Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

A smarter supply lineop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- Ensuring the food supply lines are not disrupted in the lockdown and ways to ensure it.


Context

The government must ensure that people don’t go hungry and take measures to make sure that people don’t crowd a few outlets, increasing the chances of the virus spreading.

Need for the package to compensate losses

  • Welfare package: The government has announced relief measures. Last week, the Finance Minister announced a welfare package of Rs 1.7 lakh crore.
  • This is too small to cope with the onslaught of the virus.
  • How much a comprehensive package would cost? A package to compensate all losses, including business losses, should amount to at least Rs 5 to 6 lakh crore, if not more.
  • How will the government find funds for this package?
  • Funds accrued as a result of oil price crash: The windfall gains that have accrued to it as a result of the crash in crude oil prices could come in handy.
  • Diver all the subsidies and development funds: The government could divert all subsidies and some development funds to fund this package and ask the country’s corporate leaders to help with funds.
  • Issue clarion call for voluntary donation: The prime minister could even issue a clarion call to those with a fixed income (say above Rs 50,000/month) to voluntarily donate at least 10 per cent of their salaries to fund the battle against the virus.

Focus on supply lines of food and ways to achieve it

  • Why good food supply line matters? The government must do to ensure that people don’t go hungry and the measures it must take to make sure people don’t crowd a few outlets, increasing the chances of the virus spreading.
  • The government has announced that the beneficiaries of the public distribution system can avail three months’ ration at one go.
  • The challenge of delivery: The challenge is to ensure that fair price shops deliver the provisions in an orderly manner and their supply lines remain intact.
  • Home delivery option: Home (street) delivery of these provisions, to avoid crowding, is a good option.
  • Roping in civil society: This is also an occasion to rope in civil society. NGOs, resident welfare associations, religious organisations and paramilitary forces can be engaged for orderly and safe distribution of food — both pre-cooked and fresh.
  • NGOs with experience in food preparation and distribution, such as Akshaya Patra, could guide local authorities.
  • People involved in this endeavour should be provided with safety gears.
  • The challenge of supplying perishables:  These perishables-like fruits, vegetables and milk- must be sold in a packaged form in mobile vans. The weekly markets need to be temporarily suspended lest they spread the virus.
  • Vegetable vendors can work with civil society organisations as well as e-commerce players to do this job in a safe manner.
  • Retail distribution lines: Retail distribution lines need to be seamlessly linked to wholesale supply lines.
  • Buffer stocks: The government godowns are overflowing with wheat and rice — about 77 million metric tonnes (MMT) on March 1, against a buffer stock norm of 21.4 MMT on April 1.
  • How to manage rabi season procurement? Procurement operations for rabi crops are around the corner.
  • Training and safety measures: The FCI and other procuring agencies need to be trained about safety measures and supplied safety gear.
  • Providing incentives to farmers for staggered selling: Farmers could be given Rs 50/quintal per month as an incentive to stagger bringing their produce to the market — say after May 10.
  • They will also need to be screened, given training and equipped with safety gear.

Challenge of mandi operations for fresh produce in large mandis

  • This pertains to mandi operations for fresh produce in large APMC mandis like Azadpur in Delhi and Vashi near Mumbai.
  • These mandis are usually overflowing with fruits and vegetables and the labour force at these centres usually handles the produce without safety gears.
  • The challenge of screening and providing safety kits to these workers is doubly daunting. The country is not fully prepared in this respect.
  • The safety of workers in mandis — and other workers who handle agricultural produce — should be accorded as much priority as the safety of frontline health warriors.
  • Suspend the APMC Act: We should also use this opportunity to suspend the APMC Act and encourage NGOs, civil society and corporate houses to directly procure from farmers.

Issue of poultry and maize farmers

  • Sharp fall in poultry items: In such times, prices of essential food items are known to shoot up. But in India, prices of food items like chicken meat and eggs have registered a sharp fall.
  • In Delhi’s Gazipur Mandi, for example, the price of broiler chicken has fallen from Rs 55/kg in January 2020 to Rs 24/kg in March.
  • This has also pushed the maize prices down as poultry is largely fed packaged maize.
  • The government may have to think of compensating poultry and maize farmers in due course.

Conclusion

When things settle, it will be worth knowing how the virus spread from Wuhan to Iran, Italy, Washington, India and other parts of the world. Which organisation or nation failed to blow the whistle and alert the world in time? Was it China’s failure? Or that of WHO? Or was it the failure of all governments around the world to respond quickly to the outbreak? We need better global governance for pandemics to avert the next crisis.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Ahead: bumper crop, multiple challengesPriority 1

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not Much

Mains level : Ensuring food supplies amidst COVID-19 crisis


This is perhaps the first time ever that India is facing a national disaster or a war-like situation amidst plentiful supplies of food even as a bumper Rabi crop beckons.

Bumper yield in crisis

  • Farmers are currently about to harvest —if they haven’t already.
  • Given the surplus and extended monsoon rains, which helped recharge ground water and fill up reservoirs, superabundant produce is round the corner.
  • This comes even as there is demand destruction from the shutting down of HORECA (hotels, restaurants and catering) and other institutional segment businesses following the nationwide lockdown.
  • It raises the possibility of a crisis similar to the one three years ago that followed demonetization. But the scale, it is feared, could be bigger.
  • The post-demonetization rabi crop, also a bumper one, was at least harvested and marketed even if it didn’t fetch a good price.

The real challenge

  • The food and civil supplies departments in states will ultimately ensure that the terminal markets in these centres major cities receive their required daily flow of produce anyhow.
  • The problem will be in the remote towns and the rural hinterlands that are serviced through upcountry APMCs.
  • The grocers there are at the greatest risk of running out of stocks if the lockdown continues without inter-state movement restrictions in agricultural commodities being removed.

How to transport produce

  • This time, there are doubts being raised even on that.
  • The simple reason for it is: Will farmers, labourers and machines (combines, threshers and tractor trolleys) be able to move freely to harvest the produce and take it to the mandis?
  • The UP government has issued a direction to all district administrations and law-enforcement authorities to exempt all services, including labour, that are involved in agricultural production, processing and marketing from the current lockdown provisions.
  • Other states, too, may follow. But the question remains of the directives being implemented on the ground.

Will there be workers?

  • At the second stage comes the mandis, where marketing of the crop would happen.
  • Here again, there is a possibility of shortage of labour (the people who do unloading, cleaning, bagging and reloading of the grain that is auctioned or sold) and even gunny bags.
  • Further, it would be necessary to prevent crowding, and maintain social distancing.

Possible alternatives

  • One way out could be to allow entry only to a limited number of farmers, who may be issued SMS alerts informing them about the date and time to bring their crop.
  • Each farmer can also be given a maximum quantity — say, one tractor-trolley load of 30-40 quintals — that may be brought in a single day.
  • The permission for the next trolley load will be only after other farmers have got their turn to sell.
  • All this will obviously delay the process of marketing, raising the prospect of panic sales.
  • This could be avoided if the government were to give a clear-cut assurance — at least in respect of crop where there is MSP-based procurement — that it will continue buying till the last grain is offered.

Safer places than APMC

  • Besides, the marketing of produce needn’t be limited to the APMC (agricultural produce market committee) mandi yard.
  • Any flour or dal mill, and even primary school premises can be designated as an APMC marketing area.
  • The objective should be to ensure that the farmer’s produce gets marketed without resulting in overcrowding.

