CENTRAL ISSUE PRICE

CENTRAL ISSUE PRICE

Subject: Agriculture

Context : Observing that the food subsidy is becoming “unmanageably large”, the Economic Survey 2020-21 has recommended the revision of Central Issue Prices (CIP) of food grains released from the central pool, which have been unchanged for the last several years.

Concept:

• The CIP is the price at which the government makes available food grains for beneficiaries of the National Food Security Act, 2013 and other welfare schemes to the states from the central pool.
• The issue price for wheat and rice has not been revised since the introduction of the National Food Security Act in 2013, the survey observed.
• It noted that the economic cost to the Food Corp. of India (FCI) for wheat rose to ₹27 per kg in 2020-21 from ₹19 per kg in 2013-14, while for rice it increased to ₹37 per kg from ₹26 per kg in 2013-14.
• The centre procures food grains from farmers at a minimum support price (MSP) and sells it to states at central issue prices. It is responsible for transporting the grains to godowns in each state.
• States bear the responsibility of transporting food grains from these godowns to each fair price shop (ration shop), where the beneficiary buys the food grains at the lower central issue price. Many states further subsidise the price of food grains before selling it to beneficiaries.

Public Distribution System in India

• The Public distribution system (PDS) is an Indian food Security System established under the Ministry of Consumer Affairs, Food, and Public Distribution.
• PDS evolved as a system of management of scarcity through distribution of food grains at affordable prices.
• PDS is operated under the joint responsibility of the Central and the State Governments.
• The Central Government, through Food Corporation of India (FCI), has assumed the responsibility for procurement, storage, transportation and bulk allocation of food grains to the State Governments.
• The operational responsibilities including allocation within the State, identification of eligible families, issue of Ration Cards and supervision of the functioning of Fair Price Shops (FPSs) etc., rest with the State Governments.
• Under the PDS, presently the commodities namely wheat, rice, sugar and kerosene are being allocated to the States/UTs for distribution. Some States/UTs also distribute additional items of mass consumption through the PDS outlets such as pulses, edible oils, iodized salt, spices, etc.