After court rap, govt decides to form panel to overhaul PDS

After court rap, govt decides to form panel to overhaul PDS

New Delhi: Acknowledging the Supreme Court’s concern, the government has decided to set up a committee under justice D.P. Wadhwa for reforming the public distribution system (PDS) and also provide an additional 5 million tonnes of foodgrains for distribution to the poor.

The decision was taken at a meeting of the empowered group of ministers (eGoM) on Monday, where it also ruled out wheat exports for the time being until it got a clearer picture on inflation outlook and the proposed legislation on food security—the ruling alliance’s proposed flagship programme to provide wheat and rice at subsidized rates to the poor.

It has, however, permitted wheat exports to neighbouring countries including Nepal, Sri Lanka and the Maldives.

The government has been subjected to severe criticism by the Supreme Court for its failure to fix the poor functioning of the PDS, which provides foodgrains at concessional prices to the poor. The proposed committee will also include Nandan Nilekani, chairman of the Unique Identification Authority of India, food secretary B.C. Gupta and B.K. Gairola, director general of the National Informatics Centre.

Justice Wadhwa was appointed by the apex court in 2006 to review the functioning of the PDS; the report was submitted in 2009 March to the Supreme Court.

The eGoM also preferred to be cautious on the issue of wheat exports, given that food inflation is close to double digits.

Wholesale price inflation was 8.98% in March and the wholesale food price index was at 9.18% on 26 March.

Farm minister Sharad Pawar had indicated that the government should lift the exports ban as the country has enough stocks and because a good harvest was expected. He argued that the farmers would get good returns from the prevailing high global prices.

Wheat reserves swelled to 17.2 million tonnes by 1 March, more than double a government target of 8.2 million tonnes. That, combined with forecasts of a record harvest of 84.3 million tonnes in 2011, has prompted industry and trade to demand that export curbs be lifted.

A commodity analyst said the Indian government has been buying more grains since inflationary pressure has started showing up.

“Off-loading a certain amount of wheat from the buffer is doable," said Harish Galipelli, head, commodity and currency derivatives at JRG Wealth Management.

Flour millers opposed the move. “We will oppose grain exports. Rather we would want it to go out in a processed form," said R.K. Garg, president of Roller Flour Millers’ Association of India.

Wheat exports have been banned since February 2007, when inadequate monsoon hit production. In July 2009, the government lifted a ban, but reimposed it within 10 days after the seasonal monsoon rains failed.

Although the eGoM discussed the draft legislation on food security, no decision was taken, said an official in the government who was familiar with the developments.

“A final decision on the disputed issues can be taken only after discussing with Prime Minister (Manmohan Singh) and (National Advisory Council chairperson) Sonia Gandhi," he added.

The draft legislation has not been introduced due to differences on the contours of the scheme between the NAC and the government.

Reuters contributed to this story.