Way forward

  • The risk of shortages today is really not in the metros or state capitals.
  • Once marketing is done, the crop has to move beyond the mandi.
  • This is probably the right time to dismantle all inter-state and intra-state movement restrictions in farm produce.
  • Free movement is necessary for the context of both a bumper crop and the ongoing lockdown.
Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

[pib] Essential CommoditiesPIB

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Essential Commodities Act, PSF

Mains level : Read the attached story


The Price Monitoring Division (PMD) in the Department of Consumer Affairs is monitoring the retail and wholesale prices of 22 essential food commodities due to increased panic buying by customers.

Essential Commodities Act

  • The ECA is an act which was established to ensure the delivery of certain commodities or products, the supply of which if obstructed owing to hoarding or black-marketing would affect the normal life of the people.
  • The ECA was enacted in 1955. This includes foodstuff, drugs, fuel (petroleum products) etc.
  • It has since been used by the Government to regulate the production, supply and distribution of a whole host of commodities it declares ‘essential’ in order to make them available to consumers at fair prices.
  • Additionally, the government can also fix the maximum retail price (MRP) of any packaged product that it declares an “essential commodity”.
  • The list of items under the Act includes drugs, fertilizers, pulses and edible oils, and petroleum and petroleum products.
  • The Centre can include new commodities as and when the need arises, and takes them off the list once the situation improves.

How ECA works?

  • If the Centre finds that a certain commodity is in short supply and its price is spiking, it can notify stock-holding limits on it for a specified period.
  • The States act on this notification to specify limits and take steps to ensure that these are adhered to.
  • Anybody trading or dealing in the commodity, be it wholesalers, retailers or even importers are prevented from stockpiling it beyond a certain quantity.
  • A State can, however, choose not to impose any restrictions. But once it does, traders have to immediately sell into the market any stocks held beyond the mandated quantity.
  • This improves supplies and brings down prices. As not all shopkeepers and traders comply, State agencies conduct raids to get everyone to toe the line and the errant are punished.
  • The excess stocks are auctioned or sold through fair price shops.

Ex: The Union Government has brought masks and hand-sanitisers under the ECA to make sure that these products, key for preventing the spread of Covid-19 infection, are available to people at the right price and in the right quality.

What about Food Items?

  • The items covered include rice, wheat, atta, gram dal, arhar dal, moong dal, urad dal, masoor, dal, tea, sugar, salt, Vanaspati, groundnut oil, mustard oil, milk, soya oil, palm oil, sunflower oil, gur, potato, onion and tomato.
  • Based on the deliberations, Government takes various measures from time to time to stabilize prices of essential food items which, inter-alia, include appropriately utilizing trade and fiscal policy instruments like import duty.
  • The govt. can impose stock limits and advise State for effective action against hoarders & black marketers etc. to regulate domestic availability and moderate prices.
  • The government utilizes the buffer of agri-horticultural commodities like pulses, onion, etc. built under Price Stabilization Fund (PSF) to help moderate the volatility in prices.

Back2Basics

Price Stabilization Fund (PSF)

  • The PSF was set up in 2014-15 under the Department of Agriculture, Cooperation & Famers Welfare (DAC&FW) to help regulate the price volatility of important agri-horticultural commodities like onion, potatoes and pulses were also added subsequently.
  • Procurement of these commodities will be undertaken directly from farmers or farmers’ organizations at farm gate/mandi and made available at a more reasonable price to the consumers.
  • Losses incurred, if any, in the operations will be shared between the Centre and the States.
  • PSF provides for advancing interest-free loans to State Governments/ UTs and Central agencies to support their working capital and other expenses they might incur on procurement and distribution interventions for such commodities.
  • The scheme provides for maintaining a strategic buffer of the commodities for subsequent calibrated release to moderate price volatility and discourages hoarding and unscrupulous speculation.
  • The PSF is managed centrally by a Price Stabilization Fund Management Committee (PSFMC) which will approve all proposals from State Governments and Central Agencies.
  • The PSF is maintained as a Central Corpus Fund by Small Farmers Agribusiness Consortium (SFAC), a society promoted by the Ministry of Agriculture for linking agriculture to private businesses and investments and technology.

With inputs from: http://www.arthapedia.in/index.php?title=Price_Stabilisation_Fund_(PSF)

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Growth and the farmerop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- Role of agri-growth in inclusive growth and reforms in PDS.


Context

Last month, Montek Singh Ahluwalia’s book, Backstage: The Story Behind India’s High Growth Years, was released. Which tilt in favour of consumer in food policy reduces incentives for farmers, makes it difficult to unlock resources for growth.

What is covered in the book

  • Besides some very interesting episodes pertaining to author’s personal and professional life, the book is full of useful insights into policy debates and their complexities.
  • At many places, it provides evidence of the impact of these policies.
  • This can be extremely useful as we try to rejuvenate the country’s sluggish economy and abolish poverty.

Inclusive growth and agriculture

  • Growth in agriculture must for inclusive growth: During the UPA period, from 2004-05 to 2013-14, it was believed that inclusive growth is not feasible unless agriculture grows at about 4 per cent per year while the overall economy grows at about 8 per cent annually.
  • The reason was simple: More than half of the working force at that time was engaged in agriculture and much of their income was derived from agriculture.
    • But many political heavyweights, did not believe that agri-growth could reduce poverty fast enough.
  • Main instrument of agricultural strategy: The main instrument of agricultural strategy was the Rashtriya Krishi Vikas Yojana (RKVY), which gave more leverage to states to allocate resources within agriculture-related schemes.

What was the impact of strategy?

  • Agri-growth increased: The agricultural strategy, along with other infrastructure investments in rural areas, had a beneficial impact on agri-growth.
    • Agri-growth increased from 2.9 per cent during the Vajpayee period (1998-99 to 2003-04) to 3.1 per cent during the UPA-1 period (2004-05 to 2008-09) and further to 4.3 per cent during UPA-2 (2009-10 to 2013-14).
    • The agri-GDP growth during UPA-2 was driven not as much by RKVY as it was by high agri-prices in the wake of the global economic crisis of 2007-08.
  • Impact on poverty reduction: Agri-GDP growth had a significant impact on poverty reduction, whichever way it was measured — the Lakdawala poverty line or Tendulkar poverty line, which is higher.
    • At what rate poverty reduced? The rate of decline in poverty (headcount ratio), about 0.8 per cent per year during 1993-94 to 2004-05, accelerated to 2.1 per cent per year, and for the first time, the absolute number of the poor declined by a whopping 138 million during 2004-05 to 2013-14.
    • Interestingly, this holds even on the basis of the international poverty line of $1.9 per capita per day (on 2011 purchasing power parity, PPP, also see graphs).

Right to food and debate around it

  • Scepticism over the success of agriculture support to food subsidy: Instead of celebrating this success of the growth strategy in alleviation of poverty, several NGOs and even Congress stalwarts remained sceptical.
    • They advocated food subsidy under the Right to Food Campaign.
    • National Advisory Council (NAC) came up with a proposal to subsidise 90 per cent of people by giving them rice and wheat at Rs 3/kg and Rs 2/kg.

What were the arguments put forward by Montek Singh Ahluwalia?

