buffer stocks.

The HLC also examined the policy of low output and input prices followed by GoI and illustratively explained in
detail the malady in pursuing such logic. This policy of ensuring low output prices entails providing inputs at
low rates through substantial subsidies. Illustratively, in 2014-15, fertiliser subsidy is budgeted at Rs 73,000
crore, in addition to existing arrears of Rs 35,000 crore. Further, irrigation is subsidised at state level, in
varying degrees in terms of subsidised power, low canal irrigation charges and no charge on capital
expenditure. These irrigation subsidies could cross Rs 60,000 crore. The key problem with low input costs is
that scarce resources get overused, especially when targeting is poor. A clear illustration is the sharply falling
water table because of free electricity and deteriorating soil quality due to excess use of subsidised fertilizer
in Punjab.
In view of the fact that 11.5 crore new accounts have been opened under the Pradhan Mantri Jan Dhan Yojana,
covering 99.7 per cent of the resident Indians, and connecting them with Aadhaar card is already in the
process, pattern and flow of food subsidy to consumer needs another assessment. According to estimates, 36
crore people in India are below the poverty line who probably need food subsidy. Also, according to the
National Sample Survey Organisation, there are about 1.9 per cent of households in India that had reported
inadequate food availability in 2004-05. Of these, about 1.6 per cent households reported inadequate food for
some months while only 0.3 per cent reported inadequate food for all months. Further, food inadequacy was
more prevalent in rural areas. The states in which high level of food inadequacy was above the national
average were West Bengal, Odisha, Assam, Bihar, Kerala and Chhattisgarh. Thus, it can be noted that incidence
of poverty in a state and inadequacy of food availability need not be correlated. To address this inadequacy of
food, the GoI should consider involvement of urban local bodies and panchayati raj institutions to identify, and
target-feed genuinely hungry, rather 80 crore people under NFSA.
The original objective of the FCI was to stabilise the markets for foodgrains. Over the last five decades, there
has been a paradigm shift in the foodgrains markets, with India now being an exporter and not importer of
foodgrains. But in the last few years, it has been observed that the prices of some food items, especially
onions, have been volatile and have affected the overall price level, compelling the RBI to raise interest
rates. The production of onions, which follows an agricultural cycle of about four months, is concentrated in
Maharashtra, Madhya Pradesh, Karnataka and Andhra Pradesh. In view of the fact that onion has long shelf life,
and can be easily stored/hoarded, the FCI could consider revising its lists of items under the MSP to stabilise
food markets.