UPA’s food Act was more about ‘vote security’: FCI revamp panel chief

But given the timing of the Bill’s enactment — just ahead of Lok Sabha elections — nobody wanted to say anything “that would be used against us” by the then ruling coalition. However,  “they tried to make it a vote security bill and yet did not get the votes”, Kumar said a day after submitting his panel’s report to Prime Minister Narendra Modi.  “While we had definite reservations about 67 per cent coverage, it was the political context that made us think we will correct it once we form the government,” he said.

The high-level committee, which also includes the former chairman of the Commission for Agricultural Costs and Prices Ashok Gulati and five other members, was set up by the new government in August last year.

Kumar asserted that the panel’s recommendations did not amount to any dilution of the NFSA. “On the contrary, we have sought restoration of the earlier monthly grain quota of 7 kg per person for below poverty line (BPL) families, as against the uniform 5-kg entitlement for 67 per cent of the population. We feel food security must be targeted to the really needy. With 40 per cent, we can comfortably cover BPL households and even some above that, besides ensuring the former get 7 and not 5 kg,” he said.

According to Kumar, his committee’s report was both pro-poor and pro-farmer. The report has used the National Sample Survey Office’s latest survey results for 2012-13 to show that only 5.21 million out of India’s total 90.2 million agricultural households sold paddy or wheat to government procurement agencies.

That means official minimum support price (MSP) operations, now mainly restricted to wheat and paddy, cover barely 6 per cent of India’s farmers from a few states such as Punjab, Haryana, Andhra Pradesh, Madhya Pradesh, Chhattisgarh and Orissa.

The committee has proposed that FCI completely exits procurement operations in these states, where the governments have acquired enough experience in purchase and stocking. Instead, it should move on to eastern UP, Bihar, West Bengal and Assam, where market prices often crash below MSPs. The FCI can help these states to put in place a modern and robust system of procurement and stockholding, “by handholding them, by inviting the private sector or even helping to arrange financing through multilateral agencies for building infrastructure”. The committee has also mooted direct cash transfers as an alternative to the public distribution system.

The current system of physical grain delivery is inherently leaky, more so when rice that costs FCI Rs 29.25 per kg (MSP plus various other distribution and storage costs) is sold at Rs 3 and wheat similarly costing Rs 22.5 is sold at Rs 2/kg. By directly transferring cash to the Aadhaar-seeded bank accounts of NFSA beneficiaries at the rate of Rs 500-700 per month, the government can both plug leakages and save Rs 30,000-35,000 crore.

This money, in turn, can be ploughed back to agriculture through investments in irrigation, rural roads and marketing infrastructure, the committee has said.