  • Burden on exchequer: He tried to convince them that this was likely to create an unsustainable burden on the exchequer.
  • India could end up importing food: He also argued that India could end up importing grains to the tune of 13-15 million tonnes per year.
  • Cap the population coverage at 40%: He favoured a cap at 40 per cent of the population to be covered under the Food Security Act as the poverty ratio (HCR) in 2011-12 was 22 per cent.
  • Smart card to beneficiaries: He also favoured providing smart cards to the beneficiaries so that they could opt for buying more nutritious food rather than just relying on rice and wheat.
  • Chance for diversification of agriculture: Smart card with beneficiaries would have also allowed diversification of agriculture and augmented farmers’ incomes.
    • But he could not win over the NAC — although the coverage for food subsidy was reduced from the original proposal of 90 per cent to 67 per cent of the population.
  • Against the ban on agri. export: Montek also argued against export bans on agricultural commodities as these impacted farmers’ incomes adversely.
    • Government siding with consumers: But the government of the day often ended up taking the consumer’s side, as that was considered pro-poor.
    • This reduced the incentives for farmers, who then had to be compensated by increasing input subsidies.

What are the result of this strategy adopted by the government?

  • Negative PSE: No wonder, years later, when we estimated the producer support estimates (PSEs), as per the OECD methodology — used by countries that produce more than 70 per cent of the global agri-output — we found a deeply negative PSE.
    • What negative PSE indicates? This indicates implicit taxation of agriculture through trade and marketing policies, even when one has accounted for large input subsidies going to farmers (see graph on PSE).
  • Consumer bias in the system: Today, the food subsidy is the biggest item in the Union budget’s agri-food space. In the current budget, it is provisioned at Rs 1,15,570 crore.
    • Borrowing by FCI not factored in: But this factor hides more than it reveals. Lately, the government has been asking the Food Corporation of India (FCI) to borrow from myriad sources, and not fully funding the food subsidy, which should logically be a budgetary item.
    • The outstanding dues of the FCI are more than the provisioned subsidy, and if one adds these dues to the budgeted food subsidy, the effective amount of food subsidy comes to Rs 3,57,688 crore.
    • This displays the consumer bias in the system.

Conclusion

  • Restrict the population coverage of food subsidy: The Economic Survey of 2019-20 makes a case for restricting food subsidy to 20 per cent of the population — the headcount poverty in 2015 as per the World Bank’s $1.9/per capita per day (PPP) definition was only 13.4 per cent.
    • For the others, the issue prices of rice and wheat need to be linked to at least 50 per cent of the procurement price or, even better, 50 per cent of the FCI’s economic cost.
  • Unless we make progress on this front, it is difficult to unlock resources for the growth of agriculture, which slumped from 4.3 per cent during UPA-2 to 3.1 per cent during Modi 1.0.
Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

A crisis deferredop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3-Reforms in foodgrain management, the PDS and the fertiliser subsidy.


Context

Union budget missed the opportunity to undertake reforms in the grain management system and food security act.

The massive reduction in food subsidy and its implications

  • Subsidy slashed by 75,552 crores: The revised estimates (RE) for food subsidy for 2019-20 have been slashed by a whopping Rs 75,552 crore -from the budgeted estimate (BE) of Rs 1,84,220 crore to Rs 1,08,668 crore (RE).
    • For the next fiscal year, the budget estimate has been kept at Rs 1,15,570 crore.
  • No major reforms in grain management system: One wonders whether any major reforms have been undertaken in the grain management system or in the National Food Security Act such that this massive reduction in budget estimates is feasible. But no such reforms are undertaken.
    • The Food Corporation of India (FCI) has been asked to borrow more from myriad sources, but most importantly from the National Small Savings Fund (NSSF).
    • An item that should have been in the budget, is now getting reflected as outstanding dues of FCI.
  • Implications of the movepostponing of the crisis:  In order to gauge how much is the effective food subsidy in the country, the budget numbers are becoming totally irrelevant.
    • One needs to add the actual subsidy numbers reflected in the budget to the outstanding dues of FCI.
    • Effective food subsidy: If one adds the due, the effective food subsidy turns out to be Rs 3,57,688 crore.
    • By not provisioning for it fully in the budget, and not undertaking any reforms in the foodgrain management system or the NFSA, the government is only postponing the crisis.

Need to bring down the coverage: The Economic Survey

  • Bringing down the coverage at 20 %: While the Economic Survey clearly states that the coverage under NFSA needs to be revisited, and brought down to say 20 per cent of the population.
    • The budget did not bite this bullet.
    • Cost of procurement to go up: The expected cost of rice to FCI in 2020-21 is going to be about Rs 37/kg, and for wheat it will be Rs 27/kg.
    • The issue price, that covers 67 per cent of the population, is just Rs 3/kg and Rs 2/kg respectively.

Excessive stock with the FCI

  • Actual stock in excess of buffer stocks: Compared to a buffer stock norm of 4 million tonnes, actual stocks with FCI (including unmilled paddy) were 3.5 times higher.
    • It speaks of a colossal waste of scarce resources, especially when tax revenues have been sluggish.
  • Stocks likely to increase further: Given that Skymet has predicted that the coming wheat crop is going to be one of the best in many years-the stocks is likely to touch 113 million tonnes.
    • With procurement prices being above global prices, the chances of wheat exports are bleak unless there is a subsidy for exports.
    • And that will be challenged in the WTO.
    • The FCI may run out of stock capacity: So, one should expect a piling up of grains stocks with a record procurement of wheat.
    • FCI may run out of storage capacity. Stock levels may touch 85-90 million tonnes, or even more, by July 1, 2020.

Fundamental questions

  • First: Is the government ignorant of the impending crisis of plenty?
  • Second: Does it realise that the policy of procurement prices (50 per cent above cost A2+FL), without looking at the demand side, is likely to create more troubles for the government?
  • Third: Does the government have any plan to reform the public distribution system under NFSA?

Way forward

  • Reforms in foodgrain management: Reforms in foodgrain management have to start with reforming the PDS system.
    • With moving gradually moving away from grains to cash transfers.
    • Think over implementing the Shanta Kumar Committee reports recommendations.
  • Stop open-ended procurement in Punjab-Haryana belt: The policy of procurement prices, with open-ended procurement in the Punjab-Haryana belt, is doing more damage by depleting the water table and not letting crop diversification take place.
    • This is very unfortunate as the “dead loss” in grain management runs to more than Rs 1,00,000 crore.
  • Rationalise the fertiliser subsidy: The other part related to this is the fertiliser subsidy, which is largely used in wheat and rice.
    • The budget estimates for 2020-21 show a reduction in the subsidy, while dues of the fertiliser industry keep on piling.
    • The fertiliser industry estimates that by April 2020, the dues will be roughly Rs 60,000 crore.
    • Demoralised fertiliser industry: While FCI has been asked to borrow, the fertiliser industry does not have that type of window.
    • It is feeling totally demoralised.
    • No private player wants to come and invest in this sector.

Conclusion

Instead of postponing the crisis by compelling the FCI to borrow, the government need to reform the foodgrain management system, rationalise the fertiliser subsidy and limit the coverage under the NFSA.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Thalinomics: the Economics of a plate of food in IndiaDOMRPriority 1

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Thalinomics

Mains level : Read the attached story


 

  • The Economic Survey 2019-20 states that affordability of vegetarian Thalis improved 29 per cent from 2006-07 to 2019-20 while that for non-vegetarian Thalis by 18 per cent.
  • Affordability of Thalis vis-à-vis a day’s pay of a worker has improved over time, indicating improved welfare of the common person.
  • The Survey says that food is not just an end in itself but also an essential ingredient in the growth human capital and therefore important for national wealth creation.

