Is it worth spending Rs 1,15,000 crore and more annually on a food security programme in which almost 50 per cent of the grain sold gets “leaked” and is purchased from hardly 6 per cent of India’s farmers? This is the central question raised by an official committee on restructuring the Food Corporation of India (FCI). It is a question the Narendra Modi government, too, should ask with just about a month to go for the presentation of its first full-year budget. Does delivering food security really require physically procuring, stocking and distributing rice at a cost of Rs 30/kg and then selling the same through fair price shops at Rs 3? Wouldn’t a significant part of this rice naturally find its way into the open market where prices are Rs 25/kg or higher? Wouldn’t poor consumers be better off being given Rs 22 in cash that they can, then, use to buy rice from the market?
The panel — whose chairman Shanta Kumar is a former food and consumer affairs minister — has recommended precisely such a move to direct cash transfers over the next two to three years. The first steps are already in place, with nearly 12 crore bank accounts being opened so far under the Pradhan Mantri Jan Dhan Yojana. Once every household has a bank account seeded by an Aadhaar number, it isn’t difficult to transfer up to Rs 700 per month to each poor family. They can use this money to purchase 30 kg or more of rice from any shop. The FCI can continue to stock grain, but only enough for it to undertake market intervention operations in the event of undue price volatility. The very fact that it will be required to hold not more than 25-30 million tonnes (mt) — as against 50-60 mt now — means the market will be well-supplied. As a result, the poor get their grain, leakages are plugged and the government saves Rs 30,000 crore-plus in annual food subsidy
