Centre fixes reimbursement cap for states under food security act

The Modi government has notified the first set of rules under the national food security act to cap the reimbursement rate of grains bought by states from the open market to make up for possible short supply by the Centre.

The Modi government has notified the first set of rules under the national food security act (NFSA) to cap the reimbursement rate of grains bought by states from the open market to make up for possible short supply by the Centre.

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The Centre is mandated under the NFSA, passed last year, to provide subsidised grains to the states for distribution to cover 67% of the country’s population, roughly 800 million people.

The states, in turn, have to sell rice, wheat and coarse grains to poor households for Rs 3, Rs 2, and Rs 1 per kg, respectively.

According to the new rules, if the Centre is unable to provide a state’s total share of grains, it will reimburse for the shortfall at a rate which is 1.25 times the minimum support price, minus the price at which it will be sold to the poor.

However, the state will get paid according to the market price if that is lower. The Centre has also laid down a 60-day deadline to reimburse the states.

Only 11 states and union territories, including Delhi, Bihar, Madhya Pradesh and Maharashtra have, however, implemented the law so far. The rest were recently given another 6-month extension.

“The fact that after more than a year, the only rules that have been notified by the government of India are those pertaining to the food security allowance is reflective of the lackadaisical attitude of the Central government,” said Biraj Patnaik, principal adviser, office of the Supreme Court commissioners.

Patnaik rued that the Centre had not notified rules yet “for the maternity entitlements, the integrated child development scheme, public distribution system or the mid day meals programme”.