CHAPTER-III

PRICE CONTROL AND SUPPLY OF ESSENTIAL COMMODITIES

UNDER PUBLIC DISTRIBUTION SYSTEM

Rising prices particularly of essential commodities is a matter of great concern to this government. But, as the economy is growing rapidly, the commodity prices can’t be insulated completely from inflationary effects. On one side farmers are demanding remunerative prices and on the other side consumer interest need to be protected. Thus, Government has to do the balancing act and protect the interest of both the sides. Further, Government cannot keep prices of agricultural commodities artificially at low level for long time, especially when the market forces operate freely to determine the prices, both at national and international level. However, this Government is not a mute spectator and has taken all efforts to protect poor and the middle class families from the impact of price rise.

To control the prices of essential commodities like pulses, oil etc., a special scheme was launched on 14.4.2007 in Chennai city as a temporary measure to intervene in the market by procuring, supplying toor dhall, black gram dhall and palmolein oil. Each card holder is entitled to get 1 Kg each of pulses and 1 litre of palmolein oil at a concessional rate. Besides these commodities, out of the special allotment of wheat of 15,000 MT received from the Government of India at open market rate, rava and maida was produced and distributed under the scheme at open market rates. In the case of maida, it was sold at the cost price of Rs.16/- per Kg. and in the case of rava, it was sold at Rs.17/- per Kg. with Rs.1/- per Kg. as subsidy by Govt. of Tamil Nadu. However, further allotment of wheat at open market rate was not made by Government of India due to non-availability of stock. However, a special order was obtained from the Government of India to convert a part of wheat allotted under the Public Distribution System into fortified wheat flour (atta) with iron, folic acid and Vitamin ‘A’ and supply it at cost price. As on 31.3.2008, about 18,976 MTs of toor dhall, 11,439 MTs of Blackgram dhall, 2.05 crores litres of palmolein oil, 1,813 MTs of rava and 5,459 MTs of maida were distributed.

The Government has extended the scheme upto 31.7.2008 in view of the price remaining at high level in the open market. This scheme has helped to insulate the poor against the price rise by providing these essential commodities at a rate lower than open market. Supply of these commodities also ensured the nutrition security to poor people. As on date, the following commodities are being sold under the scheme on the rates indicated below:-

1) Toor dhall Rs.32 per Kg.

2) Blackgram dhall Rs.36 per Kg.

3) Palmolein oil Rs.40 per litre

4) Fortified atta Rs. 11 per Kg.

Controlling prices of essential commodities showing an upward trend for the past three to four years has become the top priority of the Government. To protect the common man, several measures were initiated both by Government of India and Government of Tamil Nadu as and when required.

Steps taken for price control:

Following steps were taken by Government of India to control prices:

Wheat:

v Ban on export of wheat from June 2006.

v Permitted State Trading Corporation to import wheat from foreign

countries without duty from June 2006.

v Permitted private traders to import wheat from foreign countries.

Pulses:

v Ban on export of Pulses from June 2006. Ban is extended for one more year from 31.3.2008.

v Permitted State Trading Corporation to import pulses from foreign countries without duty from June 2006.

v Permitted Private traders to import pulses from foreign countries with zero import duty.

Edible Oils:

v Ban has been introduced from 17.03.2008 for the export of edible oils to foreign countries to meet domestic demand for one year.

v Reduced customs duty for edible oils as follows from 1.4.2008.v

Rice

v Import duty was exempted for rice to hold the price line till March 31^st  2009 (from midnight 20/21 March 2008)

v Ban on export of non-basmati rice implemented

General:

Future Trading on essential commodities like Toor Dhal and Urad Dhal have been banned from February, 2007 and Rice, Wheat, Maida and Rava from 01.03.2007. Tamil Nadu is one of the State among the 16 States selected under National Food Security Mission. The mission aims at increasing rice production by 10 million tonnes, Wheat by 8 million tonnes and pulses by 2 million tonnes in the next four years.

