Food minister Piyush Goyal said there was no proposal before his ministry to increase the rate of foodgrain sold through ration shops under the National Food Security Act (NFSA). The ration shops, also known as Public Distribution System (PDS), sells foodgrains at highly subsidized rates to the card holders.
The recent Economic Survey has recommended an increase in selling prices of wheat and rice under the NFSA. It said that the food subsidy bill is “becoming unmanageably large” and while it is difficult to reduce the economic cost of food management in view of rising commitment towards food security, there is a need to consider the revision of central issue price (CIP).
The CIP is the price at which wheat and rice are sold at ration shops. There has been no change in these prices since 2013: wheat at Rs 2 per kg and rice at Rs 3 per kg. Though the NFSA prescribes revision of the CIP every three years, this hasn’t been carried out. The Centre’s procurement expenditure routed through the FCI has ballooned over the years and is estimated to be Rs 1.73 lakh crore in FY20.
Goyal said the food ministry is closely working with Railways and state governments to expand capacities with silos near rail infrastructure.
The Commission for Agricultural Costs and Prices (CACP), in its rabi 2020 report, had recommended that the open-ended procurement system be reviewed. The CACP had in the past, too, pitched for direct procurement by private players, under the Private Procurement Stockist Scheme. “Due to increased procurement of wheat and rice in recent years, the government has emerged as the single-largest buyer of foodgrain.
In major wheat producing states like Madhya Pradesh, Punjab and Haryana, the government procures more than three-fourth of marketed surplus due to the open-ended procurement policy. This policy is driving out private sector from the market and has adversely affected crop diversification,” the CACP said.