In a move which will ensure Minimum Support Price (MSP) goes directly to farmers, optimizes procurement operations and reduces the government's food subsidy burden, Centre has directed state governments to fix the cap of levy rice at 25% from the procurement season beginning October 1, 2014. Under the levy mechanism, operational since 1978, states purchase some percentage of rice -- known as levy rice -- processed from that paddy purchased by millers at the minimum support price (MSP) directly from farmers for public distribution.
Although, this decision on levy rice was taken by UPA government in the previous year, the same could not be implemented due to the stiff opposition from states especially Andhra Pradesh and Uttar Pradesh (UP).
However, reports suggest that this would be the last year that government fixes cap on levy rice, post to which this system will be completely abolished. As per the Food Ministry, levy mechanism cannot be abolished in one go, since some states like Andhra Pradesh, Uttar Pradesh, West Bengal and Uttarkhand are dependent on this. Currently, there is no levy system in Haryana and Punjab.
Lastly, government aims to procure 30 million tonnes of rice in the 2014-15 procurement season, while its food subsidy for the 2014-15 has been estimated at Rs 1,15,000 crore, which is about 25% more than in 2013-14.
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