Following steps have been taken by Government of Tamil Nadu to hold the price line :

v Issuing rice at the rate of Rs.2/- per kg through Public Distribution System to all the cardholders from 03.06.2006.

v Issue of certain essential commodities at subsidized rates to the public as follows under the special public Distribution system Scheme :

 

 

v The Special PUBLIC DISTRIBUTION SYSTEM Scheme, which lapsed on 31.1.2008, has been extended for another six months till 31.7.2008.

v Reduced sales tax on wheat from 4% to 2% during the 2007-08 Budget.

v Slashed 4% sales tax and surcharge on Toor dhall, Gramdhall, Moong dhall and Urad dhall during 2006 -07 budget.

v Removed 4 % sales tax for other pulses viz; Mochai, Karamani, Kollu

and Channa during 2006 -07 budget.

v Slashed 1% Sales tax on edible oil viz; Sunflower oil, Palmoil, Soyaoil during 2007-08 budget.

v Turmeric, Coriander and Chilly are exempted from levy of tax subject to a turnover condition. (Upto Rs.500 crores per annum) This is also extended to Turmeric powder , coriander powder and chilly powder .

v Levy of purchase tax on vegetable oil, pulses and grams, turmeric, chilly and coriander under section 12 of Tamil Nadu VAT Act 2006 have been exempted from 01.04.2008 for other than star hotels.

v Distribution of fortified whole wheat flour (atta) to all cardholders at Rs.11/-per kg from February 2008.

v From 01.01.2007, 1% sales tax on Groundnut oil, Gingelly oil and Coconut oil have been exempted.

v Requested Government of India for additional allotment of wheat for Tamil Nadu under public distribution system.

v Requested Government of India to permit Tamil Nadu Civil Supplies Corporation for importing Palmolein oil without duty for its distribution under public distribution system.

Therefore Government is alert and closely monitoring the price movement and will continue to take appropriate measures in future.

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CHAPTER-IV

ENFORCEMENT IN PUBLIC DISTRIBUTION SYSTEM

Administration of the Public Distribution System is under the control of the Civil Supplies Department. At district level, District Collector coordinates the enforcement and regulation and flying squads have been put in place to keep strict vigilance on the functioning of Public Distribution System and ensure that there is no diversion of essential commodities. To take effective action on the diversion, a special police wing viz., Civil Supplies CID, headed by an Additional Director General of Police assisted by a senior Police Officer in the rank of Inspector General of Police, is functioning. This wing has a total strength of 236 police personnel located in 16 units spread all over the State. Periodic inspections and raids are being carried out to curb illegal diversion and take severe action against culprits and anti-social elements who indulge in smuggling of PUBLIC DISTRIBUTION SYSTEM rice and other essential commodities. Action is being taken under the Prevention of Black Marketing and Maintenance of Essential Commodities Act, Goondas Act and Essential Commodities Act. The Civil Supplies CID wing is focusing on collection of vital intelligence and bringing to book anti-social elements indulging in large scale smuggling.

Periodic verification is being made in selected shops to eliminate bogus cards regularly. Due to the efforts made by the Government from 1.4.2007, 99,161 bogus cards were identified and eliminated. These efforts are going on in a regular manner. But this Government wants that a massive one time cleaning operation needs to be taken up to remove bogus cards completely. After this exercise, the ration card database will be updated and thereafter maintained online incorporating all changes such as deletions, additions, address transfers etc. regularly on a day-to-day basis, using the web-based work-flow software under development by ELCOT.

To strengthen the monitoring mechanism, advisory committees on the Public Distribution System have been constituted at district and revenue division level in which people’s representatives and representatives of voluntary consumer organizations are members. Further, people’s representatives like Member of .Legislative Assembly, Member of .Parliament., Mayors and upto the President of the Village Panchayat are authorized to visit and check the fair price shops within their jurisdiction, keep vigil on their activities and quality of service to the cardholders.

During the year 2007-2008, five patrol parties were constituted under the Civil Supplies CID to keep vigil on the border districts viz. Kanniyakumari, Tirunelveli, Coimbatore, Krishnagiri and Vellore. These patrol parties are working under the control of Civil Supplies CID as well as under control of district Collector. Flying squads, functioning under the Collectors, have been made more effective by providing them with new vehicles. During 2007-2008, 18 vehicles were provided to the flying squads. All District and Taluk Supply Officers were provided mobile phones in 2006-2007 leading to better enforcement and effectiveness. The Civil Supplies CID units have been provided with telephone connectivity during the year 2007-2008. Besides sanctioning additional strength of 40 personnel to enable reorganisation of Civil Supplies CID and better control, formation of 4 more additional units at Thiruvallur, Tiruvannamalai, Thanjavur and Thoothukudi is expected to give a special thrust to better enforcement in these districts.

