'Govt can manage extra resources'

A day after Agriculture Minister Sharad Pawar questioned the rationale behind the food security Bill saying that the increased subsidy burden could jeopardise the country’s financial health, Planning Commission Deputy Chairman Montek Singh Ahluwalia on Thursday said the government could accommodate the additional resources needed for successful implementation of the proposed Bill.

“The draft food security Bill as being formulated by the food ministry is absolutely feasible, though it will lead to higher costs, but I believe we can bear it,” Ahluwalia told reporters while addressing the Economic Editors’ Conference.

He said that it is a fact that once the Bill is implemented, additional resources would be needed to run the programme, but it could be accommodated, provided misdirected subsidies like that given on petroleum and fertiliser were targeted better.

As per rough estimates, the country’s annual food subsidy is expected to rise to over Rs 100,000 crore from the current Rs 60,000 crore after the food security Bill is implemented because of high procurement cost and low price of selling them to the poor. This will be in addition to the already high fuel and fertiliser subsidies estimated to be around Rs 74,000 crore as per the 2011-2012 Budget estimates. The draft food security Bill as formulated by the food ministry proposes to give legal entitlement for grains to 75 per cent of the rural population and 50 per cent of the urban population. Rice, wheat and coarse cereals are proposed to be supplied at Rs 3, Rs 2 and Rs 1 per kilogram, respectively to priority-sector households.

On Wednesday, Pawar had said government should supply highly subsidised foodgrains only to the “really needy people”, else the country’s economy would be affected.

He also said price at which grains are sold to the poor through the ration shops should be raised or else it could be misused. This would increase the government’s subsidy burden significantly.

“My suggestion is that you should go in for that (hike in price of ration supplies) and assess the repercussions. I don’t want the Soviet Russia to happen in this country,” Pawar had said. “I feel the draft food security Bill as formulated by the ministry will target the subsidies much better and the resources for running the programme can be arranged,” Ahluwalia said.