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LATEST NEWS UPDATES | Costly APL grain to rein in subsidy? by Mahendra K Singh & Nitin Sethi

Costly APL grain to rein in subsidy? by Mahendra K Singh & Nitin Sethi

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published Published on May 4, 2010   modified Modified on May 4, 2010


Even as the government tries to meet the expectations of the Congress high command on the Food Security Bill, it is still trying tricks in the economist's books to keep its food subsidy bill as low as possible.

While the Planning Commission has now accepted that it would include community kitchens and existing nutrition security schemes such as ICDS and mid-day meal programmes under the proposed Bill, it is also considering raising the cost of foodgrains for the 11.52 crore families living above the poverty line to a level where they will be dissuaded from using their entitlements.

Oddly enough, while the government, in a presentation prepared for the EGoM has accepted that one of the five objectives of the Bill is to provide 'food security for all', it has also spent a large part explaining how raising the price for APL consumers would help reduce the real demand for the food security scheme and therefore help curtail the food subsidy.

To keep the additional subsidy burden at Rs 6,000-10,000 crore above the existing levels, the government is contemplating keeping the APL foodgrain price at 75% of the minimum support price offered to farmers while buying rice and wheat.

The government suggests jacking up the prices of foodgrains for the APL families would 'save' the government Rs 8,000 crore. The government is contending that at current levels of procurement it could only manage the supply if the offtake by the APL is kept between 10-12 million tonnes.

The divergence of views between the Congress party and the government seem not to have been reconciled entirely with the concerns about cutting down subsidy and sticking to the existing procurement strategy overriding the 'commitment for food security for all' that the latter now agrees is one of the five objectives of the proposed Bill.

For the community kitchens, the government though has now come around to create a scheme under the Jawaharlal Nehru National Urban Renewal Mission where the Centre will share the cost of the kitchens in cities for migrants and indigent on a 50:50 basis with state governments.


The Times of India, 4 May, 2010, http://timesofindia.indiatimes.com/India/Costly-APL-grain-to-rein-in-subsidy/articleshow/5887863.cms


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