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LATEST NEWS UPDATES | Food bill not to hurt coffers

Food bill not to hurt coffers

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published Published on Jul 6, 2013   modified Modified on Jul 6, 2013
-The Telegraph


Mumbai: The immediate fiscal impact of the food security programme is going to be manageable.

Since implementation of the scheme across India will take time, the cost burden for the programme in fiscal year 2013-14, in addition to the budgeted food subsidy of Rs 90,000 crore, has been estimated by Edelweiss Research at Rs 10,000 crore. This is roughly 0.1 per cent of the gross domestic product (GDP).

But once the bill is passed and implemented, the cost burden will rise to between Rs 30,000 crore and Rs 35,000 crore a year.

The bill guarantees legal entitlement to food grains at highly subsidised prices to about 67 per cent of the country's population.

The ordinance has come into effect but the bill needs to be passed within six weeks of the start of the monsoon session of Parliament.

The ordinance entitles about 75 per cent of the rural population and about 50 per cent of the urban population to 5kg food grains per person per month at rates of Rs 3 per kg (rice), Rs 2 per kg (wheat) and Re 1 per kg (coarse grains). It also provides certain additional benefits to pregnant women.

Estimates made by Edelweiss Research suggest that the government will need 61 million tonnes of food grains for the programme, which will be easily supported by the government's procurement programme.

The combined rice and wheat production in the country is about 200 million tonnes and the government procures about 20 per cent of it in a normal year. The rest will be covered by the large food stocks the government keeps as a buffer.

If the procurement doesn't rise, the implementation of the bill won't spur inflation, says the Edelweiss report.

The bigger challenge will be to identify the eligible households, a task the bill assigns to individual states. The states will either frame their own criteria or use socio-economic and caste census data for the purpose.


The Telegraph, 5 July, 2013, http://www.telegraphindia.com/1130706/jsp/nation/story_17087275.jsp#.UdfufKzcjco


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