Cash transfers not desirable at this juncture: House panel

Our Bureau New Delhi | Updated on January 22, 2013

Cash transfers to replace food subsidy at this juncture may not be desirable, a Parliamentary panel has said.

In its report, submitted to the Lok Sabha Speaker on January 17, the Standing Committee on Food, Consumer Affairs and Public Distribution System, headed by Vilas Muttemwar, suggested that the Government should first ensure that banking infrastructure and accessibility to banking are available in all parts of the country, including remote, rural and hilly tribal areas, before introducing cash transfers in lieu of food subsidy.

The panel, in its 27th report on the Food Security Bill, 2011, said it received a lot of views and suggestions on cash transfers, “some in favour and many against the provision.” Even Ministries differed with each other on the issue.

For instance, the Finance Ministry said that Bill could be combined with improvements in the delivery system, such as giving the subsidy directly to the beneficiary in the form of direct cash transfers. “This would, to a certain extent, avoid putting a heavy burden on the state machinery,” it said.

However, the Ministry of Tribal Affairs felt it was “advisable to arrange for food rather than cash because the aim is food security and money has propensity to get misutilised and will compromise food security.”

Food activists and Left parties also opposed cash transfers saying there was no guarantee that it would be free from leakages and pilferage for individual beneficiaries. In fact, the report was finalised with a lone dissent note submitted by CPI(M) Member of Parliament from Kerala, T. Seema.

In its response, the Department of Food and Public Distribution, when asked about the pros and cons of direct cash transfer of food subsidy, stated that it proposed to introduce a pilot scheme under the Targeted Public Distribution System in six Union Territories (UTs).

It assured the House panel that the proposal did not involve dismantling the TPDS, as foodgrains would continue to be distributed to the beneficiaries under the scheme through fair price shops. The scheme details would be finalised in consultation with UTs, it added.


Published on January 22, 2013

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