Food Security, PDS and Subsidies in India: NFSA 2013, FCI, Buffer Stock, DBT and Welfare Schemes for SSC Economy

Food security means that all people have access to enough, safe and nutritious food at all times. India has a large food security system built on the public distribution system, the Food Corporation of India and the National Food Security Act. SSC economy asks the features of the Act, the institutions and the major subsidies. This guide on food security, PDS and subsidies for SSC covers all these with tables, practice questions and FAQs.

Food Security: Dimensions

National Food Security Act (NFSA), 2013

• The Act was enacted in 2013 (it received assent on 10 September 2013) and gives a legal right to subsidised food grains.
• It covers up to 75% of the rural and 50% of the urban population, about two-thirds of the total population.
• Eligible households (priority households) get 5 kg per person per month at subsidised prices: rice at 3 rupees, wheat at 2 rupees and coarse grains at 1 rupee per kg.
• The poorest of the poor households under the Antyodaya Anna Yojana (AAY) get 35 kg per household per month.
• Pregnant and lactating women get a maternity benefit of at least 6,000 rupees; children aged 6 months to 14 years get meals under the ICDS and the mid-day meal schemes.
• The eldest woman (18 years or more) of the household is the head of the household for the ration card.
• From January 2023, the food grains under the NFSA are given free of cost; the free supply was extended for five years from January 2024.

Public Distribution System (PDS)

Food Corporation of India (FCI)

• Set up in 1965 under the Food Corporations Act, 1964; headquarters in New Delhi.
• Functions: procurement of grains at the MSP, storage, transport and distribution to the states; maintaining the buffer stock for price stability and emergencies.
• Food grains are bought at the MSP from the farmers and sold through the PDS at the Central Issue Price (CIP), which is lower; the difference is the food subsidy.
• The Shanta Kumar Committee (2015) recommended reforms in the FCI, including cash transfers.

Major Subsidies in India

• Direct Benefit Transfer (DBT) was started on 1 January 2013; the subsidy goes directly into the bank account of the beneficiary, which reduces leakage; it is linked to Aadhaar and Jan Dhan accounts (the JAM trinity).
• Types of subsidies: merit goods (education, health) and non-merit (other); explicit (budgeted) and implicit (under-pricing of public services).
• Subsidy cutting is a part of fiscal consolidation.

Welfare Schemes for Food and Nutrition

Buffer Stock and Price Stability

• The buffer stock norms for food grains are fixed for each quarter of the year.
• The Open Market Sale Scheme (OMSS) is used to sell wheat and rice from the stocks to control prices.
• The Essential Commodities Act, 1955 controls the supply and the prices of the essential items.
• Surplus stock of food grains in India has also been exported at times.

Tricks to Remember

• NFSA: 75% rural, 50% urban; 5 kg per person; rice 3, wheat 2, coarse grains 1.
• AAY: 35 kg per household.
• FCI: 1965; MSP buys and CIP sells.
• DBT: 2013; JAM: Jan Dhan, Aadhaar, Mobile.
• ICDS: 1975; mid-day meal: 1995.

Quick Tips

• Learn the key numbers of the NFSA: 75%, 50%, 5 kg and 35 kg.
• Remember the prices of 3, 2 and 1 rupees.
• Learn the year of each food scheme.
• Remember that FCI buys at the MSP and sells at the CIP.

Quick Revision Points

• The NFSA of 2013 covers 75% of rural and 50% of urban people.
• AAY gives 35 kg per household.
• FCI was set up in 1965.
• DBT was started in 2013.
• ICDS began in 1975 and the Mid-Day Meal in 1995.

Practice Questions With Answers

1. In which year was the National Food Security Act passed?
   Answer: 2013
2. How much grain per person per month does the NFSA give to priority households?
   Answer: 5 kg
3. How many kg of grain per month does an AAY household get?
   Answer: 35 kg
4. What is the full form of FCI?
   Answer: Food Corporation of India
5. Which scheme gives cooked meals to school children?
   Answer: Mid-Day Meal (PM POSHAN)
6. In which year was ICDS launched?
   Answer: 1975
7. What does DBT stand for?
   Answer: Direct Benefit Transfer
8. What price is paid to farmers for procurement of grains?
   Answer: Minimum Support Price
9. What is the price at which FCI sells to the PDS called?
   Answer: Central Issue Price
10. Which scheme was launched in 2018 against malnutrition?
    Answer: POSHAN Abhiyaan

How to Practise This Chapter

Practise 10 questions every day and write the steps on paper. Then attempt timed sets from our practice papers and the previous year papers page. See all topics on the Indian Economy notes page, read the previous topic Insurance, Pension and Financial Inclusion.

Frequently Asked Questions

What is food security?

Availability of enough, safe and nutritious food to all people at all times.

What is the NFSA 2013?

A law that gives a legal right to subsidised grains to about two-thirds of India’s population.

How much food grain does the NFSA give?

5 kg per person per month to priority households and 35 kg per household to AAY households.

What is the PDS?

The public distribution system through which grains are given to people at subsidised prices through fair price shops.

What is the FCI?

The Food Corporation of India, which buys, stores and distributes food grains.

What is a buffer stock?

A reserve of food grains kept by the government for emergencies and price stability.

What is the MSP?

The price at which the government buys certain crops from farmers.

What is DBT?

The transfer of subsidies directly into the bank accounts of beneficiaries.

What is ICDS?

A programme providing nutrition, health and pre-school education to children and mothers.

What is the Mid-Day Meal scheme?

A scheme that provides cooked meals to school children, now known as PM POSHAN.

Is this topic asked in SSC?

Yes. The NFSA and PDS are standard economy questions.

What is the largest subsidy of the government?

The food subsidy.