social security benefits, poor skill sets, lack effective Incentivizing ‘infant’ MSME firms rather than

representation through trade unions, lack of access to dwarf firms: Provision of incentives to firms
basic facilities such as housing, sanitation etc. irrespective of their age has led to dwarf firms. Hence,
Decline in Female LFPR: India exhibits a low and incentives should be limited to initial 5-7 years only.

declining female labour force participation rate. The Change in Orientation of SEZs: SEZs to be renamed
female labour force participation rate in India was as 3 E's- Employment and Economic Enclaves.
23.7 per cent in 2011-12 compared to 61 per cent in Today, SEZs are viewed as zones promoting only
China, 56 per cent in the United States exporters with special privileges; change in

Protection and social security: A large number of nomenclature will bring together all the categories of

workers that are engaged in the unorganized sector Investors that enable economic activity and boost

are not covered by labour regulations and social employment creation.

security. Effective Implementation of Labour Reforms,

Skills-Set: According to the India Skill Report 2018, including promotion of Fixed Term Employment.
only 47 per cent of those coming out of higher Promotion of secondary Agriculture in the rural
educational institutions are employable. areas to boost non-farm employment.

STRATEGIES TO PROMOTE JOB CREATION Making investment subsidies conditional on realizing a

targeted level of employment per unit of investment.
Focus on Labour Intensive Industries such as Textile
and Leather. Enhance female labour force participation by
ensuring the implementation of and employers’
Exploring Tourism Potential: Potential to create
adherence to the recently passed Maternity Benefit
more than 40 million new jobs in the next 5 years.
(Amendment) Act, 2017, and the Sexual Harassment
Focus on Assemble in India: By integrating of Women at Workplace (Prevention, Prohibition and
“Assemble in India for the world” into Make in India, Redressal) Act. It is also important to ensure
India would create about 4 crore well-paid jobs by
implementation of these legislations in the informal
2025 and about 8 crores by 2030. sector.

PDS- FUNCTIONING,
crores, thus making the entire food grain management
policy of the Government financially unsustainable.

LIMITATIONS AND
Hence, in order to make Public Distribution financially
sustainable, the NITI Aayog has recently circulated a
discussion paper for undertaking revision in the coverage
REVAMPING of beneficiaries under NFSA. Even the Economic Survey
2020-21 has made important recommendations to
improve the Public Distribution System.
Keeping in mind the importance of PDS from the
perspective of UPSC exam, we will focus on the following
IN NEWS
dimensions:
The Food Subsidy Bill under the National Food Security Act
Components of Food Grain Management
(NFSA) 2013 has increased to almost around Rs 3.8 lakh
 Government Initiatives to improve Food Grain
Management
Various Issues in PDS
Reasons for Increase in Food Subsidy Bill
Recommendations to improve PDS
VARIOUS COMPONENTS OF FOOD
MANAGEMENT
The nodal agency to undertake procurement and storage
of food grain is the Food Corporation of India (FCI).
Procurement: The cost incurred by FCI for the
procurement of food grains is referred to as
Economic Cost of Food grains. It comprises of 3
components - Pooled cost of grains (weighted MSP of
stock of food grains), Procurement incidentals (Labour
charges, Transport charges, storage cost etc.) and cost of
distribution. The States have also been encouraged to
undertake the procurement of food grains on their
own through the Decentralised procurement scheme.
It has been introduced to reduce the transportation
and storage costs of FCI.
Food grain stocking norms: The Government of India
has revised the Buffer Norms w.e.f. January 2015 and
the nomenclature of Buffer Norms has been changed
to Food Grain Stocking Norms. It has 2 components:
Operational Stocks: For meeting monthly
distributional requirement under TPDS and other
welfare schemes.
Strategic Reserves: To meet emergency situations.
(Presently it is 5 MT)
Note: The norms are defined for a quarter of
financial year i.e. how much buffer has to be
maintained for each quarter of financial year.
Distribution of Food grains: The National Food
Security Act 2013 provides for coverage of up to 75
per cent of the rural population and up to 50 per cent
of the urban population for receiving food grains
under Targeted Public Distribution System (TPDS),
thus covering about two thirds of the population of
the country for receiving food grains at the rate of Rs
1/2/3 per kg for nutri-cereals/wheat/rice respectively.
Identification of beneficiaries under the Act is under
two categories- households covered under Antyodaya
Anna Yojana (AAY) and Priority Households. Priority
Households are entitled to receive 5 kg per person
per month, AAY households, which constitute the
poorest of the poor, receive 35 Kg of food grains per
household per month.
Note: The Central Issue Price is the price at which
centre allocates food grains to the states. It can be
considered as the price at which food grains are sold
through the network of fair price shops. For instance, it is
Rs 1/2/3 per kg for nutri-cereals/wheat/rice respectively.
However, the central Issue Price (CIP) is defined in terms
of Quintals (not in terms of Kg). Under the NFSA, the CIP
is Rs 200/quintal in case of wheat and Rs 300/quintal in
case of rice.
GOVERNMENT INITIATIVES TO IMPROVE FOOD
MANAGEMENT
State Governments, particularly those undertaking
Decentralized Procurement (DCP), are encouraged to
maximize procurement of wheat and rice.
Strategic reserves of 5 million tonnes of food grains
over the operational stocks are maintained to be used
in extreme situations.
Sale of wheat and rice is undertaken through Open
Market Sale Scheme (OMSS) (Domestic) so as to
check inflationary trend in prices of food grains.
PDS reforms such as One Nation - One Ration Card,
Aadhaar authenticated distribution through e-POS
machines
VARIOUS ISSUES IN PUBLIC DISTRIBUTION SYSTEM (PDS)

