In the backdrop of increase in international price of wheat (courtesy, Ukraine crisis) early this month, Prime Minister Narendra Modi, had exhorted that India can help meet the global requirements of food deficit countries, provided the World Trade Organisation (WTO) allows it. He also exuded confidence that this had created an opportunity for Indian farmers to increase their income. Even as stakeholders were gearing to undertake export with several of them having signed contracts, on May 13, 2022, the Director General of Foreign Trade (DGFT) put a ban on wheat export with ‘immediate’ effect. The exports under government-to-government arrangements and contracts signed prior to May 13, 2022 are exempt. The government has sought to explain the ban in terms of...
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Category: Procurement, handling & distribution
Defending public stockholding program at WTO
In the run up to the 12th WTO (World Trade Organization) Ministerial Conference (MC-12) scheduled to be held from November 29, 2021, India has made two submissions; first, subsidies given for maintaining food security programs of developing countries should be allowed without any limit and second, member countries who give trade distorting farm subsidies in excess of US$ 10 billion should eliminate them within three years. India runs a mammoth program of Public Stockholding (PSH) for food security purposes. Under it, agencies of the Government like the Food Corporation of India (FCI) buy agri-produce such as wheat, rice/paddy, coarse cereals etc from farmers at the minimum support price (MSP) and distribute at a heavily subsidized price of Rs 1/2/3 per kg through...
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Dealing with ‘ration mafia’
Arvind Kejriwal, Chief Minister (CM), National Capital Territory (NCT) of Delhi has justified its much trumpeted scheme for door-step delivery of ration on the ground that this will help reining in what he describes as ‘ration mafia’ while ensuring that every grain of the subsidized food actually reaches the person (read: the poor) for whom it is intended. Who is this ‘ration mafia’? How does it plunder the subsidized food? Can the scheme prevent it? To get to the bottom of it, we need to see as to how the existing system of distributing food to the beneficiaries works. Under the National Food Security Act (NFSA) (2013), the Union Government directs the Food Corporation of India (FCI) and other state...
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How about reining in food subsidy?
Even as the Govt has mustered courage to give a truthful account of the money it spends on food subsidy, there is nothing on the horizon to indicate that this will be reined in In the Union Budget for 2021-22, Finance Minister (FM) Nirmala Sitharaman has given a pleasant surprise. This has to do with the Government’s decision to discontinue with the decades-old practice of so-called “off-Budget liabilities” this time around. “Off-Budget liabilities” is a fancy nomenclature used by governments to denote transfer of certain expenses incurred by the Union Government to the books of its agencies tasked with the implementation of its welfare schemes. This helps the former show lower expenses on its own books, thereby, helping it bring down fiscal...
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Legalising MSP will prove to be anti-farmer
Out of about 150 million farmers, a mere 8% of them get to sell their produce to the state agencies In the continuing stalemate over the three farm laws, the biggest sore point is the insistence of the agitating farmers that the MSP (minimum support price) should be legally guaranteed. At present, the Centre notifies MSP for 23 farm items. The Food Corporation of India (FCI) and other state agencies buy paddy and wheat, besides a few other items such as coarse cereals and pulses, at the MSP. These are meant for feeding the public distribution system (PDS) and giving food to beneficiaries at heavily subsidised prices under the National Food Security Act (NFSA). Out of about 150 million farmers,...
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Food subsidy – fudging stops, what about reining in
In the Union Budget for 2021-22, the Finance Minister, Nirmala Sitharaman has given a pleasant surprise. This has to do with the Government’s decision to discontinue with the decades old practice of so-called “off-budget liabilities”. A technique used by successive regimes in the past, this is a fancy nomenclature to denote transfer of certain expenses incurred by the Union Government to the books of its agencies tasked with the implementation of its welfare schemes. This helps the former show lower expenses on its own books thereby helping it bring down fiscal deficit to the desired level. A typical case relates to the Food Corporation of India (FCI) through which it administers its mammoth program of delivering food subsidy. Under the...
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Legalizing MSP is anti-farmer
The anger of agitating farmers over the three farm bills enacted in September, 2020 refuses to subside. Despite a categorical assurance by the Prime Minister, Narendra Modi that the MSP (minimum support price) will continue and that the government was prepared to give this in writing, they are unfazed. Their leaders are insisting that all sales of agricultural produce including those outside APMC (Agricultural Produce Market Committee) mandis – now permitted under the Central law viz. Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 – should be made at MSP and that this must be provided for in the Act. At present, the Centre notifies MSP for 23 agri-items, however, this MSP has no legal sanction. The Food...
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Farm Laws: Centre must not yield to ‘mandatory MSP’
Mandatory MSP and Levies on non-APMC markets will be an assault on the reforms the Union government has ushered in with the new farm laws Currently, under the APMC system, a farmer has to pay three levies on the produce she brings to the mandi, notified by the state government under its APMC Act. —————————————————————— To address the concerns of agitating farmers over the three farm bills enacted in September, the Union minister for agriculture & farmers welfare, NS Tomar, has agreed to consider (i) strengthening the APMC (Agricultural Produce Market Committee) by imposing levies at ‘uniform’ rate on purchase at APMC and non-APMC platforms—latter now permitted under the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020; and...
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Don’t kill the goose that lays the golden egg
In a bid to accommodate the concerns of agitating farmers over the three farm bills enacted by Modi – government in September, 2020, the Union Minister for Agriculture & Farmers Welfare, Narendra S Tomar has given positive signal on following points:- (i) require every trader transacting with the farmers to register (under the extant law, the former only needs to have PAN number); (ii) in the event of dispute, allow farmer to go to higher courts (the present law provides for dispute resolution at magistrate’s level); (iii) strengthen the APMC (Agricultural Produce Market Committee) by imposing levies at ‘uniform’ rate on purchase at APMC and non-APMC platforms – transactions at the latter are permitted following enactment of the Central law...
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Plug the leaks
The Government should stop selling food at a subsidised price through the PDS. Instead, it should limit its role to crediting subsidy directly to the accounts of beneficiaries Since 2014, the Narendra Modi Government has weeded out close to 44 million bogus ration cards by using the Information Technology (IT) infrastructure viz. digitisation, seeding of Aadhaar on ration cards, electronic point of sale machines at retail shops and so on. However, this addresses only a small aspect of the problem and that, too, is unlikely to be rooted out completely with the use of technology alone. Besides, large-scale diversion and black marketing of grain, inclusion of the privileged among beneficiaries, a ballooning subsidy bill and so on will persist so long as...
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