The rice row: Taking stock of Karnataka’s demand, gap

The Siddaramaiah government said it had been banking on FCI supply to meet its promise, and announced the July 1 launch after calculating the availability of stocks. Karnataka’s demand, given the preference of residents, is essentially rice.

“We wanted to start the free rice scheme from July 1 but we are not getting supplies of rice. We thought about procuring it from Punjab and Chhattisgarh. We spoke to Chhattisgarh, we spoke to Telangana, we spoke to Andhra Pradesh, but we are not getting the quantity that is required by the state. Even if supply is possible, they are quoting high rates,” the CM said on Saturday.

The Congress has slammed the June 13 decision of the Union Ministry of Consumer Affairs, Food and Food Distribution to exclude state governments from the ambit of the Open Market Sale Scheme (Domestic) – OMSS (D) – of the FCI as “anti-poor”. The Centre describes the move as anti-inflationary, “to maintain sufficient stocks for market intervention/control prices of wheat and rice”. An appeal by Siddaramaiah to the Centre for a rethink during his visit to Delhi was turned down.

Karnataka has said it needs 2.28 lakh metric tonnes (MT) of rice to facilitate 5 kg of free rice per member per BPL family over the next one year, apart from what is given under the NFSA.

So how short is it?

🔴 Karnataka’s numbers

The Siddaramaiah government’s calculation is that it needs 2.28 lakh MT of rice per annum, in addition to the 2.17 lakh MT provided per year by the Centre under the NFSA or Pradhan Mantri Garib Kalyan Yojana.

The Karnataka scheme has identified 1.19 crore BPL card holding families for Anna Bhagya. The Central scheme recognises 96.19 lakh regular BPL card holder families, plus 10.36 lakh state BPL card holders as NFSA beneficiaries – making a total of 1.06 crore family beneficiaries.

The Karnataka government estimates the total number of individual beneficiaries for its scheme as 4.42 crore, which is nearly 39 lakh in excess of Central beneficiaries, according to Karnataka Food and Civil Supplies Minister K H Muniyappa.

The Siddaramaiah government calculated an expenditure of Rs 890 crore per month or Rs 10,092 crore per year on the scheme, hoping to source rice from the FCI at Rs 34 per kg (including Rs 2.60 per kg for transportation).

🔴 The setback

On the assumption of the agreement with the FCI, the Karnataka government set a July 1 launch date to supply 10 kg rice free under Anna Bhagya (5 kg from the Centre and 5 kg from the state).

Muniyappa says that for the last seven months (under the previous BJP government in the state), Karnataka was procuring rice for supply to state BPL card holders and 1 kg additional rice to all ration cardholders through the OMSS (D).

As per the Congress, nearly 95% of rice sold by the Centre via the FCI’s OMSS (D) facility was bought by Karnataka this year.

On June 12, the FCI regional office in Bengaluru approved supply to Karnataka of 13,819 MT and 2.08 lakh MT of rice for July under the OMSS (D) facility. On June 14, it withdrew the order after the Centre halted FCI sale under the facility to states.

🔴 The Centre’s stand

According to a Union Food Ministry statement, the decision to stop sale of rice to states through the OMSS (D) was taken at a meeting of the inter-ministerial committee on June 8. “As there is need to maintain sufficient stocks for market intervention (to) control prices of wheat and rice through OMSS (D), the sale of wheat and rice under OMSS (D) for state governments may be discontinued,” it said, exempting the Northeast states, hilly states and states facing law and order situation, or natural calamities.

The statement further said: “As per the policy announced on the 26th Jan 2023, which was in vogue at the time of issue of orders by the GM Karnataka (the FCI official in the state), State Governments were allowed to purchase rice from FCI for their own schemes at Rs 3,400 per quintal (pan India). However, on receipt of the new orders from GOI, the earlier letter was withdrawn by GM Karnataka on 14.06.2023.”

At a press conference on June 15, FCI Chairman Ashok Kumar Meena and officials said “the wholesale and retail price (for rice) was showing increasing trend over a week, month and year”.

🔴 Karnataka response

The Karnataka government has referred to the availability of 265 lakh MT of rice with the FCI on June 14, against the mandated requirement of a buffer stock of 135 lakh MT, to question the Centre’s move.

“The fact is that the FCI has more than enough stocks to meet Karnataka’s and the country’s needs, but the Modi government is trying its very best to close every single avenue for the Karnataka government to fulfil its guarantee to the people of Karnataka,” Congress spokesperson Jairam Ramesh said.

Siddaramaiah claimed that the Modi government’s move “not only targets the additional 5 kg free rice guaranteed by the Congress government in Karnataka, it also affects the basic entitlement of 5 kg being given to an additional 39 lakh BPL beneficiaries by the Karnataka government beyond what is already allocated by the Union government under the NFSA”.

The BJP has threatened protests if the Congress does not implement its pre-poll guarantees by July 4.

The schemes are expected to cost the exchequer Rs 59,000 crore a year.