INCREASE IN THE FOOD SUBSIDY BILL Increase in MSP (Increase of one unit in real MSP leads
to 0.48-unit increase in real economic cost of
What constitutes Food subsidy? Food subsidy
procurement)
comprises of (i) subsidy provided to FCI for procurement
and distribution of wheat and rice under NFSA and other Higher procurement of food grains as against the
welfare schemes and for maintaining the strategic stocking norms (due to Open Ended procurement
reserve of food grains and (ii) subsidy provided to States Policy)
for undertaking decentralized procurement. The Food Increase in storage cost
subsidy bill is calculated as the difference between
Problems with Central Issue Price (CIP)
Economic cost of Food grains and Central Issue price
(CIP). The CIP for NFSA beneficiaries has not been revised
from Rs 200/quintal in case of wheat and Rs
Increase in Food Subsidy Bill: The food subsidy bill has
300/quintal in case of rice. These rates were fixed
increased from 1.2 lakh crores in 2014-15 to 3.8 lakh
under the Act initially for a period of three years from
crores in 2020-21.
21. In order to pay the food subsidy bill,
the date of commencement of the Act and thereafter
the Government has been borrowing from National
were to be fixed by the Central Government from time
Small Savings Fund (NSSF) through the issuance of
to time, while not exceeding the minimum support
special G-Secs. (However, this practice of borrowing from
price. However, it has not been revised since 2013.
NSSF has been discontinued from this year as
This has resulted in widening of the gap between the
announced in the Union Budget 2021-22)
economic cost and CIP
REASONS FOR INCREASE IN FOOD SUBSIDY BILL
Uniform CIP for BPL and APL households
Increase in Economic Cost of Food grains
RECOMMENDATIONS TO IMPROVE PDS
Higher coverage of beneficiaries under NFSA as
NITI Aayog: Reduce the percentage of beneficiaries
compared to erstwhile TPDS.
under NFSA in the rural (from 75% to 60%) and urban
 areas (from 50% to 40%). Accordingly, the number of 40% (comfortably cover BPL families and some even
beneficiaries under the NFSA will drop from 81 crores above that)
to 71 crores. This will lead to annual reduction in the Increasing the Food grains: The amount of food
Food subsidy bill by Rs 48,000 crores. grains should be increased to 7kg/person from the
Shanta Kumar Committee: present 5kg grain per person.
Need for End-to-End Computerization: Given that Pricing: Antyodaya households can be given grains at
leakages in PDS range from 40 to 50 percent, Rs 3/2/1/kg for the time being, but pricing for priority
Government should defer implementation of NFSA in households must be linked to MSP, say 50 percent of
states that have not done end to end MSP
computerization. Economic Survey 2020-21: The Central Issue price
Reducing the Coverage:: Reduce the current (CIP) should be revised upwards; Coverage of the
coverage of 67% of the population under NFSA to beneficiaries under NFSA should be reduced.

ONE-PERSON
About One-person Companies: The idea of introducing
One-person companies was put forward by J.J. Irani

COMPANIES
Committee Report on Company Law. One-person
companies have been provided significant leeway to
reduce the compliance burden. For instance, such a
company does not need to conduct an Annual General
Meeting, which is a requirement for other companies.

How is one-person company different from sole

IN NEWS
proprietorship?
In the Union Budget 2021-22, the Finance Minister has
eased the restrictions on one-person companies which are
registered under the Companies Act, 2013. The easing of
these restrictions is set to give a boost to the start-up
ecosystem in India.
In this regard, let us understand various facets related to
One-person companies and the recent changes introduced
in the Budget 2021-22.
Types of Companies in India: The Companies Act, 2013
provides for 3 types of companies depending upon the
number of members.
One-person company: Single Member
In case of sole proprietorship mode, person and the
company are not considered as separate legal entities.
Hence, personal wealth and assets of a person are
linked to business. There is unlimited liability of the
owner. For example, an individual invests Rs 50,000 in
a sole proprietorship. The sole proprietorship then
incurs Rs 2 lakh worth bad debt. The individual is
personally liable for the entire Rs 2 lakh, even though
he only invested Rs 50,000 in the business. This means
that a Bank could legally seize the personal assets of
the individual in order to pay the debts of the
business.

Private Limited Company: At least 2 members and
not more than 200 members.
Public Limited Company: At least 7 members and no
limit on maximum members
However, in case of one-person company, the person
and the company are considered as separate legal
entities. The liability of the person is limited only to its
investment.