(a) whether the subsidy on food is ballooning over recent year mainly due to higher
administrative and operating cost of Food Corporation of India;
(b) if so, the details thereof; and
(c) the steps taken/proposed to be taken to reduce food subsidy-operating administrative
cost of FCI?
MINISTER OF STATE IN THE MINISTRY OF CONSUMER AFFAIRS AND PUBLIC DISTRIBUTION
( SHRI SRIRAM CHAUHAN )
(a) & (b) : Food subsidy is increasing mainly due ton non-neutralisation of increase
in MSP by corresponding increase in the CIP since February, 1994 except a marginal adjustment
in prices when TPDS was introduced since 1st June, 1997. Though the CIP in respect of rice
and wheat has been increased w.e.f. 29.01.1999 for APL families only, a further upward revision
of CIP on wheat for APL population was made effective from 01.04.1999. Other reasons for
increase in subsidy are :-
(i) Higher level of buffer-stocks due to higher level of procurement and relatively lower
offtake;
(ii) Increase in freight rates;
(iii) Progressive departmentalisation of labour;
(iv) Progressive switching over to 50 kg. packing;
(v) Statutory charges around 10% levied by State Governments payable ad-valorem on
increased MSP.
(c) Following important steps have been/are being taken by FCI to reduce Subsidy-operating
administrative cost :-
(i) Making efforts to achieve average capacity utilisation of 75% to reduce storage cost
even though the procurement of grain is seasonal,
(ii) Making efforts to adhere to procurement and movement ratio norm of 1:1.35 as fixed by
the Government of India to reduce the expenditure on freight,
(iii) Making continuous efforts to reduce shortage in handling of foodgrains,
(iv) Making efforts to reduce the incurrence of Railway demurrage charges,
(v) Releasing stocks in the open market at prices above the CIP,
(vi) Controlling the administrative cost by following minimum recruitment of resultant
entry level posts irrespective of the increased volume of operations,
(vii) Trying to have a look at the economic cost,
(viii) Efforts to reduce damages,
(ix) Efforts to find ways for focusing PDS on poorest of the poor.