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LATEST NEWS UPDATES | Food bill threat to fiscal discipline

Food bill threat to fiscal discipline

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published Published on Mar 20, 2012   modified Modified on Mar 20, 2012
-The Telegraph

Annual expenses for the government’s food security programme have been estimated at Rs 112,205 crore, which will make it very difficult for the government to fulfill its commitments on checking fiscal deficit.

Food and consumers affairs minister K.V. Thomas disclosed the massive bill on the programme today in the Rajya Sabha, though no mention of this was made in Friday’s budget.

Finance minister Pranab Mukherjee had just said he would foot the entire bill for food security, while raising food subsidies a little over Rs 2,000 crore to Rs 75,000 crore in 2012-13.

In the absence of any provision in the budget, the introduction of the programme next fiscal, even in a limited manner, is certain to make the fiscal deficit calculations go awry.

Mukherjee had pledged to lower the fiscal deficit to 5.1 per cent of the gross domestic product (GDP) in 2012-13 from 5.9 per cent this fiscal. In the future, he had pledged to keep subsidies below 2 per cent of GDP — a huge challenge, given the expenses on the food security programme announced today by Thomas.

The National Food Security Bill (NFSB) seeks to give 75 per cent of the rural population and 50 per cent of people in urban areas legal entitlement to highly subsidised foodgrains. It was introduced on December 22 last and was referred to the parliamentary standing committee on food, consumer affairs and public distribution.

However, the saviour for the government is that the bill may not turn into law before the winter session of Parliament in November or December, officials said.

The food security programme aims to provide rice, wheat and coarse grains at subsidised rate to targeted people. The implementation is likely to take place in the next fiscal, giving enough time for the UPA to boost its electoral fortunes in the general elections in 2014.

“Under provisions of NFSB, and using 2011 Census population, the requirement of foodgrains for Targeted Public Distribution System (TPDS) and Other Welfare Schemes (OWS) prescribed in the Bill, is estimated at 607.4 lakh tonnes,” Thomas said.

He said the stock of foodgrains available in the central pool as on March 1, 2012 was 544.3 lakh tonnes. The average annual procurement of rice and wheat during the last four years (2007-08 to 2010-11) has been about 570 lakh tonnes compared with 382.2 lakh tonnes during 2000-01 to 2006-07.

The procurement of wheat during marketing season 2011-12 was 283.4 lakh tonnes, and estimated procurement of rice during 2011-12 is 353.2 lakh tonnes.

Poverty level

The government has said poverty in the country has declined 7.3 per cent in five years to 2009-10, but the situation has turned for the worse in the Northeast.

The Planning Commission said poverty had come down to 29.8 per cent in 2009-10 from 37.2 per cent in 2004-05.

The total number of poor in the country has been estimated at 34.47 crore in 2009-10, against 40.72 crore in 2004-05.

The commission’s estimates of poverty are based on methodology recommended by the Tendulkar committee, which said persons with monthly per capita income in rural area below Rs 672.80 and urban area below Rs 859.60 had been categorised as below the poverty line.

The poverty estimates are used to access several welfare programmes of the government.

The data showed that “rural poverty declined by 8 percentage points from 41.8 per cent to 33.8 per cent and urban poverty declined by 4.8 percentage point from 25.7 per cent to 20.9 per cent”.

The Telegraph, 20 March, 2012, http://www.telegraphindia.com/1120320/jsp/business/story_15271217.jsp


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