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  1. #1
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    Default Budget 2012: Food Security Bill may get Rs 5,000 crore

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    Signalling its commitment to roll out the Food Security Bill in the next fiscal, finance minister Pranab Mukherjee is likely to announce a token allocation of Rs 5,000 crore in the forthcoming budget.

    The funds would primarily be directed at creating and strengthening the institutional arrangement to deliver the massive allotment promised under the scheme. The food security bill is of extreme political importance to the United Progressive Alliance (UPA) which had pitched the programme as an electoral promise in 2009.

    The government hopes that the scheme will bring in votes for the UPA in the next General Elections (2014) similar to the 2009 elections when National Rural Employment Guarantee Programme attracted the rural voters.

    "While the implementation of the scheme is likely to happen in the latter part of the year, an allocation will be made in the budget itself which will be primarily be used to reform the distribution channels," a government official told ET.

    The Bill promises subsidised foodgrains to 75% of the rural population and 50% of the urban population of the country. A minimum of 46% of the rural population and 28% urban population, called the priority households, will get 7 kg of foodgrains per month per person. Rice would be provided at 3 a kg, wheat at 2 and coarse grains at 1 per kg.

    The Bill has been earlier criticised by many within the government like agriculture minister Sharad Pawar, planning commission deputy chairman Montek Singh Ahluwalia and PMEAC chairman C Rangarajan as being unsustainable to the exchequer besides requiring a major upscaling of foodgrain procurement by the government.

    However, food minister KV Thomas met Prime Minister Manmohan Singh last week to convince him regarding the feasibility and cost sustainability of rolling out the scheme in a phased manner from next fiscal.

    The food ministry has estimated that implementation of the programme will only lead to a marginal increase of around 2% in current expenditure under the Targeted Public Distribution System (TPDS). The estimates take into consideration the 2011 Census findings and pitch the cost of the Food Bill at Rs 1,12,000 crore, marginally higher than the Rs 1,09,795 crore required for operations under TPDS.

    "The scheme and its cost will be scaled up gradually. It would most likely be a transition through the targeted public distribution system," the official added.

    Food subsidy is currently at Rs 63,000 crore. The Food Bill has been cleared by the cabinet in December 2011 and is expected to be tabled in the parliament during the Budget session. The Bill will then be considered by a parliamentary standing committee before being passed by both the houses of the parliament. The government expects a formal rolling out of the scheme by November 2012.

    As far as procurement under the scheme is concerned, the food ministry has calculated that the scheme will only need an additional procurement of 2 million tones from what is currently required under TPDS.

    Currently the government procures 54 million tones (MT) under TPDS, which is expected to rise to 61 MT after the 2011 Census. The proposed Food Security Act is expected to require a procurement of 63 MT of foodgrains.

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