The term ‘Thalinomics’

  • The conclusion has been drawn on the basis of “Thalinomics: the Economics of a plate of food in India” – an attempt to quantify what a common person pays for a Thali across India.
  • Price data from the Consumer Price Index for industrial workers for around 80 centers in 25 States and UTs from April 2006 to October 2019 has been used for the study.
  • Using the dietary guidelines for Indians, the price of Thalis is constructed.
  • The Survey states that across India and also the 4 regions- North, South, East and West- it is found that the absolute prices of a vegetarian Thali have decreased significantly since 2015-16 though the price has increased in 2019.
  • This is owing to the sharp downward trend in the prices of vegetables and dal in contrast to the previous trend of increasing prices.
  • As a result, an average household of 5 individuals that eats two vegetarian Thalis a day, gained around Rupees 10887, on average per year, while a non-vegetarian household gained Rupees 11787, on average per year.

Shift in Thali dynamics

  • The Survey states that 2015-16 can be considered as a year when there was a shift in the dynamics of Thali prices.
  • Many reform measures were introduced since 2014-15 to enhance the productivity of the agricultural sector as well as efficiency and effectiveness of agricultural markets for better and more transparent price discovery.
Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

[op-ed of the day] Food for Expediencyop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- PDS and issue of excess food stock with FCI.


Context

A substantial rise in consumer food price inflation to 14.12% in December 2019, the highest ever in the past six years, has driven the retail price inflation in this country.

Discrepancies in the fiscal deficit

  • Policy dilemma for the RBI: Though the CPI was at 14.12% in December but with the core inflation rate still not overshooting the Reserve Bank of India’s (RBI) medium-term target of 4(+/- 2)%.
    • Speculations hover as to whether the RBI monetary policy committee will go for another rate cut in the coming month.
    • This is a policy dilemma for the central bank
    • Why is the dilemma? The dilemma is because the moot issues regarding the government’s key economic estimates, such as the fiscal deficit, largely remain unresolved.
  • Discrepancies flagged by the CAG: The CAG has stated that the current figures on deficit have been kept at a 1.5% to 2% low by not including the government’s off-budget borrowings from public accounts, such as the National Small Savings Fund (NSSF).
    • According to media reports, such off-budget expenditure of the current government stands at ₹1.5 lakh crore in 2019–20.
    • The major portion of off budged expenditure on food subsidy: About three-fourths of the incremental off-budget expenditure is on account of under-recoveries in food subsidies of the Food Corporation of India (FCI).
  • Low allocation but high expenditure on food subsidy: For instance, the 2019–20 Union Budget had provisioned food subsidy at₹1.84 lakh crore.
    • While the overdue of the FCI is already at₹1.86 lakh crore.
    • For these burgeoning overdue, FCI’s ­off-budget borrowings from the NSSF have been on the rise.

Excessive stock by the government and rising inflation

  • Issue of supply management: The issues of agricultural supply management are relegated to the background by the standard causality argument of “crop damages” caused by excessive rains and that the inflation will ease out once the new harvest comes in.
    • This argument can hold some water for horticulture crops like onions that saw an almost 200% rise in price in November and December.
    • Unable to explain inflation in wheat and other cereals: This argument may not find traction in explaining the price inflation of wheat and other cereals.
  • holding the excessive cereal stock: With the government currently stocking much higher quantities of cereals at the FCI than the buffer norms.
    • 45.8 million tonnes of wheat as against the buffer norm of 27.5 million tonnes and nearly double the amount of rice vis-à-vis the buffer norm of 13.5 million tonnes.
    • India is now a cereal surplus economy.
    • Why then the inflation in cereal prices? Is this artificially created by the government through its irrational stocking practice?
    • Some fundamental concerns are triggered at this juncture.
  • Concerns with excess stocks
    • First-Higher stock means higher subsidy bill-With the economic costs of the FCI being 12 times or more than the allocation cost of the grains through the public distribution system-higher stocks would imply higher subsidy bills.
    • SecondNo benefit of the stock: In tandem with the first, ad hoc releasing of the stocks will not bring about any major changes in the situation.
    • ThirdHiding fiscal deficit from the public: In this context, off-budget borrowing can serve various politically expedient purposes.
    • It has enabled the government to showcase a consistently low share (below 1%) of subsidies in national income.
    • Thereby diverted the public attention from two critical facts: the FCI’s tipping financials and the country’s (grossly) underestimated fiscal deficit.

Conclusion

The government must recall that the “illusion” of this acceptable limit of inflation potentially rests upon the savings of the common consumers, which is being unduly misemployed by the government.

 

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

[op-ed snap] A farm wish list for the budgetop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3-Rationalization of subsidies on food in PDS and Fertilizers and need to reform them.


Context

As finance minister presents the budget the FM need to ensure transparency and to fully account for the food subsidy.

The excess buffer stock and need to reform

  • A buffer stock norm and actual stock: A buffer stock norm is at 21.4 million tonnes (mt).
    • Actual stock far exceeds the norm: The actual stocks of grains with the central pool stood at 75.5 mt.
    • Which is 3.5 times what the government needs to hold.
  • The economic cost of the excess stock: At its economic cost, the value of the excess stocks with the government stands at Rs 1.6 lakh crore.
    • Potential for revenue: There is no better place to find revenue for the FM than to liquidate these stocks.
    • Need for the reform in grain management system: Unless the grain management system is reformed, the inefficiency of the grain management system will keep on increasing and the nation will suffer.

Food subsidy reforms

  • Link food prices to procurement price: It is the time to revise the central issue of price and link it to the procurement price-say at half the procurement price.
    • Limit the population coverage: There is a need to limit this highly subsidised food of Rs 3/kg for rice and Rs 2/kg of wheat to say 40 per cent of the population.
    • Move to DBT: The real fundamental reform would be to move towards direct cash transfers for the intended beneficiaries of food subsidy.

Fertiliser subsidy reforms

  • Imbalance in the subsidisation: The real problem of this sector is the imbalance in the policy of fertiliser subsidisation.
    • While urea (N) is subsidised to the extent of 75 per cent of its cost, phosphatic (P) and potassic (K) fertilisers are subsidised only to the tune of about 25 per cent of their cost.
  • Consequences of this imbalance: The result is the highly imbalanced use of N, P and K on farmers’ fields. Which results in
    • Giving a very low fertiliser-to-grain response ratio.
    • Degrading the soil.
    • Degrading underground water.
    • Degrading the environment with excessive nitrogen use.
    • Discouragement to natural farming: The current fertiliser subsidy discourages those who want to pursue natural farming as they don’t get subsidy anywhere near the amount chemical-based fertilisers do.
  • Reforms: There are two ways in which the fertiliser subsidy regime can be reformed.
    • Bring nitrogenous fertiliser under NBS: The solution to the imbalance in use is to bring nitrogenous fertilisers under the Nutrient Based Subsidy (NBS) scheme.
    • Cash transfer based on per hectare basis: The second option is to move towards direct cash transfers for fertilisers on a per hectare basis, with some adjustment for irrigated tracts.
    • 50,000 Crore saving: The above-mentioned reforms could result in the saving of Rs. 50,000 crores to the public exchequer.

Way forward

  • Investing the savings where it matters the most: The savings from the reforms could be invested in-
    • Better water management, especially drip irrigation.
    • Infrastructure for agri-markets.
    • Solar trees: The investments could also be made in setting up the solar trees in the farm to harvest solar power on farmer’s fields with buyback agreements for surplus production.
Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

[op-ed snap]Lifting growth, containing inflationop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3-Issues related to direct and indirect farm subsidies and minimum support prices, Public Distribution System- Objectives, functioning, limitations,revamping, issues of buffer stocks, and food security, Technology missions, economics of animal rearing.


Context

There is a large scope for  the improvement in the efficiency of grain management system under the National Food Security Act (NFSA).

