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ARTICLE : National food Security Ordinance- Some More FAQs
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Thursday, 08 August 2013 10:26


National food Security Ordinance- Some More FAQs

National Food Security Ordinance (NFSO), aims to provide wheat and rice at highly subsidized rates of Rs. 3 and Rs. 2 respectively to about 67% population of the country was promulgated on July 5th 2013. The Ordinance provides legal right to the beneficiaries to get food grains.  In the case of non supply they can claim monitory compensation.

Following are the few frequently asked questions and their answers (FAQs) regarding National Food Security Ordinance.

  • As per the Ordinance, only 67% of the population will be covered under TPDS. Why the coverage cannot be universalized?

The entitlement proposed in the Bill are based on recent trends in production and procurement of foodgrains. The average annual procurement of foodgrains during 2007-08 to 2011-12 has been about 60.24 million tons. In comparision, thefoodgrain requirement for covering the whole population under TPDS, even with an entitlement of 5 kg per person per month, is estimated at 72.6 million tons.  Requirement for OWS would be additional. It is not feasible to meet such a high level offoodgrain requirement at the current levels of production and procurement.

  • For BPL households, the entitlement of 5 kg. means reduction in what they are currently getting under TPDS? Will it not hurt them?

At present, the TPDS covers 6.52 crore Below Poverty Line (BPL) families, including 2.50 crore Antyodaya AnnaYojana (AAY) families on the basis of population estimates of 1999-2000 of Registrar General of India and poverty estimates of 36% (1993-94) of Planning Commission. The rest of the families are covered as Above Poverty Line (APL).  The AAY and BPL families are allocated 35 kg. foodgrains per month. Allocation to APL families is subject to availability of foodgrains. The Central Issue Prices (CIPs) of wheat / rice are Rs 2/3 per kg for AAY families, Rs.4.15/ 5.65 per kg for BPL families and Rs.6.10/.8.30 per kg for APL families.

As can be seen, only about one fourth of the total estimated households at present have fixed entitlement of 35 kg. perfamily per month. NFSB on the other hand proposes to give legal entitlement to receive 5 kg of foodgrains per month to about 67% of the population at the all India level. Within this coverage, entitlement of AAY households, which constitute the poorest of the poor, is being protected at 35 kg per household per month.  Further, all the households covered by the Ordinance under TPDS will be entitled to receive wheat and rice at  Rs.3 and 2 per kg, which is the current AAY price. As a result, the existing BPL households also, who will face reduction in their entitlement in terms of quantity of foodgrains, stand to gain in terms of highly subsidized prices.

  • Why the right to food is restricted to only food grains and does not include pulses, edible oils, etc?

There is huge dependence on imports for meeting the domestic demand for pulses and edible oils. Also, the procurement infrastructure and operations for pulses and oilseeds are not strong at this moment. In the absence of assured overall domestic availability of these commodities and weak procurement operations, it is not possible to confer a legal right for their supply.  The Government is however implementing schemes for supply of subsidized pulses and edible oils to targeted beneficiaries. Simultaneously, steps will be taken to improve procurement operations for pulses and oilseeds.

  • The Ordinance seems to address only the basic requirements in terms of foodgrains and seems to lack focus on nutritional aspects. How can this then be called a comprehensive approach to food security?

Malnutrition is no doubt a serious issue facing the nation. It is however, not a correct assessment to suggest that the Bill does not address the issue at all. It does seek to address the problem of malnutrition among pregnant women   and children which has to be the focal point of our strategy to address this challenge.

There is a special focus in the Ordinance on nutritional support to women and children. Pregnant women and lactating mothers, besides being entitled to nutritious meals as per the prescribed nutritional norms, will also receive maternity benefit of not less than Rs. 6000/-.

Children in the age group of 6 months to 6 years will be entitled to take home ration or hot cooked meal as per the prescribed nutritional standards. Higher nutritional norms have been prescribed for children in the age group of 6 months to 6 years who are malnourished. Children in the lower and upper primary classes will be entitled to nutritious meals in the schools as per the prescribed nutritional norms.

  • Whether the Government has sufficient foodgrains to meet the obligations under the Ordinance?

Total annual requirement of foodgrains, including foodgrains required for other welfare schemes, is estimated at 612.3lakh tons. Procurement of foodgrains (wheat and rice), both in absolute quantity and in terms of percentage to production, has improved in recent years. The average annual procurement, which was 382.2 lakh tons, i.e. 24.3% of the  average annual production during 2000-2001 to 2006-07, has gone up to 602.4 lakh tons during 2007-08 to 2011-12, i.e 33.2% of the average annual production. It will therefore be possible to meet the requirement at the current levels of production and procurement of foodgrains. Even with an estimated marginal decline in foodgrains production in 2012-13, the requirements for the Ordinance will be met.


