Food subsidy cut on hold

     New Delhi: Bowing to political pressure, the Cabinet on Tuesday put on hold plans for a 30 per cent food subsidy cut which had earned the wrath of most political parties. Briefing the media about the decision, Union Agriculture Minister Sharad Pawar said: "I am not executing the decision on food subsidy cut. The entire decision has been stayed. I will discuss this issue with the UPA (United Progressive Alliance) people". Pawar said that he would meet the UPA members, including the Left parties to explain the Government's position behind taking the decisions and would try to remove the misconception that the decision might affect the people below the poverty line. Pawar said this on the sidelines of a function to launch a new scheme on diary/poultry venture.

   The timing of Pawar's announcement of holding the implementation gains significance on account of Congress Party's reluctance to give a green signal to this plan. Congress party had yesterday asked the government to roll back the plan since it went against the wishes of common man. Earlier, Left parties too had voiced their strong opposition and had warned government "that they will fight against this decision" tooth and nail. With criticism abounding from every section and every party, the government by announcing the plans non-implementation has managed to nip its political isolation at a very early stage. By reducing the food allotted to the public through the Public Distribution System (PDS), the government had envisaged to save Rs 4,524 crore annually and diverge the fund to the ambitious Bharat Nirman Yojna. The Cabinet Committee on Economic Affairs (CCEA) in its January 6 meeting had taken the decision as per which, the families below the poverty line (BPL) were entitled to only 30 kg of food grains a month from ration shops, against 35 kg earlier, while the cut for those above poverty line (APL) was a steep -- from 35 kg to 20 kg. However, there was no change in the prices of rice and wheat sold to the BPL families. Only families above the poverty line had to pay 70 per cent of the economic cost. For the Antodya Anna Yojana also, the quantity had been reduced from 35 kg to 30 kg per family, but the prices were retained.

Trade unions protest government plan to cut food subsidy

    New Delhi: Hundreds of trade union activists took to the streets in New Delhi on Tuesday demanding that the government completely scrap its plans to cut grain subsidies for the poor, despite assurances given by Union Agriculture Minister Sharad Pawar that the proposal has been put on hold. "The UPA (United Progressive Alliance) government when they came to power, had promised to bring relief to the poor but to even think of such a move is a betrayal. They have betrayed the poor. On the one side the big industrialists get one bounty after another but the poor are being neglected. The industrialists are now asking the governemnt to end corporate taxes, the government is promoting corporates, but the poor swill suffer due to increase in the price of food grains," Sapan Mukherjee, general secretary of the All India Trade Union Congress, which was leading the protest, said. Last week the government cut the amount of subsidised grain supplied to the poor and marginally raised prices at which it is sold to them. Analysts said the move had been prompted by falling stocks at food procurement agencies and a desire to trim a huge subsidy bill but Pawar on Tuesday stalled the plans, saying they will release additional wheat to stabilise prices. The government had said the cut would save it about 1.01 billion dollars. But the ruling coalition's communist allies denounced the move to cut grain subsidies, and the Congress party also asked the government to think again. Subsidies account for nearly 9 percent of the government's total spending. But analysts say they often fail to benefit those aimed at, leading to wasteful expenditure by an already cash-strapped government. Last year, the government decided that containing subsidies should form an essential element of its fiscal reforms strategy.

   Analysts said the decision to hold the cut highlighted reluctance on the part of policy makers to deal with hard economic realities. For families living above the poverty line the monthly supply of wheat and rice was reduced to 20 kg from 35 under the cut, while for those below the poverty line the amount had come down to 30 kg from 35. In 2000 about 26 percent of India's billion-plus population was estimated to be living below the official poverty threshold of 2,100-2,400 calories a day. The government said it took the decision to cut subsidies in order to ensure handouts were targeted at the poorest households and to prevent grain supplied through the scheme being diverted to the open market. Pawar is optimistic that eventually he would be able to bring round critics of the subsidy cut.

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