Centre asks states to cap levy rice purchase for PDS at 25%

The Centre has directed state governments to fix the cap of levy rice -- the portion of rice states buy from mills for public distribution -- at 25 per cent from from the procurement season beginning October 1.
Although the decision on levy rice was taken by the previous government, it could not be implemented due to the resistance from states especially Andhra Pradesh and Uttar Pradesh. As a result, the decision was deferred for a year.
Under the levy mechanism, operational since 1978, states buy some percentage of rice -- known as levy rice -- processed from that paddy purchased by millers at the minimum support price (MSP) directly from farmers. The levy rice is purchased to meet the PDS demand. The levy rice percentage is fixed in the range of 30-75 per cent by different states.

"The decision to limit levy rice procurement at 25 per cent was deferred last year. Now, we have decided to enforce this from October 1 for an year before abolishing it completely," a senior Food Ministry official told PTI.
In the levy rice order, the official said that the state governments have been informed to impose levy rice procurement not more than 25 per cent for the 2014-15 season (October-September). "Their powers to fix levy rice more than 25 per cent have been withdrawn," the official said.
The move will ensure MSP goes directly to farmers, optimise procurement operations, reduce the government's food subsidy burden, the official added.

The levy mechanism cannot be abolished in one go, the official said that because some states like Andhra Pradesh, Uttar Pradesh, West Bengal and Uttarkhand are dependent on this. "If levy is abolished, states like Andhra Pradesh and Uttar Pradesh have to expand their procurement operations."
The government aims to procure 30 million tonnes of rice in the 2014-15 procurement season. Currently, there is no levy system in Haryana and Punjab.
Food subsidy for the 2014-15 has been estimated at Rs 1,15,000 crore, about 25 per cent more than in 2013-14.