Declining Agri-sector growth rate

  • India’s growth rate plummeted to 4.5 per cent in the second quarter of this fiscal.
  • The quarterly growth in GDPA (agri-GDP) is hovering at around 2 percent, it is a cause for great concern.
  • Agriculture still engages about 44 per cent of India’s workforce, which has serious consequences for the overall economy of the country.

The bleak picture of the economy

  • Recently inflation has started to surge after a long time.
  • Inflation is led by the different components of the food segment- cereals, pulses, and vegetables.
  • There is a challenge of containing inflation and increasing the demand at the same time.
  • At the same time, there is also the challenge of maintaining the fiscal deficit by 3.3 %.
  • Recently Finance minister has launched an investment package of 102 lakh crores.
  • So, there is a need to take a look at the inefficiencies in food grain management.

Inefficiencies in NFSA

  • It supplies a certain quantity of wheat and rice to 67 percent population.
  • It gives wheat at Rs. 2/kg and rice at Rs. 3/kg.
  • While the cost of these grains to FCI is at Rs. 25/kg and Rs. 35/kg respectively.
  • This led to the provision of Rs 1.84 lakh crores for food subsidy.
  • The buffer stocks with the FCI is far more than double the buffer stock norms as on January 1 every year.
  • This excess stock is the result of an inefficient strategy for food management.
  • The strategy where the procurement of these grains is open-ended while the disbursement is restricted.
  • The money locked in these excess stock is about 1 lakh crores.
  • If the rabi season procurement is good FCI may run out of storage space to accommodate.

Suggestions for improvement

  • The open market operation should be increased.
  • Even if the government liquidate half of the excess stock it would fetch Rs.50,000 crores.
  • The Shanta Kumar panel had submitted the blueprint for the improvement in the grain management system.
  • Only three reiterations are needed.
  • First-while the Antyodaya category should keep getting the maximum food subsidy, the issue price should be fixed at 50% of the procurement for the rest.
  • Second- restrict the percentage of population covered under the scheme to 40 % from the present 67%
  • Third-stop the procurement of rice in the north-western states of Punjab and Haryana where the water table is depleting.

Conclusion

  • If the government implements these three points it can save the country another Rs. 50,000 crores annually. On top of this, it will help the government to reduce its fiscal deficit.
Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

[pib] International Seed TreatyPIB

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Seed Treaty

Mains level : Intellectual property rights of farmers



A session of the Governing Body of International Treaty of Plant Genetic Resources for Food and Agriculture (ITPGRFA) better known as Seed Treaty is recently held.

About the Seed Treaty

  • ITPGRFA also known as Seed Treaty is a comprehensive international agreement for ensuring food security through the conservation, exchange and sustainable use of the world’s plant genetic resources.
  • It aims for food and agriculture (PGRFA), as well as the fair and equitable benefit sharing arising from its use.
  • The governing body meets biennially and India is a signatory to the treaty.

Objectives

  • Farmers’ Contribution: To recognize the contribution of farmers to the diversity of crops,
  • Access and Benefit Sharing: Establish a global system to provide farmers, plant breeders and scientists with access to plant genetic materials,
  • Sustainability: To conserve and sustainably use plant genetic resources for food and agriculture, and fair and equitable sharing of the benefits arising out of their use, in harmony with the Convention on Biological Diversity.

Back2Basics

Protection of Plant Varieties and Farmers’ Rights (PPV&FR) Act

  • The PPV&FR Act, 2001 was enacted to grant intellectual property rights to plant breeders, researchers and farmers who have developed any new or extant plant varieties.
  • The rights granted under this Act are exclusive right to produce, sell, market, distribute, import and export the variety.
  • According to the act, a farmer is entitled to save, use, sow, resow, exchange, share or sell his farm produce including seed of a variety protected under the PPV&FR Act, 2001 except the brand name.
  • The Act is compliant to Article-9 of the Seed Treaty.
  • A few months back in April 2019, PepsiCo sued Gujarati farmers by invoking the provisions of the act.
  • The PPV&FR Authority has registered about 3631 plant varieties out of which 1597 (44%) belong to the farmers.
Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Explained: Ration card portabilityExplained

Note4Students

From UPSC perspective, the following things are important :

Prelims level : About the scheme

Mains level : Need for ONORC



Context

  • The government is showcasing the rollout of the ‘One Nation One Ration Card’ scheme as one of the biggest achievements of its first 100 days in power.
  • The launch of the nationwide food security net is scheduled for June 2020, but several challenges remain before migrants can take advantage of full portability.

Food Security in India

  • India runs the world’s largest food security programme, distributing more than 600 lakh tonnes of subsidised food grain to more than 81 crore beneficiaries every year.
  • This is done through a vast network of more than five lakh ration or fair price shops.
  • Under the National Food Security Act (NFSA), each beneficiary is eligible for five kg of subsidised grains per month at the rate of ₹3/kg for rice, ₹2/kg for wheat and ₹1/kg of coarse cereals.

Ration Card

  • A ration card is issued to the head of the family, depending on the number of members in a family and the financial status of the applicant.
  • It is used by households to get essential food grains at subsidised prices from designated ration shops (also called fair price shops) under the Targeted Public Distribution System (TPDS).
  • Over the years, different types of ration cards were issued depending on the level of deprivation.
  • Later, in 2013, when the National Food Security Bill was passed, different ration cards were compressed to just two — priority and Antyodaya (for the most poor).
  • The responsibility of identifying eligible families and issuing ration cards to them rests with the state/UT government.

One Nation One Ration Card scheme

  • Until recently, this has been a location-linked benefit, leaving crores of migrant workers and families out of the food safety net.
  • Each household’s ration card is linked to a specific fair price shop and can only be used to buy rations in that particular shop.
  • Over the last few years, 10 States (partially in one) have implemented the Integrated Management of Public Distribution System, which allows beneficiaries to buy rations from any fair price shop within that State.
  • The Centre is now in the process of expanding these efforts into a nationwide portability network which is called the ‘One Nation One Ration Card’ scheme.
  • It is scheduled to come into full effect by June 2020, after which a ration card holder can buy subsidised grain at any fair price shop in the country.

Beneficiaries of the scheme

  • The main beneficiaries of the scheme are the country’s migrant workers.
  • According to data from the Census 2011, there are more than 45 crore internal migrants in India, of whom more than half have not completed primary education, while 80% have not completed secondary education.
  • Registering for ration cards at their new location is an arduous process, especially if some members of the household still remain in their original home.
  • Apart from this, field studies estimate that four crore to ten crore people are short-term migrants, often working in cities, but not moving there permanently.
  • Women who change locations after marriage also find it difficult to start accessing ration benefits using a new household’s card.

Benefits

  • Lower levels of education are linked to lower income, which would make a large percentage of these migrants eligible for NFSA benefits.
  • The Centre hopes that allowing ration card portability will also curb corruption and improve access and service quality by removing monopolies.
  • Under the old system, beneficiaries were dependent on a single fair price shop and subject to the whims of its dealer.
  • Under the new system, if they are denied service or face corruption or poor quality in one shop, they are free to head to a different shop.
  • The scheme is also driving the faster implementation of initiatives to digitise and integrate the food storage and public distribution system.

What is needed to make it work?

