State govts' cheaper grain schemes affect PDS offtake

Coming election sops to intensify trend.

The populist subsidised grain schemes of various state governments are bypassing the central government-run Public Distribution System (PDS). Wheat and rice offtake under the three PDS schemes — for below poverty line (BPL), above poverty line (APL) and Antyodaya Anna Yojana (AAY) categories — has declined sharply in 2008-09.

In a year when the government’s grain procurement hit a record high of over 51 million tonnes, offtake of wheat and rice under the PDS schemes has fallen by 9.72 and 7.75 per cent, respectively, thanks to the state governments’ move to sell wheat and rice at much cheaper rates.
 

STATES VS CENTRE
Commodity	Average monthly PDS offtake in 2007-08 (in tonnes)
		Monthly offtake  in April-February  (2008-09)	% change
Wheat	875,000	790,000	-9.72
Rice	1,458,000	1,345,000	-7.75
Source: Food Corporation of India

For instance, the central government is selling rice to the BPL category at Rs 5.65 a kg. By contrast, the Chhattisgarh government is selling rice to the BPL category at Rs 3 a kg, cheaper by nearly 47 per cent. The Madhya Pradesh government is selling wheat to the BPL category at Rs 3 a kg, cheaper by nearly 28 per cent to the central government price of Rs 4.15 a kg.

Governments of Andhra Pradesh, Tamil Nadu and Orissa are also running schemes that offer grain at prices lower than the PDS rates.

All these schemes were announced last year. “The decline can mainly be attributed to the cheaper grain sold by a number of states,” said a Food Corporation of India official.

Ironically, these states purchase wheat and rice from the central pool at the economic cost. The economic cost is calculated by taking into account the purchase price along with transport and handling expenses.

Average monthly wheat offtake under the PDS schemes stood at 790,000 tonnes during the April-February period of 2008-09, down 9.72 per cent from the monthly average of 875,000 tonnes during the previous year. Similarly, in case of rice, the monthly offtake during the first 11 months of 2008-09 stood at 1,345,000 tonnes, down 7.75 per cent from the average monthly consumption of the previous year.

This has happened at a time leading political parties are luring voters with promises of even cheaper grain. While the Congress has promised wheat and rice at Rs 3 a kg to BPL families, the BJP has tried to score over the former by promising wheat and rice at Rs 2 a kg.