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Published on: Aug. 11, 2023, 1:07 p.m.
Row over entitlements
  • Goyal: the Centre and the states should focus more on making the PDS foolproof than on expanding the existing schemes

By Rakesh Joshi. Executive Editor, Business India

The national conference of food ministers of states and Union Territories on 2 July was meant to discuss the issue of the discontinuance of rice and wheat sales to states under the Open Market Sale Scheme (OMSS) in view of the Centre’s restrictions. On the agenda were topics, such as an action plan for the procurement of coarse grains and a strengthened focus on food and nutritional security.

However, it saw a sharp exchange between Piyush Goyal, Union minister for food & civil supplies, and K.H. Muniyappa, minister for food & civil supplies, state government of Karnataka, over the restrictions imposed on states to purchase food grains from the Food Corporation of India (FCI) through the OMSS. 

Karnataka’s recently-elected Congress government has launched the Anna Bhagya Yojana 2.0, offering 10 kg of food grains to every member of a BPL household and Antyodaya card holders every month, from 1 July. This is 5 kg over and above the existing schemes. It is one of the Congress’s five poll guarantees. Apart from Karnataka, Tamil Nadu, Jharkhand and Rajasthan too have asked the Centre to provide food grains for their state welfare schemes from the buffer stock under the OMSS.

However, the Centre has turned down the appeals, with Goyal sounding caution on the El Niño factor in food grain production and procurement. On 13 June, the Centre discontinued the sale of rice and wheat from the buffer stock to state governments under the OMSS officially, due to inflationary pressure and concerns over monsoon. Goyal argued that the Centre and the states should focus more on making the Public Distribution System foolproof than on expanding the existing schemes.

Transferring cash

Its inability to procure food grains from FCI has forced it to provide cash instead of additional quantities of rice to BPL families, due to challenges in rice procurement. The process of transferring money to BPL cardholders as part of the scheme has begun on 10 July. The decision was taken following the Siddaramaiah government’s unsuccessful efforts to acquire rice from several rice-producing states, including Andhra Pradesh, Telangana, Chhattisgarh and Punjab. These states had expressed their inability to meet Karnataka’s monthly rice requirements of 29,000 tonnes.

Given the row in Karnataka, it was expected that there would be a solution. But the Centre was in no mood to oblige the states, which use the OMSS to cover a considerable portion of their food grain requirements. Goyal reiterated the Centre’s position of taking care of the interests of those outside the scope of the National Food Security Act (NFSA).

Experts feel that, though it is indisputable that the Centre has to look after the non-NFSA category of beneficiaries, the states’ plea too considers the needs of sections of the non-NFSA population, as those covered under the Act get their entitlements under the Centre’s monthly allocation of food grains. Besides, if states are forced to tap the open market, rice and wheat prices are bound to go up.

This will defeat the Centre’s objective behind restrictions on quantity sold through OMSS, which is keeping prices under control. Finding a middle ground would have addressed everyone’s concerns, at least partially.

  • The controversy over the OMSS and the showdown at the food ministers’ meeting have sent out the message to states that it would not be wise to rely on the Centre or its agencies when it comes to implementing state welfare schemes in the food sector

The deadlock prompted the Congress to take potshots at the Centre. Jairam Ramesh, Congress general secretary and spokesman, said in a tweet that it was clear after the food ministers’ meeting that the Union government was prioritising supply of rice for ethanol production (an aside at the launch of a sugar-ethanol portal during the conference) food security needs of the poor.

“States like Karnataka are willing to pay the FCI Rs34 per kg for meeting their food security needs, but that door has been closed by a brazenly vindictive Modi government. FCI, however, will continue to sell rice at Rs20 per kg to ethanol producers,” Ramesh said.

The controversy over the OMSS and the showdown at the food ministers’ meeting have sent out the message to states that it would not be wise to rely on the Centre or its agencies when it comes to implementing state welfare schemes in the food sector. They must identify their own sources, and in a cost-effective manner. After the U-turn by the FCI in providing additional food grains for the Anna Bhagya 2.0 programme, Karnataka could not find an equivalent supplier, cost and availability being a key reason.

But will the development force the states to introspect whether it is feasible to scale up the size of entitlements without the requisite back-up? Though Karnataka has found a way out, the episode brings into focus the fact that politics has now firmly entered the domain of food security. And, attempts to replicate schemes of the Union government, which have a bigger resource base, may not always be fruitful.

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