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New Delhi: Direct transfer of benefits in cash to targeted beneficiaries of food and fertilizer subsidies could save an estimated Rs 60,000 crore and help trim the fiscal deficit which, in turn, may calm stubbornly high food inflation, a study by a government wing has shown.

The study showed that policies to rein in food inflation would require winding down of the fiscal deficit, which has gone above 8% of GDP for Centre and states combined and way beyond the guidelines laid out in FRBM (Fiscal Responsibility and Budget Management) Act, 2003.

Identification of the poor and the scale of operation are the most critical challenges of the proposed legislation on the right to food. This article suggests universal entitlement that excludes clearly identifi able rich. Food coupons could eliminate the need for the operations of public distribution system and eliminate diversion. Also cash transfers to the women of the household through Aadhaar cards could substantially reduce diversions and avoid the problem of distribution of food coupons.

Survey says economy to revive from difficult times this year

A year after India's economic growth is headed to a record ten-year low growth of 5% in 2012-13, economic advisers in the Finance Ministry expect the economy to recover to 6.1 - 6.7% in 2013-14. The Economic Survey, 2012-13, presented today gave a wide range of 0.6 percentage points for its projections for economic growth next fiscal as it recognised that forecasting at potential turning points is difficult.

Left parties submit the papers to Prime Minister

Leaders of four Left parties met Prime Minister Manmohan Singh on Tuesday to ask the government to take immediate measures to bring in food security legislation in this budget session that would provide for a universal public distribution system; ensure 35 kg of grains at not more than Rs. 2 a kg and end the cash transfer scheme for the public distribution system.

Read text of Pranab Mukherjee's speech during budget session of the Parliament. He touched upon various issues like the slow economic growth, growth in agriculture and allied sectors to India's role at Doha climate conference & called for greater transparency in governance.

Emphasising that the money involved in giving food subsidy should be treated as high priority, Planning Commission deputy chairman Montek Singh Ahluwalia on Friday said the subsidy should not be linked with fiscal deficit.

“The money involved in food subsidy can be treated as high priority and should not be linked with fiscal deficit. The food subsidy bill can be met. I see no merit in subsidising diesel. We can't subsidise petrol and fertilizers and these are the subsidies that we need to get rid of,” Ahluwalia said at a panel discussion at IIT, Delhi.

Current grains allocation, AAY entitlement will be protected under the Bill, he assures States

Responding to concerns expressed by several States on a possible cut in food grains allocation under the National Food Security Bill, the Centre on Thursday gave an assurance that the current allocation will be protected and so will the Antyodaya Anna Yojna (AAY) entitlement for the poorest of the poor. The Bill, Minister of State for Food K.V. Thomas said, would be reworked to make it “practical” and “acceptable.” It was proposed to be presented in the budget session of Parliament.

While the UPA government is seeking to push its ambitious food guarantee law in the forthcoming Budget Session of Parliament, many state governments on Wednesday objected to several provisions in the proposed Bill with Tamil Nadu seeking an outright exemption citing lack of clarity in the Bill.

A meeting of state food ministers was convened on Wednesday by the Centre to discuss the National Food Security Bill. Chhattisgarh CM Raman Singh, in fact, wrote to Prime Minister Manmohan Singh highlighting his reservation on issues related to quantum of foodgrain being guaranteed and ceiling on beneficiaries being imposed on states among other issues.

The Union government’s direct cash transfer scheme linked to the Unique Identification (UID) number was launched with much fanfare in January with pilots in five districts of Rajasthan. The government believes this initiative is a game changer, which will successfully plug leakages in delivering entitlements to the poor and pluck out fake beneficiaries.

Indian households purchased much more food items through the public distribution system (PDS) in 2009-10 than they did five years ago, the 66th National Sample Survey has indicated, raising doubts over the effectiveness of the government’s new direct cash transfer system over a large base.

Greater penetration and higher use of the PDS will make it difficult for the government to eventually deliver the Rs 75,000-crore food subsidy to its eligible beneficiaries.