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Govt makes foodgrains free of VAT
July, 05th 2011

While criticizing the UPA government at the Centre for inflation and spiraling prices of essential commodities, the NDA government claimed it is doing its best to provide some succour to the people. After reducing VAT on diesel, it has notified to make foodgrains free of VAT.

Deputy CM Sushil Kumar Modi said that the VAT on foodgrains like rice, wheat, pulse and flour has been fully withdrawn. "When our government came to power in 2005, the VAT on these commodities was four percent which we reduced it to one percent in 2006. Now in view of the escalating prices of essential commodities, we have decided to do away with VAT on them," he said. He added that with this relaxation, about 5,000 small and medium traders dealing in foodgrains whose annual turnover is up to Rs 100 crore will be benefited.

Meanwhile, the food and consumer protection department has suggested that the Centre provide cash instead of foodgrains to the ration card holders under the proposed National Food Security Act (NFSA). Food and consumer protection minister Shyam Rajak said that this suggestion has been sent to the Centre in response to the state's opinion sought on the NFSA. The Centre is working on a draft Bill that will be placed before the Empowered Group of Ministers on food. It aims to provide legal right over highly subsidized foodgrains to 68 percent of the country's population.

Rajak said that due to problem in storing the foodgrains in the godowns of the Food Corporation of India in Bihar, the arrival of the stock for public distribution is delayed for two to three months. "This has resulted in diversion of foodgrains," he added.

Chief minister Nitish Kumar is a strong advocate for cash incentive to check anomalies and corruption in public distribution system (PDS). Nitish also pleaded it before the Planning Commission and said such schemes introduced in Bihar are bearing good result. He gave the example of bicycle and uniform to school going girls who are given money to purchase them.

Rajak said that Bihar is not alone in making such a demand. Delhi and Andhra Pradesh governments too have made similar suggestions to the Centre. "We have proposed that cash be provided in the name of woman of the household," he said and added that it has been suggested that a bank account be opened in the name of woman of the beneficiary family and transfer cash in her account. The food and consumer protection minister said that his government has been repeatedly taking up with the Centre the issue of updating the number of beneficiaries under the public distribution system.

"The Centre is providing foodgrains for only 65 lakh people of the state under different schemes whereas the state's figure of beneficiaries is around 1.5 crore," Rajak said and added that due to this discrepancy, the state government is providing foodgrains on its own to around 85 lakh left out families.

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