  • The scheme involves the creation of a central repository of NFSA beneficiaries and ration cards, which will integrate the existing databases maintained by States, UTs and the Centre.
  • Aadhaar seeding is also important as the unique biometric ID will be used to authenticate and track the usage of ration by beneficiaries anywhere in the country.
  • Currently, it is estimated that around 85% of ration cards are linked to Aadhaar numbers.
  • For the scheme to work, it is critical that all fair price shops are equipped with electronic point-of-sale machines (ePoS), replacing the old method of manual record-keeping of transactions with a digital real-time record.
  • On the back-end, the Food Corporation of India’s Depot Online System is integrating all warehouses and godowns storing subsidised grain in an attempt to create a seamless flow of online information from procurement until distribution.

Progress so far

  • Two pairs of States — Andhra Pradesh-Telangana and Maharashtra-Gujarat — became the first to begin implementing portability between their States last month.
  • From October 1, two more pairs — Kerala-Karnataka and Rajasthan-Haryana — will join the experiment.
  • By January, all eight States and at least three others which already implement intra-State portability will form the first national grid for the ‘ONORC’ scheme.

Difficulties ahead

Lack of infrastructure

  • There are only 4.32 lakh ePoS machines which have been installed in more than 5.3 lakh fair price shops.
  • Apart from much of Northeast India, much of that gap comes from three States: Bihar, West Bengal and Uttarakhand.
  • Given that they are major source States for migrants, Bihar (only 15% coverage) and West Bengal (70% coverage) must speed up ePoS installation for the system to work smoothly.
  • In some rural and remote areas, ePoS connectivity also remains erratic, jeopardising smooth functioning.
  • In Jharkhand, a State which was an early adopter of digitisation and Aadhaar-based biometric authentication in 2016, there have been widespread complaints of denial of food due to system failures.

Different ration benefits

  • In other States, the challenge comes from the difference between ration benefits offered by the State in comparison to the Central entitlement.
  • Tamil Nadu, for example, offers 20 kg of free rice per month to almost 2 crore ration card holders, as well as subsidised sugar, pulses and oil, over and above the NFSA benefits.
  • The State government has made it clear that it will not be offering these benefits to migrant workers, as the Centre will cover the costs of NFSA benefits only.

Household issue

  • Another issue could arise if the members of a single household are split between two different locations.
  • The scheme’s guidelines only permit purchase of half the subsidised grain at one time in an effort to prevent one member of the household taking the entire ration for the month, leaving family members in a different location stranded without food.

Lack of data and inventory management

  • The biggest challenge may lie in the lack of any concrete data on inter-State migration trends, especially short-term migration.
  • The allocation of food grains to States will have to be dynamic to allow for quick additional delivery to cover any shortfalls in States with large migrant populations.
  • Currently, Food Corporation of India godowns stock grains up to three months in advance.
  • Food Ministry officials acknowledged that there is a “steep learning curve” ahead to ensure that movement of grain matches migration flows.
Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

One Nation, One Ration Card scheme: a boon for poor migrantsGovt. Schemes

Note4Students

From UPSC perspective, the following things are important :

Prelims level : ONORC Scheme

Mains level : Benefits of ONORC



  • Recently the government has launched the pilot project for the inter-state portability of ration cards between Telangana and Andhra Pradesh, and between Maharashtra and Gujarat, as part of its ‘One Nation, One Ration Card’ scheme.

What is a ration card?

  • A ration card is issued to the head of the family, depending on the number of members in a family and the financial status of the applicant.
  • It is used by households to get essential food grains at subsidised prices from designated ratio shops (also called fair price shops) under the Targeted Public Distribution System (TPDS).
  • Over the years, different types of ration cards were issued depending on the level of deprivation.
  • Later, in 2013, when the National Food Security Bill (NFSA) was passed, different ration cards were compressed to just two — priority and Antyodaya (for the most poor).
  • The responsibility of identifying eligible families and issuing ration cards to them rests with the state/UT government.

What is a ration shop?

  • Ration shops can be privately owned or owned by cooperative societies or by the government.
  • Ownership licenses are issued by the concerned state government.
  • Presently, commodities including wheat, sugar, rice and kerosene are being allocated as part of the TPDS.
  • State governments have the discretion to provide additional commodities.

 ‘One Nation, One Ration card’ scheme

  • Since ration cards are issued by state governments, this implied that beneficiaries could procure food grains only from the designated ration shops within the concerned state.
  • If a beneficiary were to shift to another state, he/she would need to apply for a new ration card in the second state. There were other complications.
  • For instance, after marriage, a woman needed to get her name removed from the ration card issued to her parents, and get it added to the ration card issued to her husband’s family.
  • The ONORC scheme attempts to address this gap in TPDS delivery.
  • Essentially, the scheme has been launched keeping in mind the internal migration of our country, since people keep moving to different states in search of better job opportunities and higher standards of living.
  • As per Census 2011, 4.1 crore people were inter-state migrants and 1.4 crore people migrated (inter- and intra-state) for employment.

Good signs of implementation

  • With the ONORC scheme being implemented in Telangana and Andhra Pradesh, the beneficiary can buy food grains from ration shops located in either of the states.
  • The same is the case with Maharashtra and Gujarat.
  • The government hopes to implement the scheme across India by June 1, 2020.
Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

One nation, one ration card: Govt launches pilot projectGovt. Schemes

Note4Students

From UPSC perspective, the following things are important :

Prelims level : One Nation One Ration card

Mains level : Nothing much


The government launched inter-state portability of ration cards between Telangana-Andhra Pradesh and Maharashtra-Gujarat as a pilot project to implement ‘One Nation, One Ration Card’.

In detail

  1. Beneficiaries in Telangana and Andhra Pradesh, Maharasthra and Gujarat, can now buy their quota of ration from ration shops in either state.
  2. Government is planning to roll out ‘One Nation, One Ration Card’ across the country by June 1, 2020.
Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

[op-ed of the day] The Malaise of malnutritionMains Onlyop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : Malnutrition is the biggest challenge before India which needs attention


Note- Op-ed of the day is the most important editorial of the day. Aspirants should try to cover at least this editorial on a daily basis to have command over most important issues in news. It will help in enhancing and enriching the content in mains answers. Please do not miss at any cost.

CONTEXT

A new report, ‘Food and Nutrition Security Analysis, India, 2019’, authored by the Government of India and the United Nations World Food Programme, paints a picture of hunger and malnutrition amongst children in large pockets of India.

Poor Conditions

  • This punctures the image of a nation marching towards prosperity. It raises moral and ethical questions about the nature of a state and society that, after 70 years of independence, still condemns hundreds of millions of its poorest and vulnerable citizens to lives of hunger and desperation.
  • And it once again forces us to ask why despite rapid economic growth, declining levels of poverty, enough food to export, and a multiplicity of government programmes, malnutrition amongst the poorest remains high.

A trap of poverty, malnutrition

Intergenerational poverty

The report shows the poorest sections of society caught in a trap of poverty and malnutrition, which is being passed on from generation to generation.

Mothers who are hungry and malnourished produce children who are stunted, underweight and unlikely to develop to achieve their full human potential.

Effects of malnourishment

Poor Cognitive Development

  • The effects of malnourishment in a small child are not merely physical. A developing brain that is deprived of nutrients does not reach its full mental potential.
  • A study in the Lancet notes, “Undernutrition can affect cognitive development by causing direct structural damage to the brain and by impairing infant motor development.”
  • This, in turn, affects the child’s ability to learn at school, leading to a lifetime of poverty and lack of opportunity.
  • Another study in the Lancet observes, “These disadvantaged children are likely to do poorly in school and subsequently have low incomes, high fertility, and provide poor care for their children, thus contributing to the intergenerational transmission of poverty.”
  • In other words, today’s poor hungry children are likely to be tomorrow’s hungry, unemployed and undereducated adults.

