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Shanta Kumar Committee Report on Revamping FCI
Jan 31, 2015

The Shanta Kumar committee constituted by the government on how to reform the Food Corporation of India (FCI) submitted its report. Former Union Food minister Shanta Kumar, who chaired the committee, said the report was pro-farmer and pro-poor, and followed the Gandhian ideal of Antyodaya.

Key Recommendations

  • The committee suggests limiting food grain distribution under the National Food Security Act (NFSA) to 40 per cent as against the current norm of 67 per cent, thus, saving the exchequer around Rs. 30,000 crore per year.

  • It, however, wants more to be given to households classified as Below Poverty Line (BPL), seven kg a head instead of five kg in a month.

  • The coverage of 67 per cent would mean a subsidy of Rs. 1.3 lakh crore a year and that of 40 per cent would mean Rs. 77,000 crore a year, at 5 kg. each of grain.

  • If 7 kg. is given, the subsidy will be Rs. 1.07 lakh crore.

  • The food ministry should be quick to export grains or sell them in the local market as soon as FCI procures more than the requirement.

  • The government should defer implementation of NFSA in states that have not done end-to-end computerization.

  • The government should not put the list of beneficiaries online for anyone to verify and have not set up vigilance committees to check pilferage from the Public Distribution System (PDS).

  • Beneficiaries covered under the Antyodaya Anna Yojana, numbering around 30 million households on the basis of a 1992-93 census, should continue to get food grain through the PDS at highly subsidised rates of Rs. 3 a kg. for rice, Rs. 2 for wheat and Rs .1 a kg. for coarse cereals.

  • Those outside this classification but priority households should get grain at a price which is half the government's minimum support price.

  • Under the current form of the Act, food grain is to be allocated to all beneficiaries at a uniform Rs. 3 a kg. for rice, Rs. 2 a kg. for wheat and Rs. 1 a kg. for coarse cereals each month. This price would remain for three years.

  • The committee also suggested the government gradually move to cash transfer of the subsidy in the PDS, starting with the 50-odd cities having a population of more than a million.

  • This could be extended to the food grain surplus states and thereafter the deficit states could be given the option of either cash or physical grain distribution.

  • If the report is implemented in full, it will have a magnificent impact on the poor of this country and add an extra income of Rs. 3,000 crore per annum for the poor, helping bringing around 15 crore people out of poverty.

  • The panel estimates if food subsidy is transferred in cash, it will save the exchequer around Rs. 30,000 crore per annum in subsidies, while giving a better deal to consumers.

  • The committee also suggests FCI hand over procurement of wheat and rice to the state governments in Andhra Pradesh, Chhattisgarh, Haryana, Madhya Pradesh, Odisha and Punjab. And, concentrate on Uttar Pradesh, Bihar, West Bengal and Assam, where farmers resort to distress sales due to poor state procurement and are dominated by small land holdings.


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