Special Service and Features
| Prices of essential commodities a major challenge for the Government |
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The
prices of pulses because of huge demand supply gap and the government measures
to contain the prices dominated the food sector in 2015. On the other hand,
sustained efforts of the central government resulted in the implementation of
the National Food Security Act in 25 states/UTs towards the end of the year --
under which 67 per cent identified population is to get highly subsidized
foodgrains through ration shops -- and secured assurances from remaining States
to set the ball rolling by March next year.
The
government took several steps to check the rise in the prices of tur and urad
dals during the year. The gap between supply and demand is huge and there is
tightness in the availability also in international markets which is putting
pressure on prices. Pulses’ domestic production declined to 17.20 million
tonnes in 2014-15 as against 19.25 million tonnes in the previous year, owing
to drought in parts of the country, leading to an additional shortfall of about
2 million tonnes in availability. The country imported 4.58 million tonnes in
2014-15 and till October this year, 2.78 million tonnes had been imported to
augment availability and check price rise. Export of pulses, except for kabuli
chana and organic dals, was banned. Import of pulses with zero duty was
further allowed. The government entered the market and imported 5000 tonnes of
tur and sold it in Delhi through its Kendriya Bhandars and Safal outlets at Rs.
120 per kilogram as against higher prices in the open market. The situation
worsened as even in the international market there was a squeeze in the
availability of tur and urad, as the pulses growing countries too had suffered
from drought which impacted their production.
Official
statistics showed that the prices of tur escalated from Rs 75.66 per kilogram a
year ago to upto Rs.198 per kg. Urad prices jumped from Rs.75.81 per kg to Rs.
144 per kg. Not only this, the prices of gram dal spiraled by 51.67 per cent,
moong dal by 13.27 per cent and masoor dal by 22.36 per cent in one year.
To
better manage the situation, the central government convened an urgent meeting
of state food ministers and issued an advisory to States to invoke the
Essential Commodities Act and take strict action against hoarders and black
marketers. Stockholding limits were imposed not only on domestic stocks but
also on imported tranche of pulses. Frequent raids by states unearthed about
1.3 lakh tonnes of pulses that were hoarded for speculation.
To
arrest the prices of pulses, the government decided to form a 1.5 lakh
tonne-buffer stock of tur and urad which will be procured directly from farmers
during the kharif and rabi marketing seasons at market rates. At what price the
buffer stock pulses will be sold, is not declared yet as the market is largely
ruled by private trade.
Meanwhile,
the minimum support price of most pulses was raised by Rs. 275 per quintal for
the kharif marketing season to encourage sowing of pulses. However, the ban on
export and stockholding limit on pulses remains, indicating that the situation
is not very comfortable. An inter-departmental group comprising departments of
food, agriculture, commerce and revenue was formed for better coordination and
to prevent repeat situation in the coming year. It will also monitor prices of
onion and decide in advance about its availability and the need to import.
During
the year, the government had to deal with the serious situation of sugarcane
growers not getting their dues from sugar mills, as excess sugar production
over domestic demand resulted in huge stocks with the sugar industry. The
government took a number of steps and now the arrears that peaked to Rs. 21000
crore in March-April this year, stand at Rs. 5406 crore currently.
Among
the steps that the government took to give relief to the beleaguered industry
and thus to the growers, was to give a soft loan of Rs. 6000 crore to the
industry and to bear the interest subvention cost estimated at Rs. 600 crore.
Of this amount, Rs. 4047 crore have been disbursed to enable millers to clear
farmers’ dues. It was also decided that after clearing arrears, any balance
amount will be credited into the mill accounts. This will benefit about 150
additional sugar mills that had proactively liquidated more than 90 percent of
their cane dues payable to farmers and to ensure that mills are incentivized
for arranging bridge finances for timely clearance of cane arrears.
In
addition, the central government decided to pay a production
linked subsidy of Rs 4.50 per quintal directly to cane farmers in 2015-16
season, costing the exchequer an estimated Rs 1,147 crore. Besides
extending incentives on export of raw sugar, the government
enhanced import duty on sugar from 25 per cent to 40 per cent to discourage
imports.
In another major step to help the sector, the government
decided to withdraw the excise duty on ethanol, for blending with petroleum,
from the next sugar season, so that the price benefit to the sugar mills could facilitate payment
of sugarcane arrears. Remunerative prices for Ethanol supplied for
blending was raised substantially to Rs. 49 per litre.
The High-Level Committee under Mr Shanta Kumar to study
restructuring of the Food Corporation of India (FCI) gave its report earlier in
the year. One of its recommendations was to restrict the beneficiaries of the
Targetted Public Distribution System. This was however not accepted by the
government. But the government took a step towards Direct Cash Transfer of Food
Subsidy to Beneficiaries by not only notifying “Cash Transfer of Food Subsidy
Rules” under the National Food Security Act but also by launching pilot schemes
in the Union Territories of Puducherry and Chandigarh. Preliminary reports
suggest that beneficiaries do not prefer cash in lieu of foodgrains. Recently
the Roller Flour Millers Association also backed the proposal for cash
transfers to prevent leakage. With most states digitizing the PDS, the scope
for diversion of subsidized foodgrains into the open market will be minimized,
official sources said. End-to-end computerization has also helped in weeding
out bogus ration cards.
With enough foodgrains stocks (about 50 million tonnes on
December 1, 2015) with the FCI, the government took steps to revise the buffer
norms, create additional storage capacity, paid attention to foodgrains’
movement in the north-east and reduced transit and storage losses.
In a bid to increase reach of minimum support price (MSP)
operations to more farmers and increase procurement of paddy, private players
have been allowed to procure paddy from growers in a cluster, identified by the
respective state government in the states of Assam, Bihar, Eastern Uttar Pradesh,
Jharkhand and West Bengal, where the Food Corporation of India (FCI) does not
have a robust procurement mechanism which often forces farmers to go for
distress sale. Private firms would deliver custom milled rice (CMR) at the FCI
or state government-owned agency godowns.
To protect consumers’ interest in terms of quality and
services, the Department of Consumer Affairs replaced
certain provisions in the 29 year-old Bureau of Indian Standards (BIS) Act for
simpler self-certification mechanism, mandatory hallmarking, and product recall
and product liability for better compliance to standards. More subjects
relating to health, safety, environment, prevention of deceptive practices,
security were brought under the mandatory certification. Hallmarking of precious
metal articles had been made compulsory.
In a far reaching action, the government proposes to
amend the Consumer Protection Act to set up a Central Protection Authority
which will have powers to recall products and initiate class action suits
against defaulting companies, including e-retailers. E-filing and time bound
admission of complaints in consumer courts is proposed. Efforts are
being made at the level of the National Consumer Court to clear pendency of
cases.
To
tackle the menace of misleading advertisement such as fairness creams and
weight reduction claims etc., the department launched a dedicated
portal www.gama.gov
which enables consumers to register their grievances against misleading
advertisements in food and agriculture, heath, education, real estate,
transport and financial services sectors.
In
order to protect interests of consumers’, the government filed class action
suits, suo motu, to take action against misleading ads against a major MNC
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