Govt can save Rs 30,000 cr food subsidy by reducing coverage of beneficiaries to 40%: Panel

A high level panel has suggested that government's food subsidy bill can come down by over Rs 30,000 crore a year by reducing coverage of beneficiaries to 40 percent under the food law and outsourcing major work of Food Corporation of India (FCI)  to state governments and private players. The eight member panel, headed by Shanta Kumar, has submitted its report on restructuring FCI to Prime Minister Narendra Modi. The panel has recommended direct cash transfer of Rs 3,000 per person a year as food subsidy and Rs 7,000 per hectare as farm input subsidy besides revising minimum support price (MSP) policy with more focus on pulses and oilseeds. It also suggested revising the National Food Security Act, which the UPA government had rolled out in 2013 as the coverage of beneficiaries is higher and not targeted well. Further, the panel has suggested giving cash transfer in 52 cities having 1 million or more population in two years and also asked the government to give deficit states the option of either supplying grain or cash transfer. The committee is of the view that lowering the coverage of beneficiaries under the food law to 40 percent, from 67 percent, to cover more BPL families and increase the quantity of foodgrains supply to 7 kg per person from the existing 5 kg. On restructuring the FCI, the panel suggested that despite FCI is in operation for last 50 years, only 6% of the nine crore farmers are getting the MSP and most poor people are not receiving subsidised grain under PDS due to leakages of upto 40-60 percent. Therefore, there is need to restructure the corporation. Finance Ministry had allocated Rs 1.15 lakh crore for food subsidy this year, of which Rs 92,000 crore is for FCI.