Concerned over rising economic cost of wheat and rice including burden of carrying forward stocks, the pre-Budget Economic Survey on Wednesday called for redesigning the food security framework terming the current regime as fiscally unsustainable.
Economic cost of rice and wheat at Rs 1,262.51 and Rs 924.82 a quintal this fiscal up from Rs 1074.80 and Rs 887.51 a quintal respectively in 1999-2000 is much higher than their purchase price.
Economic Survey 2003-2004: Complete Coverage
Favouring a thrust on decentralised procurement, restrain in hiking MSP, fixing procurement price inclusive of four per cent state levies in lieu of MSP, crop diversification and food processing, the annual survey tabled in Parliament said resources at present being spent on holding stocks can be better used for eliminating hunger.
"The fiscal unsustainability of providing food security through buffer stock operations is becoming increasingly evident," it said adding, "carrying cost of buffer have been rising substantially in recent years, currently accounting for about 25 per cent of the food subsidy bill."
Storage losses are high, procurement incidentals, distribution and administrative cost, together with the carrying cost form a very high proportion of the actual purchase cost of grains, making it imperative to redesign the food security framework.
In the last two years, foodstocks have been used as a principal resource for poverty alleviation programmes under welfare schemes. In the long run, with resources currently being spent on holding stocks, it should be possible to eliminate hunger.
The Survey said there should be restrain on hike of grains MSP till it equals 'C2' cost of production of the least cost state.
There has to be rationalisation of the existing high level of state levies on grains. The proposal to announce a procurement price inclusive of four per cent state levies in lieu of the MSP, needs to be pursued, it said.
It pointed out that mid-day meal scheme and the Sampoorna Gramin Rozgar Yojana were the two major welfare schemes that absorbed a substantial off-take of grains.
Resources spent on holding stocks can be used to make a significant dent on the current appalling levels of malnutrition among the country's children and augment the quality of human resources.
With rising acquisition cost of both rice and wheat, the Survey said there was no alternative to decentralised procurement operations to help save transport cost and reduce overall economic cost.
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