Huge financial burden on State in the offing in new Public Distribution System policy

Centre recently decided to give New Year’s gift to the country’s poor by supplying free rice under the National Food Security Act

The Telangana government will face a huge financial burden on one more count, this time with the recent decision of Centre to give New Year’s gift to the country’s poor by supplying free rice under the National Food Security Act (NFSA). 

Currently, the Centre is implementing Prime Minister’s Garib Kalyan Anna Yojana by allocating rice to States for supply to its Food Security Card holders under the Public Distribution System (PDS) at a subsidised price of ₹3 per kg. But, this will cease after December 31 as the Centre will switch to NFSA for rice distribution totally free from January 1 to December 31, 2023. 

In the purchase price of ₹3 per kg., the Telangana government added its own subsidy of ₹2 a kg and took up PDS at ₹1 a kg. With rice becoming totally free from January 1, the Telangana government will now have to bear that extra one rupee. Also, the Centre had announced the rice allotment will be only five kgs per head per month. But, the State government was so far giving six kgs per head per month to food security card holders of Central and State schemes.  

The Centre procured rice from FCI at ₹32 a kg and provided a subsidy of ₹29 a kg for allotment to States at ₹3 a kg. The States at their will took up PDS at either the same rate or added their own subsidy.    

For the 89.96 lakh cards to as many families in the State, only 54.44 lakh cards were covered by Central scheme while the remaining 35.52 lakh cards were issued by the State government. There were a total of 2.83 crore consumers in both schemes. Hence, the State government will not only have to bear the Re. one per kg burden but supply one kg extra rice to 1.91 crore members in 54.44 lakh families supported by the Centre.    

In these circumstances, the State government has not yet taken a decision in the matter even as the fair price shop dealers were clueless about the amount payable for drawing demand drafts on banks for stocks to be lifted in the first week of next month.