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National food law dawdles

The National Food Security Act (NFSA) is still getting a lukewarm response from a majority of states.

An extended deadline for implementing the law will expire in about a month and the Centre would have to give more time. Barring the nine states and two Union Territories (UTs) which introduced a food security scheme under the Act within a year of it coming into force, none of the other 20 states and five UTs has shown interest in starting.

“States are not ready to introduce NFSA even after the government gave them three more months to implement it,” a finance ministry official said on condition of anonymity.

He said most state governments do not have the wherewithal to do the required surveys for identifying beneficiaries in rural and urban areas separately. “They are finding it very cumbersome,” he added.

The Act was enacted on July 5, 2013, during the previous United Progressive Alliance government. States and UTs were asked to implement it within a year. However, only 11 – Punjab, Haryana, Rajasthan, Himachal Pradesh, Delhi, Madhya Pradesh, Bihar, Chhattisgarh, Maharashtra, Karnataka and Chandigarh – did so. A three-month extension was given, till October 5. However, no other state has come forward.

Officials said this could force the Central government to further extend the deadline for implementing the ambitious programme by another year.

The government in Gujarat, where Prime Minister Narendra Modi was chief minister till recently, has said it wants a year more to implement.

A one-year extension will also provide relief to the Centre, battling to rein in the fiscal deficit at the target of 4.1 per cent of gross domestic product for the current financial year. The food subsidy was pegged at Rs 1,15,000 crore for the current financial year, around Rs 23,000 crore more than in 2013-14. The spillover of subsidy from the fourth quarter to the next financial year would also be reduced. The deficit has already crossed 60 per cent of the full-year target given in the Budget in the first four months itself. And, at the end of the first quarter, the deficit was over 10 per cent of GDP.

If implementation is postponed in all states for a year, the Centre would save about Rs 20,000 crore.

Starting October, the government might also be able to limit its food subsidy as it has adopted various steps to limit foodgrain procurement to the requirements under the public distribution system. Officials said the food department had decided to purchase only 25 per cent of levy rice, sold through ration shops, from mills against the earlier practice of 35-70 per cent. This could instantly lower its rice procurement in the 2014-15 season that will start from October by around 10 million tonnes (mt).

Second, it has decided not to make any extra rice or wheat procurement from those state governments which declare a bonus over and above the Centre-determined Minimum Support Price. This would be from October in the case of rice and next April in the case of wheat. It has also decided to offload 10 mt of grain this year in the open market, which would help lower the stock.

“In food, there will be less procurement and more offloading. This will lead to savings,” the finance ministry official said.

Of the 57.4 mt of government stocks at present, wheat is 38.1 mt and rice is 19.3 mt. This does not include 8.1 mt of unmilled paddy with private mills.

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