Food card for poor families proposed



Govt needs Rs39bn more to feed eight million poor families through cash subsidy

Thursday, May 22, 2008
By Aftab Maken

ISLAMABAD: The government only needs an additional Rs39 billion to feed eight million poor families through cash subsidy to avert flour crisis and tackle the looming food security threats, reveals a pro-poor food programme.

The program, brainchild of Agriculture Policy Institute (API), a department of Ministry of Food Agriculture and Livestock (MINFAL), has proposed cash assistance of Rs7,200 per family for wheat flour or Rs12,150 per family on other commodities including wheat, rice, sugar, pulses and edible oil.

The targeted families would be issued food cards through NADRA that could be swiped at registered stores to buy staples on discount.

The federal government is already providing subsidy to the tune of Rs68 billion through domestic wheat procurement, imported wheat, incidentals to procuring agencies and Utility Stores Corporation (USC) operations, whereas it needs a total of Rs107 billion to provide total cash relief to eight million poor families (30 per cent of total population) on the major items of inflation basket, the proposal exclusively available with The News recommends.

In option one, out of total 165 million population the food assistance programme targets 50 million people or 8 million families with an average six family members requiring 720 kg for the whole year.

Price differential of Rs10 per kg with maximum wheat flour price of Rs25 per kg accounts to Rs7,200 per family per year when multiplied with eight million target population, it comes to around Rs58 billion coupled with Rs6 billion for management and operational expenditures the project cost totals to Rs64 billion, the document suggests.

Option two requires total of Rs107 billion to provide cash subsidy of Rs12,150 per family on wheat, rice, sugar, pulses and edible oil. If a six person family consumes 720 kg wheat, 78 kg rice, 90 kg sugar, 36 kg pulses and 60 kg edible oil, then the gross subsidy for eight million poor families would be Rs97 billion with an additional Rs10 billion of cost of management and operation.

If the prices of the commodities would remain wheat at Rs25 per kg, rice Rs50 per kg, sugar Rs30 per kg, pulses Rs60 per kg and edible oil Rs150 per kg, the government subsidy on wheat would be Rs10 per kg (40%), rice Rs10 per kg (20%), sugar Rs5 per kg (20%), pulses Rs20 per kg (33%) and edible oil Rs50 per kg (50%).

Annual requirement/consumption pattern of six member family requires wheat 720 kg, rice 78 kg, sugar 90 kg, pulses 36 kg and edible oil 60 kg and with fixed subsidy on these commodities, the total subsidy of Rs12,150 per family would be required.

The existing subsidy the federal government is providing amounts to Rs68 billion. It required Rs25 billion on domestic wheat procurement while it also needs Rs26 billion for importing 1.5 million tonnes, Rs10 billion for compensation for losses to procurement agencies and Rs7 billion for USC operations.

Owing to direct cash subsidy to targeted families the government would make substantial savings on expenses being incurred due to indirect subsidies meant to control market mechanism.

In multiplier effects, study further hoped that the government can generate funds for this program as it would be saving on procurement expenses, imports, reserves of wheat but also no subsidy under existing system, closing of USC, foregoing GST and diversion of Zakat Usher in welfare purposes.

Under the scheme, the proposal further said that the vulnerable section would be issued either food cards, food stamps, welfare cards or subsidy cards and would be linked with identification team/institution but certainly independent.

The cards would be issued on annual basis and renewable inbuilt system, but the transactions should be confined once a month or let this option be open with card holders. The verifications of CNICs used for cards would be strictly done by NADRA

All shops/stores/super stores registered for accepting cards directly just like credit cards and continuous monitoring of the system should be assigned to some institution.

The food cash assistance for wheat flour or other commodities would be provided through public sector institutions like Banks, NADRA, Agri extension departments, agri universities, education departments, research organization, local governments, zakat and usher committees, it added.


http://thenews.jang.com.pk/daily_detail.asp?id=113967