Annexure II

I.  Statutory levies imposed on purchase of food grains amount to as much as 12.5 per cent of the procurement price in certain states. The Committee recognises that payments by the FCI as statutory levies to state governments are essentially transfers from the centre to state governments and should be counted as such. It therefore recommends the elimination of such levies on food grain, an essential commodity. Till such time, the statutory levies charged by states should be settled separately between the Centre and the state governments without involving FCI or its economic cost. This would require necessary amendments in the states’ Sales Tax Acts. Alternatively, the amounts being implicitly transferred to states from the central government in the form of statutory levies may be transferred directly in the form of current transfers.

II. The Committee notes with concern attempts by various producing state governments to have the quality norms for purchase of food grain for the central pool relaxed from time to time. Many consuming state governments have refused to accept such food grains for PDS distribution. The Committee therefore recommends that FAQ norms be strictly adhered to. If any state government requests for relaxation of quality norms, this should be invariably accompanied by an appropriate price reduction besides exemption from statutory state levies.

III. The MSP for paddy and the levy price for rice be fixed only for a single grade, as against Common and Grade A at present.

IV.  OMSS prices should cover not only the acquisition cost but also, as far as possible, reflect fully the differences in costs of transport and storage at different points of sale. This should be at least FCI’s acquisition cost less statutory levies. Further, differentials across regions should be restored, and there should be a pre-announced graded escalation per quarter.

V. In order to revive the offtake from PDS system, the APL population needs to brought into the net by reducing the APL price to 80% of the economic cost, excluding statutory levies or about 75 % of the present economic cost including levies. The BPL price should be 50% of the economic cost, excluding the statutory levies. This would help improve the viability of the distribution network and thus improve BPL offtake as well.

VI.  For the BPL families, the quota should depend on the number of members in a family. The committee recommends that each BPL family be permitted to purchase up to 5 Kg per person at the announced BPL price per month or an allocation of 20 Kg per family whichever is higher. Any additional requirement may be provided at the APL price.

VII.  For the areas covered earlier under the Revamped PDS (1775 blocks), and areas currently drought affected or ravaged by other natural calamity like floods, cyclones,  earthquakes, etc., a universal PDS be introduced  at  BPL prices and quota.

VIII.  In the Revamped PDS areas, the Supplementary Nutrition Programme (SNP) of ICDS may be strengthened. Similarly, the Midday Meal Scheme could be strengthened by extending its coverage to secondary school students.

IX.  The Committee strongly urges the government to examine ways of expanding programmes of employment generation to create an effective demand for food grains.

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