Panel recommends direct cash transfer of food subsidy

In a bid to rationalize the subsidy, a high level panel has recommended a cut in food subsidy,  giving cash to beneficiaries and shifting rice and wheat procurement to states that do not have provisions for administered purchase price. In its report submitted to Prime Minister Narendra Modi, the panel highlighted that Food Corporation of India (FCI), the union government's nodal agency for procurement and distribution of foodgrains, should focus on eastern states, leaving bulk purchase to state agencies in Punjab, Haryana, Andhra Pradesh, Chhattisgarh, Madhya Pradesh and Odisha. 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. To improve foodgrains storage, the panel has suggested outsourcing of stocking to Central Warehousing Corporation (CWC), State Warehousing Corporations (SWCs) and private organisations. Further, in order to strengthen distribution of foodgrains, the panel suggested ‘end-to-end computerisation’ and setting up of a vigilance committee. As states imposing higher mandi taxes on wheat and rice, the panel favoured uniform tax of minimum 3 percent and maximum 4 percent and the same to be included in the minimum support price (MSP). The government has asked the Department of Food and Public Distribution to give its comments soon on the report so that it can be implemented in a time-bound manner. The government had allocated Rs 1.15 lakh crore for food subsidy this year, of which Rs 92,000 crore is for FCI.