—By Charu Latha
The Department of Food and Public Distribution allocates food grains to states and union territories under the Targeted Public Distribution System (TPDS) and other schemes. To make food security a legal right, the government enacted National Food Security Act (NFSA) in 2013. Eligible households identified by the state receive food grains at subsidised prices. NFSA has been implemented in all states and each of them are entitled to their allocation of food grains.
The central government on May 13, 2022, slashed the wheat allocation by about 40 per cent for 10 states under the NFSA. The revised allocation will be applicable till March 2023. Previously on May 3, 2022, the wheat allocation for 11 states under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) was revised till September 2022. The wheat allocation for 10 states has been reduced by around 40 per cent. These states are: Bihar, Jharkhand, Odisha, West Bengal, Delhi, Uttar Pradesh, Gujarat, Maharashtra, Madhya Pradesh, and Tamil Nadu. The reason behind reduction in allocation is concern over fall in wheat stock. As per the new allocation, if a state was allotted wheat and rice at a ratio of 60:40, after the revision the ratio will be 40:60. Similarly, if a state was allotted at a ratio 75:25, now after the revision they will be allotted at 60:40.
These 10 states account for about 55.14 crore beneficiaries (67 per cent) under the NFSA. The earlier wheat allocation to these states was 15.36 lakh tonnes and after the revision, it comes down to 9.39 lakh tonnes. These states will be provided with rice in place of wheat to compensate for the reduction in allocation. For small states, North East states, and special category states, there was no change in allocation. Gujarat and Uttar Pradesh have demanded to restore their initial wheat allocations under NFSA.
Reason for Cut in Wheat Allocation One of the main reasons for the cut in wheat allocation is lower procurement by the government. In the Rabi season of 2021-22, the wheat procurement was 433.4 lakh tonnes whereas the procurement in Rabi season of 2022-23 till July was 187.8 which is around 56 per cent lower than that is 2021-22. The wheat stock in the country’s food grain stock has been lowest since 2008. To compensate the lower procurement and lower output of wheat this year, the government also imposed a ban on wheat exports in May 2022. Lower procurement was due to the lower output and soaring prices mainly on account of the rise in oil prices. Due to the supply disruptions caused by Russia-Ukraine war, the global wheat prices have increased drastically. The weather conditions affected the wheat output in many countries. Both the factors contributed to huge demand for Indian wheat all over the world. In the current financial year 2022-23, India agreed to export 45 lakh tonnes of wheat. Of this, 14.63 tonnes has already been exported till April 2022. This was a very high quantity compared to 2.43 lakh tonnes in April 2021. Due to the increased demand and high prices, most of the domestic traders offered higher price than MSP which encouraged the farmers to sell it to them. This also reduced government’s procurement.
The average monthly per capital wheat consumption, according to NSSO, (National Sample Survey Office) is 4.28 kg in rural areas and 4.01 kg is urban areas. The consumption of wheat was above the average consumption in Uttar Pradesh, Madhya Pradesh, Bihar, Delhi, and Maharashtra and lower in Odisha, West Bengal, and Tamil Nadu. Gujarat and Jharkhand have lower than the average consumption in rural areas and higher than the average consumption in urban areas. So, the states which could be affected are the ones with higher consumption than the average consumption. However the wheat allocations revision under the PMGKAY may affect consumption patterns in some states but not their food consumption. The revision of wheat allocations and the ban on wheat exports appear to be short-term adjustments till the wheat stock of the government is restored. But, if a similar situation persists globally, it is better for the government to offer a bonus price on MSP so that the farmers have the incentive to produce more and to sell it to the government. Since the ban on wheat exports is also a temporary measure, it would be better to restrict rather than put a total ban on exports to compensate for the decline in wheat stock.
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