The Prime Minister's Office (PMO) has adopted a two-pronged strategy to douse the inflationary flames in the economy. Apart from deferring the UPA's ambitious Food Security Act by three months, prime minister Narendra Modi has issued instruction on meeting adequate supplies for the targeted public distribution system. The government will meet all the chief ministers to hold deliberations on the implementation of the Act.
The government has also said tough action will be taken against hoarders. The brainstorming session on inflation started at 10:30 am and was attended by agriculture minister Radha Mohan Singh, food processing minister Ram Vilas Paswan, finance minister Arun Jaitley and minister of state for commerce Nirmala Seetharaman.
Paswan said after the meeting, "The food security law came into force on July 5, 2013. As per the law the state governments were to implement it within 365 days, by July 4, 2014. Twenty states and five union territories have not implemented it so far. So we have decided to extend the deadline by three months."
Paswan, however, said the government will remain committed to the targeted public distribution system and schemes such as Antyodaya Anna Yojana so that the poor are not affected and continue to receive 35 kg of food grains per family a month.
Paswan, meanwhile, has been asked by the PMO to review the condition of the foodgrains in the FCI godowns. He is leaving for Patna tomorrow to take stock of the FCI.
Even though the government has put the onus of deferring the food security law on the state governments, it is also the fiscal constraints that have led the government to defer the implementation of the Act. The interim budget, presented during the UPA regime, factored in Rs88,500 crore spend for the implementation of the Act in the current financial year, which in itself is a huge challenge given the high fiscal deficit and low growth. Finance minister Arun Jaitley had already apprised the PMO regarding the implications of the Food Security Act, and called for use of TPDS for the meanwhile.
Explaining the rationale behind deferment of the law, a senior ministry official told dna, "The government will procure food grains from the market to meet the liability for the bill – thereby reducing the supply in market. For the requirement out of the bill, the beneficiaries will have to approach the market. Apart from the demands from the beneficiaries in the market, there will also be demand from the non-beneficiaries, thereby creating pressure and spiking prices. At a time when inflation is high, this may boomerang."
About Food Security Act
The food security law came into force on July 5, 2013. As per the law, state governments were to implement the law within 365 days (by July 4, 2014). Twenty states and five union territories have not implemented the food law so far.
Only 5 states have so far fully implemented the food law and another 6 have rolled out it partially
Haryana, Rajasthan, Punjab, Chhattisgarh and Maharashtra, have fully implemented the Act; while Delhi, Himachal Pradesh, Karnataka, Chandigarh, Madhya Pradesh and Bihar have done it partially
Each eligible person would get 5 kg of of rice and wheat at Rs 3 and Rs 2 per kg respectively. The existing Antyodaya Anna Yojana (AAY) households, poorest of the poor, will continue to receive 35 kg of foodgrains per family a month
The implementation of the law would increase the Centre's food subsidy bill by Rs25,000 crore to Rs1.31 lakh crore while the grains requirement would rise by 6-8 million tonnes from the current 55 million tonnes annually