{"id":252438,"date":"2023-07-17T20:22:21","date_gmt":"2023-07-17T14:52:21","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=252438"},"modified":"2023-08-31T12:16:32","modified_gmt":"2023-08-31T06:46:32","slug":"why-the-govt-has-more-cash-less-grain-to-give","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/why-the-govt-has-more-cash-less-grain-to-give\/","title":{"rendered":"Why the govt has more cash, less grain to give"},"content":{"rendered":"\n

Source<\/strong>: The post is based on the article\u00a0\u201cWhy the govt has more cash, less grain to give<\/strong>\u201d published in The Indian Express <\/strong>on\u00a017th<\/sup> July 2023<\/strong>.<\/p>\n

Syllabus: <\/strong>GS 3 \u2013 Agriculture \u2013 Issues of Buffer Stocks and Food Security<\/strong><\/p>\n

Relevance: <\/strong>About uncertainties over foodgrains production<\/strong><\/p>\n

News:<\/strong> The article describes the government’s food grain supply three years ago and its current situation.<\/p>\n

What was the situation of foodgrains three years ago?<\/strong><\/h2>\n

Three years ago, during the pandemic, both the center and the states did not have money to make large-scale cash transfers to poor and vulnerable households.<\/p>\n

However, there was plenty of wheat and rice in the Food Corporation of India\u2019s (FCI)<\/strong> warehouses. Due to which, there was enough distribution of these foodgrains.<\/p>\n

Along with distribution, the three years from 2020-21 also saw all-time-high grain exports from India. <\/strong>Thus, there was surplus grain not only to give out free, but even to export in record quantities.<\/strong><\/p>\n

What is the present situation?<\/strong><\/h2>\n

The situation has reversed today. Governments have money, due to the resumption of economic activity, but there has been a shortage of grains.<\/p>\n

The newly formed Karnataka government sought additional grains from FCI to fulfill its poll promise of providing 10 kg of free rice per month to all members of below-poverty-line (BPL) households. However, the FCI refused to provide it.<\/p>\n

Hence, the government in Karnataka is transferring cash into the bank accounts of beneficiaries.<\/strong> Thus, earlier there was grain but no money. Now, there\u2019s not much grain, but governments have money to pay PDS beneficiaries.<\/p>\n

Why is the FCI hesitant to provide additional grains?<\/strong><\/h2>\n

The total stocks of wheat and rice in the Central pool on July 1, 2023, are at a five-year low.\u00a0<\/strong><\/p>\n

While these stocks are currently above the minimum required level, there are concerns regarding the monsoon and its potential impact on this year’s rice crop.<\/p>\n

Although the country has experienced normal rainfall during the current monsoon season, major rice-growing areas, including Telangana, Andhra Pradesh, Chhattisgarh, Odisha, have faced significantly below-normal rainfall<\/strong>.<\/p>\n

Additionally, the presence of El Ni\u00f1o<\/strong>, through the 2023-24 winter, raises concerns about the monsoon’s performance in the rest of the season. This can impact the production of not just the kharif rice, but even the upcoming rabi wheat crop.<\/p>\n

Must Read: <\/strong>Protect rural incomes to tackle the current food security threat<\/strong><\/a><\/p>\n

What are the concerns present with exports?<\/strong><\/h2>\n

Last year, due to a poor crop, the government banned wheat exports<\/strong> in May 2022. This was followed by a prohibition on exports of broken rice and the imposition of a 20% duty on non-parboiled non-basmati rice shipments in September.<\/p>\n

However, despite these restrictions, the last two years registered record exports of rice and wheat.<\/p>\n

However, with retail cereal inflation at 12.7% in June and monsoon-related production uncertainties, the government is considering additional curbs on rice exports.<\/strong><\/p>\n

What can be the way ahead?<\/strong><\/h2>\n

India is the world\u2019s largest rice exporter<\/strong>, with a 40.4% share of the global trade in the cereal. Therefore, given its position, it cannot import rice even for domestic production shortfalls; instead, it can only limit exports.<\/p>\n

Moreover, if the FCI does not have surplus grain, it is possible that many states could follow Karnataka.<\/strong> However, from a macroeconomic perspective, opting for cash transfers has an inflationary effect, while distributing free grain is deflationary.<\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on the article\u00a0\u201cWhy the govt has more cash, less grain to give\u201d published in The Indian Express on\u00a017th July 2023. Syllabus: GS 3 \u2013 Agriculture \u2013 Issues of Buffer Stocks and Food Security Relevance: About uncertainties over foodgrains production News: The article describes the government’s food grain supply three years… Continue reading Why the govt has more cash, less grain to give<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[218,216,10500],"class_list":["post-252438","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-agriculture","tag-gs-paper-3","tag-indian-express","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704844289},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/252438","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=252438"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/252438\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=252438"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=252438"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=252438"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}