Subsidies – Govt. invites comments
Ministry of Finance invites suggestions/comments from public on operationalising the National Common Minimum Programme objective of targeting all subsidies sharply at the poor and truly needy like small and marginal farmers, farm labour and urban poor. In this connection, the report “CENTRAL GOVERNMENT SUBSIDIES IN INDIA, December 2004”, and the agenda papers and minutes of the meeting of stakeholders may be referred to.
Comments/suggestions may be sent by e-mail to subsidycomments@nic.in before 28th June 2005.
The Finance minister had a meeting with stake holders last month and some of the observations in the meeting were:-
PDS, Determination of BPL and Issue of Food Coupons
• The different weaknesses in the targeted public distribution system (TPDS) include ration cards being mortgaged to ration shop owners, large errors of exclusion of BPL families and inclusion of above poverty line (APL) families, prevalence of ghost BPL cards with weaknesses in the delivery mechanism leading to large scale leakages and diversion of subsidised grains to unintended beneficiaries, section of the APL households holding BPL cards actually not lifting their ration quota and thus a part of the entitlement of these households leaking out of the PDS supply chain.
Some suggestions in this regard were
++ While some favoured introduction of food stamps/coupons, initially on a selective basis with necessary safeguards, others were not in favour of it as it would be difficult for coupon holders to purchase the rations from private shops. The possibility of private shop owners denying rations to coupon holders and facing reimbursement difficulties due to bureaucratic hassles were also emphasised.
++ It was pointed out that to rectify the errors of inclusion and exclusion, the Government of Andhra Pradesh has come out with specific criteria for selection of beneficiaries under BPL category in rural and urban areas.
++ Elimination of bogus/ghost cards by computerised cards adopting the Iris technology/biometric system proposed to be implemented by Andhra Pradesh was also suggested.
++ To facilitate drawal of subsidised rice by the targeted group and not by any others, it was suggested to adopt the bar coded coupons being issued in Andhra Pradesh. These are scanned to arrive at the actual drawal of rice by the cardholders under different schemes. The unutilised quantity available with the fair price shop dealer with reference to the bar coded coupons scanned is reduced from the next month’s allotment. This ensures proper accounting of the stocks and eliminates the scope of diversion of stocks which was prevalent when the rice was issued on cards.
++ One more suggestion was that considering the high cost of holding buffer stock and low off-take at Economic Cost, both BPL and APL cardholders may be issued additional quantity of grains at less than economic cost. This would involve no additional budgetary subsidies, but would have a significant impact on the off-take of grains, viability of FPS and operational logistics of Food Corporation of India (FCI).
? As an alternative to food coupons, providing food credit to consumers at lower interest rates to stock foodgrains, when prices are low and as per individual requirements, was suggested.
• The need to monitor the public distribution system (PDS) system with the help of vigilance committees and active involvement of Civil Society to help in checking leakages by acting as watchdogs was also felt.
• Some participants emphasised the need to be realistic in deciding BPL definition as the differences in estimates of identification of BPL families by Government of India (based on NSSO) and State governments (based on the identification by Gram Sevaks) have led to some States not being able to distribute foodgrains to BPL cardholders as per their entitlement of 35 Kgs/card/month. To streamline BPL identification, it was suggested to delink BPL identification survey from the official methodology of poverty estimates and redesign TPDS on the basis of a fresh country-wide survey. Some opined that leaving BPL fixation to states would lead to competition among states to declare more people as poor. Some others suggested that family income should be the basis of deciding BPL and not ownership of electronic goods.
• Some recommended that incidental charges like handling and transportation charges under the Antyodaya Anna Yojana (AAY) scheme should be met by Government of India as in the absence of this, it is passed on to fair price shops (FPS), which can meet these costs only by dubious means.
• Some suggested that States should be allowed to decide which items should be subsidised as some States want to subsidise coarse cereals to maintain regional food security. Some participants opined that coarse grains should not be included in PDS operations since their shelf life is limited and are available at lower prices to the poor.
• To increase the viability of FPS it was stated that besides subsidised commodities being supplied through PDS, FPS dealers in Andhra Pradesh were allowed to sell other essential commodities as well. This enhances their economic viability and the consumers are able to get most of the commodities at one place at reasonable prices, free from adulteration. For financial viability of FPS, the possibility of channelising food grains to the existing beneficiaries of Food For Work Programs (e.g. SGRY) was suggested. Some States (e.g. Rajasthan) are issuing food coupons to the beneficiaries of SGRY for exchange at FPS. Improvement in this system was suggested as the beneficiaries have to wait for a long period to get their quota.