  • It is argued that the Ordinance will dissuade the farmers, especially the small and marginal farmers, from producing foodgrains as they will be assured to get highly subsidized foodgrains to meet their consumption requirements. Your response?

Production of foodgrains is a means of livelihood for farmers for which they are adequately rewarded by way of MSP for their produce. The reach of MSP is expanding every year and in the wake of the increased requirement for implementation of the Ordinance, more and more farmers will be brought under the ambit of MSP operations. Therefore, contrary to dissuading farmers, the Ordinance will in fact encourage them to produce more.

Access to highly subsidized foodgrains to small farmers on the other hand will ease the burden on their limited earnings and allow them the option to spend the money so saved on other necessities and hence improve their quality of life.

  • States have been complaining about additional financial burden that the legislation on food security imposes on them. How will Central Government bring States on board as it is the States who have to implement the Ordinance?

The main financial implication of the Ordinance would be on food subsidy. At the proposed coverage and entitlement,total estimated annual foodgrains requirement is 612.3 lakh tons and the corresponding estimated food subsidy for its implementation, at 2013-14 costs, is about  Rs.1,24,747 crore. When compared to the estimated food subsidy requirement under existing TPDS and Other Welfare Schemes, the additional food subsidy implication is about Rs. 23,800 crore per annum. This additionality will be borne completely by the Central Government.

States had expressed their concern about additional burden on them, especially on account of setting up of grievanceredressal machinery and intra-state transportation of foodgrains, fair price shop dealer’s margin etc. These concerns were based on provisions of the original Bill, which was introduced in Lok Sabha in December, 2011. However, keeping into consideration the recommendations of the Standing Committee and views of the State Governments, the Ordinance now provides that Central Government will provide assistance to States in meeting the expenditure incurred by them on transportation of foodgrains within the State, its handling and FPS dealers’ margin as per norms to be devised for this purpose. Further, with respect to grievance redressal mechanism, the Ordinance gives flexibility to State Governments to either set up separate mechanism or use the existing machinery.

  • In a Central legislation, how fair is it to put the responsibility of payment of food security allowance on State Government?

It is not correct to say that this responsibility is being squarely placed on States. Such responsibility will lie on States only in case they fail to distribute the entitled foodgrains or meals after having received the foodgrains from the Central Government.

Section 23 of the Ordinance provides that in case of short supply of foodgrains from the central pool to a State, the Central Government shall provide the State Government funds for meeting obligations under the Act. The obligation for paying the food security allowance to the ultimate beneficiary, under section 8, is however on State Govts. as distribution offoodgrains/meal as per entitlement will be their responsibility.

  • How soon the Ordinance is expected to be actually implemented by States?

Some preparatory work is required before the Ordinance can be implemented. For example, the actual identification of the households, within the coverage determined for each States/UT under TPDS, is to be done by State Governments, in accordance with guidelines to be evolved/ specified by them.  State Governments will therefore be required to first evolve suitable criteria for identification and thereafter undertake the actual work of identification. Allocation and distribution offoodgrains under the Act can take place only after the exercise of identification of households is complete. The Ordinance accordingly provides that State Government shall complete the identification within 180 days after its commencement. This period may however differ from State to State and if any State is ready to implement it early, they will be encouraged to do so.

For the interregnum, the Ordinance contains transitory provisions for continuation of existing schemes, guidelines etc.

  • Any rights based approach can work only if there is an independent grievance redressal mechanism. What does Ordinance provide in this regard?

The Ordinance  provides for an effective and independent grievance redressal mechanism  at the District and State levels. This will include a District Grievance Redressal Officer for each District to enforce the entitlements and investigate and redress grievances.  There is also provision for setting up of State Food Commission, which will either suo motu or on receipt of complaint inquire into violations of entitlements. The Commission will also hear appeals against orders of DGRO and have powers to imposed penalty. Any aggrieved beneficiary can approach these authorities.

  • Identification of households to be covered is proposed to be left to States. Every State will adopt different criteria, leading to a situation of  households with same socio-economic condition getting the benefit in one State but not in other State. How desirable is this?