Extent of malnutrition

  • India has long been home to the largest number of malnourished children in the world.
  • The proportion of children with chronic malnutrition decreased from 48% percent in 2005-06 to 38.4% in 2015-16.
  • The percentage of underweight children decreased from 42.5% to 35.7% over the same period.
  • Anaemia in young children decreased from 69.5% to 58.5% during this period. But this progress is small.

An ambitious target

National Nutrition Mission –

  • (The government’s National Nutrition Mission (renamed as Poshan Abhiyaan) aims to reduce stunting (a measure of malnutrition that is defined as height that is significantly below the norm for age) by 2% a year, bringing down the proportion of stunted children in the population to 25% by 2022.
  • But even this modest target will require doubling the current annual rate of reduction in stunting.

Ineffective implementation

  • A year after it was launched, State and Union Territory governments have only used 16% of the funds allocated to them.
  • Fortified rice and milk were to be introduced in one district per State by March this year.
  • But the minutes of a March 29 meeting showed that this had not been done, and officials in charge of public distribution had not yet got their act together.
  • Anganwadis are key to the distribution of services to mothers and children.
  • But many States, including Bihar and Odisha, which have large vulnerable populations, are struggling to set up functioning anganwadis, and recruit staff.

The problem is access to food

  • As Amartya Sen noted, famines are caused not by shortages of food, but by inadequate access to food.
  • And for the poor and marginalised, access to food is impeded by social, administrative and economic barriers.
  • In the case of children and their mothers, this could be anything from non-functioning or neglectful governments at the State, district and local levels to entrenched social attitudes that see the poor and marginalised as less than equal citizens who are meant to be an underclass and are undeserving of government efforts to provide them food and lift them out of poverty.

Conclusion

A lot of attention has focussed on the government’s aim of turning India into a $5 trillion economy in the next five years. Whether this will achieved is a matter for debate. But these declarations only serve to obscure a larger reality. There is a large section of society, the poorest two-fifths of the country’s population, that is still largely untouched by the modern economy which the rest of the country inhabits. As one part of the country lives in a 21st century economy, ordering exotic cuisines over apps, another part struggles with the most ancient of realities: finding enough to eat to tide them over till the next day.

Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

‘One Nation One Ration Card’ SchemeGovt. SchemesPriority 1

Note4Students

From UPSC perspective, the following things are important :

Prelims level : One Nation One Ration Card Scheme

Mains level : Read the attached story


One Nation One Ration Card” scheme

  • The union govt. is working on a plan to launch a “One Nation One Ration Card” scheme for beneficiaries to access to any PDS shop across the country.
  • The scheme is aimed at providing freedom to beneficiaries, as they will not be tied to one PDS shop.
  • It aims to reduce their dependence on shop owners and curtail corruption.
  • The biggest beneficiaries will be migrant workers who move to other states to seek better job opportunities.

Plan of action

  • PoS machines are available at all PDS shops in various states, like Andhra Pradesh, Haryana and a few other others, but 100 per cent availability is required to provide the benefit across the country.
  • The availability of PoS (Point of Sale) machines needs to be ensured at all PDS shops to implement the scheme.

Implementation

  • The Ministry of Consumer Affairs, Food and Public Distribution will implement the scheme.
  • It will be subsumed under the Integrated Management of PDS (IMPDS), under which beneficiaries can avail their share of food grain from any district.
  • Such a scheme is operational in Andhra Pradesh, Gujarat, Haryana, Jharkhand, Karnataka, Kerala, Maharashtra, Rajasthan, Telangana and Tripura.

Importance of the scheme

  • The work done by the PDS  fair price shops is a lifeline for 81 crore beneficiaries across the country.
  • There is 612 lakh tonnes of food grains stored in warehouses of FCI, CWC, SWCs and private godowns for distribution annually.
  • Around 78 per cent of Fair Price Shops in India have so far been automated by installing electronic PoS devices.
Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

[op-ed snap] If food prices riseMains Onlyop-ed snap

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Inflation

Mains level : Low inflation in food prices is affecting well being of farmers and trend might revers soon.


CONTEXT

For 32 months running (from September 2016 to April 2019), consumer food inflation has been trailing general retail inflation.

Background

  • To understand its significance, rewind to the preceding 32 months (from January 2014 to August 2019), when in as many as 25 months the annual increase in food prices exceeded overall consumer inflation.
  • Food prices aren’t pinching as before and have also not been a hot-button issue in the current Lok Sabha elections — unlike in 2014, when they were one of the key reasons for the then Congress-led ruling alliance’s rout.
  • Bringing down retail food inflation from near double-digit to low single digit levels — even negative in many months — has, indeed, been a signal achievement of the government.

Impact of Low inflation

  • However, it hasn’t been an unmixed blessing.
  • While consumers have benefitted, the same cannot be said about farmers, for whom flat or falling prices of food and other agri produce have spelled disaster.

Reversal of trend  –

  • Meanwhile, there are also signs of a trend reversal.
  • The last couple of months have seen prices of a host of farm commodities — from coarse grains, cattlefeed ingredients and cotton to tomatoes and seasonal vegetables — going up significantly.
  • Even milk and sugar are beginning to shake off a prolonged bear phase.

Reasons for reversal

  • The immediate trigger for this seems to be drought in large parts of Maharashtra, Gujarat, Karnataka, Andhra Pradesh and Telangana.
  • But there could be structural reasons as well.

Disastrous for farmers –

  1. Cutting down crop acreages – It is not difficult to believe that sustained low produce realisations have broken the backs of many farmers, leading them to cut down crop acreages or underfeed their cattle.

2. Impact on yields – These are bound to impact yields and supply at some point. In that case, a normal monsoon alone, as forecast by the Met Department, may not be enough.

3. Long time to overcome the decline in productivity – Farmers aren’t going to ramp up output overnight, just as insufficiently nourished bovines will take time to calve and produce close to their genetic potential.

4. Return of food inflation – If structural supply constraints combine with a not-so-great monsoon, the result may well be a return of food inflation.

Way forward

  • That, on the face of it, may not be good news for the next government.
  • The mistake it should avoid is to clamp the usual restrictions on exports, internal trade and stocking, even while allowing unlimited imports at zero duty.
  • On the contrary, this is the time to scrap the Essential Commodities Act and laws allowing agricultural produce trade only in government-controlled wholesale mandis.
  • The current food inflation, if at all, is a necessary price correction that will help restore farmer confidence.
  • Improved price realisations would also create an environment to phase out wasteful government spending, whether through market-distorting minimum support price procurement operations or under-pricing of fertilisers, water and electricity.
  • Farmers deserve remunerative prices, not handouts.
Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Odisha to launch State Food Security SchemePriority 1States in News


Note4students

Mains Paper 3: Agriculture | Public Distribution System – objectives, functioning, limitations, revamping; issues of buffer stocks and food security

From UPSC perspective, the following things are important:

Prelims level: SFSS

Mains level: Food Security in India


News

Odisha Scheme for NFSA Left-outs

  1. The Odisha will launch its own State Food Security Scheme (SFSS) which would be totally funded by the state government.
  2. Over 18 lakh poor and eligible people left out under National Food Security Act, 2013 (NFSA) will receive their quota of 5 kg of rice at the rate of Rupee 1 per kg .

