FAQs on National Food Security Ordinance
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 entitlements
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 comparison, the foodgrains 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 of foodgrain
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 croreAntyodaya Anna Yojana (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. per family 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 food grains to meet the obligations under the
Ordinance?
Total annual requirement of foodgrains, including foodgrains required
for other welfare schemes, is estimated at 612.3 lakh 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 food grains 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.1,24,747crore.
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 grievance redressal 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 Governments as distribution of foodgrains/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 of foodgrains 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 lakh crore 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 the offtake against it. Currently, subsidised foodgrains are
being made available to 6.5 crore BPL households (including 2.43 crore AAY
households) and about 11.5 crore APL households. While BPL and AAY
households are entitled to receive 35 kgs foodgrains per month,
allocation for APL households is subject to availability, and currently they
are being allocated @ 15 kgs 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 tonnes 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 612lakh 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 offtake against 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 endeavour to
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 of FPSs 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 lakh bogus/ 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 of foodgrains 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 20lakh 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 of foodgrains however may get damaged during storage
due to various reasons such as storage pest attack, leakages in godowns,
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
|
Off take of foodgrains
from FCI stocks (lakh tons)
|
Quantity damaged
(lakh tons)
|
% damaged foodgrains
|
|
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
(up
to Feb, 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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