The Bill as introduced in the Lok Sabha in December, 2011 provided that guidelines for identification will be prescribed by the Central Government. State Governments during interaction with them expressed the view that they should have a greater role in determining the criteria for identification of households. The Standing Committee also recommended that Government should devise clearly defined criteria in consultation with the State Governments. These opinions and recommendations have been carefully considered. Keeping in view the wide inter-State variations in the socio-economic conditions, it was felt that any criteria evolved by the Central Government for the country as a whole may not properly reflect these diversities, and therefore invite criticism.  It was also difficult to evolve a consensus with State Government over the issue of criteria to be adopted. Therefore the work of identification is now proposed to be left to States, which may develop their own criteria.

  • Will the NFSO lead to expenditure close to 3% of GDP?

Reports have appeared in the media that implementation of the Ordinance will involve expenditure of more than 3 lakhcrore or 3% of the GDP. These estimates are based on erroneous comparisons and extrapolations. Requirements under NFS Ordinance should be compared with the existing commitments of the Government for providing subsidized foodgrains for a meaningful assessment of the impact of the Ordinance.

Expenditure on subsidy is incurred by the Government on the foodgrains allocated by it at subsidized prices and theofftake against it. Currently,  subsidised foodgrains are being made available to 6.5 crore BPL households (including 2.43crore AAY households) and about 11.5 crore APL households. While BPL and AAY households are entitled to receive 35kgs foodgrains per month, allocation for APL households is subject to availability, and currently they are being allocated @ 15kgs per month in 22 States and 35 kgs per month in 13 special category States. As per the current coverage and entitlement, total requirement of foodgrains under TPDS is estimated at 498.7 lakh tons. If requirement of 65 lakh tons for other food based welfare schemes such as ICDS, MDM etc is added, the requirement goes up to 563.7 lakh tons and the corresponding food subsidy implication is estimated at about Rs. 1,00,953 crore per annum. For implementation of NFS Ordinance, the estimated foodgrains requirement is about 612 lakh tons, with associated food subsidy implication of Rs. 1,24,747 crore, implying thereby an additionality of Rs. 23,794 crore.

It is not correct to attribute the current levels of food subsidy expenditure to the coverage and distribution figures derived from findings of a sample survey and use it as a basis to extrapolate the implications under NFS Ordinance. The expenditure incurred on food subsidy is for the total quantity of foodgrains allocated by the Central Government and offtakeagainst it by States/UTs and not to household coverage and per family distribution as estimated through a sample survey. At best, the sample survey points to leakages and diversions in the public distribution system. Steps are being taken to check these leakages and the same will be strengthened through increased use of ICT tools and other means.

  • It is generally believed that the Public Distribution System needs a major overhaul. How does the NFSO propose to address this?

PDS is operated under the joint responsibility of Central and State Governments wherein the Central Govt. is responsible for procurement, storage and bulk allocation of foodgrains to States, and the operational responsibilities including allocation within States, identification of eligible families, issue of ration cards , supervision over functioning of fair price shops etc. lies with State Govts. Accordingly, the NFS Ordinance provides that the Central and State Governments shall endeavourto undertake necessary reforms in TPDS such as doorstep delivery of foodgrains; end-to-end computerization to prevent diversion; transparency; preference to Panchayats, SHGs, co-operatives in licensing of fair price shops, management thereof by women/their collectives, etc.

The Department of Food and Public Distribution has already initiated number of measures to streamline and strengthen Targeted Public Distribution System (TPDS), some of which are given below.

End-to-end computerization of TPDS operations:

With a view to provide necessary infrastructure and financial support to States/UTs, the Government is implementing a Plan Scheme on ‘End-to-end Computerization of TPDS Operations’ for implementation in all States/UTs on cost-sharing basis.  Total estimated cost  of Component-I of the scheme is Rs. 884.07 crore, and comprises of activities, namely, digitization of ration cards/ beneficiary and other databases, computerization of Supply-Chain Management, setting up of transparency portal and grievance redressal mechanisms.

Digitisation of beneficiary database will help in de-duplication of ration cards, weeding out the bogus ration card and better targeting of subsidies. With computerisation of supply-chain, the movement of foodgrains upto FPS levels can be tracked and the problem of leakage and diversion can be addressed. Transparency portal will strengthen the functioning ofFPSs and ensure accountability at various levels. Beneficiaries can also register their grievances through toll-free numbers and seeks its resolution.

