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LATEST NEWS UPDATES | Cash transfers can save Rs 30,000 crore per year in food subsidies: Shanta Kumar -Dipak K Dash & Surojit Gupta

Cash transfers can save Rs 30,000 crore per year in food subsidies: Shanta Kumar -Dipak K Dash & Surojit Gupta

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published Published on Nov 17, 2014   modified Modified on Nov 17, 2014
-The Times of India

NEW DELHI: Conditional cash transfer instead of providing grains at subsidized rates to the poor under the Food Security Act can save at least Rs 30,000 crore annually, said Shanta Kumar, chairman of a panel set up to revamp the state-run Food Corporation of India (FCI).

Kumar said linking cash transfer to conditions such as constructing toilets was one of the several options being considered to ensure every beneficiary under the scheme gets government support.

"With the Pradhan Mantri Jan Dhan Yojna, everyone in the country will have a bank account and so transferring the benefit to their account will be easier. There will be no leakage or diversion," Kumar told TOI in an interview.

Restructuring FCI, the massive state-run food procurement, storage and transportation agency, is one of the key reform plans of the Narendra Modi government as it devises measures to plug leakages and ensure targeted delivery of subsidies.

Referring to a Planning Commission report, the former food minister during Atal Bihari Vajpayee-led NDA regime said that between 40-45% of poor don't get the subsidized grains.

"We are looking into all aspects since our main aim is to help the poor people and poor farmers... What can be a greater concern than the fact that even after providing Rs 73,000 crore on fertilizer subsidy our farmers are committing suicide? Only 15% big farmers are getting the benefit of government-approved minimum support price (MSP) who bring their produce to the mandis. The rest 85% farmers don't get the benefit," said Kumar.

The eight-member panel has been formed to suggest a model to improve FCI's operational efficiency and financial management and suggest a roadmap to reorient the role and functions of the state-run entity in MSP operations, storage and distribution of foodgrains and food security system in the country.

Kumar said the panel is studying the best practices and models that different countries have adopted. For example, United States provides income support to farmers instead of subsidy. Brazil has introduced a new norm where there is conditional cash transfer linked to initiatives such as compulsory school education for children of beneficiaries and vaccination.

"We can think of something like this. Why can't we link cash transfer to having a toilet at home?" he asked.

Kumar said if India opts for cash transfer and procurement of grains is left to the private players, then there would be need for a robust regulatory mechanism to ensure that the poor don't suffer. "We are exploring several such options so that we can come out with a good solution," said the former Himachal Pradesh chief minister.

On the future of FCI, he said the panel was looking into whether the procurement can be handed over to state governments as the corporation procures only about 12% wheat and 2% of rice. "We are considering whether the task of storage and transportation be given to the Central Warehousing Corporation (CWC), which can manage this with the help of the private sector," Kumar said.

He said once the states declare their surplus grain, the extra grain which is procured can be transported to deficient states. "FCI can play the key coordination role. It can also be tasked to maintain buffer stock. There will be efficiency," Kumar said, adding that the panel will submit its report to the government soon.


The Times of India, 17 November, 2014, http://timesofindia.indiatimes.com/india/Cash-transfers-can-save-Rs-30000-crore-per-year-in-food-subsidies-Shanta-Kumar/articleshow/45172007.cms


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