From 1.4.2007 to 29.2.2008, 2,397 persons were arrested under E.C Act 1955 and 57 smugglers were detained under Prevention of Black Marketing and Maintenance of Supplies of Essential Commodities Act, 1980. Further, these inspections and raids resulted in the seizure of 2,050 vehicles and 20,023 tonnes quantity of rice and 562 K.L. of kerosene from 1.4.2007 till 29.2.2008. It is noteworthy to mention that nearly 7 notorious culprits, who have been evading the law for over a few years, have been detained during 2007-2008. These persons have been the brains behind large-scale diversion of essential commodities. Further, criminal prosecution of persons detained under Prevention of Black Marketing and Maintenance of Supplies of Essential Commodities Act, 1980, is being vigorously pursued.

Effectiveness of the Government in improving enforcement quality is clearly evident from the following statistics:

However, the following additional steps to eliminate diversion have also been initiated:

· Surprise night raids by District Revenue Officers, District Supply officers and other officers every week.

· Control rooms have been opened in all districts, including Chennai, to receive information on diversion as well as complaints regarding PUBLIC DISTRIBUTION SYSTEM.

· Criminal actions are initiated against the persons detained under the preventive detention.

· Criminal Action against and detention of Fair Price Shop employees involved in smuggling activities.

· Reward scheme for informants of Rs. 500 for each correct information leading to seizure has been implemented.

· 100% Intensive Verification of sales and monitoring of Kerosene bunks in a phased manner.

· 100% door-to-door verification of cards and bills in Fair Price Shops reporting higher offtake.

· Prosecution of notorious offenders vigorously by Civil Supplies CID to enable conviction by Courts of Law.

· Reward Scheme for informants of Rs.200 for each bogus card identified and cancelled.

· Action is taken to cancel the vehicle permit belonging to the vehicles which were caught while carrying the smuggled essential commodities.

· For the first time in the history of this department, Anna medal has been awarded to Thiru Natarajan, formerly District Supply and Consumer Protection officer of Krishnagiri, for exceedingly remarkable enforcement work even under threat to his life. This has served as a morale booster to sincere and bold officers involved in enforcement work.

 

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CHAPTER -V

PROCUREMENT OF PADDY UNDER DECENTRALISED

PROCUREMENT SYSTEM

The Tamil Nadu Civil Supplies Corporation is procuring paddy under the decentralised procurement system on behalf of the Government of India with effect from 1.10.2002 at the Minimum Support Price fixed by the Government of India. The paddy procured is processed through the modern rice mill owned by the Corporation and also through the private hulling agents. The converted rice is adjusted against the central pool allotment of Government of India and utilized in the Public Distribution System. During Khariff Marketing season 2007-2008, the Government of India has fixed a rate of Rs.675 per quintal for ‘A’ grade and Rs.645 per quintal for common variety of paddy with an incentive of Rs.100 per quintal over and above the Minimum Support Price from 1.10.2007 to 30.9.2008. Farmers were demanding for the higher procurement price to match the procurement price fixed for wheat. Government of Tamil Nadu took the matter with Government of India for fixing procurement price of paddy on par with wheat. However, on the initiatives of the Government of Tamil Nadu, an additional incentive of Rs.50 per quintal was announced from the State budget to encourage the farmers and sell their paddy to Tamil Nadu Civil Supplies Corporation Ltd. Thus, the effective procurement price in Tamil Nadu during 2007-2008 is Rs.825/- per quintal for grade ‘A’ and Rs.795/- per quintal for common variety.

During KMS 2007-2008, the Corporation has opened 1297 Direct Purchase Centres. As on 31.3.2008, Government have procured 9.87 lakhs MTs of paddy as against 16.5 lakhs MTs of paddy for the Khariff Marketing Season 2007-2008. Procurement for KMS 2007-2008 will continue upto 30.9.2008. Since the arrival to the Direct Purchase Centres has dwindled sharply in recent weeks it is unlikely to achieve the procurement target of 16.5 lakhs MT as the open market price for the paddy is prevailing at higher level than the price offered by Tamil Nadu Civil Supplies Corporation Ltd.

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