Other steps being impressed upon States/UTs

Campaign by States to review BPL/AAY lists to eliminate ghost ration cards: As on 31.3.2013, a total of 364.01 lakhbogus/ ineligible ration cards have been eliminated in 28 States:

Door-step delivery of food grains to FPS: Foodgrains to be made available at the door step of fair price shops in order to check leakages and diversions. 20 States/UTs have reported implementation of door-step delivery.

FPS licenses be given to SHGs, gram panchayats, cooperatives etc.: Out of about 5.16 lakh FPS in operation, about 1.21 lakh FPS are being run by such organizations in 30 States.

Viability of FPS dealers: States have been asked to reassess and increase the margins being given to FPS dealers. 14 State/UT Governments have confirmed that  FPS in these States are selling non-PDS items such as edible oil, pulses, milk powder, soaps etc.

  • There have been numerous cases of foodgrains rotting due to lack of storage facilities. What provisions have been made in the NFS Ordinance to create more storage?

The NFS Ordinance requires Central as well as State Government to take steps for creation and maintenance of scientific storage facilities at the Central and State levels. While the Central Government is expected to create storage facilities for safe storage of stock of foodgrains in the Central Pool, States/UTs need to create intermediary storage facilities to be able to store foodgrains at decentralized locations for meeting the distribution needs.

A.   Available storage capacity and steps to augment it

The Storage capacity, Covered and Cover & Plinth (CAP) available with the FCI is 397.02 lakh MTs as on 31.5.2013. The storage capacities, both Covered and CAP, available with State agencies for storage of Central Stock offoodgrains is about 341.35 lakh MTs. As a result, a total of about 738 lakh MTs of storage capacity was available for storage of Central stock of foodgrains which stood at 739 lakh MTs as on 30.6.2013.

The Government is successfully implementing the Private Entrepreneurs Guarantee (PEG) Scheme to augment the Covered Storage capacity. This scheme incentivizes private investment for construction of storage godowns by giving guarantees to hire godowns constructed under this scheme for a period of ten years, thereby, ensuring for the investor, a fair return on his investment.

A capacity of about 203 lakh MTs as on 31.5.2013 has been approved for the construction of godowns in 19 States out of which a capacity of 145.06 lakh MTs has been sanctioned for construction. A total capacity of 71.08 lakh MTs has been completed under the scheme as on 31.5.2013.

For ensuring long-term scientific storage, the Government has also approved construction of 20 lakh MTs of storage capacity in silos within the overall sanctioned capacity of the PEG Scheme.

The Government has finalized a Plan scheme especially for the North East, for creation of an additional storage capacity of 5.40 lakh MTs through the FCI, in the next 3 to 4 years. These capacities once created in the NE region, would take care of the storage requirements of about 3 to 4 months.

B. Rotting of foodgrains

There is a well established quality control mechanism for scientific storage of foodgrains followed in FCI godowns for proper storage and to avoid damage during storage. Department of Food & Public Distribution has issued instructions to all State Governments/UT Administration and Food Corporation of India from time to time to take required measures, for proper enforcement of quality control mechanism of foodgrains during procurement, storage and distribution. Some quantities offoodgrains however may get damaged during storage due to various reasons such as storage pest attack, leakages ingodowns, procurement of poor quality stock, exposure to rains in case of unscientific storage because of lack of storage space, floods, negligence on the part of concerned officials in taking precautionary measures etc.

Due to constant monitoring and follow-up, the accrual of damaged foodgrains in FCI godowns in absolute quantity as well as in percentage terms has been declining and is extremely low, as can be seen from table below.

Year

Offtake of foodgrainsfrom  FCI stocks

(lakh tons)

Quantity damaged

(lakh tons)

% damagedfoodgrains

2007-08

324.50

0.34

0.10

2008-09

306.20

0.20

0.07

2009-10

371.06

0.07

0.02

2010-11

432.10

0.06

0.014

2011-12

473.59

0.03

0.006

2012-13

(uptoFeb, 13)

552.60

0.03

0.005

  • Leakages in the delivery systems have been noticed all throughout the chain. How will NFSO ensure a corruption free system?

Following measures are likely to check leakages and diversions of foodgrains:

States/UTs will be required to evolve transparent criteria for identification of households. Fresh identification of beneficiaries based on transparent criteria for delivery of entitlements in a rights based manner, will address the problem of inclusion and exclusion errors in the present PDS.

Measures such as end to end computerisation of PDS operations will also help in checking the leakages and diversion of foodgrains

The NFS Ordinance provides for grievance redressal authorities at the District and State levels to enforce the entitlements and investigate and redress grievances of beneficiaries.  The State Food Commission will also have powers to impose penalty.

 

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