the official data, all the existing 23 crore ration cards have been digitised and most of the cards have been seeded with Aadhaar numbers and 2.75 crore ration cards have been deleted during 2013-17.
Food ministry officials have often stated that deletion of ration cards has ensured better targeting of beneficiaries.
The offtake of foodgrains by the states under the PDS after deletion (bogus) and digitisation of ration cards has not declined in the last five years.
- Rising food subsidy dues & loans:
The total outstanding dues to the FCI stand at `1.85 lakh crore as on March 31, 2019, because of the mismatch between budget allocated to the corporation and the actual expenses incurred.
The actual expenditure towards food subsidy has been rising because of two factors—the annual rise in MSP for paddy and wheat given to farmers for procurement, and ‘open ended’ purchase operations leading to excess grains stocks held by the FCI.
- On cash transfer to PDS beneficiaries, the progress has been minimal. Only Chandigarh, Puducherry and parts of the Union Territory of Dadra and Nagar Haveli have opted for cash transfer in the PDS.
Rising food subsidy bill:
- Reluctance to increase the price of highly subsidisedfoodgrains supplied under the NFSA, 2013. Under the Act, the price of Rs 3/2/1 for rice, wheat and coarse grains, was capped for three years, which ended in 2016.
Each rupee (per kg) increase issue price of grains could result in savings of food subsidy of over Rs 5,000 crore annually.
- FCI’s economic cost (procurement, distribution and storage of holding foodgrains) has been rising sharply, contributing to rising food subsidy expenses.
The NFSA—which has the objective of providing for food and nutritional security by ensuring access to adequate quantity of quality food at affordable prices to the people to live a life with dignity—is gradually turning out to be huge financial burden on the central government. The mounting burden of the food subsidy budget is compounded by huge surplus grains, and this has put enormous pressure on the central government’s finances.
Steps to tackle the issues should be taken on an immediate basis.
What are the criticisms against Shanta Kumar Report on FCI? ( 150 Words)