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Rangarajan panel differs with NAC on food entitlements for non-poor by Gargi Parsai

The Experts Group chaired by the Prime Minister's Economic Advisory Council Chairman, C. Rangarajan, favours mandatory entitlement of subsidised foodgrains to the ‘priority' category (Below the Poverty Line) as recommended by the National Advisory Council (NAC). But the Group does not think that it is feasible to extend to the ‘general' category (Above the Poverty Line) legal entitlement of subsidised foodgrains under the Public Distribution System (PDS).

The panel has suggested that the subsidised grain for the poor be linked to inflation and indexed to the Consumer Price Index in the coming years. This means the rate at which 35 kg of wheat (at Rs. 2 a kg) and rice (Rs. 3 a kg) is given per month to a poor household will be revised at a later date.

The panel, formed by Prime Minister Manmohan Singh to study the recommendations of the Sonia Gandhi-headed NAC on the proposed National Food Security Bill, submitted its report to him on Friday. The report will be presented to the NAC, which is meeting here on Monday.

As for the ‘general' or APL population, the panel, in a major watering down of NAC recommendations, has suggested that cheap foodgrains be supplied to this category “as and when” available after meeting the requirements of the entitled ‘priority' category (BPL) and only at the minimum support price.

While lauding the NAC's effort to work towards a universal PDS and describing its suggestions as “revolutionary,” the panel said it had considered whether the proposals were administratively feasible, what impact they would have on the open market, especially when the poor bought half of their requirement from the market and a huge step-up in food subsidy that would be required. The panel estimated the subsidy bill for the entitled category at Rs, 83,000 crore at 100 per cent lifting.

The panel has gone with the poverty estimates suggested by the NAC. The NAC suggested that 46 per cent ‘priority' (BPL) population in rural areas and 28 per cent poor in urban areas be covered under the proposed bill.

Dr. Rangarajan has gone with the Tendulkar Committee's estimate of the poor at 41.8 per cent in rural areas and 25.7 per cent in urban areas, and added 10 per cent to it to cover those living on the “margins” to arrive at a figure that matches the ‘priority' number suggested by the NAC.

However, in addition, the NAC recommended that 44 per cent ‘general' category people (APL) in rural areas and 22 per cent in urban areas be covered under the Act with a monthly entitlement of 20 kg at a price not exceeding 50 per cent of the current minimum support price for millets, wheat and rice. The Rangarajan panel has disagreed with this recommendation on the ground that it is not feasible at the current levels of procurement and production of foodgrains. The current level of procurement is between 50 million and 55 million tonnes, the highest being 58 million tonnes.

Kaushik Basu, Chief Economic Adviser to the Finance Ministry, and the Secretaries of the Ministries of Food, Agriculture and Expenditure, who were members of the Experts Group, presented status papers on the current levels of availability of foodgrains for the PDS. It is learnt that the officials maintained that to cover 75 per cent population under the proposed Food Security Bill as suggested by the NAC, the procurement levels would have to be around 80 million tonnes, which would be possible only by 2039.