State Food Security Scheme (SFSS)

  1. The state government decided to launch its own food security scheme after the Centre did not respond to Odisha government’s request to add additional 25 lakh poor people under the NFSA.
  2. 25 lakh beneficiaries will be provided with cheap rice under the SFSS.
  3. A total of 3,26,41,800 beneficiaries were included in the NFSA as per the 2011 census.
  4. Over 73 per cent of the target for SFSS has been achieved by September 30 and rest will be covered by the second week of October.
  5. The state government on October 2, 2008 had launched the cheap rice scheme in Odisha where beneficiaries were given rice at the rate of Rs 2 per kg.
  6. Later in 2013, the price of cheap rice was reduced to Rupee 1 a kg for people living below poverty line.
Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

[op-ed snap] Steps to stop the rot: on dangers of storing foodgrains in the openop-ed snap


Note4students

Mains Paper 3: Agriculture | Public Distribution System – objectives, functioning, limitations, revamping; issues of buffer stocks & food security

From UPSC perspective, the following things are important:

Prelims level: PDS system, Food Corporation of India

Mains level: Foodgrain storage practices in India & how it leads to huge wastage of foodgrains


Context

Storage of foodgrains inefficient

  1. Most grain in India, which is procured from farmers by the government, is stored using the CAP, or cover and plinth method
  2. The agencies build a cement plinth and pile up foodgrains in bags and then cover all this with a tarpaulin
  3. India stores about 30.52 million tonnes of rice, wheat, maize, gram and sorghum in such structures at the Food Corporation of India godowns and hired spaces
  4. It is estimated that there is a 10% loss of harvested grain, of which 6% (around 1,800,000 tonnes) is lost in storage
  5. This means that the grain is so damp and fungus-ridden that it cannot be ground and passed on to the public for consumption

Effects of eating mouldy grains

  1. Eating mouldy grain causes a variety of illnesses
  2. According to a World Health Organisation paper, mycotoxins, which are found in mouldy grain/foods, are associated with human disease and produce aflatoxins (cancer-causing), trichothecenes, ochratoxins, citrinin and other toxins
  3. Aflatoxicosis causes abdominal pain, vomiting, hepatitis and (sometimes) death after acute exposure to high concentrations in food
  4. Chronic low dose exposure to aflatoxin can result in impaired growth in children

International storage practices

  1. In other parts of the world, grain is stored in silos
  2. Here, stored grain is kept dry and aired so as to prevent fungal and insect attacks
  3. The U.S. has a permanent storage capacity nearly equivalent to its annual grain production

Status of storage in India

  1. In India, the government has considered only four silos to be sufficient for the nation’s needs — one each in Kolkata, Chennai, Mumbai and Hapur-Ghaziabad
  2. The remainder of government-procured grain is stored in shoddy conditions
  3. In order to export basmati rice, Punjab has, in a public-private partnership, built modern, temperature-controlled grain silos with a storage capacity of 50,000 tonnes — but this is not for the Indian market

Way Forward

  1. Even though foodgrain production has been encouraged and increased, there need to be efforts to ensure that grain being procured annually is stored properly
  2. There is now an abundance of steel, cement and other building materials, money and the technological know-how
  3. The government should move on a war footing to store food grains in the proper manner
Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

[op-ed snap] For nutrition security: On undernourishmentop-ed snap


 Note4students

Mains Paper 1: Social issues | Poverty & development issues

From UPSC perspective, the following things are important:

Prelims level: State of Food Security and Nutrition in the World report, National Food Security Act

Mains level: State of undernourishment in India & Government interventions for same


News

Report on food security

  1. The UN’s State of Food Security and Nutrition in the World report for 2017 has important pointers to achieve nutrition policy reform
  2. India remains lacking in the commitment to tackle undernourishment
  3. At the global level, the five agencies that together produced the assessment found that the gains achieved on food security and better nutrition since the turn of the century may be at risk

Deprivation on the rise

  1. The estimate of 815 million people enduring chronic food deprivation in 2016, compared to 775 million in 2014, is depressing in itself
  2. The deprivation is even greater among people who live in regions affected by conflict and the extreme effects of climate change
  3. The report says that child under-nutrition rates continue to drop, although one in four children is still affected by stunting

Reasons for food scarcity

  1. The impact of the economic downturn
  2. Many violent conflicts
  3. Fall in commodity export revenues
  4. Failure of agriculture owing to drought and floods

India’s efforts

  1. India’s efforts at improving access to food and good nutrition are led by the National Food Security Act
  2. There are special nutritional schemes for women and children operated through the States
  3. In spite of such interventions, 14.5% of the population suffers from undernourishment, going by the UN’s assessment for 2014-16. At the national level, 53% of women are anemic.

Way Forward

  1. The report on nutritional deficiency should serve as an opportunity to evaluate the role played by the PDS in bringing about dietary diversity for those relying on subsidized food
  2. The NITI Aayog found that families below the poverty line consumed more cereals and less milk compared to the affluent
  3. Complementing rice and wheat with more nutritious food items should be the goal
Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

[op-ed snap] Nutrition security has a much wider connotation than food securityop-ed snap


  1. Context: Only five States, Punjab, Haryana, Chhattisgarh, Maharashtra and Rajasthan, have fully executed National Food Security Act
  2. Aim of NFSA: likely to benefit 720 million people through availability of 5 kg/capita/month of subsidised foodgrains at a much lower rate than in open market
  3. Free daily meals for children, maternity benefits, including cash for pregnant women, to combat undernutrition and malnutrition
  4. Administrative steps needed: Abolition of private procurement and storage system, controlling diversion of foodgrain from godown to the millers
  5. Proper recording of procurement, storage and distribution of grains across the departments
  6. Distribution through self-help groups and gram panchayats, regular monitoring at block and ward levels
  7. Positive outcomes in the 5 states: significant increase in number of households having ration cards, improvement in distribution and consumption of food
  8. Nutrition Security: encompasses a biological approach- adequate and safe intake of protein, energy, vitamin and minerals
  9. Under PDS, poor quality of food, lacking essential micronutrients and no diet diversity, and unhygienic conditions of storage come in the way of providing adequate nutrition
  10. Measure to increase nutrition: NFSA to provide one additional coarse cereal, viz., millet along with wheat and rice
Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Food Security Act implemented: Paswan


  1. Source: Food Minister Ram Vilas Paswan
  2. What: The National Food Security Act (NFSA), which envisages supply of subsidised foodgrains, has been implemented across the country
  3. Why: Kerala and Tamil Nadu have also rolled out the NFSA from November. With this, the Act now has been implemented in all the States and Union Territories
  4. 81.34 crore persons will get wheat at Rs. 2 per kg and rice at Rs. 3 per kg
Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Govt to announce NFSA with Rs 1,30,000 crore outlay


Govt is gearing up to announce a mammoth rollout of NFSA with an outlay at Rs 130,000 crore, which will be double the number earmarked in this year’s Budget.

  1. The planned commitment is greater than the entire allocation towards food subsidy in this year’s Budget — Rs 124,419 crore and the full-fledged rollout of the Act will begin from April 1.
  2. Some 1.8 lakh fair price shops across the country will have electronic point of sale devices to authenticate beneficiaries at the time of distribution.
  3. The quantum of grains distributed to each family will be electronically captured.
  4. The number of these shops, at 70,000 now, will increase to 5.52 lakh by March 2017.
Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

Gujarat got four extensions on Food Security Act


  1. Gujarat has not yet implemented the National Food Security Act (NFSA).
  2. It received four consecutive extensions from the Centre.
  3. The govt. says it has prepared the list of beneficiaries according to provisions of the Act.
  4. As per the latest extension, the State will implement NFSA from April 2016.
  5. A PIL petition was filed in the High Court demanding compensation from the State for its failure to implement the law.

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