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Odisha sees red at cash transfer plan -Subrat Das
-The Telegraph

Bhubaneswar: The state government has opposed the Shanta Kumar Committee's recommendation for direct cash transfer through the public distribution system (PDS) instead of subsidised food grain supply to the beneficiaries.

Officially, the state's opposition is based on the argument that cash transfer would affect farmers, as procurement from them would stop. However, sources said the state was worried about the move's fallout on its scheme providing rice to the poor at Re 1.

The Centre had set up a high-level committee, headed by former Himachal Pradesh chief minister Shanta Kumar, on reorienting the role and restructuring of the Food Corporation of India (FCI). The panel had submitted its report in January.

It recommended that the FCI should hand over all procurement operations to six states, including Odisha, which had gained sufficient experience in this regard and created procurement infrastructure. It also recommended for gradual introduction of cash transfers through the PDS, starting with cities having more than one million population, extending to the grain-surplus states such as Odisha. "This will empower the consumers, plug high leakages in the PDS and save resources," the committee stated in its report.

If the direct cash transfer is implemented, it will cast shadow on the Re 1-a-kg rice scheme in the state, as the supply of subsidised food grain by the Centre will stop, official sources said.

At present, as against the market price of Rs 25.80 paise per kg, the central government is providing subsidy of Rs 19.37 paise per kg for BPL rice. The state government provides a subsidy of another Rs 5.43 per kg to make the rice available to the poor at Re 1 per kg.

If the supply of subsidised rice by the Centre stops on the recommendation of committee, the state will have to drop the Re 1-a-kg rice scheme or bear the entire subsidy burden of Rs 24.80 per kg.

At present, 61.02 lakh families are covered under the Re 1-a-kg rice scheme. The number of beneficiaries may go up after the ongoing process of identifying them under the Food Security Act is over. The state government now has extra burden of supplying rice and dalma (a vegetable-based preparation) to 25,000 persons in five cities per day under the Aahar scheme launched on April 1.

The state government as such is facing a severe resource crunch this year. The 2015-16 budget has a projected a deficit of more than Rs 10,000 crore.

Food supplies and consumer welfare minister Sanjay Das Burma has written to Union minister for consumer affairs, food and public distribution Ram Vilas Paswan, raising objections to the committee's recommendations.

"As Odisha's economy depends upon agriculture where 70 per cent of the population is engaged, direct cash transfer will have negative impact on the procurements," said Das Burma.

He also argued that the families might divert the cash for purposes other than buying food grain thus endangering their food security. Besides, as there are no shops at many villages, especially in the tribal pockets, people may not have easy access to food grain.

Besides, he said that while many BPL families did not have bank accounts, only around 1,500 of the total 6,230 gram panchayats in the state have a bank branch, and many of these did not have core banking facilities, which would force them to make manual transfers, which was a time-consuming process.

"Unless specific solutions are found, direct cash transfer should not be taken up in Odisha," the minister argued.

Earlier, food supplies and consumer welfare secretary Madhusudan Padhi had sent the state government's comments to the Centre on the committee's recommendations. The Centre is yet to respond to the state's objections, Das Burma told The Telegraph.